The late Ronald Reagan once famously quipped: “The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help.”

Will the time ever be right for Biden and Xi to sit down together?

Milton Friedman and his legions of neoliberal economic followers, including Reagan and his best pal Margaret Thatcher, thought anything the government touched caused inefficiencies or worse.

If by industrial policy, we mean concerted government efforts to promote specific industries identified as being critical to national security and/or economic competitiveness, then practically every country in its early developing phase or during post-war recovery has pursued it one way or another.

As Korean economist Chang Ha-joon has pointed out, after the second world war, Germany, Sweden, France, Finland, Austria, Norway, Italy, Japan, Taiwan, and Korea, among others, had all pursued their own versions of industrial policy. Interestingly, Hong Kong’s post-war economic take-off as a British colony might have been a rare exception that proves the rule; Friedman might not have been entirely wrong by citing the city as the perfect example of free enterprise.

Then, of course, came China; and the rest is history. But this history leaves out the United States, and Britain. Many Americans are sold on the idea of the magic of private enterprise and the free-spirited entrepreneur. They don’t know their own economic history. In fact, several American founding fathers were proponents of industrial policy.

Alexander Hamilton’s Report on the Subject of Manufactures to the US Congress has been credited as the first American tract on industrial policy. He might have invented the term “infant industries”, which need government protection against foreign competition. However, Chang has credited Daniel Defoe’s A Plan of the English Commerce as the first Western statement on industrial policy, even though the Tudors were already practising trade protectionism while shielding domestic wool manufacturing from Dutch competition.

While Hamilton’s ideas focused on protecting particular industries and promoting what we today call national champions, Benjamin Franklin, himself a scientist, advocated public promotion and funding for research and infrastructure building. James Madison argued for the use of antitrust and industrial regulations, a theme that was followed during the “Progressive Era” by Theodore Roosevelt.

Abraham Lincoln was a big believer in high tariffs, infant industry protection and heavy government spending on infrastructure such as building canals. Throughout the 19th century and up to the Great Depression, as the US became the world’s pre-eminent power, its tariffs were among the world’s highest.

Franklin D. Roosevelt’s New Deal and the World War II national mobilisation were the ultimate industrial policy that also achieved full employment.

In recent decades, though, Reaganomics, neoliberal economic orthodoxy and its anti-Keynesianism, free-trade globalisation and Wall Street deregulation all conspired to deny or at least underplay this crucial part of America’s economic history.

But there is no denying that the Cold War was a great motivator of America’s industrial policy. Dwight Eisenhower’s feared “military industrial complex” was industrial policy par excellence. Where would Lockheed Martin, Boeing, Northrop Grumman, Raytheon and General Dynamics be without the US government and especially the defence department?

The Pentagon’s Defence Advanced Research Projects Agency is credited with inventing the first version of the internet and the Global Positioning System (GPS), not private enterprise. The need for massive computing powers under the Cold War’s space programme helped create the semiconductor industry.

Seen in this light, President Xi Jinping’s “Made in China 2025” – which aims at rapidly expanding its hi-tech sectors, and developing an advanced manufacturing base and high-end supply chains – sounds less Chinese and almost American.

What an irony that in competing against Xi’s China, his critics think Biden is becoming like the Chinese when he is just returning to good old American (economic) roots!

In the end, the Chinese aren’t real communists, and the Americans aren’t real capitalists. And maybe, just maybe, we aren’t all so different after all.