A new report on China from the Senate Small Business Committee, now chaired by Senator Marco Rubio, is turning heads in the conservative policy world. The report details the “Made in China 2025” initiative, China’s national plan for technological and economic supremacy in a number of emerging industries. But what makes the report interesting, particularly from a Republican-chaired committee, is its suggestion that America shouldn’t merely punish China for unfair trade practices, but also should pursue a national innovation strategy of similar ambition.
“This report’s central conclusion is that the U.S. cannot escape or avoid decisions about industrial policy,” its authors write, after opening with an extended quotation from Alexander Hamilton’s “Report on Manufactures.” Then it explicitly rebukes the orthodox libertarian view that markets are “neutral” when government simply gets of the way:
States place great value on capturing high-productivity, high-labor content industries, or developing new ones. This is no new insight, for constraining the excessive possibilities of this behavior is arguably the orienting view of the World Trade Organization (WTO). States can attempt to redirect this fundamental interest by agreeing to “not select” industries, or at least not do so outside the bounds of reasonable policy difference. But even here, distinctions between competing decisions of economic value must be made.
Markets are always and everywhere structured by rules and institutions, the parameters of which shape final outcomes for society at large. That these rules should align with national priorities like strong families and decent wages for average people might seem obvious, but alas, too often it’s not…