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Another Open Letter to Oren Cass

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Here’s another open letter to Oren Cass: Mr. Oren CassAmerican Compass Oren: I enjoyed your Soho Forum debate with Scott Lincicome. But I remain unconvinced by your case for industrial policy. Let’s here overlook your misinterpretation of the current (well, immediately pre-Covid) state of the American economy as well as your mistaken understanding of market processes and of what economics says about these processes. Let’s instead focus on the four goals that you assure us your industrial policy will achieve. These goals are (1) improved national security; (2) more innovation and higher productivity; (3) creation for poorly educated men of more jobs producing physical outputs; and (4) a general encouragement of manufacturing jobs instead of service-sector jobs. Alas, each of these

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Here’s another open letter to Oren Cass:

Mr. Oren Cass
American Compass

Oren:

I enjoyed your Soho Forum debate with Scott Lincicome. But I remain unconvinced by your case for industrial policy.

Let’s here overlook your misinterpretation of the current (well, immediately pre-Covid) state of the American economy as well as your mistaken understanding of market processes and of what economics says about these processes. Let’s instead focus on the four goals that you assure us your industrial policy will achieve. These goals are (1) improved national security; (2) more innovation and higher productivity; (3) creation for poorly educated men of more jobs producing physical outputs; and (4) a general encouragement of manufacturing jobs instead of service-sector jobs.

Alas, each of these goals potentially conflicts with the other three. How will these conflicts be resolved?

For example, what specific criteria will guide industrial-policy officials when they must decide whether to allow or to prohibit a productivity-enhancing innovation that would destroy jobs for poorly educated men who produce physical outputs? What operational guidance do you offer to industrial-policy officials who encounter – as, at some point, they inevitably would – the reality that creating more manufacturing jobs dampens the government’s ability to strengthen national defense? How will your industrial policy trade-off the creation of manufacturing jobs for poorly educated males against the creation of manufacturing jobs for better-educated workers (regardless of sex)?

The list of such questions – that is, the identification of the need for such trade-offs – can be extended indefinitely. Yet not only do you not tell us what criteria are to be used by industrial-policy officials to make such trade-offs – or how these officials will acquire the detailed and dispersed knowledge necessary for making such trade-offs sensibly – you appear to be unaware that the goals that you list for industrial policy must at some point be traded off against each other.

Nothing is easier than listing aspirational goals. But listing such goals doesn’t, in fact, constitute a case for industrial policy. Unless and until you recognize the fact that your goals must be traded off against each other – and then unless and until you offer specific criteria for how these trade-offs are to be struck – and then, further, unless and until you inform us how real-world government officials will acquire the detailed knowledge they must possess in order to know how to apply your criteria on a regular basis – your case for industrial policy is but a stream of happy words and wishes with zero substance.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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Don Boudreaux
He is a professor of economics at George Mason University in Fairfax, Virginia. Previously, he was president of the Foundation for Economic Education.

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