Industrial policy is all the rage in Washington, spurred by China's aggressive and sometimes successful use of industrial policy tools. I've lived through a few past enthusiasms for industrial policy, and I'm hoping this time we've learned lessons from the past. That at least is the premise of my op-ed today in The Hill. Here's the lead:
At the start, we should recognize that letting governments pick economic winners and losers is wasteful, inefficient and corrupting. For the West, and open capital-market economies such as the U.S. and the UK, it’s hard to think of a worse policy — other than the alternative, which is to let China pick winners and losers for the world.
So, we need a way to counter China without making a politicized mess of everyone’s economy. As they embark on that effort, here are six rules I’d commend to Western governments.