Charity to one part of the private sector, paid for by all the other parts of the private sector.

Or more realistically, charity to one part of the private sector paid for by all of our great grandchildren.

Charity is when you get nothing in return. This is called industrial policy and this country was a lot better off when it had one.

That's a bold claim. Coming out of WWII the US had virtually the only operational factories in the world. Arguably protectionism caused incumbents to become moribund and fall behind foreign firms. The steel industry is a great example. By the time tariffs came down US steel plants were half a century out of date and producing steel that was either too expensive or too low in quality compared to competition. For another angle on just steel, the Chinese industrial policy caused such a glut of steel that they were frantically searching for things to do with all of it, and ended up doing a bunch of stupid and wasteful projects that diverted funds from more useful endeavors.

The US also protected furniture and garment production into the 90s. Had that not been the case, the transition int hat industry likely would have been much smoother and no so apocalyptic for workers.

Underlying your claim is the notion that technocrats can or could ever know what an economy as large and complicated as the US "should" be producing.

Underlying your perspective is the idea that economic activity is only about growth or efficiency or "winning". Governments have very different interests, such as maintaining social order, protecting vital industries and spurring innovation. A government doesn't care if their industrial policy is sub-optimal from a growth-uber-alles perceptive. Only a tiny sliver of libertarian-types think that way and those people rarely if ever hold significant political power.

So my point is that protectionism undermines things like innovation by creating protected industries that don’t need to be innovative.

Maintaining order is an odd goal for an economic policy no? But on that note, France is probably the most protectionist among developed western nations. Yet they have created a situation where a third of young people can’t find work and social cohesion is unraveling.

I didn't say governments were always good at it. But every one of the East Asian tigers owes its first-world status to aggressive industrial policy. And despite France's issue with unemployment and immigration, you'd still rather be born there than almost any other nation on the planet. And I'd add, NASA is industrial policy. ARPA is industrial policy. University funding is industrial policy. Government-directed investment is responsible for a significant chunk of technological development since the dawn of... industrial policy.

I would argue that both China and Vietnam owe most to their success to market reforms and not to particular industrial policies. Prior to Deng, China couldn't even produce enough food, and they had industrial policy for years(every 5 in fact). South Korea is a US satrap that has been showered with development dollars since the 1950s, and even still the economy took off after liberalization and a turn to democracy. Moreover SK's cozy connection between state an industry spawns endless scandal, is eroding trust in the state, has create a perverse system of cram schools and test taking to get onto corporate ladders that is absolutely crushing young people there, and a number of other social and political problems. Japan has also seen its industrial policy turn to shit. The bending to Toyota's quixotic dream of hydrogen cars has hobbled the whole auto industry there and has stalled the roll out of any charging infrastructure for EV. They were well positioned due to a history in auto engineering and electronics to have become an EV powerhouse and a leader in battery tech, but industrial policy fucked that up, because policy makers were convinced that Toyota the national hero knew better.

The 5th Republic has been teetering on the edge of collapse for the last few. years, so I wouldn't be so bullish on France.

BY ARPA I'm not sure if you're referring to the Advanced Research Projects Agency or the American Rescue Plan which is now stupidly called ARPA sometimes.

Um yeah, NASA was pretty cool back in the day when they were shooting V2s at the moon. But later efforts like the shuttle were kind of boondoggles because it was tethered to goofy military spying stuff, so it ended up being shitty for science and a dead end for anything commercial. That's not really a great success story for industrial policy IMHO.

Prior to Deng, they were operating under a command economy, which is not what we are discussing.

"The 5th Republic has been teetering on the edge of collapse for the last few. years, so I wouldn't be so bullish on France."

OK, I don't think we're going to see eye to eye on anything if you hold those kind of hyper-cynical views.

This is the first time I've seen a non-politically motivated accusation that cutting off money had anything at all to do with their failure.

The tech reason was that they had a way to make thin film panels which was super promising for driving down costs due to a silicon shortage. But then Diamond based silicon tech emerged, eliminating the silicon shortage and reducing input materials, which outcompeted thin film on price.

Such is the way of innovation. Looking only at subsidies gives you a false picture.

Of course. But maybe the government shouldn’t be picking winners and losers, and gambling with my tax dollars.

Silicon Valley was built on government investment.

Wasn't solyndra given a loan that requires repayment? Government funded grants, loans and research are reasonable for developing damn near all of our fundamental tech. The internet has it's origins as ARPANET to connect universities/military installations.

The government wasn't picking winners and losers, anymore than VCs or banks pick winners and losers. It was loans for well proven tech development, and has a fantastic track record for financial success.

Certainly you can see the difference between VCs and banks deciding where to invest, and the government which allocates tax dollars?

We've subsidized things we consider strategically or economically important for, what, at least a century now?

It doesn't make sense to think of infrastructure and technological capacities as less important than agriculture anymore, when it comes to keeping some significant presence locally.