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It's a pretty big logical leap. The Lada was a fully Russian made car, from the joint collaboration of the U.S.S.R.'s trade dept and Fiat. It's got a history of being cheap, and was often made fun of by Americans, but was pretty well received by it's target audience of the Eastern Bloc for being easy to repair. The company is still around, but these days their market niche is pretty well satisfied by Asian manufacturers like Hyundai and Kia, so you don't really hear about them.

To take that story and go to "All state-funded manufacturing is bad and awful" is where it becomes insane.

I'm glad you asked. The Soviet Union was famous for industrial policy. Or the government controlling what gets created and produced. It's basically the reason why we say free markets are better and that we can't use industrial policy to catch up.

The original Lada was famous for being the prime example of this. While western nations were driving highly advanced cars, the Lada was incredibly primitive. It didn't have airbags, or anti-lock breaking or any safety features. Basically they were rolling death traps. Btw, Iranian cars are basically at this state and are also created with government control. The reason is, industrial policy doesn't focus on what's good for the market, but the demands of politicians. They saw the Lada could drive and that's good enough and didn't invest more into it since there were too many other demands. This happened to basically all soviet industries causing them to fall far far behind.

But the Lada is just an example. There are many other examples like the Russian Aerospace industry, or the Japanese Aerospace industry, or India's chip fabs.

Now, that isn't to say I disagreed with the chip act initially. China's proven you can stimulate markets as long as you don't get involved in the actual production. Basically China had a big chip fund and spread it across both large and small organizations, but most importantly allowing those who couldn't compete to go bankrupt. That's why there were so many reports about over 1,000 chip companies bankrupting in China last year. But it also produced Huawei's new chip. You can't pick winners and losers, you need to let the market decide. Which I thought initially what Biden would do. I also knew 50 billion wouldn't be enough, but I thought it would be a start. Instead, we're seeing Biden pick winners and losers. This will lead to bad outcomes.

Russian Lada was a “people’s car” that (like other Soviet products) was built for internal use and protected from competition. When the Soviet Union fell and Russian car manufacturers were exposed to competition, they eventually went out of business.

The story is not that simple though. The Lada was a really popular and robust car. It lived on for a long time and exported versions to Canada and other places using Western fuel-injected engines. I have no idea what happened to the company in the end but it seems clear at least to me that it was the sudden huge change in competitive landscape that did it in, not the industrial planning.

Škoda is a similar car brand from (at the time) Yugoslavia that managed to survive the fall of the Soviet Union and is still active as a brand today.