This time isn't different, of course it isn't

So, government lashing the cash out to favoured businesses seems not to work very well:

‘A naive and stupid idea’: how Rishi Sunak’s Future Fund spent millions on failed firms

The then chancellor’s loan scheme, set up as Covid hit, was supposed to keep dynamic startups going, but ended up giving taxpayer cash to long-established or lame-duck businesses

This does surprise everyone, doesn’t it?

Which is to be somewhat unkind of course. But perhaps also realistic. This was something devised on the fly, in an emergency. Government closed down the economy, government might want to do something about that. But the real reason it didn’t work well is described here:

In May 2020, shortly after the fund was created, the BBB chief executive, Keith Morgan, wrote a “reservation notice” to ministers warning of concerns that the scheme would only attract “second tier” companies that could not attract investment from elsewhere

Getting government money comes with significant costs. So, those who can gain their necessary investment elsewhere tend to do so. The people who apply to the government schemes are those that can’t gain that necessary investment elsewhere. Precisely and exactly because submitting to politics means submitting to politics only the second-raters submit to politics for their money.

Board meeting minutes, leaked last year, revealed that the BBB’s non-executive director Dharmash Mistry warned that the fund risked creating “zombie businesses” kept alive artificially by taxpayers’ cash. New data obtained by the Observer suggests that he was right to be concerned.

Quite so. And given the constraints on handing out government - taxpayers’ - money this puts the kibosh on that whole idea of the subsidised industrial policy. By definition it will be the second rate - the not very good mousetrap - that gains the government support. The better mousetrap already has the world’s chequebooks lined up outside its door.

There is also no way out of this conundrum. We all agree that capitalists are greedy so they’re going to rush into financing the things most likely to do well. It’s simply inevitable that any political financing scheme will be financing the dross that doesn’t cut it on purely commercial terms. It’s not even that government picks losers so wondrously well - it’s that government will only get the losers to pick from.

It’s not going to work so we should stop trying to do it.