Debating Industrial Policy and Government Intervention

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The chapter delves into the debate of market failure and government intervention, discussing the arguments made by Cambridge welfare economists in the 1920s about industrial policy. It explores concerns about government's ability to choose industries, political manipulations, and the need for competition policy to address market imperfections. The conversation ranges from the role of experts in decision-making processes, the necessity of public insurance in healthcare, to reevaluating government intervention and failure in market systems.

Economics students are often taught that government should intervene when there is market failure. But what about government failure? Should we expect government intervention to outperform market outcomes? Listen as Duke University economist Michael Munger explores the history of how economists have thought about this dilemma and possible ways to find a third or even fourth option beyond government or markets.