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The Case Against Industrial Policy

As a professional economist, I have a deeply-rooted skepticism about the capacity of government to manage economic growth or technological change more efficiently than the free market. As chairman of the Federal Trade Commission, moreover, I am officially charged with keeping a suspicious watch on interference with free competition-even when such interference is sponsored by government itself. In the early 1930s, for example, the FTC played an active role in criticizing several of the anticompetitive industry "codes" sponsored by the ill-fated National Recovery Administration. Thus from where I stand it seems to me the burden of proof ought to be on those who advocate ambitious new ventures in governmental management of the economy. There is no doubt the American economy has been through some very rough weather in the last 15 years. And like any patriotic American, I find myself stirred by the cry that we can and must do better in the remaining years of this century. But for the life of me, I cannot believe the answer lies in current proposals for an activist industrial policy. I come to this judgment for three simple reasons: first, proposals for activist industrial policy begin with faulty history; second, they proceed through untenable economic reasoning; and, third, they conclude with deluded political projections. In sum they are bad history, bad economics, and bad politics-three strikes that should declare a policy "out" in any league. Let me explain.

  • Authors: James C. Miller III
  • Year: 1984
  • Organisation: Cato Institute
  • Publisher: Cato Institute
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