Industrial policy is a term that means different things to different people. To some it is about giving tax breaks in a race to the bottom game of international "beggar-thy-neighbor" tax competition, while to others it is about investing in the development of skills and infrastructure to complement/partner private sector investment. I am not in favor of the first interpretation as it is irresponsible at a global level and will ultimately be self defeating. Support for subsidizing training and providing public investment depends on whether you think there are externalities associated with skill accumulation and public infrastructure. I believe that there are very strong externalities associated with these investments and so support such an industrial strategy.

The control of the amount of credit in the economy and the control of the banking sector more generally is intrinsically political. Central bank independence only makes sense within a mindset of a stable balanced economy where the only implication of too lax a credit policy is inflation. This mindset was never grounded in reality but recent events have shown just how wide of the mark this vision of the macroeconomy is. It is not just risk and financial crises that is missing. Major banks are global enterprises that are engaged in regulatory arbitrage, in channeling billions of dollars around the world in tax avoidance schemes - (Zucman, Piketty ) - thereby significantly weakening state capacity, and in funding political campaigns in favor of reduced regulation. The idea that control of this sector should be removed from government and thus ultimately from accountability to those that the system is supposed to work for (the general public) is economically ludicrous…..and politically terrifying. The economics literature on the independence of central banks has been about eliminating political influence on central banks. However, a more relevant independence is that between the regulators and the regulated. As an economist one of the most worrying aspects of the recent financial crises has been the seemingly great desire amongst policy makers and regulators to insure ex post those who made bad investments. If the market's incentive mechanisms are to work then those who lend to people or companies or governments who have little chance of paying the money back, must lose money. To understand the ease with which an ex-post insurance policy was implemented, it is surely not coincidental that many politicians, regulators and central bankers are ex-bankers and vice versa. For credible independence, working for a regulator or as a responsible politician should preclude one from ever working in the sector that you regulate or govern. Career paths must be uni-directional (no movement from regulator to regulated) if not entirely separate.