We don’t want government to try to help businesses, we want to stay out of their way, providing a free market for entrepreneurs to thrive without government, said Dan Mitchell, a public policy economist in Washington, D.C., at an event attended by Romanians are present. entrepreneurs

“In the US, this debate is called industrial policy. We have Republicans and Democrats who say, we need the government to subsidize these businesses in certain industries and so forth,” he says.

Industrial policy, he says, is a weak version of central planning.

“We saw this during the collapse of the Soviet Union: centralized planning does not work. I saw Mao from China,” he said.

What is centralized planning?

“Bureaucrats and politicians are trying to determine what should be produced and where, etc. Industrial policy is a humble version of this. It is not completely going in the wrong direction, but to a large extent it is going in the wrong direction,” the economist explained.

The difference between capitalism and corporatism. Corporatism means bribing politicians

Capitalism and corporatism are similar.

“The difference is that capitalism is about creative destruction. You can come up with a new idea, you can become rich, but sooner or later someone will come up with a new idea and replace you. You can lose all your money if you don’t diversify or find something that can be reinvented,” he said.

In corporatism, he says, you have an idea and you get rich.

“Then you use the money to bribe politicians to keep your place in the economy. This is obviously wrong. What happened? When obstacles intervene, you freeze economic development because you block new ideas, innovations that entrepreneurs create,” he says.

• It’s like an iceberg. You see something on the surface, rescue plans, and under it – protectionism, monopolies, that is, all kinds of things, because of which politicians drink their hands in the economy and interfere.

“Many people say that China is the future (ie the economic model is not). Falsehood. They’ve liberalized a little bit compared to Mao’s time, but it’s not a very good example,” Dan Mitchell said.

Favoritism, he says, is not the same as a free market.

• “Just because you’re pro-free market doesn’t mean you’re pro-big business (no big companies). It means you’re pro-competition and pro-property. If you support competition and property rights, that means some businesses will thrive, at least for a while, at least until new competitors emerge, but most competitors will be smaller. But you shouldn’t let politicians and bureaucrats determine which companies succeed and which don’t.”

• “This is a Canadian economist who said what industrial policy really means: government can’t pick winners, but losers can pick government.”

“Do you want your country’s businesses to serve you as consumers, or do you want them to get rich by going to the government, to the parliament, to ask for special favors and to block competitors with regulations and taxes?” he asks. .

What are the problems in the USA with big business

“It worries me in Washington. If you’re a big company and you have a staff of 100 people dealing with legislation, tax code and the like, you know you have an advantage over smaller competitors,” says the economist.

If governors come up with a new law that requires 100 hours a year to comply, it will hurt small businesses because they don’t have as many hours to help consumers, he said.

“If you’re a large corporation and you have 100 employees for this, that would mean an hour for each. So big companies in the US often support laws that hurt the economy, including themselves, but they support them because it hurts competition much more,” he said.

• “It’s like playing a tennis match with someone. I have 10 kilograms on my back, and my competitor has 100 kilograms. I could beat him even though he is a good tennis player because I hurt him more than I hurt myself. That’s how some big companies in Washington work.”

“You don’t want businesses to be corrupt, and you don’t want politicians to be corrupt. The authority and power of the Government should be limited,” he says.

China will never catch up with Europe and the US

Everyone sees China as a success story, says the economist.

He pointed to IMF and World Bank data on China in terms of GDP per capita, where the US is far ahead of China.

His advice: “Don’t copy China. This is a big mistake.”

He then introduced some other countries in Asia, including Taiwan: some “Asian Tigers”. Likewise, Taiwan was much higher than China.

“China is doing much worse than Taiwan, South Korea and Japan. This is not to say that Taiwan, South Korea and Japan are perfect, but they are much better than China. Everyone is afraid of China. Do not be afraid. China is shooting itself in the foot too much with excessive government involvement,” he said.

Dan Mitchell summed it up: China will never catch up with Europe, it will never catch up with the US.

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