The best classroom teacher I ever had is Avinash Dixit (whom I was lucky to have as dissertation adviser as well). One of his remarkable traits as a teacher was that he would never treat silly or obvious questions as such. No matter how stupid a question seemed, he would stop, raise his hand to his chin, narrow his eyes, and think a long time about it, while the rest of us in the classroom would roll our eyes at the stupidity of the questioner. Then he would say: "Ah, I see what you have in mind..." and he would roll out an answer to a deep and interesting question the student had no idea he had asked.
It is in that spirit that I have been mulling about the derision and incredulity with which my recent post on industrial policy was met among some libertarian bloggers. (See sample.) I had argued in that post that industrial policy is not unlike many other areas of government responsibility, such as education or health. My rhetoric was meant to entrap middle-of-the road economists, who see nothing wrong with governments playing a significant role in these other areas, but have an instinctive aversion to industrial policy. I had not counted on the reaction from the libertarians (whom I didn't think I would be convincing anyhow), which was: ok, now that we have shot ourselves in one foot, you think we should shoot the other foot as well?
So what are the deeper lessons? First, I am not as unconventional as I sometimes think I am. The real revolutionaries here are the libertarians. They envisage a real good world out there that looks like nothing we have now (or have ever had), and they want us to get there. Second, there are really deep philosophical differences here that have nothing to do with economics per se. Most importantly, I believe government can be a force for good; they do not. But third, libertarians hold on to their priors so strongly that they seem impervious to evidence. They shrug off the fact that there is more freedom and more wealth in those parts of the world where the government is stronger, not weaker. With respect to industrial policy proper, they refuse to engage with the fact that every nation that has grown rapidly has made use of it.
I look at the world and see some government programs that work and others that fail. I want to understand what determines these outcomes, and to know how we can improve the ratio of the first to the second. When libertarians look at the same programs, they see one wreck after another.
It is genuinely hard to see how we can carry out a fruitful discussion when we observe the world through such different glasses. (But I am always game when there is a substantive, empirically-based argument to respond to.)