The Olympics loom. American eyes will turn to London, hoping for Olympic gold. As they do so, it will be worth remembering that this will be London’s second post-World War II Olympic Games, not the first, and that there are also medals to be won by comparing the condition of the U.K. on the last time the Games were held in London with its condition now.

In 1948, when London hosted the first post-war games, the U.K. was still one of the global Big Three. For all the immediate rationing with which Londoners then struggled, the government there still presided over an enormous empire, still oversaw its own sterling area in which the U.K. currency remained as acceptable as gold, and still managed what in 1948 remained the free world’s second strongest major economy. In the more than six decades since, absolute living standards in London have been transformed, as they have everywhere in the advanced industrial world; but in relative terms the U.K. has definitely slipped. Per capita living standards in London are lower now than in at least 9 other EU countries.[1] U.K. productivity per hour is currently 18 percent lower than in Germany and 16 percent lower than in France.[2] An empire that at its peak covered 12 million square miles and took in a quarter of the world’s population is now entirely gone.

The Republican Party likes to pretend (even to itself) that it doesn’t have an industrial policy. It also likes to pretend that the U.S. economy is currently in such deep trouble because the Democratic Party does.

Not so. Both parties have industrial policies whether they acknowledge them or not.

The American economy is in trouble now primarily because the industrial policy to which the Republican Party currently subscribes remains hugely influential and entirely inadequate.

Ask any of the  Republican presidential hopefuls in this long and drawn out primary season what in general is wrong with the economic policies of the Obama Administration, and they will each tell you that the economy is under-performing now because the current Administration intervenes in its workings too frequently and too heavily. They will each tell you that the private sector has not yet rebounded with sufficient vigor from the recession of 2008-9 because the footprint of the federal government is everywhere – everywhere too present and everywhere too controlling.

That standard Republican litany has one particularly unfortunate consequence – at least for potential Republican voters. It prevents any of the Party’s would-be presidential nominees from pointing to areas of American economic and social life in which current under-performance is caused by the lack of adequate federal intervention. Yet there are such areas, and they are areas of genuine Obama weakness. Two in particular spring to mind: inadequate intervention in the U.S. housing market,[1] and inadequate prosecution of banking folly and corruption.[2] Indeed the two are linked: the inability or unwillingness of the Obama Administration to adequately prosecute and control the economy’s major financial institutions is now one further cause of its inability to rapidly and effectively resolve the U.S. housing crisis.

And there still is a major U.S. housing crisis.

          In the standard trilogy of core commitments currently being made by Republican presidential candidates, the cutting of taxes and the pruning of government is invariably accompanied by the promise to deregulate business – and indeed to re-regulate labor. The Obama administration stands condemned, not simply for its tax-and-spend propensities, but also for its subordination to organized labor[1] and its associated over-regulation of private enterprise. Setting America free, restoring American prosperity, and defending the American way, is said by all four major Republican presidential candidates to require the same basic policy moves: the lifting of intrusive government controls on American businesses, the exclusion of the federal government from corporate bailouts, and support for right-to-work legislation in one state after another. We have already found weaknesses in the claims about tax cutting.[2] It is time now to examine the validity of the argument that American business will create growth and jobs just as soon as the heavy hand of federal regulation and intervention is lifted from its shoulders.