Item — HN Reader

Yes. This is called industrial policy, and there is bipartisan support for this. 2008 changed thinking on both sides of the aisle around leveraging state power to build industries.

Plenty of us Obama and Biden alums are industrial policy fans, and there is a similar cohort across the aisle.

4 comments

The issues with this are precedent/slippery slope. Today it's a small stake in a small number of companies, but empirically government initiatives almost always grow. Once entrenched, I would be willing to bet that the government will take larger and larger stakes in a bigger and bigger number of companies until this model becomes a non-trivial, potentially dominant, share of the economy. I can see myself becoming a single-issue voter to oppose that future (although given bipartisan support I'm unlikely to have any options; maybe Rand Paul).

Anything is a slippery slope if you resign to it. It's not like governments have never been willing (or forced) to privatize or reduce their roles in markets. We are exchanging ideas on a government initiative

Not anything. There are domains where precedents empirically don’t balloon and domains where they do. Federal government is nearly always the latter.

Yeah, this is how you get an oligarch system.

We desperately need a third party to displace one of these two. Having a state interest in industry is of course a great idea—telecoms, power generation, a base level of healthcare providers, pharmaceuticals, base level tech manufacturers are obvious things that should be state owned—but this just seems like an extension of the defense industry corruption (the "military industrial complex") that's plagued our country for many decades. Why am I paying to protect myself from china? Who will protect me from this one?

Exactly, few would oppose a stake in rare earths mining or something, but the more likely endgame of this is a government stake in companies like Google and Palantir. Which will inevitably lead to even more influence and “special access” privileges.

Edit: others have pointed out that the government likely already had investments in most of these tech firms through In-Q-Tel, which is also a potential issue, but that’s funding for small growing companies. It’s another matter entirely when government owns a percentage of our mature technology infrastructure.

I'm against the government having stake in any private company. It incentivizes the wrong behaviors. Regulations need to be written by a neutral party. Policy decisions need to be fair and balanced between the players in the market, not favoring one that they "own".

Right, it should simply compete on the open market with zero-margin public companies. A very straightforward way to incentivize efficient markets when other mechanisms fail. Not every industry and certainly not every process benefits from innovation—schumpeter, the father of the modern vc industry, was very emphatic about this.

There are many issues to have with this too, of course—the devil is in the details. If we implemented it today this process would look like paying five guys billions of dollars to pay northrup grumman slightly less to subcontract producing basic products to firms overseas anyway

I agree with you that it’s a bad idea, I just don’t think there are many in the US right now who care. And I myself have to grudgingly accept that industrial policy is probably going to happen in areas like strategic resources, even if I don’t like it. I just think it has to stop at a very low level, or you quickly end up with the government owning 25% of Blackrock in order to prop up the market.

Do I think we have that kind of restraint? No. It’s probably going to end up this way. Our future is all the bad parts of China without any of the good.

I'd be curious as to how much the executives at these firms earn (whether it be through salary or equity or whatever else).

In most cases, same as an L6/7/8 SWE at Google MTV but at the upper rungs closer to L8/9/10 EM ar Google MTV. Use levels.fyi to look at the Google payscale.

Heck, I earn less as a VC today than if I remained a SWE or PM in my niche but with more stress and worse working hours.

Edit: Why the downvotes? Do y'all actually even know PE/VC and leadership salary scales?!?

I think many don’t so why not just say the numbers.

As long as we're socializing the gains just the same as we're socializing the losses (through taxpayer-funded bailouts), I have no problem.

That's unfortunately not been the reality through Obama, Trump and Biden policies.