Common knowledge, well-stated! (I know, common knowledge has in our time become a scarce resource).
This leads to a general policy that I wish a political party would adopt in a strict fashion. Namely: use industrial policy, but don't employ it to "pick future winners", because that leads to the stupidity of investing billions in Hydrogen and whatnot.
Instead, use industrial policy exclusively to level the playing field. If we have pretty clear evidence that Wisconsin is investing 2 bn in flooding the global market with cottage cheese, then offer grants to whoever is producing the damn stuff in Europe.
Very much agreed. If you want to know how to do industrial policy properly, just look at Japan, South Korea or Taiwan after 1950. They all managed to become high-tech powerhouses through the extensive use of industrial policy without the government 'picking winners'. The winners emerged naturally as all companies were allowed to compete with each other. That Samsung, TSMC, etc. emerged as winners was not pre-ordained, which is why some people call Asian style industrial policy "socialism, but it works".
I think if you add defense spending the picture would change quite a bit, and I guess that is how the US ist actually supporting its industrial giants already today...
Yes and no. Yes, the US is already spending a ton of money on defence and thus provides support to GE, Lockheed, etc. But China's subsidies in the defense area are about as high as they are in the US as a share of GDP, so if anything, the defense area is one where the US and China are competing on a level playing field.
Finally a non-biased view. Some Chinese companies are damn good at what they do. And China does not pick winners. It usually takes 2-3 years in which a massive amount of companies pops up in one supported industry. Then about the same amount of time for the weak ones to die, and the government doesn’t throw money after them.
Common knowledge, well-stated! (I know, common knowledge has in our time become a scarce resource).
This leads to a general policy that I wish a political party would adopt in a strict fashion. Namely: use industrial policy, but don't employ it to "pick future winners", because that leads to the stupidity of investing billions in Hydrogen and whatnot.
Instead, use industrial policy exclusively to level the playing field. If we have pretty clear evidence that Wisconsin is investing 2 bn in flooding the global market with cottage cheese, then offer grants to whoever is producing the damn stuff in Europe.
Very much agreed. If you want to know how to do industrial policy properly, just look at Japan, South Korea or Taiwan after 1950. They all managed to become high-tech powerhouses through the extensive use of industrial policy without the government 'picking winners'. The winners emerged naturally as all companies were allowed to compete with each other. That Samsung, TSMC, etc. emerged as winners was not pre-ordained, which is why some people call Asian style industrial policy "socialism, but it works".
I think if you add defense spending the picture would change quite a bit, and I guess that is how the US ist actually supporting its industrial giants already today...
Yes and no. Yes, the US is already spending a ton of money on defence and thus provides support to GE, Lockheed, etc. But China's subsidies in the defense area are about as high as they are in the US as a share of GDP, so if anything, the defense area is one where the US and China are competing on a level playing field.
Interesting. What brand of Chinese EV do you like?
I drive a Polestar and am so happy with it, I even wrote a post about it: https://klementoninvesting.substack.com/p/the-beauty-of-simplicity
Finally a non-biased view. Some Chinese companies are damn good at what they do. And China does not pick winners. It usually takes 2-3 years in which a massive amount of companies pops up in one supported industry. Then about the same amount of time for the weak ones to die, and the government doesn’t throw money after them.