The Dangers of Industrial Policy

Last Sunday, The New York Times Magazine published an encomium to the potential of
the electric battery industry to lead a resurgence in American manufacturing in
the Midwest and elsewhere. In particular, the piece heralded the role of the
Federal government, in providing funding through the economic stimulus program
and various other sources to jump start this high growth sector. (In fairness,
The Times piece acknowledged the possibility of overcapacity in the nascent
battery industry.) Just three days later, The Wall Street Journal weighed in
from another direction, with a headline that said it all: Car-Battery Shakeout
. Turns out that a number of companies and countries have had the same
idea that we had.