• The Economist was founded in 1843 to champion the cause of free trade. Open markets and limited government still lie at the heart of our worldview. Our cover this week draws on those principles, to warn of a looming threat to ideas that have helped bring about an astonishing improvement in people’s lives.
• An era of zero-sum thinking has begun. Countries are racing to subsidise green industry, lure manufacturing away from friend and foe and restrict the flow of goods and capital. Mutual benefit is out and national gain is in.
• For many in Washington, muscular industrial policy holds a seductive appeal. America has unleashed vast subsidies, amounting to $465bn, for green energy, electric cars and semiconductors. These are bolstered with requirements that production should be local. Bureaucrats tasked with scrutinising inward investments to prevent undue foreign influence over the economy now themselves hold sway over sectors accounting for 60% of the stockmarket’s value.
• Fans argue that this will help seal America’s technological ascendancy over China, which has long pursued self-sufficiency in vital areas using state intervention. As carbon pricing is politically unfeasible, it could also foster decarbonisation. And it reflects a hope that government intervention will succeed where private enterprise failed, by reindustrialising America’s heartlands and even reviving support for market capitalism.
• Such thinking is misguided. If zero-sum policies are seen as a success, abandoning them will become only harder. In reality, even if they do remake American industry, their overall effect is more likely to cause harm by corroding global security, holding back growth and raising the cost of the green transition. Even when it is inspired by the best of motives, zero-sum thinking threatens to make everyone poorer and the world more dangerous.
Zanny Minton Beddoes