Law professor Ganesh Sitaraman has a piece arguing in favor of an industrial policy for the United States. He laments that "[o]ver time, industrial policy ultimately became the Lord Voldemort of economics, so evil and dangerous that it must not be named," and he wants to make it safe to talk about industrial policy again. To this end, he notes that "the United States has always had one," and sets out what he describes as four American industrial policy "traditions," as follows:
1. "the Franklinian tradition in industrial policy emphasizes what comes before industrial production: knowledge and infrastructure. In this tradition, the public directs industrial-policy priorities in these arenas and the government provides them, either directly or through a regulated monopoly." Two examples are: "Land Grant Colleges Acts in the 19th century" and "the Franklinian-style post office."
2. "Hamilton is widely (and rightly) considered the founder of American industrial policy. In his Report on Manufactures, Hamilton outlined a system that included tariffs, subsidies, and investments"; "In his report advocating for the creation of a national bank, Hamilton also hoped to expand the national debt, extend more legal tender, and develop America’s fledgling financial system"; "The oft-decried 'military-industrial complex' was the Cold War heir to the Hamiltonian tradition."
3. "regulated competition is perhaps best associated with anti-monopolist and Supreme Court Justice Louis Brandeis, but it has its roots in Madisonian political economy. The Madisonian tradition sees the route to economic success as requiring competitive markets, but it holds that there must be an active government regulating and channeling market activity to ensure a fragmented and separated industrial ecosystem"; "the Madisonian tradition found expression in the anti-monopoly movement and in regulatory policies based on the principle of separating functions."
4. "The Jacksonian tradition in industrial policy differs from the other three traditions in that it opposes the development of a coherent federal strategy or system of industrial policy in favor of decentralization to the states and privately directed activities"; "For the last 40 years, American industrial policy has largely followed the Jacksonian approach. ... Deregulation, privatization, trade liberalization, and austerity all caution against government action."
I disagree with various aspects of his four categories, but what I want to focus on here is the idea that these are all part of something called "industrial policy." What exactly is industrial policy? At one point, Sitaraman offers what I would have thought of as the traditional definition: "They want policymakers to encourage domestic production in specific sectors, a practice known as industrial policy." Later, though, he provides a much broader view of the term: "any public policy that shapes or structures a sector of the economy is an industrial policy." The problem I see is that, under that definition, and if all of his four traditions constitute industrial policy, then just about everything is industrial policy. If I propose the multilateral elimination of tariffs, is that industrial policy? I wouldn't have thought so, but when you characterize things so broadly, perhaps it is. How about school choice and charter schools? If this "shapes or structures a sector of the economy," which it clearly does, then that's covered too. How about occupational licensing? Or copyright terms? Or restrictions on abortion providers? Or gun regulations? Or limits on inter-state provision of medical services? Under his broader view, there's a pretty good case that these are all part of industrial policy.
If everything is industrial policy, however, I wonder if anything is really industrial policy. If you make the scope of industrial policy so broad, at a certain point you are really just discussing economic policy (or even just domestic policy more generally, or possibly even just policy of any sort). And if industrial policy is really just economic policy, then perhaps we should be talking about economic policy, rather than spending time trying to recharacterize it as "industrial policy."
It seems like his push for saying "industrial policy" is about finding a good marketing term for these ideas, and he believes that "industrial policy" could serve this purpose. But if you just want to talk about economic policy, and are trying to argue for particular policies, there's no need to put the term "industrial policy" out there. It may actually confuse more than it enlightens.
In my view, the key to all of this is not really the terminology. I can see how catchy slogans are useful (although I think people may overemphasize the importance sometimes), but just saying "industrial policy" doesn't really get us anywhere. What specifically are industrial policy advocates proposing? Tell us the details and then we can debate it.
