Yesterdays foreign policy speech by Donald Trump has received extensive coverage.
However, one sentence in his policy speech is not receiving any coverage in mainstream media. The sentence deserves extensive coverage,
It is this sentence:
We need to think smarter about areas where our technological superiority gives us an edge. This includes 3-D printing, artificial intelligence and cyberwarfare.In the paragraph above this, Trump said, "We are also going to have to change our trade, immigration and economic policies to make our economy strong again – and to put Americans first again. "
This suggests that Trump is thinking in terms of some sort of national industrial policy, perhaps infant industry protection.
A google search for news relating to "Trump industrial policy'" turned up my comment yesterday on the matter but there were no other links related to Trump's speech and industrial policy.
Murray Rothbard considered industrial policy to be a left-Keynesian policy (See: Making Economic Sense chapter 32).
Specifically, with regard to infant industry protection, Rothbard wrote (See: The Rothbard Reader chapter 13):
The “infant-industry” argument has been considered as the only justifiable ground for a protective tariff by many “neoclassical” economists...James E. Miller wrote when discussing Paul Krugman's book Pop Internationalism:
Protectionist economic historians are under pains to assert that no important infant industry can be established without substantial tariff protection against entrenched foreign competition. The high degree of tariff protection in the greater part of the history of the United States, has made this preeminent industrial country a favorite “proof” of the infant-industry argument.
Ironically, it is the United States that provides the most striking illustrations of the fallaciousness of the infant-industry doctrine. Within its vast borders, the United States offers an example of one of the world’s largest free-trade areas. The frequent regional shifts in American industries provide numerous examples of birth and growth of infant industries, and decline of old, established industries.
Krugman's basic premise throughout the book is that free and globalized trade is not something a wealthy country such as the United States should fear, but rather something it should embrace. Protectionist fears of free trade such as "massive unemployment" and "trade deficits" are unjustified according to Krugman, because what drives trade is comparative rather than absolute advantage....
Krugman points out that the idea of a country adopting an industrial policy to help certain "high-value" industries to be competitive in the world economy is superfluous. "Why," Krugman asks, "weren't private markets already doing their job?"
He goes on to state that "the productivity of the average American worker is determined by a complex array of factors, most of them unreachable by any government policy."..To top off his embrace of market efficiency over government policy, he even goes on to acknowledge that government intervention to improve competitiveness can ultimately lead to "misallocations of resources."
It is extremely difficult to see how far down the road of central planning Donald Trump would go as president. Though it is clear his own guiding principle is the Führer Principle, that is, the view that the economy needs a strong guiding leader. In his version of the Führer Principle, it is to "cut deals."
He talks of negotiating with China and Russia but from a free market perspective what is there to negotiate? They are not threatening us. Free trade is about open borders. This does not require negotiations with other countries. It requires only an order from the President to U.S. customs guards: "Allow goods and service to flow in and out."
But the industrial policy heavy sentence of Trump's implies, he thinks differently. He wants to manage trade. He wants to manage some industries This is indeed left-Keynesian talk, It is socialist talk.
Yes, Trump may shake-up the establishment but he may replace it with something much worse, new directions in a planned economy and society overall and everyone of those yahoos cheering at his rallies will be primed useful idiots to report to the government anyone that is not going along with the plan.