One hallmark of any fundamentalism is the habit of refashioning past events into imaginary histories that validate unchallengeable truths, preserving internal coherence in a narrative that drifts ever further from reality. For the high priests of free trade, the strong track record of trade barriers and industrial policy in spurring economic development, both in America and around the world, has long been an awkward subject best unstudied. But as they lose ground in the public debate, that strategic silence is now giving way to embarrassing revisionism.

The latest absurdity comes from Adam Posen, president of the Peterson Institute for International Economics, in his Foreign Policy cover story on “America’s Zero-Sum Economics.” Rejecting a strategy of subsidizing strategic industries, Posen points to “the long-running conflict between Airbus and Boeing.” In his telling, foolish government intervention in both the United States and Europe, as “these two giant economies subsidiz[ed] their respective champions,” which were “deemed too strategically important to fail,” has led to “limited innovation” and “substandard production” that “put both the underlying system and many of their customers at risk of devastation.”

The aircraft industry’s real lesson for policymakers is nearly the opposite…

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