Here in the USA, our government hands out money to keep vital industries afloat, or to ensure that what they produce sells way below market value. Billions of dollars to overproduce, prop up or otherwise bastardize the capitalist system. Not exactly a "free" market.
This could not be done instantly; there would need to be some time to implement the new system, after which current subsidies could slowly be phased out without ruining anyone. The new system would need to retrain subsidy recipients,
finding ways to empower them to move into more profitable modes of existence where
they could better control their own destinies instead of being cogs in
the military-industrial complex.
A lot of tax money goes into propping up systems that would quickly fail, yet our educational system is in danger of collapse due to lack of funding.
What if, instead of subsidies to all manner of businesses and production systems, we gave the money to colleges and universities for research into how to do things better, here, with our own people?
The universities would develop technologies, doing the research and testing needed to make them marketable, real-world solutions to problems. Things like food and energy production, manufacturing, materials science, communications, data... anything that our society needs to function.
Once developed, the government would hold the patents, and companies would pay to license these technologies. There could be multiple tiers of licensing fees - expensive for limited-time exclusive rights, moderate for shared rights, and minimal for things that could be applied at a grass roots level to ease major world problems. Companies outside the USA or American (or non-NAFTA?) companies using the technologies outside the USA or its territories would pay the highest fees with the most limited time. We want our tax money to stay here, after all.
The licensing fees would go back into the funding system, reducing the burden on taxpayers.
The end result is that the USA would over time develop and hold patents and processes in all manner of vital areas. We would build the skills and production base here, keeping jobs in our country and raising employment.
Since funding would come from the government, hopefully with citizen oversight as part of a wholly transparent system, questions of bias due to corporate sponsored research might disappear as a fringe benefit.
Wouldn't this system be better than subsidies, some most likely awarded as a result of major industry manipulations of the government?
Companies could do their own R&D, of course. Nothing stopping them, but if this were set up right it would be less expensive to license the tech from the schools than to build and staff expensive facilities. I suppose the military would remain outside this system, since some things really do need to stay secret.