Electric-truck manufacturer Lordstown Motors is going out of business, despite being championed by politicians including Donald Trump as an example of successful industrial policy. Politicians pose for pictures at groundbreaking ceremonies and brag when these projects are started, then vanish when they fail.
George Mason University economist Don Boudreaux suggests a policy reform to better align politicians’ incentives:
Investors who stake their own funds on projects that fail pay a heavy personal price for their poor judgment, thus disciplining them to improve their judgment. It only seems right, then, that politicians who stake other people’s funds on projects that fail should likewise pay a heavy personal price. If required to be personally and visibly associated with their destruction of other people’s wealth, politicians might be less cavalier at showering that wealth on industrial-policy boondoggles.