Were I Bernie Sanders, I would continuously quote Oren Cass and his ambition of giving the United States an industrial policy.
Though he is more nuanced and moderate than most advocates of an “entrepreneurial state”, Cass interprets industrial policy as being oriented towards supporting manufacturing and “vital sectors that might otherwise suffer from underinvestment”. That definition, as always with industrial policy, is loose enough to be applicable to pretty much everything. What is a vital sector? How do you assess under-investment?
Industrial policy is meant to be discretionary, because it aims to correct alleged errors on the part of investors and consumers in the market economy insofar as the allocation of resources is concerned. It is “picking winners”, and picking winner needs a picker.
A number of people have produced meaningful criticism of Cass’s ideas. See Henderson, Reinsch, Cowen and Boudreaux among others. Yet these ideas seem to be certain to gain traction, as they are well attuned with the ambitions of the political class and with the widespread idea that markets ought to be “corrected” so as to guarantee better social outcomes.
But why should Sanders think about Cass? Because, in a way, Cass wants to give the left the right they always dreamt (and ranted) about. The left tends to believe that the right is the hostage of special interests that drive its economic policies. Yet deregulation is an implausible proof of that point: from an almighty entity such as government, nobody is satisfied with getting simply “being neglected”; they want boons. Subsidies, special privileges, regulations that allows them to keep competitors at bay.
Now, this always happens, more or less, with either the left or the right in government, as they are both sensitive to the sirens of interest groups. Yet the free market rhetoric of (some part of) the right was if anything a brake on this tendency. Their much talked about allegiance to the ideas of a freer economy created a problem for right wingers: they needed to justify, at least in front of their followers, deviations from a policy of non-intervention. But take away the free market rhetoric, and they won’t even need to do that.
Were I Sanders, I would point out that the right has even stopped pretending not to be a covered-up special interest operation. But I suspect it won’t do it. Because, perhaps with better intentions, his rhetoric is completely aligned with that of industrial policy wannabes. You make your own deductions.
READER COMMENTS
nobody.really
Feb 21 2020 at 5:39pm
Thoughtful. Interesting–and dismaying–parallels.
H. L. Mencken remarked that “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.”
I have long criticized libertarian-ish Republican policies. But I’ve now had several years to reflect on the merits of being careful what I wish for. I’ve read endless discussions about the merits of policy guided by the principle of laissez faire–but none as compelling as three years of policy devoid of any principles whatsoever.
I think I’ve learned my lesson now. Please make it stop.
nobody.really
Feb 21 2020 at 5:46pm
In another gift to Bernie Sanders, Russia appears to be intervening in the election on his behalf (0r, at least, refraining from intervening against him, as they do with other Democrats).
Thomas Sewell
Feb 21 2020 at 8:29pm
Did you perhaps mean sensitive?
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It’s bad enough we have to convince the people theoretically opposed to free market principles when not everyone who is supposedly on our same side is even convinced yet. Long way to go. Fortunately, many people want to “be left alone” naturally, so there is that.
Alberto Mingardi
Feb 22 2020 at 7:58am
Thank you!
Thaomas
Feb 22 2020 at 7:58am
Odd reflections throughout.
Cass probably does re-enforce Sanders by divorcing willingness to intervene in markets from any theory or evidence for the desirability of any particular intervention, but providing a better”target?”
And tell me again about how “free market rhetoric of (some part of) the right” impeded protectionism in trade (Reagan and GWB, not just DT), restrictions on immigration and increasing the deficit in an almost full employment economy (Reagan and GWB, not just DT), costly subsidies to deal with CO2 accumulation instead of carbon taxes?
Marshall Locke
Feb 23 2020 at 1:10pm
Call it what you will: Industrial Policy, Dirigisme, Top-Down, Command-And-Control, etc., Oren Cass and his fellow travelers on the illiberal right appear to be succumbing to a similar or the same temptation that leftists/progressives have long fallen prey to: The notion that a more meddlesome, more authoritative state can make better economic/societal decisions … Hayek’s Knowledge Problem alone should dispense with this nonsense, but the definitive word goes to Progressive mugged by reality Walter Lippmann in 1937:
“Their doctrine is that disorder and misery can be overcome only by more and more compulsory organization. Their promise is that through the power of the state men can be made happy … Throughout the world, in the name of progress, men who call themselves communists, socialists, fascists, nationalists, progressives, and even liberals, are unanimous in holding that government with its instruments of coercion must by commanding the people how they shall live, direct the course of civilization and fix the shape of things to come … But the burden of proof is upon those who reject the oecumenical tradition of the western world. It is for them to show that their cult of the Providential State is in truth the new revelation they think it is, and that it is not, as a few still believe, the gigantic heresy of an apostate generation.”
Warren Platts
Feb 23 2020 at 4:14pm
Cass is right about one thing: that “Libertarian” free market economics has nothing to do with conservatism. It is liberalism. The only practical difference between Libertarian economics and progressive economics is that the latter think the casualties caused by “creative destruction” can be adequately compensated with economic bandaids like minimum wage laws and generous transfer payments. (Libertarians, to the extent they have a conscience at all, console the patsies with the nostrum that at least their grandchildren will be better off once the grand experiment has had a century or more to operate.)
What would a truly conservative economics look like? For starters, it will not be new. If there is no need to change, there is a need not to change. Therefore, a conservative economics will be found in the past. And it is easily found: it used to be called the “American System.”
Yes, the American System is frankly protectionist. But it is not mercantilist. Trade happens, but it is not emphasized. The goal is not to be “competitive” in a world where most people make $2/day. Rather, the goal is consumption driven growth through high wages.
So the immediate goal has to be to continue to give Eddy and Reggie a raise in pay. And we don’t do that with minimum wage laws and UBI. We want to make such “solutions” superfluous. So we simply manage for a tight labor market. As David Ricardo himself said, a tight labor market is a happy labor market. Restrictions on free trade will increase the demand for labor; restricting immigration will reduce the supply of labor. The market will then raise wages.
The eventual goal is to restore Labor’s share of the GDP to its historic levels. Yes, it’s the case that Profit = Production – Wages, but owners will be better off with a smaller slice of a bigger pie. We will not be soaking the rich; we will be saving the rich from themselves.
If the Republicans can figure out how to once again be the champion of the working-class stiff, they will save America and rule for a hundred years easy. If they can’t, then its going to be Bernie-Bro/Squad-style socialism that will turn us into another Venezuala. There is no third option because the Libertarian/globalist economic experiment is done with: the voters have figured out it doesn’t work as advertised, even if 99% of economists are still true believers. The only question is what is going to replace it.
So choose your poison carefully…
Mark
Feb 23 2020 at 7:06pm
Not only special interests, but remember a common Left critique of the free-market Right for years has been that the free-market stuff is a sham covering up for racial resentment, not wanting government support for minorities.
Now we have a situation where significant numbers of non-whites, both within the US and abroad, are benefiting from the free market system. So the Right’s response is to abandon support for the free market, instead advocating protectionism to remove non-whites from the marketplaces, while also abandoning their opposition to forms of government support that primarily benefit their older, white base.
I used to think that Left critique was incorrect and uncharitable, but I have had to admit that I was wrong, and that the above critique is fundamentally correct.
And if the choice is going to be between a command economy that is egalitarian and a command economy that is there to perpetuate the privileges of historically advantaged groups, then the egalitarian option is the lesser evil.
Warren Platts
Feb 24 2020 at 2:22pm
Mark, the idea that economic nationalism is some sort of racist plot to screw over non-white people is an utterly ridiculous straw man. In point of fact, the people who benefit the most from immigration restrictions are non-white workers. Cf. the recent Economist article “Immigration to America is down. Wages are up” that reluctantly concludes that the reason workers without a high school diploma are up 10% over the past year compared to 3% average nominal wage growth is thanks to Trump’s immigration restrictions.
Thomas Williams
Feb 26 2020 at 8:30am
Woodrow Wilson and others of his time married the Federal Government to the monopolies, thinking to use industry to further the interest of the state. Instead, the monopolists captured the government, leading to excesses, mass poverty and social instability.
In Europe, the same scenario played out, giving rise to Fascism in Italy which was applauded here at home. Much of our leadership class admired fascism wanted to follow that here.
The situation is similar here today, with corporate media cheerleading global monopolies and crushing the livelihoods of normal people. I’ll stop here but the alignment of powers is identical to what it was 90 years ago. The same players mouthing the same propaganda, engaged in the same tactics.
Pushback by normal people – electing Trumo and Sanders is the peaceful alternative to Pinkertons shooting workers and open revolt.
Tom Hamilton
Feb 26 2020 at 11:59pm
Bernie really wants to take over the means of production. Cass just wants better jobs in the USA. What we need to do is use the tax code to encourage more investment in manufacturing in the USA. Then let the companies decide what to do, not the government. I would lower the corporate rate to 0% and raise the tax rate on dividends and short term capital gains and stock buybacks. I would raise the rest of the revenue with a VAT tax. Most of our trading partners use it. Its just a legal way to subsidize a country’s exports and tax their imports. Tariffs would be fairer if we don’t institute a VAT tax. The only reason Bernie is so popular is the fact that the middle class hasn’t shared in the growing economy like they did in the 1950’s and 60’s. Trump is trying.
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