Senator Marco Rubio had a piece in the New York Times yesterday headlined “We Need a More Resilient American Economy” in which he again called for industrial policy.
There’s a lot that’s wrong with it, but I will not go over all that here. I will note one irony, one that would be laughable if it weren’t taken seriously by so many people — namely, the senator’s assertion that “there is a clear need for a sweeping pro-American industrial policy,” meaning more top-down central planning at least in some industries on the theory that government is more attentive to the long run and to creating a resilient economy than a private sector that is, we are told, mostly preoccupied with efficiency.
As Don Boudreaux explains here, the popular myth — repeated by Rubio — about corporate short-termism is simply wrong. The facts contradict it. Businesses and investors in private markets, with rare exception, plan well and effectively for the long run. If they don’t, they’re out-competed by businesses and investors who do.
Leaving this point aside, I would like to address one point. The senator writes that “any prudent policymaker should recognize that both efficiency and resiliency are values we should prioritize and seek to balance.” I assume the “we” is other politicians like him. However, no entity has so surely proven itself to be less interested in the long run than has the U.S. government. Despite having a decade-long economic expansion where the government should have paid off some of its debt and reformed entitlement spending, Rubio and his colleagues, both in the House and the Senate, added trillions more to the national debt.
By habitually financing current programs and handouts with debt to be repaid by future generations, Congress and the President — Democrats and Republicans alike — offer solid proof that they are irresponsibly attentive only to the short-term (and quite the opposite of prudent policymakers).
I know Republicans like to blame this trend on Democrats, but even assuming — contrary to fact — that only Democrats are to blame, those same bumbling and profligate Democrats will have a say in crafting and running the industrial plan that senator has in mind. (To see the latest evidence of how Washington works and grows, check out the bill that adds funds to the small business relief program.)
Senator Rubio claims that the private sector favors efficiency over resiliency. But what we have seen play out in Washington is that policymakers systematically favor today’s voters and special-interest groups over future generations. To pretend otherwise, and to demand that we turn over more of the economy to “prudent policymakers,” is disturbing, especially since this pandemic has provided yet more evidence of the government failure to prepare us for emergencies, and the stupidity of many of the restrictions all levels of government impose on the private sector.