The late Lester Thurow was quite popular in the 1980s and 1990s for his incessant warnings that America was losing at the game of trade with other countries. Most ominous, Thurow (and others) warned, was our failure to compete effectively against the clever Japanese who, unlike us naive and complacent Americans, had the foresight to practice industrial policy, including the use of tariffs targeted skillfully and with precision. Trade, you see, said Thurow (and others) is indeed a contest in which the gains of the “winners” are the losses of the “losers”. Denials of this alleged reality come only from those who are bewitched by free-market ideology or blinded by economic orthodoxy.
And so – advised Thurow (and others) – we Americans really should step up our game by taking many production and consumption decisions out of the hands of short-sighted and selfish entrepreneurs, businesses, investors, and consumers and putting these decisions into the hands of the Potomac-residing wise and genius-filled faithful stewards of Americans’ interest.
Sound familiar? It should. While some of the details from decades ago of the news-making proponents of protectionism and industrial policy differ from the details harped on by today’s proponents of protectionism and industrial policy, the essence of the hostility to free trade and free markets of decades ago is, in most – maybe all – essential respects identical to the hostility that reigns today.
Markets in which prices, profits, and losses guide the decisions of producers and consumers were then – as they are today – asserted to be stupid, akin to a drunk donkey, while government officials (from the correct party, of course) alone have the knowledge, capacity, willpower, and power to allocate resources efficiently and in the national interest.
Nothing much changes but the names. Three or four decades ago protectionism and industrial policy in the name of the national interest was peddled by people with names such as Lester Thurow, Barry Bluestone, and Felix Rohatyn. Today protectionism and industrial policy in the name of the national interest is peddled by people with different names.
Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2020-03-12.
March 18, 2025
QotD: Lester Thurow and the other cheerleaders for “Industrial Policy” in the 1980s
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