This new piece by National assessment My courageous Mercatus Center colleague Véronique de Raggi, a researcher affiliated with American Compass, has made clear how weak the arguments in favor of industrial policy and protectionism are.. Here are some excerpts from Vero’s essay (but read the whole thing)
American compass Recently produced A pieceWritten by Gabriela Rodríguez, describing the greatness of European industrial policy. Rodriguez uses European governments’ support for Airbus as a case study. You see, Airbus has sold more planes than Boeing by 2022, invested more in R&D, hired workers across Europe and has lower production costs thanks to strategic decisions by a few European governments to change things.
Rodriguez’s piece is part of a series of American Compass articles to highlight “lessons focused on the critical role of public policy in a productive market economy that supports families, workers, communities and entire nations.” Airbus’s experience contrasts sharply with that of Boeing, and is offered as evidence that “owning shareholders does not necessarily make for the most competitive or innovative companies.”
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As American Compass often does, this piece makes sweeping claims and doesn’t deliver. A contrast is drawn between two ways of doing business: the mindless, unfettered free market way, supposedly exemplified by Boeing, and the careful marriage of government and business, supposedly exemplified by Airbus. But this comparison is a cartoon, and to draw it, Rodríguez has to erase some important facts.
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Rodríguez does a poor job of assessing the real costs involved in adding Airbus to Europe and whether these are justified. It is important to answer these questions properly if it is to be argued that the subsidies and other privileges granted to Airbus have improved the lives of Europeans. But her department made no attempt to show that these subsidies and privileges — more than $200 billion in today’s dollars given to Airbus over the past 40 years — were beneficial to anyone other than Airbus and its executives, suppliers and employees. Is the industrial policy produced by Airbus positive for the European economy or the taxpayers in the countries that support it?
Europe’s slow economic growth over the past few decades, high unemployment and high debt are no proof of this theory. European countries have also seen the manufacturing sectors Reduction As a share of total employment since the 1970s, developed countries have been similar to those in other continents.
