> Subsidy is saying: you know you can only compete with China if you pay $5 an hour, so pay $10 and we will pay the rest because having a steel manufacturing industry is important to the government
I'm not saying it can't be done. I'm saying everyone who has tried something like this wound up with a sclerotic industry. At a certain point, you wind up with the subsidy grantor deciding who can and cannot participate in the industry. Those already in don't want competition. The rest follows quite simply. (Moreover, your export market gets constrained because foreign countries will overcorrect undoing your subsidy with tariffs.)
We do this sort of thing in America. It's why we have booming shipbuilding and steelmaking industries.
I'm not saying it can't be done. I'm saying everyone who has tried something like this wound up with a sclerotic industry. At a certain point, you wind up with the subsidy grantor deciding who can and cannot participate in the industry. Those already in don't want competition. The rest follows quite simply. (Moreover, your export market gets constrained because foreign countries will overcorrect undoing your subsidy with tariffs.)
We do this sort of thing in America. It's why we have booming shipbuilding and steelmaking industries.