The Commerce Department's going to have to be a lot tougher and a lot stronger -- an elite civil service that commands business confidence and respect. I'm not talking so much about giving orders, but defining an agenda and ways that we can be more effective. Whether it's tax policy, whether it's selective use of R&D subsidies, whether it's allowing consortia in areas where we need to have some antitrust change.
The Japanese have had industrial policy with certain clear characteristics. It was market-conforming. It was prescriptive, not proscriptive. Business was encouraged through incentive and moral suasion. It wasn't ordered to do things.
Japan has made all its policies interact together. There was a very pro-saving tax policy that created a low cost of capital. It wasn't just MITI (Ministry of International Trade and Industry) saying, 'You should invest in the car industry.' The cost of capital was very low and you could take a five- and 10-year time horizon.
~ David Hale, chief economist, Kemper Financial Services, "A Top Economist Frets About '80s Hangover," Investor's Daily, February 1, 1990
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