Word: bower
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...Bower: I think that's a terribly important distinction because it seems to me that when I debate with Bob about this. I almost always am sympathetic with large elements of his diagnosis, that is to say that we have a whole set of individual policies that affect industry which are incoherent and have many disfunctional effects, but my problem is when you come to do something about that, on the prescriptive side, what does that mean? Industrial policy is an attempt at a coherent intervention aimed at industry whose goal is to improve macroeconomic performance. It's clear that...
...Bower: My differences with Bob have to do with the ability or wisdom of trying to get a coherent intervention. Let's take the G.M.-Toyota example. Presumably, how you handle G.M. Toyota is going to have something to do with the trade position of the United States and effect on negotiations. Should the U.S. negotiator talk to the person who might block the deal for anti-trust reasons? And vice versa. There's an intimate relationship between one policy and the other, and I think that raises the question: should we have a coherent policy...
...Bower: Let me come out in a different direction. My concern is that I think we know fairly well what is needed in order to have a competitive economy. On the whole, you have to suppress consumption, you have to encourage savings, and then you have to invest selectively in those industries and companies where the returns are highest. My sense is that all central political instruments are designed to do the opposite. They are designed to redistribute in order to achieve some equity. And they are extremely sensitive to the perfectly legitimate needs of interest groups of various kinds...
...Bower: Let me interject a major qualification about whether people outside the industry shouldn't think about the question of what the industrial structure in the United States should be. All the mistakes come from people outside the activity trying to make a judgement about what we need. But I think this destruction in anti-trust would almost certainly be a good idea. I think we ought to look hard at our anti-trust policies to see if we can make them better...
...Bower: I have colleagues who argue that what we need is not an industrial policy, but we need an industrial strategy. And by that I mean that there ought to be an effort in the central government to diagnose what's going on in the economy in macro and sectoral terms, so that one could at least understand what would be attractive if it happened. Giving some sense to the extent to which pieces are interrelated, how they affect a particular part, and what might be attractive. There is an argument that when you do that, the argument for indicative...