Korean Industrial Policy, Hyundai Car Jokes, And Samsung Galaxy Phones

South Korea also offers false hope to believers of state capitalism, but for a fundamentally different reason — industrial policy, which refers to extensive government interference in the allocation of resources. In any economy, resources such as capital and labor are scarce and finite. In a market economy, those scarce resources flow according to demand — if consumers buy more cars, more machines and workers will flow to the auto industry. Broadly speaking, industrial policy means that the state, rather than market demand, dictates the allocation of resources. That is, government bureaucrats identify promising firms and industries, and direct resources toward their favored firms and industries. Under industrial policy, the government rather than the market picks winners — which firms and industries prosper — and losers — which firms and industries shut down. South Korea, and Japan earlier, are sometimes viewed as having actively and successfully pursued industrial policy…