I am not feeling very well and might go home after I make this post, so sorry for the anemic output.
When I wrote a recent post on the cost of colonizing the moon I commented that sometimes the government can properly incent an industry, but I was having problems thinking of any success stories. So it was quite apropos when I saw this:
Who’s afraid of industrial policy?
Government support of industry is the American tradition
While the article is specifically about ship building and the supporting infrastructure it mentions several other industries that were once supported/protected by the government and later became independent. It also makes the claim that the US government has a better track record than most VC firms, something I didn’t investigate so can’t really comment on.
As a consequence I have been reevaluating my earlier reluctance to support the government support of industries such as space launch vehicles, etc. In my own considerations of government design I had myself made decisions to ensure that certain industries (most notably food, raw materials and energy) were subsidized to the point that they remained robust enough to ensure that they could fully support my country if necessary. What I hadn’t also considered was the undoubtable stimulating effect on the economy that would have and that the overall cost (once the taxes on the dollars invested were accounted for) would likely be so low that it resulted in a net gain. Much like I complain that our silly-assed government should be spending money like water to upgrade our pitiful infrastructure as a way to both keep us from joining the third world in that regard as well as to stimulate the economy, perhaps some careful consideration could be given to the idea of subsidizing certain industries (space could be a good focus, but not with NASA on the critical path) as a way to bolster our economy in the short-term as well as long-term. I think that care needs to be given to the idea of avoiding picking winners (and therefore losers) and to keep it from becoming a simple transfer of tax payer dollars into the pockets of companies with the most lobbyists, but I am starting to come down on the side of a certain amount of protectionism might be a good thing.
What do you think? Is protectionism always bad, mostly bad, sometimes bad or implementation dependent?