Industrial policy and COVID vaccines
By Alberto Mingardi
Deirdre McCloskey and I have and op-ed on Project Syndicate on industrial planning and COVID vaccines. The article argues against the currently rather popular position now that the rapid development of COVID-19 vaccines was a triumph of the Entrepreneurial State.
Here’s a bit:
This time, the federal government helped by acting as a big bank to finance COVID-19 vaccines, but didn’t choose winners in the fashion of industrial planning. Instead, Operation Warp Speed promised to buy good vaccines, and paid up front for guaranteed supplies. South Korea does the same, subsidizing trial-and-error research and development, but relying on profit-making firms to do it.
Federal procurement during World War II was similar, with the government dumping money into small innovative firms such as the American Austin Car Company or big ones such as General Motors. Contrary to the myth of the US wartime production miracle, as the economic historian Alexander Field has shown, haste was inefficient from the point of view of an imagined perfection. But haste was necessary to win the war. The result was worth it. Operation Warp Speed was, too.
During WWII, the US government didn’t usually pre-pick industrial winners. When it did, it attracted the attention of then-Senator Harry S. Truman’s hearings on corrupt procurement. Mainly, the government had private companies compete, yielding winners such as the Willys-Ford collaboration on the Jeep. General (and later President) Dwight D. Eisenhower called the weird-looking roofless four-wheel-drive car “one of three decisive weapons” of the war.
You can read the piece here.