Picking winners, saving losers - have governments learned from past failures?

From The Economist - Industrial policy remains controversial. Defined as the attempt by government to promote the growth of particular industrial sectors and companies, there have been successes, but also many expensive failures. Policy may be designed to support or restructure old, struggling sectors, such as steel or textiles, or to try to construct new industries, such as robotics or nanotechnology. Neither tack has met with much success. Governments rarely evaluate the costs and benefits properly. In America the debate has raged fiercely. The government has long helped business, for instance through the Small Business Administration (SBA), set up in 1953, which guarantees loans to small firms. Heavy defence and space spending has created national champions, such as Boeing in aircraft-making. The government bailed out Lockheed in 1971 and Chrysler in 1979, and raised motorbike tariffs in 1983 to save Harley-Davidson. But efforts to support specific industries and firms have remained sporadic despite calls for a coherent policy. Ronald Reagan and George Bush senior tried to eliminate industrial policy wherever they found it, says Michael Boskin, chairman of the Council of Economic Advisers under Mr Bush. Read more

Picking winners, saving losers - have governments learned from past failures?