You're not wrong, but you are mostly arguing against an exaggerated version of w...

panick21_ · 2026-10-19T09:55:27

> Industrial policy should be measured by how industry delivers for the goals of the population

Yes, that's my position. None of those things are directly dependent on domestic manufacturing.

> Shrewd investments make productivity, and the public is generally incentivised to make these investments unlike owners

The history of British industry would point to the opposite. But there are counterexamples as well. In general, a government-owned industry faces much less pressure to make difficult choices because it can continue running losses for a long time. If, for example, an industry is not competitive, cutting wages might be the only way it survives to fight another day, but politically this is often impossible, creating a permanent structural deficit.

Meanwhile, many private owners do make smart decisions, and these often preserve at least some significant employment in the country of origin.

And making "shrewd investments" with the long term in mind doesn't really go well with a political system focused on election cycles, the media, and parties trying to undo each other's successes or failures.

British public industries demonstrated exactly these patterns. They were often structurally underdeveloped, leading to low labour productivity. That is not something you can fix with limited protectionism.

> who can simply move the money to low-cost countries

For many industries, there isn't a simple investment you can make to reduce labour costs sufficiently. If you want to preserve some of those industries, you will need to subsidise their higher labour costs through taxes, tariffs, or higher consumer prices. That hurts the competitiveness of your other industries.

If you have the right tax regime and a company headquartered in your country, moving some production abroad isn't necessarily a bad outcome. If that keeps the company internationally competitive while retaining valuable functions domestically, it can be a perfectly reasonable arrangement.

> Of course, the devil is in the detail, and this may be a sound decision (e.g. if you had other more critical industries in need of capital). But since these decisions are made by private owners, and not by the public, such cases are exceedingly rare.

"The public" doesn't make these decisions. Bureaucrats or politicians do. And those decisions are only indirectly influenced by elections every few years, with many layers of indirection.

It's almost impossible to express differentiated views. For example, I might want airlines to be private, the steel industry to be private, but telecommunications to remain public. It's unlikely that any political party will represent exactly those preferences.

I'm Swiss, so we get to vote on many more things than people do in the UK, especially individual policies. But even so, that's a tiny fraction of all the choices a government makes.

If you assume a much larger public sector, actual democratic control can become even weaker.

Politicians are often poorly informed about the details. The UK is a good example, where parliamentarians regularly get appointed to ministerial positions in fields in which they have little experience.

Politicians also prefer to argue over headline-grabbing industries and are more likely to advocate whatever is popular in the short term than to work out what's best for each individual manufacturing business.

Alternatively, decisions are made by bureaucrats, over whom the public often has very little direct influence because of the many layers of indirection. Singapore developed a powerful technocratic bureaucracy that performed extremely well in many areas. Its senior civil servants had considerable internal authority.

But such structures can also fail badly and become deeply undemocratic. It's a sword without a hilt in many ways.

> Limited strategic protectionism

You're picking out a few limited examples while ignoring the broader trends of economic liberalisation in these countries. And you're pointing mainly to arguable successes while ignoring failures.

Norway, for example, tried to protect and develop its domestic electronics industry, but much of that industry ultimately failed to remain competitive internationally.

The UK also maintained substantial protectionism and industrial subsidies, even under Thatcher. British Leyland is an obvious example. The company continued receiving extensive government support throughout the 1980s. Britain also maintained restrictions on Japanese car imports.

Often, governments privatised companies only after absorbing their losses or providing further subsidies, undermining some of the supposed fiscal benefits of privatisation.

The US poured enormous amounts of money into its aerospace and computing industries through military spending and government-funded research. It also maintained extensive protectionism in sectors such as shipping and agriculture.

The US also had a major trade conflict with Japan over semiconductors, leading to measures such as the 1986 US-Japan Semiconductor Agreement and government support for SEMATECH.

But military R&D, strategic procurement, tariffs, and subsidies for declining industries are very different policies. Some were highly successful, while others imposed substantial costs without producing internationally competitive industries.

The point is that protectionism and government intervention were hardly absent from these countries. The question is what those interventions actually achieved, at what cost, and whether the same resources could have been invested more productively elsewhere.

> If not from industry, then where does the Wealth of Nations come? If banking and finance service only foreign industry

You are aware that there are other services besides finance?

But yes, finance is part of it, and it's a great business if you can get it. It provides high-paying jobs, is relatively clean, and requires comparatively little physical infrastructure. And established financial centres can maintain their positions for centuries.

You can use that wealth well, as Switzerland has done in many respects, or you can concentrate financial activity in one city and allow much of the resulting wealth to be captured by landlords.

There is also agriculture. Look at the Netherlands, which developed a highly competitive agricultural sector despite having historically faced many of the same geographical and economic constraints as Britain.

There is also mining and resource extraction, which can be managed well or badly. Britain did a lot to keep its coal sector thriving, a questionable long term choice.

Software is generally classified under services too. Along with other kinds of design and art.

> No it doesn't, but I hope that it at least has led you to consider the possibility.

The Netherlands, for example, has a manufacturing share of GDP only moderately higher than Britain's, nowhere near enough by itself to explain the difference in living standards.

Let's create a counterexample. Assume that all of Britain's industrial policies and its manufacturing trajectory remained exactly the same, but that Britain had instead:

- Invested in railway infrastructure like Switzerland (even assuming private operation), and generally spent public money more efficiently rather than having some of the world's highest infrastructure construction costs.

- Invested in cycling infrastructure like the Netherlands (which is relatively inexpensive compared with major road and rail projects).

- Invested in nuclear power, electrification, and better insulation like France, instead of following its actual energy policies.

- Adopted a land value tax to combat landlordism rather than relying on Stamp Duty, and generally developed a sensible tax system instead of one still burdened by 19th-century structures.

- Introduced proper devolution so that local areas could address their own problems arising from deindustrialisation and invest in local infrastructure.

- Avoided creating a planning system that makes construction extraordinarily difficult, while subsequently reducing public housing provision without adequately addressing the restrictions on private construction. This includes problems with green belts and other housing policies.

- While we're at it, adopted better zoning laws like Japan.

- Developed a better-organised welfare state, like Denmark.

- Adopted a better pension system, like the Netherlands.

- Given the NHS a stronger focus on preventative care, alongside government policies promoting healthy food and healthier lifestyles in general. There are many things the NHS doesn't do particularly well. Sweden spends a broadly comparable share of GDP on healthcare but achieves better outcomes on several important measures.

- Adopted a voting system that better represents what people actually want, rather than one that overwhelmingly favours two major parties.

- Avoided creating such an extensive surveillance and policing apparatus.

- Dealt with inflation more effectively and earlier.

- Developed a better apprenticeship-based vocational education system, like Germany or Switzerland.

- And, as a fun bonus, not followed the US into the invasion of Iraq.

All these things could have been done even if you assume exactly the same trajectory for manufacturing.

I deliberately picked mostly real policies from other countries to illustrate where Britain could have made different choices.

Taken together, these changes could plausibly have brought British living standards much closer to those of the more prosperous European countries.

You're overly focused on manufacturing. Most of these problems are not directly related to manufacturing.