This article originally appeared in the Financial Post. Below is an excerpt from the article.
By William Watson, June 3, 2024
The New York Times ran a story last weekend on the supposed mystery of how China has got way out ahead of western countries on the industrial policy that is almost as popular these days as Taylor Swift. Huh? What mystery? If you want to do top-down allocation of economic resources, there’s nothing like 75 years of totalitarian dictatorship to get you warmed up for it. The question is whether it will work in the long run. My bet is no.
China’s astonishing — but then again not really surprising — economic success in the last quarter of the 20th century came only after it gave up serious top-down economic planning and exposed its skilled, talented and big population to economic incentives that finally, after 40 years of communism, allowed it to profit from its people’s own effort and imagination.
The more it or any other country departs from that model and has supposedly wise men at the top determine just what everybody in society should be turning their energies to, the more chance there is of a big screw-up. Lots of people trying lots of things using their own money or money they’ve persuaded, not coerced, other people to let them use and then facing real consequences from success to failure — in other words, capitalism — is still better than planning committees.
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