America, the richest country in the world, now lags behind many of the other G7 nations in building the infrastructure needed to support the AI economy. Recently, one of the institutions that played a leading role in creating that problem quietly admitted it had been wrong. Almost nobody noticed.
I'm talking about the World Bank, which, for half a century, orchestrated—alongside the International Monetary Fund—one of the largest economic engineering projects in modern history: the systematic dismantling of government-led industrial policy across much of the developing world.
It did this by making free-market absolutism a condition of receiving financial assistance. Industrial policy—the idea that governments should actively build industries, protect strategic sectors and invest for the long term—was dismissed as outdated, inefficient and economically illiterate.
This became known as the Washington Consensus. But there was one small problem. There was no consensus outside Washington.
The countries that have since become industrial superpowers ignored the advice. Japan, South Korea, Taiwan and China all relied on active government planning, aggressive industrial strategy and decades of coordinated public investment to build globally competitive industries.
This year, the World Bank's Chief Economist, Indermit Gill admitted the institution's advice against industrial policy "has not aged well" and now has "the practical value of a floppy disk today." To the critics who described the report as a U-turn, Gill responded: "We didn't U-turn. The world changed."
Two problems.
First, this is, quite literally, the most complete U-turn in recorded history. Never, since records began in the late eighteenth century, has anyone—or anything—executed a more perfectly choreographed, tire-screeching, rubber-burning, 180-degree reversal. Ever.
Second, the world hadn't changed at all. The quantitative evidence that governments could build world-class industries had existed for decades. What changed was the willingness of the world's leading economic institutions to acknowledge that markets alone do not build great industrial economies. They only faced reality after their dogmatic advice had already done severe damage.
In the intervening years, nations including Ghana, Zambia, Argentina and many others were forced toward privatization, deregulation and trade liberalization as conditions of financial support. They were promised efficiency. Instead, they got weaker domestic industries, diminished state capacity, rising debt and the gradual surrender of economic sovereignty.
The World Bank's new advice is that industrial policy is fine—just make sure you get it right. Thanks. Helpful.
And it offers this advice from its headquarters, just a few blocks from the White House and the U.S. Treasury Department, in a country that is itself desperately trying to rediscover industrial policy in order to build the infrastructure required for the AI economy.
Will it do so?
Because the U.S. spent fifty years gutting its own building capacity and outsourcing its supply chains, it no longer knows how to execute. Programs like BEAD have struggled to deliver even the broadband foundation upon which the AI economy depends, hopelessly stalled in bureaucratic delays.
America still has no coherent national strategy for building the integrated physical stack—power, water, fiber, permitting, compute and transmission—that artificial intelligence requires. In this vacuum of state leadership, the hyperscalers are investing billions in lobbying and political influence to shape that future around private tech monopolies rather than the public utility.
The World Bank—and, by extension, much of the American economic establishment—spent half a century exporting an economic doctrine it is now quietly abandoning. In doing so, it helped hollow out the domestic capabilities of the very country that created it.
As the race for AI dominance transitions from software code to physical concrete and gigawatts, that ideological crusade may prove to be one of the greatest strategic own goals of the modern age.
Stephen M. Saunders MBE is a communications analyst and USPTO-registered inventor examining how digital infrastructure — 5G, cloud, and AI — is reshaping industry, power and society, as well as underpinning the emerging, ubiquitous global digital economy. As anchor of FNTV and a longtime industry insider, he focuses less on growth narratives and more on execution, risk and how hyperscale technology is distorting markets, governance and society at scale.
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