I’ve been thinking about the recent work of our colleague Gideon Rachman Regarding the revival of industrial policyThe report explores how many of the world’s largest countries and regions (including the United States, China, India, and the European Union) are increasing national intervention in the economy, or at least talking about the ways in which such interventions are made. His view is basically that this is an old and terrible idea that will lead to geopolitical conflicts.

Although I disagree with his conclusion, this topic is very important. The industrial policy is indeed very old, but I don’t think this is a bad thing. How you perceive it depends in part on how you define it.

When people talk about industrial policy, they have many different meanings. Some people refer to the Soviet Union’s economy, which was entirely planned by the state. Others are thinking about China’s state-owned capitalist model. Others are thinking about the public-private relationship between job creators and educators in places like Germany, or the spaghetti bowls between companies and countries like South Korea, Japan, Taiwan, and Singapore.

I consider industrial policy from a very broad perspective, starting with the idea that the private sector and the market system do not always allocate resources for the benefit of the country, but for the benefit of asset owners. Therefore, the voting public may sometimes have reasons to elect politicians who will formulate policies that clearly target the common national interest.

This has nothing to do with the selection of winners (no Solendra Please send an email, this is a small mistake compared to other things the government has done in technology (such as inventing the Internet). This is about creating a level playing field (no, the market itself does not do this, so there are 5 companies owning 40% of the market) and prioritizing investment in things that will create a more resilient economy and society .

In the United States, this is no longer radical. Indeed, after more than half a century of laissez-faire freedom, we need to carry out some public intervention in the market system, which has become the status quo on both the left and the right.I think Marco Rubio’s speech The conservatives who come to the House of Representatives will be seen as a bit like sand.

As i wish Written before, Industrial policy is actually a deep American idea-our first Secretary of the Treasury, Alexander Hamilton (Alexander Hamilton) was taking advantage of the market Prioritize national interests. China has learned a lot from this method. According to research, this is why it has been one of them for more than 40 years. Two big economic winners From globalization and large multinational companies.

On this score, please check my column within a week or so, which will provide the McKinsey Global Institute with some amazing data on how big companies affect the economy and households. If you have any questions about my statement about the market’s disproportionate rewards for asset owners, this will keep you safe.

You cannot categorize the industrial policy approaches of all countries into one category—Europe. To a certain extent, China may need less public intervention in the market, while the United States needs more. The nature of the network economy and the platform giants that support the network economy will only push everything to the winner. This is politically unsustainable.

The question is how the state can intervene in a productive way. I will not repeat my articles on the various initiatives of the Biden administration (I think most of them are great and some of them carry the risk of unproductive expenditure), but I will say that I think the United States needs a concerted effort.What I advocate is a way to create the next huge productivity boom around climate change Here. It’s all about holding loosely and creating the floor under the right things.

In addition, given that there are some critical infrastructure collapses every week, I hope to see more systematic thinking, and even in the White House there may be a resilient czar who can cut off the BS within the institution and obtain all government The department’s military is moving in the same direction in terms of supply chain resilience, food safety, technical standards, and cyber security.

Once this happens, the private sector will follow suit. I would love to see some truly capable former military leaders play such a role-those who are not captured by the private sector or bothered by the challenges of professional politicians. Gideon appeared as a special guest. Do you agree, and if you agree, do you think of anyone’s name? I will ask readers the same. . .

Recommended reading

• The narrative story of “The New Yorker” The revival of Native American languages ??in Penobscot It is one of the best forms I have read in years. It is not only a wonderful yarn, but also involves key intellectual property issues.

• The New York Times has a good summary of the state of mind regarding cryptocurrency regulation and how the Fintech industry is Increase lobbying around the issue.

• Ed, I like you right The geopolitics of vaccines.

• Finally, I will read my friend Zachary Karabell’s new book on the history of Brown Brothers Harriman, Comment here Written by my colleague Robert Armstrong in the Financial Times.

Gideon Rahman responded

Hi Rana, I am glad that my column makes you think. As you said, “industrial policy” can mean many different things. Broadly speaking, I mean that the country, not the market, is “picking winners.” They either favor the industrial sector, or a particular company, or both. Industrial policy is also closely related to protectionism and state subsidies.

I think that your attitude towards these ideas will usually be deeply imprinted when you grow up, including formative experiences and all of them. This is an indirect statement, I think I am much older than you. (I’m 58 years old this year, and you’re in your 20s, right?) Those who grew up in the UK in the 1960s and 1970s strongly opposed the idea that the government was good at selecting winners, promoting innovation or developing industries. The tragic story of British Leyland (automotive), International Computer Co., Ltd. and the British government’s industrial restructuring company laid the foundation for Thatcherism and privatization.

I think the UK’s experience in industrial policy is not terrible. In my column, I quoted the views of Indian economist Swaminathan Aiyar, who feared that the country would return to the failed state intervention policies of the 1970s, as Aiyar pointed out That way, it was a “terrible failure.” After the country began to withdraw from the economy, the Indian technology industry emerged-its success was driven by the private sector.

You cited China as a model of successful state intervention. I have a different view. Deng Xiaoping’s economic revolution was based on encouraging private sector and foreign investment. Indeed, China retains a large state-owned sector. But this is usually the least efficient and most productive part of the economy.

Of course, I am not saying that the state has no role in guiding the economy. If the adoption of specific technologies is encouraged for overwhelming environmental reasons, the state can do this through regulation and taxation. But once we enter state subsidies or state-owned enterprises, I feel nervous. By then, the arrogance of politicians and (usually) their own economic interests come into play. The results may be ugly.

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