How do you get it right?…

Mike’s response to a short note from me I lifted and summarized from an advertisement/advice for investors on Brazil. Mike’s response below the fold:

Today, Brazil moved aggressively to ensure that the widening global financial crisis will not reach its shores, taking several measures to stimulate consumption and investment in the world’s seventh largest economy. Finance Minister Guido Mantega estimates that the moves will help Brazil’s GDP reach 5 percent next year.

The following will take effect immediately:

– Producers of 8,500 manufactured products will receive tax credits of up to 3% for sales abroad

– The IOF transaction tax will be eliminated on foreign purchases of Brazilian stocks (previously 2%) and on corporate bonds with maturities of more than four years (previously 6%)

– Stock receipts of Brazilian companies traded abroad, such as American Depositary Receipts (ADRs), will be cancelled

In fairness, Brazilian trade policy has often been poorly designed and managed even worse. When I was growing up there were 500% tariffs on imported electronic goods, the idea being to protect the burgeoning Brazilian electronics and computer industries. (Needless to say, it didn’t work.)

On the flip side, protection of aircraft has led to Embraer making some pretty good planes. Similarly, as I noted before (this isn’t exactly trade policy, but it is economic policy) actions by the Brazilian government in the late 1970s, 1980s and 1990s are responsible for the fact that a Brazilian can walk into a car dealership today and buy a tri-flex vehicle that runs on any combination of gasoline, ethanol or natural gas. I doubt Americans will be able to do the same thing before my 17 month old son is able to drive, and perhaps not for decades later.

The trick, I guess, is… how do you get it right? To come back to the US, how do you increase the ratio of Arpanets to Solyndras?