In sum, humans lack not only all the data but also the ability to assimilate all the information they would need to be able to say with a considerable degree of confidence that a given industrial policy will realize a particular outcome efficiently or even effectively. Industrial-policy advocates often respond by saying that this over-theorizes the problem. Of course, they argue, humans can’t know everything. No entrepreneur or business, they point out, can know everything about their present and future market. And yet we allow them to embark upon thousands of endeavors, many of which fail — sometimes spectacularly. Why, it follows, should we not let technocrats and government officials engage in similar activity?
A second argument of some industrial-policy supporters is that while they recognize that realizing the goal is likely to be an inefficient and costly process, there are times when efficiency needs to be sacrificed if important economic and non-economic goals are to be achieved.
Third, even if industrial policy fails, some industrial-policy boosters maintain that there is a significant possibility that it will have positive spillover effects. While these are unplanned, they end up indirectly benefiting many businesses and consumers.
There are no fewer than six major problems which, I’d suggest, should cause us to be skeptical about these claims.
Department of Labor (DOL) announced last week that it was proposing a new rule to prevent “worker misclassification.” This is the latest volley in an ongoing battle by federal regulators and organized labor meant to bring so-called “gig economy” companies to heel, with millions of freelancers caught in the middle.
Marty Walsh, the former union president now running the Biden labor department, wants to enable regulators to classify app-based companies such as Uber, Lyft, and Doordash, among others, as traditional employers. This move may undermine the business model that made the gig economy possible in the first place. But ensuring that these companies are viable, it seems, is not as important to the Biden administration as ensuring that their workers have union cards, whether they want them or not.
And if you missed it yesterday, be sure to check out the latest episode of the Capital Record, where David Bahnsen interviews former senator Phil Gramm. Listen here, or wherever you get your podcasts.