To prevent getting lost, the elevator goes directly to the safety island to report Liu Yadong A
Source: Zhongguancun Industrial Upgrading Research Institute
Author: Zhang Weiying
Zhang Weiying: Famous economist and professor at the National School of Development of Peking University
It is not conceivable that government officials are more sensitive to the judgment of future technologies and industries than entrepreneurs, and some government officials are indeed very entrepreneurial, but in general government officials are more sluggish in innovating than entrepreneurs. - Zhang Weiying
Refutation of Lin Yifu's eight views
Lin said China's economy should "grow along the lines indicated by New Structural Economics." "I don't know what line the new structural economics has shown us!"
1. Before the reform and opening up, China implemented a planned economy, but after the reform and opening up, it was a bit embarrassing to talk about the planned economy, so we changed the name to "industrial policy".
Industrial policy is actually a planned economy in vests. Since the 80s of the last century, examples of China's industrial policy failures abound, and successful examples are rare, which even Lin Yifu himself does not deny. Which of the ongoing structural imbalances and overcapacity in China's economy is not the result of the government's industrial policy?
2. Lin Yifu and others believe that although many industrial policies have failed, it cannot be said that the government cannot formulate correct industrial policies; the key is not whether or not to have industrial policies, but what kind of industrial policies to formulate.
This viewpoint is very similar to the viewpoint of some people in the 80 s of the last century who defended the planned economy: It is not that the planned economy itself is bad, but that we have not done a good job in the planned economy! The "correct industrial policy" that Lin Yifu and others hoped for did not have in the past, did not have it now, and will not have it in the future.
3. Proponents of industrial policy generally have an implicit assumption that technological progress and new industries can be foreseen in advance and therefore can be planned. But this assumption is completely wrong.
Throughout the history of human industrial development, we will find that innovation and new industries are unpredictable. We are now talking about how important an industry played in a certain period of time, and it is all an afterthought-based summary. Thirty years ago, no one could have predicted today's new industries, not even 20 years ago, and similarly, we have no way of predicting which industries and technologies will be most important in 20 or 30 years from now. There is no way to make any plans for new industries and innovation, and the only way to achieve innovation is the freedom of economic experimentation, not to lock ourselves into a predetermined path through so-called industrial policy.
4. Industrial policy means that we have to invest limited resources (human and material) in the priority goals selected by the government, which is actually a big gamble, and it is not even a blind man touching an elephant.
It is not conceivable that government officials are more sensitive to the judgment of future technologies and industries than entrepreneurs, and some government officials are indeed very entrepreneurial, but in general government officials are more sluggish in innovating than entrepreneurs. By the time government officials recognize the importance of a certain technology, it is largely outdated. Whatever the government can see, the free-market entrepreneurs have long seen clearly, and whatever the free-market entrepreneurs have not seen clearly, the government can see even more clearly.
5. Let's not think that with the help of experts, the government can formulate a successful industrial policy.
In terms of judging the future, experts do not have any advantage, and there will be no essential difference between expert decision-making and officials' decision-making, and it may even be worse.
I recommend reading William Easterley's Authoritarian Politics, a former World Bank economist who talks about being wary of the tyranny of technocrats, which Mises and Hayek have repeatedly warned us about. Technocrats think that a country's economy will thrive as long as its authoritarian government accepts their proposals, and they often ignore the rights of individuals, especially the poor, in order to achieve their grand plans. The development plans they promote have proven to be rarely successful.
6. Industrial policy creates power rents through the differential treatment of different industries and enterprises in terms of market access, taxes and subsidies, financing and credit, land incentives, import and export licenses, etc., which will inevitably lead to rent-seeking behavior by entrepreneurs and government officials.
From a practical point of view, both the process of formulating industrial policies and the implementation of industrial policies are full of a series of rent-seeking activities. The introduction of a specific industrial policy is not so much the result of science and cognition as the result of a game of interests. As a result, policy-supported entrepreneurs are often not truly innovative entrepreneurs, but arbitrageurs and rent-seekers. New energy vehicle fraud is a typical example. It's not hard to understand that companies that take a lot of money from the government aren't really innovating. In fact, industrial policies only hinder innovation, but cannot promote it.
7. Lin Yifu vividly compared the innovator to "the first person to eat crabs", and believed that the government should subsidize the first person to eat crabs.
I haven't looked at the history of crab eating, but I believe that the first person to eat crabs must have eaten them because of their own adventurous urge to taste delicious food, and not because of government or other subsidies. Lin Yifu completely underestimated the adventurous spirit of entrepreneurs. Entrepreneurs take risks out of conviction and vision, not calculation. Those who rely on government subsidies to innovate are at best rent-seekers, not entrepreneurs.
8. If we want to implement industrial policy, there can be no fair competition.
When you give special preferential treatment and special care to certain industries and enterprises, these companies can do it, and those companies cannot, which completely destroys fair competition. Industrial policy will inevitably undermine fair competition, especially between state-owned enterprises and private enterprises. In a sense, industrial policy is to protect state-owned enterprises, protect some enterprises, and put other enterprises in a disadvantageous place.