Robert Atkinson is an unusual liberal who does not support smart growth. In fact, he believes in automobility and in using market tools such as congestion pricing to reduce traffic congestion.
But he is still a liberal and as such he has much more faith in government than the Antiplanner. The Antiplanner believes government can only work if people watchdog it to keep in small and unintrusive. Atkinson believes government can and should pick winners. That, he explains, “means government identifying industries and technologies where the country needs to be competitive globally, (i.e. health IT, nanotechnology, green energy, biotech, robotics, broadband) and then developing and implementing policies to work with the private sector to ensure that we grow and retain high-end jobs at home in these key sectors.”
It may be possible, if you search hard enough, to find an example of a government successfully picking and promoting a winner. Atkinson specifically mentions “Internet, the web browser, the search engine, computer graphics, semiconductors, and a host of others.” One problem with these examples is that government did not pick any of these technologies with the aim of promoting the industries. Instead, it help develop these technologies because they were useful to government (mainly defense) agencies.
More important, for every successful example, you can find numerous failures. Think about corn ethanol, one example of government picking a technology for the specific purpose of promoting a new industry. It wasn’t long before people realized that corn ethanol is a very inefficient way of trying to save energy, but once government picked it, it can’t stop supporting it.
Of course, the Antiplanner would list light rail, streetcars, and high-speed rail as examples of loser-industries that our federal and local governments seem determined to pick. Your list may differ, but if you are involved at all in public affairs, you are certain to have one.
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The problem is that government is not about efficiency, it is about power. If government tries to pick winners, it will tend to pick things favored by powerful interest groups, not the best technology. Once it has made its picks, the winning interest groups will work to maintain the policies favoring them even if the pick turns out to be a loser.
The idea of government picking winners was popular back in the 1980s, because that seemed to be the way Japan grew its economy. Japan’s Ministry of International Trade and Industry (MITI) seemed to have a knack for selecting industries such as autos and electronics and encouraging those industries to grow. Michael Crichton’s novel, Rising Sun, raised fears that Japan was so well organized that it would eclipse the United States as a world industrial power.
Ironically, Rising Sun was published just as Japan’s economy was collapsing. One reason for the collapse was that MITI had encouraged companies to worry more about their asset value than their profits, and many companies discovered they would increase their assets by investing in land speculations instead of production. When the resulting property bubble burst, banks discovered they had billions of dollars worth of loans to companies with only land for collateral, and that land was now worth far less than the value of the loans.
One company in particular that Japan tried to pick as a winner was the Japanese National Railways, which was a government-owned railroad that was supposed to run at a profit, or at least break even. The company owned a lot of land, so it was able to borrow $200 billion ($350 billion in today’s dollars) with the land as collateral and spend that money building high-speed rail lines. By 1987, it was clear that the company would never be able to pay back that money, and that any attempts to sell the land to recover the money would burst the bubble. So the government privatized the rail lines, selling the high-speed lines for 1/2 cent for every dollar spent on them.
Since then, Japan has suffered two “lost decades,” meaning years of zero or negative economic growth. For a time, this quieted those who argued that the U.S. should follow Japan’s example of trying to pick winners. But politicians have short memory spans, so it is disappointing, but not surprising, that someone would start promoting the idea today.
With the direction of the left now, Gov will be making many more decisions for individuals, for the purpose of political power & the supposed collective.
Look at “net neutrality” & the “fairness doctrine”. Those names are huge misnomers. The gov wants to restrict info.
The recessions will get much worse. We can thank porkulus spending & rising taxes & increased regs for that.
Scott wrote:
> Look at “net neutrality†& the “fairness doctrineâ€.
> Those names are huge misnomers. The gov wants to
> restrict info.
Is “net neutrality” binding federal law or regulation? I know it has been discussed, but is it law?
The “fairness doctrine” (as applied to over-the-air radio broadcasts) has not been in effect for many years.
“The idea of government picking winners was popular back in the 1980s, because that seemed to be the way Japan grew its economy… raised fears that Japan was so well organized that it would eclipse the United States as a world industrial power.”
Do you think the “State Capitalism” system in China is something to worry about? I find it interesting that some of these big government states are starting to catch up to us, and I fear we may be surpassed.
C. P. Zilliacus,
The “net neutrality†is proposed; I even typed in future tense. Not sure why it seemed like that existed.
The “fairness doctrine†is being reworked to quiet dissent & viewpoints. It’s different than before, when it helped WWII.
bennett wrote:
> Do you think the “State Capitalism†system in China is
> something to worry about?
IMO, yes.
> I find it interesting that some of these big government
> states are starting to catch up to us, and I fear we
> may be surpassed.
Your timing is good. I suggest you read a Washington Post op-ed by James McGregor (not one of the usual-suspect Post pundits) that ran in this morning’s paper:
Time to rethink U.S.-China trade relations
The Antiplanner wrote:
> Robert Atkinson is an unusual liberal who does not support
> smart growth. In fact, he believes in automobility and in
> using market tools such as congestion pricing to reduce
> traffic congestion.
Hey! I am a liberal who dislikes Smart Growth and the rest of it with a passion! I have seen the Smart Growth disasters live, up-close and personal (as have you). And social engineering (which is what Smart Growth ultimately is) does not work so well.
So maybe there are more of us out there?
> But he is still a liberal and as such he has much more faith
> in government than the Antiplanner.
Probably this is true, even though I find myself in agreement with the Antiplanner most of the time.
“Of course, the Antiplanner would list light rail, streetcars, and high-speed rail as examples of loser-industries that our federal and local governments seem determined to pick. Your list may differ, but if you are involved at all in public affairs, you are certain to have one.”
My list of industries the the government picked (both winners and losers) would include:
-Sprawl http://architecture.about.com/od/communitydesign/a/suburban_3.htm
-Gasoline http://www.progress.org/gasoline.htm
-Coal http://www.sourcewatch.org/index.php?title=Federal_coal_subsidies
-Investment Banks http://www.newsweek.com/id/230530
bennett,
How has the gov picked those industries (in your words)? Specifics please.
Excepting some banks (GSEs), which were hindered by gov pressure to loan to poor, those are all provided by private businesses & wanted by consumers. Those 2 conditions are not there for the industries that Randall mentioned.
bennett, I’m addressing the article points:
Sprawl created by gov loans—Ridiculous. If true, then all people in suburbs would have mortgages from gov. By choice, all people actually prefer crowded, dirty, noisy, cramped, core cities?
True gas cost is $15/gallon—FALSE. Bogus report. Very unlikely to get any confirmation and other reports show that the US gas is slightly above cost. The highest priced gas in another country is about ½ that, because of taxes.
Coal subsides—Source Watch is unreliable & biased. Many of their claims are not actual subsidies. Find any gov budget with direct payments to a coal company. Externalities occur for everything, including each person existing. This should be kept more tangible with direct costs. Although, companies should be liable for cleanup of pollution.
Banks—Huge area of discussion. Can’t argue about their subsidies, but much help is by loans. They should have been left to fail, but gov set them up by promoting risky lending standards. If the S&L weren’t bailed out in the 90s, this mess would not have happened.
SourceWatch is incredibly biased. Look at their standards for sourcing and compare them to Wikipedia’s. I could go fabricate my own blog post solely for the purpose of backing up my SourceWatch article (as some have done) and then link it as a source. Not acceptable on Wikipedia. Also consider how they’ve hired Burton to scour the site for non-progressive entries to purge. The whole enterprise is essentially a propaganda machine relying heavily on guilt-by-association and ad hominem fallacies.
As for coal subsides, a DOE report shows that federal government subsides for wind and solar are 108 times greater per kilowatt hour produced than coal.
Anyway, f–k the DOE. They distort energy markets, allow government utility monopolies to run massive power lines through places like Joshua Tree National Park, and let companies install water-intensive solar plants in sensitive desert areas. End the DOE. End all federal energy subsidies.
Frank wrote:
> Anyway, f–k the DOE. They distort energy markets,
> allow government utility monopolies to run massive
> power lines through places like Joshua Tree National
> Park, and let companies install water-intensive solar
> plants in sensitive desert areas. End the DOE. End
> all federal energy subsidies.
How does Department of Energy “distort” energy markets? Electricity markets in most of the United States are usually operated by so-called regional transmission organizations by operations like the PJM Interconnection, not the DoE.
We visited California’s Joshua Tree National Park a few summers ago (when the place was blissfully empty), and did not see any high-voltage transmission lines in the park, though we saw several near I-10, south of the park, which is also where the Colorado River Aqueduct runs.
Regarding DOE, I am not aware of any substantial DOE energy subsidies. Can you be more specific, please?
C.P.: Search Google for “federal coal subsidies” and read the DOE report; look up DOE on Wikipedia and read the budget section.
As for how the DOE and the federal government distort energy markets, I don’t have the time right now for a lecture on economics and how government intervention in markets in the form of subsidies result in distortion.
My statement on JOTR should have said adjacent, not through.
How odd, the silence here on the recent track record of private sector in choosing winners. Oh, sure, there are 3-4-5 people. But the vast majority? Sheesh.
DS
Dan, the topic is government taking taxpayer money for private business.
Why would somebody bring up businesses w/out gov intervention?
What the frick is your “sheesh” reaction for expecting ~60% of the commenters to go off topic, rather than ~30%?
(Out of 13 posts, not much is statistically significant.)
Are you thinking of 2 big business failures now?: banking & cars.
Well, risky mortgages were made due to gov coercion, and car costs are too high due to labor-monopoly (unions).
The beauty of private businesses failing, under “truer than now capitalism”, is that it does not force money from others.
Choosing winners? All US businesses total over $20 trillion. That’s well over the GDP because final goods are counted. That’s a lot of winners.
It’s strange that you would even mention anything to the effect of silence, because your points (of what little they are) are often challenged with concrete & specific, facts, concepts & reasoning, plus questions for you to offer backing or elaborate on your vagueness. Then you rarely respond. On the rare occasion that you respond, it’s not direct to points.