Marco Rubio Is Wrong About Industrial Policy
Breaking down Rubio's factually flawed and logically incoherent call for more government involvement in the economy.
In an op-ed published this week by The Washington Post, Sen. Marco Rubio (R–Fla.) makes the case for why conservatives ought to support top-down industrial policy set by the federal government—and, inadvertently, also provides a concise illustration of just how incoherent and illogical that idea actually is.
The article's headline—which was likely applied by the Post's editors and not Rubio himself, but nonetheless captures the spirit of the piece—promises to explain why the senator believes in industrial policy "done right." At its heart, Rubio's argument is no more complex than that: Industrial policy is good when he gets to be in charge and bad when someone else is running it.
Certainly, there's no way that could go wrong!
It might be slightly easier to believe that we ought to give Rubio and his friends more control over the economy if the rest of the op-ed wasn't littered with factual errors and worrying gaps in logic. In fact, Rubio doesn't even get through the first paragraph of the piece before making a significant error. "Today," he writes, Congress no longer views industrial policy with the same skepticism that it once did, but "what replaces unfettered free trade remains hotly debated."
Unfettered free trade? That's hardly an accurate description of the current status quo in the United States—a fact that Rubio surely knows, since Florida's sugar and fruit industries are the beneficiaries of some of the most aggressive protectionist policies on the books. Even before former President Donald Trump ramped up the use of tariffs, America had more protectionist policies than other large, developed economies: A 2015 report from Credit Suisse called the United States the world's most protectionist developed nation.
Rubio's inability to describe the current status quo matters. It's a failure of the ideological Turing Test, and it reveals that he misunderstands the economic policies he's trying to shift—or that he is deliberately misinforming readers about them. Either way, this ought to call the rest of his claims into question.
Unfortunately, that's far from the only mistake in the piece. A more blatant factual error occurs when Rubio riffs on some of what he sees as the more successful examples of industrial policy in American history—including NASA, which he credits with inventing baby formula, among other things. That's just wrong. Baby formula was invented in the 1860s, and one of the most popular brands available today dates back to 1925, decades before NASA was founded. (Seriously, did no one at the Post fact-check this?)
Rubio also errs when he claims that America's manufacturing sector "has suffered decades of neglect and unfair competition." In fact, American manufacturing is stronger than ever—even though manufacturing employment has declined in recent decades, largely because of increased automation. The supposed decline of American industry is the lynchpin to pro-industrial policy arguments on both the right and the left, but it is an imagined problem. As the Cato Institute's Colin Grabow put it in a recent article published by the American Institute for Economic Research: "A sector that accounts for a greater share of global output than any country save China, exported nearly $1.6 trillion in 2022, and has over 600,000 job openings is a poor poster child for globalization's alleged ills."
After getting those basic facts wrong, Rubio's op-ed pivots toward logical incoherence. The senator condemns the Biden administration's efforts at implementing industrial policy via the CHIPs Act, which poured subsidies into domestic manufacturing of semiconductors, and the poorly named Inflation Reduction Act, which ramped up incentives for production and purchasing of electric vehicles. Rubio correctly diagnoses why those initiatives seem to have failed, pointing out that "absurd diversity, equity and inclusion requirements and environmental regulations" have undermined the goals of both bills, as has the influence of lobbyists.
But rather than learning a lesson from those failures, the senator encourages conservatives to double down. Rubio would do well to take to heart F.A. Hayek's observation that "it is an illusion when the more conservative interventionists believe that they will be able to confine these government controls to the particular kinds of which they approve."
The concrete steps Rubio says he'd like to see the government take only confirm the problems with this line of thinking. He proposes "tying generous subsidies to performance requirements such as export quotas" and "getting serious about deregulation and permitting reform to create a competitive business environment where industrial policy can actually work."
There's a nugget of a good idea in there—yes, the government should get serious about deregulation and permitting reform.
But hold on. If the government is going to be doling out support to favored companies, isn't that likely to harm rather than promote a competitive business environment? Industrial policy that props up established, politically connected firms will make it more difficult for new competitors to gain a foothold in the market—or might prevent investors and entrepreneurs from even trying, since they know the deck is stacked in advance.
Indeed, protectionism is by definition about protecting companies from competition. Arguing for more protectionism and a more dynamic economy is nonsensical.
Given all the flaws with industrial policy, one might believe that it's a fool's errand to give government officials more power over the economy. But that's a debate that Rubio says we can't even have. "We simply don't have the option of doing nothing," he writes. "Decisions about how we run our economy are always being made—the only question is by whom."
This is a nod to the "everything is industrial policy" argument recently made by Oren Cass, the former Mitt Romney adviser who now runs the American Compass think tank and a prominent advocate for industrial policy among conservatives. In short, Cass believes that everything the government does necessarily involves picking winners and losers, and therefore policy makers should eschew neutrality and actively wield their power to shower favoritism on the right winners.
As Reason's Stephanie Slade has already explained at length, this is a nonsensical claim. Indeed, if everything is industrial policy, then Rubio's attempt to draw a distinction between "unfettered free trade" and his aim to "chart a new course" via industrial policy is meaningless because we've been doing industrial policy all along.
Obviously, there are two competing visions here: one that favors less governmental intrusion into the marketplace and one that calls for the government to take on a more active role in directing sectors of the economy that officials view as important. Trying to wipe away that distinction is nothing more than a rhetorical ploy.
Or, to put it in Rubio's own terms: Yes, the government absolutely has the option of doing nothing—and given its track record when it comes to picking winners and losers, that's exactly what it should do.
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This is obviously Rubio’s attempt at attracting the anti-capitalist right – who aren’t interested in factual analyses either. But I doubt it’s enough to position himself either as a possible Trump VP or as a GOP leader post-Trump.
I wonder whether he believes what he wrote.
How much do you think there is of an “anti-capitalist right” — which I’ll take to mean “conservatives” who oppose free enterprise per se — in the USA? I think there are just “conservatives” who have a scattering of hobby horses that together you can add up as opposition to free enterprise, but in reality they overwhelmingly favor free enterprise in most walks of business, and don’t even agree as to those hobby horses.
HELL yeah! Banning all trade and production of even the weakest beer for 13 years is the very definition of laissez-faire free enterprise! Robbing, jailing and shooting people for possession of plant leaves and sending goons with guns to jail doctors providing birth control is free trade run wild fer shoor. Fining people for failure to buy work permits, giving murderers government jobs with impunity, confiscating houses, bank accounts, planes and cars over sumptuary trade is ABSOLUTELY free and uncoerced voluntary buying and selling–to an idiot!
The anti-capitalist right includes all those supporters of Trump’s tariff policies, those who want to use government power either to prevent/punish companies moving production abroad, or to subsidise companies to develop production in the US, generally opposed to globalisation of trade and free trade agreements, etc.
America Firsters tend to fall into this category.
When Biden does it its fascism. When Trump does it he’s heroically putting America first.
Yes, Trump hates China while Biden hates America. Glad you’re finally getting it.
If Trump hates China he has a funny way of showing it, putting heavy tariffs on friendly trading partners who could have helped us decouple from China.
So, because Trump put heavy tariffs on friendly trading partners who could have helped us decouple from China, he doesn’t hate China? Or maybe he just hates so called friendly trading partners too. Learn to recognize a joke when you read one, you fucking shaft.
Bush made China great again…no president has been pro-China other than the Bush family.
So fucking what? And you might want to do a bit more research before declaring no president has been pro-China other than the Bush family. You’ll no doubt discover that, despite their rhetoric, most presidents’ policies have been pro-China. Or, like a good little sycophant, you could just remain ignorant and continue to choose politicians over policy.
You enjoyed getting assraped by Lizard Cheney with a black strap-on.
America Firsters tend to fall into this category.
Do you have a cite for your broad stroke, or would I be better served simply to file it under “made-up bullshit I read on the internet”?
Here’s an example:
https://americancornerstone.org/the-importance-of-an-america-first-trade-policy/
That’s the evidence you’re citing to justify your bigotry? You should have just left it at “made-up bullshit”.
I can’t decide if it’s humorous or pathetic that when digging for something to rip on Trump about the only item left is ….. but T A R R I F S!/s
It’s a tax on foreign goods. It’s not a regulation a boycott or anything else but apparently its the WHOLE WORLD to those with TDS.
There are many things to rip Trump for – the point of ripping him for tariffs is because they’re anti-capitalist/free market and hence go against the purported principles of the party he leads – and yet members of the party don’t care, which shows that their dedication to Trump is deeper than their commitment to principles.
Or maybe Trump did cut taxes like his party principles purports but did so more wisely than most by making up for those tax cuts on the international trade market.
And maybe the only Trump obsession is entirely by the left because Trump threatened their [Na]tional So[zi]alist Empire building.
I myself was against Trump winning the presidency. I wanted Rand Paul to win; but after Trump De-Regulated, Cut-Taxes, Cut the ‘green’ energy [Na]tional So[zi]alist empire, and didn’t launch any new expensive wars what’s not to like? but, but T A R R I F S?
Before I read this, I want to get a general sense from commenters: How much do you think a desire for “industrial policy” actually influences the economy in the USA? I get the feeling it’s just the usual palms being greased with a fancy label, and that therefore railing against “industrial policy” per se does us no good, because “industrial policy” does us no particular harm compared to government as usual in the USA…or in other countries where it’s invoked.
because “industrial policy” does us no particular harm compared to government as usual in the USA…or in other countries where it’s invoked.
With industrial policy you see benefits in the form of jobs and such. You don’t see the dispersed costs which are difficult to measure. It’s the Broken Windows fallacy.
As far as other countries go, I say thank them if they’re going to subsidize industry. Their taxpayers are giving us a discount. This whole attitude of “They’re making stuff cheap and that’s not fair! Government needs to make it more expensive!” is just downright stupid.
But I think this affects only a minuscule amount of the US economy. 99% of businesses go on as if there were no such thing as industrial policy, and most of those that are affected by what they’ll call “industrial policy” would be affected by policy under some other name if there were no such thing as “industrial policy”. At least that’s my hunch of the quantitative aspects of this issue.
I’m trying to get a handle on how important issues are relative to each other.
I doubt any individual “industrial policy” has a huge effect. But they add up and send ripples all around them.
The biggest problem is that you can’t measure opportunity cost.
How much richer and productive would society be if the government consumed 10% of GDP instead of 20%? We’ll never know.
What else would we have produced if industries that couldn’t compete were allowed to fail instead of being protected with tariffs and subsidies? We’ll never know.
What else would people have bought and enjoyed if prices of imports weren’t artificially inflated with tariffs? We’ll never know.
I get the feeling it’s just the usual palms being greased with a fancy label…
Indeed. Just about every market distortion seems to be owed to government never learning to keep its greasy palms to itself.
When was the last time Boobio OR Stephanie Slade was right about something?
I don’t know whether partisan polemics count as malice or incompetence but as someone here pointed out recently, they are not mutually exclusive. It is possible for Rubio to be both incompetent and malicious, although we probably would all agree that the malicious explanation trumps the incompetent one.
Yeah. Malice trumps incompetence because it’s deliberate.
I don’t consider Rubio much of a conservative but I find it hopeful that, “Or, to put it in Rubio’s own terms: Yes, the government absolutely has the option of doing nothing—and given its track record when it comes to picking winners and losers, that’s exactly what it should do.”