Secondly, there have been calls for a US industrial policy -- that is, for Washington to essentially "pick winners and losers" by promoting some industries that they feel have a high probability of success. Asian countries have been doing this for years with remarkable success and it is a policy which we clearly need to copy.
The market is pretty good at picking winners. Washington likes to take money away from the winners and give it to the incumbent losers that bribe lawmakers.
Yeah, that part seems like it needs more support. The situation for the largest and most diverse economy on the planet is a little bit different than the situation for those Asian countries. Our economy is far too complex for this sort of central planning to be effective. Also, politicians are idiots, and need to secure votes from the workers in industries currently existing, not the industries of the future.
> Asian countries have been doing this for years with remarkable success and it is a policy which we clearly need to copy.
Even if Asian countries can consistently do that, which I doubt (there's a serious case of survivor's bias here), that doesn't imply that the US can. The American political class is fundamentally incompetent.
After watching the health care discussion on Friday, did anyone think "those are the folks who I want running something important"?
Whenever I see a politician, my reaction is thatt I don't want that person in charge of anything having to do with my life.
Also, although some of the quasi-planned economies (where "winners" were picked and subsidized) in Asia have been remarkably successful, it doesn't necessarily follow that the relationship is causative, or that they wouldn't have been successful anyway, had that selection process not happened.
A lot happened in the 20th century in Asia that keeps it from being a repeatable experiment, much less a model that can be followed elsewhere. The effects of WWII and the consequent rebuilding on Japan, and urbanization and the so-called "demographic dividend" (http://en.wikipedia.org/wiki/Demographic_dividend) on many other countries in the area, shouldn't be underestimated.
I'm not sure how you saw this sentence: "Washington likes to take money away from the winners and give it to the incumbent losers that bribe lawmakers." and thought that Goldman was an example of the former rather than the latter.
Unfortunately, the government has just as strong a history of protecting the thieves and pirates from competition as it does protecting others from them. Goldman and Enron are possible because of government intervention in their favor.