Last week in the nation’s newspaper of record, the venerable New York Times, well-known columnist/commentator/Palin critic/conservative impersonator David Brooks mounted his soapbox and told those who harbor doubts about the economic recovery to cheer up because things are not as bad as they seem. He points out, no doubt correctly, that “The United States remains the world’s most competitive economy …” we are the international leader in nearly every important economic sector, and the world’s most creative and dynamic growth engine, with the American share of the world’s Gross Domestic Product actually higher today than it was in 1975, a full generation ago.
So far, so good! Brooks then segues into the heart of his argument by questioning the need for a national industrial policy. He points out that President Obama’s National Economic Council dusted off this idea and is now considering it as a model for development. The National Industrial Policy debate began in the mid-1980s and pitted supporters like Lester Thurow, Felix Rohatyn, and Robert B. Reich against the traditional free market oriented Chicago- school economists who argued that “Industrial Policy” was simply a new title for a neo-mercantilist approach to political economy, and would invariably involve bureaucracy choosing winners and losers in the marketplace and would ultimately stifle innovation and development. This debate seemingly ended with the defeat of the Industrial Policy cabal by the early 90s, but like other bad pennies of bygone years, it has turned up again in the Obama Age.