I recommend checking this out. Concerning the last link in the essay, I write
Many of my readers know that in Specialization and Trade I pointed out that the political process for industrial policy is to subsidize demand and restrict supply, which is never what orthodox economics recommends for dealing with market failures. Subsidizing demand while restricting supply has ambiguous effects on output (in the case of housing, for example, the net effect is probably negative) while certainly raising prices.
This refers to Noah Smith’s link to a paper by Steven M. Teles, Samuel Hammond, and Daniel Takash.Their paper is called Cost Disease Socialism, which I think of as synonymous with “subsidize demand and restrict supply.”
I differ from Noam and from the authors in that I don’t believe that “cost disease socialism” is some sort of mistake or aberration. Instead, it is the inevitable path for industrial policy, given the way political incentives work. See Specialization and Trade.
Although Singapore has had terrific success with an export-oriented dirigiste economy, one that targets trade surpluses, I think that model only works for a well-run micro-state.
The US does not need an industrial policy, but perhaps a 30% across-the-board tariff on manufactured goods.
That’s a back-of-the-envelope estimate of the amount of subsidy seen in exports from Asia and parts of Europe.
Globalization has not worked for the employee classes of developed nations. You see it increased social tensions, and declining real living standards, everywhere.
Elites everywhere love globalization, but nowhere by employee classes.
Might be a clue there.
Slightly off-topic but a comment on your substack re FITs: Sorry Arnold, I don’t find Scott Alexander all that impressive as a thinker. The article you mention, “Chilling effects”, only made me think I should read the actual field to find out what’s going on and why, if I cared that is. The recent one reviewing ‘Scout mindset’ was IMO worse, and the actual book (which was praised) appeared kind of dumb too, for starters in that ‘scout’ is a poor simile in the first place for what these people are doing.