Industrial Policy in America

Industrial Policy in America

Breaking the Taboo

Marco R. Di Tommaso and Stuart O. Schweitzer

In contrast to what observers have frequently argued, this timely and thought provoking book suggests that the concept of industrial policy is not alien to the American past and present. The debate on this topic in the US has always been full of contradictory rhetoric and policy practices, and the expert authors therefore acknowledge a need to rethink the traditional antagonist positions. They illustrate that contemporary markets continue to demand to be fixed by government policies, and governments continue to show how fixing-the-market policies might fail. The conclusion is that the future of industrial policy is about how to make both markets and governments better in their functioning, but that the real goal for industrial policy is to make better-market and better-government policies consistent with the goal of building a better society.

Chapter 1: Industrial policy: tools, targets, and goals

Marco R. Di Tommaso and Stuart O. Schweitzer

Subjects: economics and finance, industrial economics

Extract

This book is about industrial policy in the US. However, this description is probably not complete enough to tell the reader what policies are dealt with between the book’s covers. There are two preliminary problems. The first is that the book is written by a pair of economists and there is a widely quoted truism that, “. . . (a)ny random collection of six economists is sure to produce at least a dozen different opinions on the subject . . .”! The second problem, closer to the subject, has been expressed by many other authors; that no generally accepted definition of industrial policy exists in the literature. Our first task is to address the question of what industrial policy is, and we answer that question in this chapter. Much of the discussion revolves around the problem of market failure and the options and needs for government to intervene to make markets work better. In the next chapter, Chapter 2, we point out that a frequent problem with industrial policy is that governments are not always capable of replacing or improving markets adequately. Next, in Chapters 3 and 4, we ask what role these ideas have played in America’s economic past and in more recent times. Chapters 5, 6, and 7 deal in more detail with the industrial policies of the Obama administration, pointing out ways in which these policies mark a turning point in the role of industrial policy in America’s economic history.

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