My Take | Failed at free enterprise? Well, try industrial policy, China style

This year apparently marks the 125th anniversary of Friedrich von Hayek’s birth. But I only read about it in a Marxist magazine. The grandaddy of neoliberalism seems to have gone to history’s graveyard where ideologies go to die and be buried.

These days, in Washington and Brussels, it’s all industrial policy and trade protectionism all the time. China should be proud.

Imitation is supposed to be the sincerest form of flattery. The West has gone from denouncing Chinese industrial policy, to pursuing a version of its own. It’s still rounding on China, though, for doing it too well. Hayek, the prophet of free enterprise, small government, and unfettered market must be turning in his grave.

US Treasury chief Janet Yellen’s recent charges of overproduction against China may also be seen as a backhanded compliment to Beijing’s long-standing industrial policy, which Washington is only now trying to play catch-up.

Beijing has counterclaimed that its global supply of affordable goods has alleviated inflationary pressures on the world economy, while its dominance of green technology has been helping fight climate change. This is especially the case with low-cost electric cars, solar cells and lithium batteries.

In May, at a Group of Seven meeting in Italy, finance ministers declared together that the US and its European allies must coordinate their protectionism and industrial subsidies to counter China’s dominance in key industries.

Unfortunately, playing catch-up is hard, and pursuing industrial policy even harder.