Thursday, September 28, 2017

Deriding industrial policy when it saves jobs

In October 2016, the Financial Times wrote about French industrial policy using this example:

You can argue, as does the FT and as do many FT readers, that this is a perfect example of misguided government policy.

High-speed trains the country does not need is clear, and the point is reinforced with maximum speed is 200km an hour at best.

The FT may be right to invoke the mental background image of industrial policy we have learned to associate with old style socialist governments and backwards regimes in general.
One big problem, as the blogster sees it, is that government controlled economic activity in these systems tends is inextricably linked to corruption, laziness, and exploitation by a nomenklatura, or ruling clique.
These aspects do not seem to be in play in the example given by the FT, unless one is willing to claim that averting the shutdown of the plant signifies laziness in the face of the need for change. So, sure, you can go there, if you feel like it.

We are not told whether France needs new regional trains, or how much they would cost if not built to the "state-of-the-art TGV".

When it comes to "needs" in general, there is sometimes surprising leeway, as anyone who had the opportunity to ride the glorious old late weekend nights "hospital train" out of San Francisco will understand. The blogster nicknamed the train hospital train because the carriages were plain white on the outside with a definitely military-ish green interior.

They were old and quiet.

Unlike the newer ones, which must have been labeled "needed" at some point in order to justify their purchase.  

Yes, government money should be spent reasonably, but as long as France, or any other country for that matter, can afford the luxury of splurging billions upon billions upon producing stuff that is not meant to ever be used, buying a few new trains and keeping workers employed a little longer is not a big deal to the simple minded blogster.

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