Richard Sennett, writing in FT, goes further. He wants government to infuse equity into real sector firms in order to safeguard employment in the western world. He even writes approvingly of the role of public investment in certain sectors in India:
We are entering a period of financial socialism, by which I mean that the government is buying enterprises which cannot survive in the free market – Fannie Mae and Freddie Mac, the $700bn credit bailout in the US, Northern Rock and Bradford and Bingley in the UK. Most observers look at such financial socialism as an emergency measure – and a bad thing. To me it is a good thing; indeed, public ownership needs to be extended from the financial sector to the manufacturing and service sectors.The reason for this is that Europe and the US have many industries and service businesses which cannot survive in the global economy....
Regulation, of the kind the financial sector is now experiencing, is largely irrelevant to expanding the number of jobs. The point is not to restrain risky action, but to encourage investment and innovation. That agenda requires money, more money than can be justified by the austere calculus of the market. This extra cash is where public investment comes in.
If this seems too much to swallow, consider India. Much of its construction, information technology and healthcare sectors have been – on a western calculus – over-staffed and inefficient, supported by government grants. Public investment has, however, developed these industries and as they have grown the need for government aid has declined.