"Kill all the economists. They'll do anything for a buck," says Senator Fritz Hollings writing in a blog submission on the Huffington Post. To fully appreciate the irony in this, Google "Senator Disney." The first thing that comes up is: Ernest Hollings -- Wikipedia. The reason:
As a senator, Hollings was noted for his support for legislation in the interests of the established media distribution industry (such as the proposed "Consumer Broadband and Digital Television Promotion Act"). His hard-line support of various client-side computer restrictions such as DRM and Trusted computing led the Fritz chip (a microchip that enforces such restrictions) to be nicknamed after him.
If you wonder about doing anything for a buck, click here:
According to Federal Election Commission data presented by campaign contribution watchdog Open Secrets, there are five major media and entertainment companies in the top 20 list of Hollings' most generous campaign donors. They include AOL Time Warner ($33,500), Fox parent News Corporation ($28,224), Viacom's CBS ($16,632), the National Association of Broadcasters ($22,000), and Walt Disney Co. ($18,500). The individual donors from those companies include a flock of high-ranking executives from various News Corp/Fox subsidiaries, Viacom CEO Sumner Redstone, and Ted Turner from AOL Time Warner. Since 1995, employees from companies producing television, movies, music, and other media content have sent Hollings $287,534, making the entertainment industry his second most generous supporters.
It's a little hard to find anything coherent about policy from Senator Hollings; the best I've been able to find is "Japan closed its domestic market, subsidized its manufacture, sold its export at cost, making up the profit in the closed market with Toyota putting General Motors into bankruptcy." How successful was this policy? Bankrupting foreign firms isn't the usual measure of economic success -- personally I'd rather be rich than have bankrupt competitors. In 1990 Japan had roughly the same per capita GDP as the United States. Japan's industrial policy has been so effective that in the intervening two decades their GDP per capita has fallen to about 2/3rds of ours.
The fact is that "industrial policies" have been tried all over the world -- and all with the same kind of "success." Take for example Brazil, famous for its industrial policies. You probably didn't know that. Maybe you did know that Brazil won the world cup in soccer in 1994. You might be interested in the details of their return home from the United States.
The team arrived more than three hours later than scheduled, due to the large amount of excess baggage on their flight. Officials said the players had gone on a shopping spree in Los Angeles and loaded up on electrical goods like freezers and washing machines.
Now why do you suppose they carried freezers and washing machines with them on an airplane from Los Angeles to Brazil? Well, if you wanted to buy a Ford Focus sedan, you could pick one up in the United States for around $17,000. Or you could go to Brazil and get it for a mere $32,000. Same story with freezers and washing machines. Yes, if we did have an "industrial policy," things would cost a bit more.
But that's ok. So the Brazilians pay a lot more for things that we take for granted -- like freezers and washing machines and cars and computers. But at least their workers earn a lot more than ours do, right? After all they are protected from international competition - from offshoring. Well, no. According to the International Labor Office in 2001 Brazilian auto workers earned roughly 25% of what American auto workers earn.
What exactly are the "industrial policies" that Fritz and his protectionist friends champion? We have some industries that are growing rapidly and lead the world. Our computers...our software... We have other industries that are pathetic failures. Our buggy whips...our automobiles... An industrial policy is a plan for hobbling our leading industries with taxes and regulations (such as the "Fritz chip") - and using the proceeds to bail out our failures. The reason that economists oppose this kind of policy isn't that we are being paid off. It's that this kind of policy is the road to poverty.
Ever notice how the proponents of "industrial policy" always say "let's be more like Japan" not "let's be more like Brazil?" And they don't mention that Japan for two decades has been in a depression that makes our "great recession" look like a brief but pleasant holiday. I have a suggestion for Fritz Hollings: Let's be more like the United States -- the richest greatest country in the world.
Oh by the way, Shakespeare's original line in Henry IV: "First thing we do, let's kill all the lawyers."
Fritz Hollings is a lawyer.