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Bad and good arguments for industrial policy

noahpinion.blog · 3,209 words · saved by 1 readers

Throughout the 2010s, a number of people argued that China had discovered a better way to run an economy. Obviously the country was still relatively poor at the time, and it’s easier to grow quickly from a lower base. But what was remarkable about China’s growth was that it was so consistent — China never officially experienced a recession in the 2000s or 2010s, despite the global financial crisis of 2008 and the Chinese stock market crash of 2015. It seemed to have found the secret sauce of macroeconomics. That secret sauce came with a cost. China avoided recessions by having its state-controlled banks lend lots and lots and lots of money to the real estate industry. That ended up reducing productivity growth, by channeling capital into less productive uses. It also exacerbated a gigantic real estate bubble that has now popped, leading to another growth slowdown that’s almost certainly worse than China’s official statistics say, and which has left large parts of the populace pessimist

Bad and good arguments for industrial policy Has China invented a better way to run an advanced economy? Noah Smith Jul 19, 2024 210 108 18 Share AE Solar , CC BY-SA 3.0 Throughout the 2010s, a number of people argued that China had discovered a better way to run an economy. Obviously the country was still relatively poor at the time, and it’s easier to grow quickly from a lower base. But what was remarkable about China’s growth was that it was so consistent — China never officially experienced a recession in the 2000s or 2010s, despite the global financial crisis of 2008 and the Chinese stock

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