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Comment by hunglee2 | Hacker News Reader

Premature doom-ism from the Economist here, but perhaps not surprising seeing that they are historically a magazine for the capitalist class.

US state intervention into the free market - a.k.a 'Bidenomics' - is in its early stages and will require multi-decadal commitment to seed and train an entire generation of skilled workers in the new / old manufacturing industries. Redirecting excess capital from the services to as-yet unprofitable de facto state enterprises will only bear fruit when those enterprises start producing products which become competitive in the global market. The timeline is measured in decades, US can see it through, though will need an 'economic deep state' to see the policies through the oscillations of the democratic political system

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It’s quite unlikely for the state enterprises to prove profitable, because political motivations will supersede profits when handling managerial decisions.

that's true, but you can expose SOE's to national free market, then global free market to weed out those who fail. State intervention needs to be seen as a temporary step to (re)build an industry, once it is strong enough, you can set it free.

It is just another excuse to print more money. What Biden is doing now, is just "lets print a few trillions and buy some solar panels in China!".

For mass reindustralization, you need reforms and technically skilled people. For example you will need way more oil and cheap energy. You also must stop shitting on imaginary "white men", and offer them free industrial-tech education. Army did that quite a lot, but that avenue is closed now.

Biden is definitely printing money, but to be fair that is what the US has been doing for the past several decades. What is different with Bidenomics is the allocation of that money - the attempt at least is being made to convert excess capital into productive economy. Will surely be massive wastage though - probably up to 90%. Point is though, some SOE's might succeed, particularly if they are early to emergent economic niches. One legit criticism of Biden policy is that it is playing catch up rather than looking around the corner

> Will surely be massive wastage though - probably up to 90%..... One legit criticism

Would you agree that huge wastage (up to 90%) is a reason for legit criticism?

As long as that money enter the primary market first and is not directly injected in the secondary like it used to since 2008 (the 'real economy' and not the 'speculative economy' if you will), it isn't a real issue if most of it is 'wasted' (90% is a bit high, but it depends what your view of 'waste' is).

I don't know the US, but in France the government overhead cost for Healthcare is 20% (for every 100€ collected for public healthcare, 80€ is paid to doctors/hospitals/medecine/nurses/PT, 20€ is paid to operations/public servants), and social security is sightly more effective, with 13 to 18% overhead (but it isn't really government, it's weird). A federal government will necessarily be less effective (as you probably have more layers), so I guess for the US I would expect something like 30% overhead?

Still 90% wastage seems high.

the way think about this is that the state is acting as a mega scale VC, with similar hit rate. Needs 1 out of 100 to make it. Wastage is simply part of this investment game, what needs to happen at end point is the creation of national champions and national industry. That is the Biden promise and if he delivers it, it will be worth it. For what its worth, I think 'he' will fail because this is a multi-decadal commitment, which the political system in the US will be unable to see through

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