Government intervention can be self-defeating because it tends to prot

QUESTION

Government intervention can be self-defeating because it tends to protect the inefficient rather than help firms become efficient global competitors.

Indicate whether the statement is true or false.

ANSWER

TRUE
Government intervention can be self-defeating because it tends to protect the inefficient rather than help firms become efficient global competitors. Intervention is dangerous; it may invite retaliation and trigger a trade war. Intervention is unlikely to be well executed, given the opportunity for such a policy to be captured by special-interest groups.