The world requires inoculation against statist policies

livemint.com:

climate change and sovereign debt, the global pandemic of industrial policy initiatives deserves to be on the agenda. From Magdeburg in east central Germany, where Intel was reportedly given subsidies of €7 billion to build a semiconductor factory, to a Taiwanese battery factory near Dunkirk in France lured by subsidies of €1.5 billion to the Micron Technology factory in Gujarat, more than two-thirds of which will be financed by the central and state governments, subsidies in the name of fostering strategic industries have gone viral.

These examples are just from announcements made in May and June. The justifications continue to grow apace, from the urgent and expensive goal of arresting climate change to preparing for the very real threat that Beijing could impose a blockade on Taiwan, the world’s undisputed leader in semiconductors, or even go to war to reclaim it in the next few years.

Both are valid concerns, but many statist measures are being introduced under this umbrella. It is unclear in the case of India’s production-linked incentive (PLI) programme—which could be nicknamed ‘popular lazy ideas’ since it unoriginally draws on the 1970s’ Licence Raj, apart from global industrial-policy fads—why it has been extended to textiles and the automobile industry.

In the US, last year saw both the CHIPS and Science Act and the Inflation Reduction Act passed with bipartisan support; the first targets self sufficiency in semiconductors, while the second seeks to speed up a transition to clean energy. To slow this epidemic of economic interventionism or at least ground it in past experience, G20 leaders should table and even memorize an excellent research paper by Dominick Bartelme of the University of Michigan and Arnaud