Let Government Remain Agnostic

by Conor Friedersdorf

E.J. Dionne's most recent column argues that President Obama needs to do a better job cementing a particular sort of alliance with business:

Obama doesn't need to coddle CEOs so they will say warm things about him at parties in the Hamptons. He should figure out which parts of the private sector share an interest in reducing the dreadful inequalities that have metastasized over nearly four decades and in creating an economy that produces well-paying jobs.

Here is the conclusion of the piece:

Anyone who speaks of reviving American manufacturing confronts critics who hear echoes of the supposedly discredited "industrial policy" arguments from the early 1980s. But Carl Pope, the visionary who led the Sierra Club for many years, notes that through trade agreements and other policies, our government already favors certain industries that have done very well as a result: banking and finance, big agriculture, pharmaceutical companies and Hollywood. One might add oil and gas, and defense.

Government policies, no matter how often we use the words "free enterprise," through design or inadvertence, inevitably affect the private economy. Why not choose policies that specifically encourage sectors that create good jobs for Americans? Why not ally with companies and CEOs whose interests lie in doing just that?

There are two answers. The first is that there is no reliable way for a central planner to forecast what sectors are going to create "good jobs" a decade or two hence. The second is that even if that information could be wrung out of current economic data, any Congress that attempted to pass industry-favoring legislation would wind up giving breaks to politically connected sectors, or else industries that were popular with constituents, while the folks capable of producing the "good jobs" if only they had federal help would continue to lack it. (And even if you could direct money to the right sector, how would you prevent the wrong firms within it from gaming the system?)

Is Dionne possibly unaware of this? We're a country that subsidizes ethanol, socializes Wall Street losses, and passes landmark health care legislation without even discussing the indefensible goings on in the medical device industry.

What makes Dionne think we're capable of passing far-sighted industrial policy that better advantages a class of people who exert less influence than average on our political process? I am forever puzzled by commentators who don't acknowledge the most basic constraints of the real world when suggesting what the president ought to do.