America Has No Alternative to Industrial Policy
When the US economy ran aground in the late 1970s, the arguments for neoliberalism won out over the arguments for pursuing an activist industrial policy. Yet even if one remains convinced of the previous generation's case against government-led development, industrial policy has become unavoidable.
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BERKELEY – By the end of the 1970s, the US economy appeared to be in serious trouble. Years of inflation had caused deep discontent; measured productivity growth had fallen from its post-World War II pace of 2% per year to almost zero; and America’s resilience in the face of geopolitical and geoeconomic shocks seemed to be waning. The proposed solutions to these problems fell into two categories: neoliberalism and activist industrial policy. The neoliberals won.