When governments fund decades-long loss-making ventures that expand the economy’s production capabilities, we call it industrial policy. When a billionaire does it, we say it is markets at work.
It is the social decision to tolerate losses today in order to build capabilities tomorrow.
Whether the loss-bearer is NASA, Tesla, SpaceX, or the state, advanced production requires someone to fund uncertainty before markets know what to price.
Mate my honest assessment, I’ve noticed you make this argument in slightly different format before, and it’s an area that I would challenge as someone whose idea of property rights does NOT stem from the concept that just because government maintains the property rights system, that it has license to extract favours. Rather we Locke types say property rights emerge from individuals without a government bestowing them upon individuals. And that individuals cede some rights to government eg the right to defend property rights with force. AND THEN individuals pay taxes for the maintenance of that property rights system given they agree with the format.
So previously I noticed you made this move: equating private actors with a government in a counterfactual world where government “replicates what a private, voluntary or contractual organisation would have done.”
On Josh Szeps show you equated a private, gated community enforcing HOA regulations over members with local government enforcing similar restrictions on property owners. Yet the key you avoid is that one is voluntary or contractual, and the other is not.
The government “investing in industrial policy” is always susceptible to the usual risks of investing - losses, low returns, much as billionaires are. Where you’ve done a similar rhetorical move in equating government investment with private investment. But for us - the key is always “who pays and how?”
Is the money obtained voluntarily - via capital markets? Or by taxation ie through democratic majority force?
So we reject the equation of the two as slippery and not equivalent.
Moving to a city with certain by-laws that you can now vote to amend is just as voluntary as moving to a gated community with certain by-laws that you can now vote to amend, no?
In any case, I certainly agree that government involvement in industrial policy is risky. And I think that is the key. If we want transformational investment, SOMEONE has to take the risk and loss. Whether Elon and Jeff do it, or the public, the real economic cost is the same (i.e. all those people and materials went to a failed project instead of something else).
Countries that have transformed their economies (asian tigers, China, US in Hamilton era, WWII, and today with CHIPs ACT etc) have always taken big collective risks in transformational new investment. I guess a subtle point is that if we want such things, then someone, or some group of investors, or some collective via tax, must do it.
On that pushback - that moving into a locality with its existing by-laws or HOA rules - height restrictions, heritage etc - we get closer to the voluntary and contractual assocation arrangement. But we are still not 100% there. What about those who were already there before any new HOA restrictions were implemented? They may never have voluntarily agreed to such new restrictions, rather these can be democratically imposed on them via tyranny of the majority. In other words, the imaginary 100% voluntary gated community scenario is “opt-in.” Where we will never have 100% opt-in in the equivalent-ish local council scenario.
As for governments doing things - I worry just as much about us doing a Proton Malaysia or the enormous Snowy 2.0 blowout we’re seeing now taking place! Then we have the high voltage state interconnection projects to come that I foresee cost and timeline blowouts! 😂 So capital wasted thanks to political calculus, where losses are simply shored up with taxpayer dollars.
Just confirming Im no bot Cameron, just an ex subscriber, check your list it will have gone down one yesterday. You have the occaisonal interesting idea but no balance which is what really annoys me. Good luck and goodbye.
But what I really wanted to say is that, macroeconomically, it doesn't matter who makes the loss to make transformational change, whether Elon or the public via NASA.
Australia has a great long shot bio technology community with a huge number of firms raising patient capital on ASX. Also in tech and environmental industries. There is an R&D tax concession already a lot of these companies receive. The Government pays for fundamental research at the Universities and CSIRO. The Government doing its own venture type investments like an Australian NASA would be a recipe to lose money on a grand scale. A lot of our billionaires came from resources so I suppose it is natural the skew their investments in that direction, whereas in the U.S. technology has been the foundation for a much higher percentage of the wealth and therefor the investment.
"Australia’s billionaires, for example, are busy fighting to keep their generous tax loopholes and government-protected monopolies, innovating more in their lobbying and corruption than in production"". Another piece of generalised nonsense - not much Thinking fresh or otherwise in this sub srtack. Time to unsubscribe
What bit in that sentence is not factually correct?
what innovation came out of Australian billionaires? Some of them did innovate but well before they became billionaires and that is a crucial difference
Both the original Substack and this comment fall into the same trap: they rely on an "easy" rent-seeker trope that falls apart the moment you look in the slightest detail. The idea that innovation stops at a certain net worth ignores the fact that the most significant, high-stakes risks—the ones that actually impact the economy - require the massive scale only these individuals can deploy.
Take these few examples from the Top 10 list:
Anthony Pratt hasn't just sat on a family business; he’s spent the last decade making paper recycling profitable at a massive industrial scale - especially his recent US expansions - is a feat of logistical innovation that only happened because he reached a scale where he could take that kind of risk.
Michael Dorrell (Stonepeak) revolutionized how we build essential infrastructure. Instead of just "trading" assets, he built a firm that takes on massive engineering risks in the physical backbone of the economy—funding the subsea fiber cables and massive renewable energy platforms that the digital world actually runs on.
Melanie Perkins (Canva) is the perfect example in the tech sector. If she had stopped innovating the second she became a billionaire, Adobe would have erased her years ago. She is rewriting the rules of global design software in real-time just to stay in the game.
Gina Rinehart took Roy Hill—a project "experts" dismissed for decades as being too low-grade and logistically impossible—and solved the massive financial and engineering puzzles to make it a global powerhouse. That is production and risk-taking, not a "loophole."
Andrew Forrest (Fortescue) is currently betting the house on electrifying both his massive mining fleet and the downstream treatment processes. This isn’t lobbying; it’s high-stakes industrial R&D happening right now, funded by the very scale being dismissed here.
Rent-seekers restrict supply to jack up prices. These people have done the opposite: they've innovated to increase scale and drive down unit costs. Their capital expenditure into actual production dwarfs their lobbying budgets by a factor of a thousand.
That list being the best of Australian billionaires' “innovation” is a great confirmation that "Australia’s billionaires, for example, are busy fighting to keep their generous tax loopholes and government-protected monopolies, innovating more in their lobbying and corruption than in production"
If you think that list not a shame, look what billionaires in other companies are doing
Industrial policy is not just subsidies.
It is the social decision to tolerate losses today in order to build capabilities tomorrow.
Whether the loss-bearer is NASA, Tesla, SpaceX, or the state, advanced production requires someone to fund uncertainty before markets know what to price.
Mate my honest assessment, I’ve noticed you make this argument in slightly different format before, and it’s an area that I would challenge as someone whose idea of property rights does NOT stem from the concept that just because government maintains the property rights system, that it has license to extract favours. Rather we Locke types say property rights emerge from individuals without a government bestowing them upon individuals. And that individuals cede some rights to government eg the right to defend property rights with force. AND THEN individuals pay taxes for the maintenance of that property rights system given they agree with the format.
So previously I noticed you made this move: equating private actors with a government in a counterfactual world where government “replicates what a private, voluntary or contractual organisation would have done.”
On Josh Szeps show you equated a private, gated community enforcing HOA regulations over members with local government enforcing similar restrictions on property owners. Yet the key you avoid is that one is voluntary or contractual, and the other is not.
The government “investing in industrial policy” is always susceptible to the usual risks of investing - losses, low returns, much as billionaires are. Where you’ve done a similar rhetorical move in equating government investment with private investment. But for us - the key is always “who pays and how?”
Is the money obtained voluntarily - via capital markets? Or by taxation ie through democratic majority force?
So we reject the equation of the two as slippery and not equivalent.
Moving to a city with certain by-laws that you can now vote to amend is just as voluntary as moving to a gated community with certain by-laws that you can now vote to amend, no?
In any case, I certainly agree that government involvement in industrial policy is risky. And I think that is the key. If we want transformational investment, SOMEONE has to take the risk and loss. Whether Elon and Jeff do it, or the public, the real economic cost is the same (i.e. all those people and materials went to a failed project instead of something else).
Countries that have transformed their economies (asian tigers, China, US in Hamilton era, WWII, and today with CHIPs ACT etc) have always taken big collective risks in transformational new investment. I guess a subtle point is that if we want such things, then someone, or some group of investors, or some collective via tax, must do it.
On that pushback - that moving into a locality with its existing by-laws or HOA rules - height restrictions, heritage etc - we get closer to the voluntary and contractual assocation arrangement. But we are still not 100% there. What about those who were already there before any new HOA restrictions were implemented? They may never have voluntarily agreed to such new restrictions, rather these can be democratically imposed on them via tyranny of the majority. In other words, the imaginary 100% voluntary gated community scenario is “opt-in.” Where we will never have 100% opt-in in the equivalent-ish local council scenario.
As for governments doing things - I worry just as much about us doing a Proton Malaysia or the enormous Snowy 2.0 blowout we’re seeing now taking place! Then we have the high voltage state interconnection projects to come that I foresee cost and timeline blowouts! 😂 So capital wasted thanks to political calculus, where losses are simply shored up with taxpayer dollars.
Excellent post, Cameron! And it looks like you might have hooked a bot!
Haha! Thanks John. Yeah, possibly.
Just confirming Im no bot Cameron, just an ex subscriber, check your list it will have gone down one yesterday. You have the occaisonal interesting idea but no balance which is what really annoys me. Good luck and goodbye.
So what you're saying is that Australia should have tried harder to teraform the outback in the early 20th century?
Haha! Yeah, maybe.
But what I really wanted to say is that, macroeconomically, it doesn't matter who makes the loss to make transformational change, whether Elon or the public via NASA.
So you're saying we should be doing the inland sea proposal?
Jokes aside it would be awesome. Waay cooler than the useless high speed rail project Albanese is planning
Australia has a great long shot bio technology community with a huge number of firms raising patient capital on ASX. Also in tech and environmental industries. There is an R&D tax concession already a lot of these companies receive. The Government pays for fundamental research at the Universities and CSIRO. The Government doing its own venture type investments like an Australian NASA would be a recipe to lose money on a grand scale. A lot of our billionaires came from resources so I suppose it is natural the skew their investments in that direction, whereas in the U.S. technology has been the foundation for a much higher percentage of the wealth and therefor the investment.
Please re-read "the seen and the unseen".
"Australia’s billionaires, for example, are busy fighting to keep their generous tax loopholes and government-protected monopolies, innovating more in their lobbying and corruption than in production"". Another piece of generalised nonsense - not much Thinking fresh or otherwise in this sub srtack. Time to unsubscribe
What bit in that sentence is not factually correct?
what innovation came out of Australian billionaires? Some of them did innovate but well before they became billionaires and that is a crucial difference
Both the original Substack and this comment fall into the same trap: they rely on an "easy" rent-seeker trope that falls apart the moment you look in the slightest detail. The idea that innovation stops at a certain net worth ignores the fact that the most significant, high-stakes risks—the ones that actually impact the economy - require the massive scale only these individuals can deploy.
Take these few examples from the Top 10 list:
Anthony Pratt hasn't just sat on a family business; he’s spent the last decade making paper recycling profitable at a massive industrial scale - especially his recent US expansions - is a feat of logistical innovation that only happened because he reached a scale where he could take that kind of risk.
Michael Dorrell (Stonepeak) revolutionized how we build essential infrastructure. Instead of just "trading" assets, he built a firm that takes on massive engineering risks in the physical backbone of the economy—funding the subsea fiber cables and massive renewable energy platforms that the digital world actually runs on.
Melanie Perkins (Canva) is the perfect example in the tech sector. If she had stopped innovating the second she became a billionaire, Adobe would have erased her years ago. She is rewriting the rules of global design software in real-time just to stay in the game.
Gina Rinehart took Roy Hill—a project "experts" dismissed for decades as being too low-grade and logistically impossible—and solved the massive financial and engineering puzzles to make it a global powerhouse. That is production and risk-taking, not a "loophole."
Andrew Forrest (Fortescue) is currently betting the house on electrifying both his massive mining fleet and the downstream treatment processes. This isn’t lobbying; it’s high-stakes industrial R&D happening right now, funded by the very scale being dismissed here.
Rent-seekers restrict supply to jack up prices. These people have done the opposite: they've innovated to increase scale and drive down unit costs. Their capital expenditure into actual production dwarfs their lobbying budgets by a factor of a thousand.
That list being the best of Australian billionaires' “innovation” is a great confirmation that "Australia’s billionaires, for example, are busy fighting to keep their generous tax loopholes and government-protected monopolies, innovating more in their lobbying and corruption than in production"
If you think that list not a shame, look what billionaires in other companies are doing