“You can drive almost anywhere in the state of Michigan — pick a point at random and start moving — and you will soon come upon the wreckage of American industry.”

August 27th, 2011

Oh Michigan. This article in the Times focuses how the Feds have picked certain manufacturing industries as the recipients of massive rents.

For decades, the federal government has generally resisted throwing its weight —and its money — behind particular industries. If the market was killing manufacturing jobs, it was pointless to fight it. The government wasn’t in the business of picking winners. Many economic theorists have long held that countries inevitably pursue their natural or unique advantages. Some advantages might arise from fertile farmland or gifts of vast mineral resources; others might be rooted in the high education rates of their citizenry. As the former White House economic adviser Lawrence Summers put it, America’s role is to feed a global economy that’s increasingly based on knowledge and services rather than on making stuff. So even as governments in China and Japan offered aid to industries they deemed important, factories in the United States closed or moved abroad. The conviction in Washington was that manufacturing deserved no special dispensation. Even now, as unemployment ravages the country, so-called industrial policy remains politically toxic. Legislators will not debate it; most will not even speak its name.

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