Economics Explored

The Revival of Industrial Policy: Should Governments Pick Winners? - EP243

Episode Summary

This episode explores the resurgence of industrial policy in the US and Australia. We critically analyze whether government interventions can truly shape industries or if they are doomed to repeat past mistakes, such as those experienced during the 1970s and with the Concorde project. The episode includes clips featuring Saxon Davidson from the Institute of Public Affairs and Eamonn Butler from the Adam Smith Institute.

Episode Notes

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What’s covered in EP243

Introduction to Industrial policy and its potential consequences. (0:00)
Budget, inflation, and economic policies in Australia. (8:34)
Climate change policy and government incentives for renewable energy. (13:59)
Australian economy, productivity, and government intervention. (19:44)
UK's economic struggles in the 1970s, including strikes. (29:41)
The failure of the Concorde supersonic jet project. (35:59)
Failures of activist industrial policy - e.g. in Australia's car industry. (49:16)

Takeaways

Revival of Industrial Policy: Governments in the US and Australia are reintroducing industrial policies to shape their economies, sparking debate among economists.
Historical Lessons: The economic turmoil of the 1970s and failures such as the Concorde serve as cautionary tales against heavy government intervention in industry.
Climate Policy Challenges: The push for renewable energy in Australia raises concerns about the rapid transition and its impact on the economy and energy grid reliability.
Productivity Focus: Effective economic policies should enhance productivity through structural reforms rather than picking winners.
Government's Role: While there is a place for government to address market failures, extensive intervention often leads to inefficiencies and unintended consequences.