Brussels is celebrating the "return" of industrial policy like a man cheering for a rainstorm in a leaking boat. The prevailing narrative—spread by bureaucrats and echoed by the competitor's piece—suggests that the European Union is finally waking up to the realities of global competition by throwing billions at chips, batteries, and green tech.
They call it "strategic autonomy." I call it a slow-motion suicide pact for European competitiveness.
The consensus view is that Europe must copy the United States' Inflation Reduction Act or China’s state-led capitalism to survive. This logic is fundamentally broken. By trying to beat Washington and Beijing at their own game, Europe is abandoning its only real advantage: the ability to build lean, efficient, and market-driven giants. Instead, we are creating a continent of "subsidy junkies" that cannot breathe without a government respirator.
The Myth of the Level Playing Field
Everyone asks, "How do we compete with China’s subsidies?" That is the wrong question. The right question is: "Why would we want to replicate a system that creates massive overcapacity and zombie companies?"
The European Chips Act and the Green Deal Industrial Plan are built on the premise that capital is the primary bottleneck. It isn't. If money alone built world-class tech hubs, Saudi Arabia would be the global leader in AI, and Japan’s "Lost Decades" would never have happened.
The real bottleneck is regulatory friction.
Europe spends €43 billion on the Chips Act while simultaneously strangling the tech sector with the AI Act, the GDPR, and a fragmented digital market. We are giving companies a small bag of gold while shackling their legs. Intel and TSMC aren't coming to Germany because of "innovation synergy." They are coming because the German taxpayer is footed a massive portion of their bill. The moment those subsidies dry up, those factories become legacy liabilities.
Picking Winners is Just Selecting Losers
Governments are historically terrible at picking winners. They are, however, excellent at picking losers who are good at lobbying.
When the EU "targets" specific sectors—like hydrogen or battery cells—it creates a monoculture. It forces private venture capital to follow the "dumb money" provided by the state. I have watched founders pivot their entire business models not to solve a market problem, but to fit the specific criteria of a European Innovation Council (EIC) grant.
This is how you get companies that are world-class at filling out paperwork but mediocre at shipping products.
Imagine a scenario where the EU stopped trying to build a "European Google" and instead focused on the structural reasons why a European Google cannot exist. In the US, a startup can scale to 330 million consumers with one set of rules. In Europe, that same startup hits a wall of 27 different tax codes, employment laws, and language barriers the moment it crosses a border.
Subsidies are a cosmetic fix for a structural rot.
The Tragedy of the "Green" Requirement
The competitor article argues that industrial policy is the only way to hit Net Zero. This is a dangerous conflation of environmental goals and economic growth.
By tying industrial aid to strict "green" checkboxes, Europe is forcing its industries to compete with one hand tied behind their backs. While the US uses the IRA to basically hand out cash for anything that looks green, the EU's bureaucracy ensures that every euro comes with a thousand pages of ESG reporting requirements.
We are making it more expensive to build things in Europe under the guise of making them better. The result? Carbon leakage. We aren't saving the planet; we are just exporting our industrial base to India and Vietnam, then patting ourselves on the back for our declining domestic emissions.
The False Security of Local Supply Chains
The push for "reshoring" is the ultimate populist sedative. The idea that Europe is safer if every microchip is made in Dresden is a fantasy.
Modern supply chains are too complex for total independence. Even if you manufacture the wafer in Germany, you are still dependent on chemicals from Japan, machines from the Netherlands, and raw materials from South America or China.
Strategic autonomy shouldn't mean "making everything here." It should mean being so essential to the global value chain that nobody dares cut you off. ASML in the Netherlands is the perfect example. They don't need a subsidy to survive. They are the "choke point" of the entire semiconductor industry because they built a product that is impossible to replicate.
Europe needs more "choke point" companies, not more subsidized assembly lines for tech that was invented elsewhere.
What Real Industrial Policy Should Look Like
Stop writing checks to multi-billion dollar corporations. It is a transfer of wealth from taxpayers to shareholders. If Europe wants to lead, it needs to get out of the way.
- Kill the Fragmented Market: A true Single Market in services and digital goods would do more for European industry than a trillion euros in subsidies.
- Labor Reform: It is currently easier to get divorced in most European countries than it is to lay off an underperforming employee in a tech startup. High-growth industries require liquidity in the labor market.
- Energy Prices, Not Energy Grants: Industry follows cheap power. If Europe wants to keep its steel and chemical plants, it needs to solve the energy cost crisis through nuclear and radical deregulation of the grid, not by giving companies "transition checks" to pay their inflated electricity bills.
The current path is a race to the bottom. We are burning our fiscal house down to keep the lights on for a few legacy manufacturers.
If we don't stop treating industrial policy as a glorified welfare program for CEOs, Europe will end up as a picturesque museum—beautiful to visit, but irrelevant to the future of the global economy.
Put the checkbook away. Open the markets. Let the weak companies fail so the strong ones can finally have some room to grow.
