What do people have in mind when they talk about industrial policy today? And why do politicians of all stripes clamor for industrial policies? In this episode, EconTalk Russ Roberts welcomes back perennial favorite guest Mike Munger to discuss.

Roberts and Munger agree that people often don’t like what the profit-and-loss system produces, and think they can steer it better with industrial policy. So what are the things these policy makers are so concerned about? And when and why might industrial policy be superior to markets? Both fans of free markets, Roberts and Munger dig deep to answer these objections.

And now we’d like to hear what you took from this episode. Please, help us continue the conversation.

1- Munger starts by reminding us that the presence of profits in an industry doesn’t necessarily mean the output is socially valuable. He reminds us, too, of the Schumpeterian view of the economy, which “may involve violent and wrenching changes.” This leads him to a provocative question: What are the entitlements of workers who lose their jobs through no fault of their own?” How would you answer this question?

2-Perhaps the central question of this episode is, if there is an objection to industrial policy, what is the correct objection? Munger’s reply is (in part) that it is simply impossible to solve the political problem in a democracy. On what does he base this argument, and to what extent are you convinced by it?

3- Roberts brings up his recent interview with Devon Zuegel on Argentinian inflation, which Munger dubs the perfect example to illustrate his stance. What does Roberts mean when he says of the Argentines, “they prefer the world of high inflation with all of its horrors?” Who is the the “they” in this statement? Why would a central bank in Argentina be politically worse than rampant inflation?

4- Roberts challenges Munger to identify the lesson of the conversation. What do you take to be the lesson? Is is that you just shouldn’t try to make the world a better place? You’re just stuck with the reality? Explain.