Subsidies and protection for manufacturing will harm the world economy

Politicians havegdp always been captivated by manufacturing, but rarely has their desire to make things been as zealous as it is today. In the West they are doling out enormous subsidies to manufacturers, especially chipmakers and those behind green technologies, such as batteries. They say they are fighting climate change, enhancing national security and correcting for four decades of globalisation during which workers suffered and growth slowed. In the emerging world, governments hope that subsidies can secure a foothold in supply chains as worried Westerners move production out of China.The sums being spent are vast, and growing. Since they were signed into law, the estimated ten-year cost of America’s green subsidies has risen by at least two-thirds, and is likely to pass $1trn. The Biden administration has also expanded the eligibility for chipmaking subsidies. In June Germany increased its handout to Intel to build a chip plant, from €6.8bn ($7.6bn) to €9.9bn. India’s central government is subsidising a Micron factory in Gujarat to “assemble and test” chips, spending an amount equal to a quarter of its annual budget for higher education. Eventually, Britain’s opposition Labour Party wants to lavish £28bn ($36bn) a year on green handouts which, as a share of , would be nearly ten times more than America’s.