Savior or snake oil?: The brave "new" old world of industrial policy

Research evidence excerpt

Savior or snake oil?: The brave "new" old world of industrial policy

Jahangir Aziz AC (1-212) 834-4328 Steven Palacio (1-212) 834-5031 Industry & Policy Thematics J P M O R G A N

jahangir.x.aziz@jpmorgan.com steven.palacio@jpmorgan.com Savior or snake oil?

J.P. Morgan Securities LLC 09 July 2026

Alexander Wise (1-212) 622-6205

alexander.c.wise@jpmchase.com

To IP or not to IP

We’ve been here before

In 1791, the then-Treasury secretary Alexander Hamilton delivered to Congress his

Report on the Subject of Manufactures. In the report, he warned that an economy overly

dependent on farming and commodity exports would struggle to sustain long-run

growth. What the U.S. needed was not simply more production, but a different kind of

production: manufacturing that would widen opportunity and raise output through

specialization, skill formation, and technological advancement. He never used the

phrase “industrial policy,” yet the toolkit he outlined remains strikingly recognizable—

protective tariffs; direct financial support for selected activities; a national development

bank; tax and duty relief on critical inputs; policies to speed the diffusion of know-how,

including patents; incentives to attract skilled immigrants; and an emphasis on

infrastructure that would lower transportation costs and expand markets. Just as

important as the instruments was the framing: Hamilton presented state intervention not

as an ideological repudiation of markets, but as a pragmatic way to build national

capacity in peacetime so the country would not be strategically exposed in a crisis.

Congress did not act on Hamilton’s program, blocked by agricultural and Southern

interests led by Jefferson and Madison. But the defeat of the report did not end the

underlying logic.