Dani Rodrik on the New Economics of Industrial Policy

Capitalisn't

University of Chicago Podcast Network

Stigler Center, Chicago Booth, Socialism, Antitrust, University Of Chicago Podcast Network, Growth, 087667, Policy, Monopoly, Professors, Distortion, Research, Competition, Capitalisnt, Inequality, Promarket, Politics, Policymaking, Special Interest, Economics, Efficiency, Regulations, Chicago, Business, Markets, University Of Chicago, Kate Waldock, Capitalism, Friction, Bethany Mclean, Government, Macroeconomics, News, Education, Waldock, Georgetown, Microeconomics, Luigi Zingales, Zingales, Finance, Ucpn

4.5 • 584 Ratings

🗓️ 1 August 2024

⏱️ 45 minutes

🔗️ Recording | iTunes | RSS

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Summary

Harvard professor of international political economy Dani Rodrik has long been skeptical of what he calls "hyperglobalization," or an advanced level of interconnectedness between countries and their economies. He first introduced his theory of the "globalization trilemma" in the late 1990s, which states that no country can simultaneously support democracy, national sovereignty, and global economic integration. At the time when he proposed his trilemma, Rodrik was considered an outcast. However, economists and policymakers have come to accept his theory as governments seek to address populism, trade imbalances, and uneven growth through renewed interest in industrial policy, or government efforts to improve the performance of key business sectors. Rodrik joins co-hosts Bethany and Luigi to discuss changing attitudes towards globalization: its distributional effects, how it affects politics, and how it is still searching for a narrative consistent between academic circles and the media. Together, the three of them discuss what role corporate America should play in our world restructured by economic and political populism and if economics is getting too far away from the rest of the social sciences when it comes to shaping industrial policy and creating the jobs of tomorrow. Show Notes:Read Rodrik's co-authored December 2023 paper on the "New Economics of Industrial Policy"Read an ebook by ProMarket on cutting-edge contemporary debates around industrial policy

Transcript

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0:00.0	There are a whole bunch of maintained assumptions that we are not explicitly testing.
0:06.5	You know, government intervention is ineffective.
0:09.3	Markets tend to do well.
0:11.7	It's pointless to try to countervail against, you know, the free flow of capital.
0:18.8	I'm Bethany McLean.
0:20.3	Did you ever have a moment of doubt about capitalism and whether greed's a good idea?
0:25.8	And I'm Luigi Zengales.
0:27.2	We have socialism for the very rich, rugged individualism for the poor.
0:32.6	And this is Capital Isn't, a podcast about what is working in capitalism.
0:36.6	First of all, tell me, is there some society you know that doesn't run on greed?
0:41.1	And most importantly, what isn't?
0:43.1	We ought to do better by the people that get left behind.
0:46.0	I don't think we shouldn't kill the capital system in the process.
0:50.0	In 2009, a prominent economist labored the period between 1980 and the Great Financial Crisis as the age of Milton Friedman.
0:58.0	This period was characterized by the belief that reliance on market forces with an open economy in a stable macroeconomic environment with a sure property right was key to rapid economic growth.
1:10.0	This period ended with the great financial crisis and then really came to a crashing end
1:15.4	with the COVID-19 pandemic.
1:17.4	After these two cataclysmic events, globalization started to be reversed.
1:22.3	Industrial policy has come back in vogue, and even the protection of property rights
1:26.8	has started to be called into
1:28.1	question. For example, with the idea of forgiving all the loans, jokes aside, if we take the term
1:35.9	the age of Milton Friedman as the age that vindicated many of Milton Friedman's claim, then we can
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