>It does not matter that the home grown product can only compete with government support,

Even that isn't a given, because unless you have amassed a certain amount of technocratic and governmental competency chances are it can't compete even with government support and you just produce crony dysfunctional companies.

And of course there's economic trade offs. If you're politically ordering your economy to make chips, it doesn't make something else, and whatever it was making and trading for chips it was better at, and so you get fewer chips, that's comparative advantage. Industrial policy (and tariffs) do not increase aggregate production, they reduce it. And given that the circle of items you "can't do without" seems to be a bit of a moving target these days, at some point you're actually more brittle because you've replaced large chunks of the market with state production.

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treyd 3 days ago | parent | next [-]

People take it as an assumption that cronyism will always happen if the government invests too strongly/consistently in a certain thing. But cronyism is a policy and structural failure, it's usually because the incentives for the different parties involved encourage it to happen. Institutions can be designed carefully if policymakers actually want to do it.

USPS is a great example of an organization that's managed to largely avoid this. Whenever you mention that people crawl out of the woodwork to complain about the 7 different times they lost their package, but their logistics at scale is still unmatched by the private sector, while also not completely negating the value of private sector alternatives (which so often is argued would happen if the government actively started doing anything new).

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Barrin92 3 days ago | parent | next [-]

>People take it as an assumption that cronyism will always happen if the government invests too strongly/consistently in a certain thing.

No, it's the opposite. It's a conclusion taken from empirical evidence looking at success rates in the real world. As the US has engaged on its most recent bout of industrial policy, industrial activity has declined, not gone up. Again, this is expected. If you through protectionism make chips and steel in the US inefficiently, everyone in the US using those products as inputs suffers.

There's some limited cases like developing countries engaging in catch up growth , but there's virtually no evidence for effectiveness of these policies in cutting edge technologies, which isn't surprising because they by definition tend to rely on supply chains and knowledge sourced from all across the globe, and to this protectionism is particularly disruptive. And even in developing nations most of the time practices like ISI (import substitution industrialization) fail, it's devastated Latin America in the 1950s to 1980s.

I don't know what USPS proves in this case because it's sustained by a government monopoly. Obviously you could if you wanted privatize mail delivery.

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manquer 3 days ago | parent | prev [-]

It is established economic theory not just some opinion . Constraints in form of regulations, subsidies, tariffs by government intervention will produce inefficiencies.

This is the core economic philosophy behind both the modern centre right[2] i.e. neoliberal democrats (80s-today) and the right wing republican conservatives (pre MAGA -2016).[1]

Even communists would agree this is correct, it is understood in different levels since Adam Smith invisible hand, from far left to centre left just posit that different polices that benefit the people not the economy are worth the cost .

That is actually true for all other groups except anarchists and libertarians all agree government intervention is needed in some form, they just disagree on how .

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Postal services anywhere in the world are inefficient by design. They are governed by universal service obligation principles not efficiency same with telecom providers and other utilities.

The question then becomes how much inefficiency is acceptable given the objectives . There are no right answers, you could have competing private couriers who dump unprofitable low density routes to USPS while serving profitable ones themselves (UPS, fedEX, Amazon ) or you could have gigantic postal service which is sole delivery provider socialist style, there are going to be some problems either way.

It is just matter of preference which set of trade offs we are okay with .

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[1] Post MAGA it is a populist party economically there is no fixed ideology to be characterized

[2] the centre right label is economic and technical to contrast say the socialist left party of FDR/New Deal 1930-70s, not meant to offend.

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treyd 3 days ago | parent [-]

But that's exactly the thing, where we care about an industrial capacity for its strategic reasons rather than because we're trying to maximize efficiency of revenue extraction. Pure market efficiency is great if you're trying to maximize profits, but that's not necessarily the goal here because the benefits are indirect, just as they are with universal postal service (or universal healthcare, etc).

	▲	manquer 3 days ago \| parent [-]
		Maximize economic output not necessarily profit outside of that I agree with your comment, nobody is questioning whether we should have other goals. The problem is however first can we all define the goals consistently and agree on the definition. Next can we measure the value/benefits of the goal. This is typically subjective so everybody paints the picture best suited to their preconceived ideas. Finally perception drives the political will for a social program. UBI style programs or just giving money in welfare instead of in-kind benefits for food or healthcare etc or rehabilitation over punishment are more efficient and while shown to work, will rarely get political support because of how they are perceived. Given that we all have different understanding of the goals, measure them differently and have different moralities on what should be done as society (for welfare, crime etc) and have varying degrees of influence over policy what can we do to approach a problem better

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quantumwannabe 3 days ago | parent | prev [-]

You should tell Taiwan that.