Why Industrial Policy Is (Almost) Always a Bad Idea (with Scott Sumner)

Published in 1776, 'The Wealth of Nations' is Adam Smith's magnum opus that laid the groundwork for modern economics. The book critiques mercantilist economic theories and introduces the concept of the 'invisible hand,' which describes how individual self-interest leads to societal benefit. It emphasizes the division of labor, the accumulation of capital, and the importance of free markets. Smith argues that a nation's wealth is not measured by its gold and silver reserves but by the stream of goods and services it produces. The book also outlines the core functions of government, such as maintaining defense, enforcing civil law, and promoting education, while advocating for limited government intervention in market activities.

This research analyzes the global music consumption and trade since 1960, using a unique dataset of popular music charts from 22 countries. It investigates whether the increased availability of music from large economies, particularly the US, has displaced local music in smaller economies. The study finds that trade volumes are higher between geographically closer countries and those sharing a language, and that domestic music consumption has increased sharply in the past decade. It also notes that national policies, such as radio airplay quotas, may contribute to the increased consumption of local music[1][3].