Deirdre McCloskey and Alberto Mingardi: The Myth of the Entrepreneurial State

The wages of sin are still paying for the Vice Fund

Bureaucrats a heterodox economist trusts big time to pick winners are too witless to phone to confirm her credit card details

Table of Contents

  1. Introduction: Thinking Big Again
  2. From Crisis Ideology to the Division of Innovative Labour
  3. Technology, Innovation and Growth
  4. Risk-Taking State: From ‘De-risking’ to ‘Bring It On!’
  5. The US Entrepreneurial State
  6. The State behind the iPhone
  7. Pushing vs. Nudging the Green Industrial Revolution
  8. Wind and Solar Power: Government Success Stories and Technology in Crisis
  9. Risks and rewards: From Rotten Apples to Symbiotic Ecosystems
  10. Socialization of Risk and Privatization of Rewards: Can the Entrepreneurial State Eat Its Cake Too?
  11. Conclusion

MARIANA MAZZUCATO is a Professor in Economics at the University of Sussex, where she holds the RM Phillips Chair in Science and Technology Policy. She is interested in the interactions between technological change, economic growth, and the ways that industries are structured. Her recent work has looked at the leading role of the State in fostering innovation, and hence the implications of ‘austerity’ for Europe’s ability to be an ‘Innovation Union’. In her last book The Entrepreneurial State she argues that active State investment has been the secret behind most radical innovations, and that this requires economists to analyse the State as market ‘maker’ and market ‘shaper’ not just market ‘fixer’.

The importance of the market test

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Investment strategy of @NZSuperFund is against all the odds @TaxpayersUnion

The Injustice of Corporate Welfare

John Oliver on Economic Development

Free To Choose 1980 – The Tyranny of Control – Hand Looms

@NZSuperFund claims to beat the market

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How an Island Lost Its Fortune Making a Terrible Musical

Paul Krugman has been on a bit of a bad trot for sometime

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Corporate welfare explained

Johan Norberg – Picking Winners or Losers

Making trouble again for @stevenljoyce for @TaxpayersUnion

The Dutch disease for the benefit of #GarethMorgan @stevenljoyce

I am putting in a Official Information Act request to see if anyone advise ministers that a export promotion target results in a matching increase in imports along with a large appreciation in the New Zealand dollar. Did New Zealand dodge the Dutch disease from this foolhardy export promotion policy? The Dutch Disease story is one of sectoral shifts.

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In the 1960s, with fixed exchange rates under the Bretton Woods system, the Netherlands discovered off-shore natural gas. As natural gas was extracted, it increased domestic income and spending. Investment was redirected toward the natural gas sector. Dutch wages and prices began to rise gradually. The Dutch guilder became overvalued in real terms, their industrial products became uncompetitive, and the manufacturing sector shrunk. This phenomenon of de-industrialization in the presence of rich natural resources was called the Dutch disease. They got natural gas but lost manufacturing.

In the late 1970s and early 80s, the UK experienced similar de-industrialization under a floating exchange rate regime. They discovered and exploited the North Sea oil fields. Since the global oil price was rising, the UK was expected to earn a great amount of foreign exchange in the future. But even before these earnings were realized, the British pound appreciated suddenly in both nominal and real terms. This damaged the British manufacturing sector.

Source: MF model – float

If there is an increasing demand for New Zealand exports if the Business Growth Agenda target of increasing New Zealand exports was successful, there is an increase in demand for New Zealand dollars to pay for these exports. This will result in an appreciation of the New Zealand dollar making imports cheaper. This will switch demand for New Zealand competing industries to these imports.

This process of currency appreciation and expenditure switching will continue until export match exports again. There is nothing wrong with an export boom as long as it is based on comparative advantage rather than subsidies.

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