The phrase 鈥渋ndustrial policy鈥� conjures up images of Europe鈥檚 dirigiste failures, corruption in African and Latin American econ颅omies, and the disastrous 1984 presidential campaign of Walter Mon颅dale. In board rooms and think tanks and even university class rooms across the country, the term generates an instinctive revulsion hard颅wired by decades of listening to laissez-faire and supply-side econom颅ic thinkers, from Milton Friedman and Martin Feldstein to George Gilder and Arthur Laffer. The phrase recalls humiliating policy fail颅ures from Solyndra and Evergreen Solar at one end to Soviet five-year plans at the other, more sinister end鈥攏ot to mention the Great Leap Forward.
All this explains why industrial policy has been, by and large, a taboo subject among American politicians as well as economists. That is, until now. There鈥檚 been a recent shift in mood and attitude about the proper role of government in shaping America鈥檚 economic desti颅ny. There鈥檚 a growing fear that limiting government鈥檚 role to merely umpiring market mechanisms is hurting both our economic future and our national security. There is a growing belief that policy op颅tions beyond market fundamentalism must exist, and that a failure to pursue these alternatives might put us on a different road to serfdom.
Those options would be especially attractive if they managed to avoid a radical uprooting of America鈥檚 basic economic landscape, or supplanting the normal incentives that foster economic growth and innovation. If, instead, government鈥檚 attention were simply focused on bolstering the handful of key industries that will determine the global balance of power in the twenty-first century鈥攁nd where in many cases America already has a lead, though one that will quickly diminish if action isn鈥檛 taken soon鈥攖he notion of industrial policy might gain some new political as well as intellectual traction.
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