blake: Are there examples or evidence that suggests that interventionist industrial policy can lead high quality jobs and community flourishing in developed economies? I get that there are plenty of example where it has helped low income countries climb the economic ladder, but are there good examples/evidence where it has been effective in high income countries?
blake: Are there examples or evidence that suggests that interventionist industrial policy can lead high quality jobs and community flourishing in developed economies? I get that there are plenty of example where it has helped low income countries climb the economic ladder, but are there good examples/evidence where it has been effective in high income countries?
Tons! My favorite historical example is from Abraham Lincoln. He almost doubled tariffs from 20% to ~40% in order to protect labor, and he established a national banking + currency system in order to reign in the chaos caused by laissez faire wildcat banking. His legacy was frequently invoked whenever the US's global tariffs came under pressure from importers. It was all done for pro-labor / pro-national welfare reasons.
While contemporary examples abound (Taiwan and TSMC, Singapore's economic development board, Denmark and wind turbines) I will admit that it can be hard to isolate where benefits are limited to particular communities / industries, and which benefits go nation-wide. Agglomeration and innovation spillovers are a big factor here (e.g. how Chinese manufacturers take skills from lower-value manufacturing like batteries + phones and apply them to higher-value manufacturing like EVs and drones). The general pattern is clear though тАФ sovereigns either invest heavily in industries whose success will help them achieve policy goals, or insulate them from foreign competition through trade policy, or both.
IMO this is the crux of the tariff v. targeted subsidy debate, and people are right to push on it тАФ see e.g. when Ezra Klein had Oren on his podcast. I happen to believe that the broader you go, the more agglomeration effects you get and the more innovation you get in areas you wouldn't have thought to target. But at the margin where your targeted industrial policy interventions approach, say, China-scale, I'd say they're probably about as good as global tariffs.
blake: Are there examples or evidence that suggests that interventionist industrial policy can lead high quality jobs and community flourishing in developed economies? I get that there are plenty of example where it has helped low income countries climb the economic ladder, but are there good examples/evidence where it has been effective in high income countries?
Tons! My favorite historical example is from Abraham Lincoln. He almost doubled tariffs from 20% to ~40% in order to protect labor, and he established a national banking + currency system in order to reign in the chaos caused by laissez faire wildcat banking. His legacy was frequently invoked whenever the US's global tariffs came under pressure from importers. It was all done for pro-labor / pro-national welfare reasons.
While contemporary examples abound (Taiwan and TSMC, Singapore's economic development board, Denmark and wind turbines) I will admit that it can be hard to isolate where benefits are limited to particular communities / industries, and which benefits go nation-wide. Agglomeration and innovation spillovers are a big factor here (e.g. how Chinese manufacturers take skills from lower-value manufacturing like batteries + phones and apply them to higher-value manufacturing like EVs and drones). The general pattern is clear though тАФ sovereigns either invest heavily in industries whose success will help them achieve policy goals, or insulate them from foreign competition through trade policy, or both.
IMO this is the crux of the tariff v. targeted subsidy debate, and people are right to push on it тАФ see e.g. when Ezra Klein had Oren on his podcast. I happen to believe that the broader you go, the more agglomeration effects you get and the more innovation you get in areas you wouldn't have thought to target. But at the margin where your targeted industrial policy interventions approach, say, China-scale, I'd say they're probably about as good as global tariffs.