“I watched with incredulity as businessmen ran to the government in every crisis, whining for handouts or protection from the very competition that has made this system so productive. I saw Texas ranchers, hit by drought, demanding government-guaranteed loans; giant milk cooperatives lobbying for higher price supports; major airlines fighting deregulation to preserve their monopoly status; giant companies like Lockheed seeking federal assistance to rescue them from sheer inefficiency; bankers, like David Rockefeller, demanding government bailouts to protect them from their ill-conceived investments; network executives, like William Paley of CBS, fighting to preserve regulatory restrictions and to block the emergence of competitive cable and pay TV. And always, such gentlemen proclaimed their devotion to free enterprise and their opposition to the arbitrary intervention into our economic life by the state. Except, of course, for their own case, which was always unique and which was justified by their immense concern for the public interest.”

“Politicians have often declared that unbridled competition among financial intermediaries promotes failures that will harm the public. Although the evidence that competition does this is extremely weak, it has not stopped the state and federal governments from imposing many restrictive regulations.”

“The rules that govern competition between species are (and must be) very different from the rules that govern competition within species.”

“It is the principal paradox of this period that the only sphere of our economic system in which government intervention is urgently necessary is also the only point at which action of the State is now effectively inhibited. It is in the region of wages and prices that we really require the continual economic leadership of government, but in our prevailing trade structure any such suggestion has come to be regarded as impious.”

“Ever since 1945 the federal government has held and indeed increased its importance as the first customer of the American economy. Government spending had been the primary economic stimulant and to increase it had been the goal of hundreds of interest groups; hopes of balanced budgets and cheap, business-like administration always ran aground upon this fact. What was more, the United States was a democracy; whatever the doctrinaire objections to it, and however much rhetoric might be devoted to attacking it, a welfare state slowly advanced because voters wanted it that way. These facts gradually made the old ideal of totally free enterprise, unchecked and uninvaded by the influence of government, unreal.”

“An industrial policy worked in Taiwan only because the state was able to shield its planning technocrats from political pressures so that they could reinforce the market and make decisions according to criteria of efficiency—in other words, worked because Taiwan was not governed democratically. An American industrial policy is much less likely to improve its economic competitiveness, precisely because America is more democratic than Taiwan or the Asian NIEs. The planning process would quickly fall prey to pressures from Congress either to protect inefficient industries or to promote onesfavored by special interests.”