[redwood]

There's this idea floating around that governments shouldn't support businesses. I guess there is nuance in that some might say: government should support business sectors, but not specifics businesses over others.

Anyway it's an odd argument when we look at the history of the country where governments and specific companies often worked hand in hand and continue to do so in so many areas.

Many argue that the American government ought to be more aggressive about being pro-business, as our friends abroad are. E.g. if the Taiwanese, Israelis, Chinese, etc have very strong government-private partnerships (e.g. subsidies for engineering jobs, or green-lighting through regulatory processes, or access to cheap capital) then the US competitors have trouble competing. What I find so odd is the same camp that often says the US needs to be more pro-business, is often, as you describe, against government support of American business!

[dkhenry]

Just because other countries are corruptly sponsoring businesses to line the pockets of politicians doesn't mean we should be doing that in America. There needs to be an ideological line drawn that says we will _not_ pick winners in a market, and we will _not_ protect failing businesses. That means large and small companies get the same levels of "support" from the government, none. Once you stop doing that you end up with a fascist co-mingling of government and industry ( kinda like we have now )

[rayiner]

Yes! We should do things based on ideology! Not results! Not empiricism! Instead: principles and handwaving.

Singapore proved that heavy government subsidization of research can pay enormous dividends in economic growth. Other countries are having tremendous success doing the same.

[dkhenry]

So what do you say when the government doesn't decide to support your start up, but instead picks your competitor and runs you out of business because they happen to be related to a senator ? The ends don't always justify the means.

[rayiner]

Leaving aside the silliness of deciding macroeconomic policy on hypothetical edge cases for a moment... How often does that happen? The US government is utterly paranoid about nepotism, to the extent that we waste a huge amount of money in the bidding process for government contracts because we don't want to seem as if we're favoring anyone, even if that favor is the result of something like having done good work in the past. It's an imagined problem.

[dkhenry]

This isn't an edge case. In fact the NYT just did an expose on how this effects China[1]. You will also find this kind of corruption in every other country where the government is allowed to openly partner in private ventures. Heck we did it in America with Boeing under the pretense of security and managed to mothball our entire aviation industry.

1. http://www.nytimes.com/2012/10/26/business/global/family-of-...

See Also: http://en.wikipedia.org/wiki/Yukos

[rayiner]

It's an edge case in the US, and it's not like we don't have public/private partnerships here.

[Shivetya]

Nepotism is a live and well at the local and state level. If anything it works just fine at the national level, the difference is that today's politicians have become very adept at keeping you from finding out. Better yet, when you do find out and they get caught they rarely suffer any consequences for it.

[rayiner]

Yes, there is a problem, we just can't see it! Sigh.

Every federal government contract that has even a hint of favoritism is litigated to all hell, where lawyers comb through everyone's emails going back years to dig up any dirt they can find. If it was a big problem, we'd know about it.

Nepotism is alive and well at the state and local level. This is partly because state and local governments are far less sophisticated than the federal government in terms of process and people, and also because there is not a strong culture of litigating contracts.

[Cushman]

What do you say when Apple does the same thing? "Well, crap," I imagine.

[btilly]

...we will _not_ pick winners in a market, and we will _not_ protect failing businesses.

Then let's start by getting rid of chapter 11, which allows businesses to go bankrupt, then go back into existence again. Most countries do not have anything like it, and its existence has been horrible for some sectors, for instance the airline industry.

[twoodfin]

There's a difference between being pro-business and pro-market.

Historically, industrial policy doesn't have a terrific track record.

[scarmig]

Hmm. My impression has always been that industrial policy did a whole lot to set the stage for the East Asian Tigers to come up like they did. The government and companies involved certainly think so. (Then again, they would, wouldn't they?)

At the very least, it seems that governments proactively favoring companies whose profitability lies in investing for high productivity work instead of labor intensity or natural resources tends to pretty compatible with decent outcomes.

[orangecat]

I guess there is nuance in that some might say: government should support business sectors, but not specifics businesses over others.

And I wouldn't even agree with that. We've seen what happens when government decides to support Hollywood.