Liberals love the idea of government-directed investment because they love big government and hate free markets.

What’s the Republicans’ excuse for backing this looney idea typically associated with corporate welfare schemes? Many Republicans want a New Industrial Policy that would hand out corporate welfare grants to “strategic industries” – such as microchips and steel mills. The way to beat China’s centrally-planned economy is evidently to have more central planning here.

Where have we heard this cockeyed idea before? In the early 1980s, we were told that we must shower our manufacturers and automakers with taxpayer dollars or else the Japanese would eat our lunch. But then the Reagan tax cuts kicked in and we had the ferocious economic comeback of America – and nobody talked of industrial policy again, until now.

Thank God we rejected corporate welfare in the 1980s. We stuck with free markets in guiding investment capital while Japan chose government-directed investment. The chart below shows the U.S. stock market vs Japan’s. The Japanese stock market has been basically flat for four decades and our market is up about 20-fold.

Let the free market and private capital markets direct the market for investment capital – and stop double taxing investment and America will flourish.