September 14, 2011
The Economist: Then and Now
The times, they are a'changing.
In August of 2010, the Economist published a special issue on the rise of the industrial state following the Crash of 2008. The newspaper warned against "intervening in individual industries and companies" and chastised the "Leviathan" of industrial policy.
How things can change in a year. In last week's issue, the Economist joined flocks of worried global citizens in beseeching governments to intervene and avert economic catastrophe. "Until politicians actually do something about the world economy...BE AFRAID" was the cover caption.
August 2010: "Fortunately, there are some powerful constraints on governments' ability to meddle. In an age of austerity they can ill afford to lavish money on extravagant industrial projects."
October 2011: "The collective obsession with short-term austerity across the rich world is hurting."
While the wise and informed distinctions over appropriate and inappropriate economic policies made in the Economist are not lost on us, the newspaper's changing tone is conspicuous. Their about-face on government intervention in markets does not amount to a full-throated endorsement of industrial policy--given the lack of concrete policy recommendations, it doesn't amount to any endorsement of anything--but the authors do admit that "theorists' thinking about industrial policy is acquiring greater nuance."
As Breakthrough documented in our 2010 report "Where Good Technologies Come From," governments have historically played a pivotal role in driving technological transformation and economic growth. The Economist appears on the verge of admitting this.