"State capitalism"? Here? Why not?

There was a lot of grousing in the U.S. in the 70's---obviously, among folks in the auto industry, but also fairly widespread among ordinary citizens---that Japanese cars were making inroads in the American market because they had "unfair advantages" over domestic car companies. You'll sometimes hear it yet today.

Among the complaints was the fact that Japanese labor costs were far lower than American. But by far the biggest one was that Toyotas and Hondas were "subsidized" by the Japanese government. R & D were subsidized. Actual production costs were subsidized. And exporting costs were subsidized.

I have no idea exactly to what extent these assertions were true. But I don't doubt that some, or all, were true to a greater or lesser degree.

Anyway, the upshot of all the complaints was simply that Japan was "cheating".

I'm not an economist, but I have to wonder: what's "wrong" with a government subsidizing an industry? Doesn't the U.S. government do it? With guaranteed loans and tax incentives?

Where is there a line that governments shouldn't cross in "nurturing" an industry?
Is it more a matter of what one CALLS the subsidy, e.g., "R & D money"? In the larger view, isn't ALL government assistance that provides money where an industry otherwise wouldn't have it an "overall subsidy"? Does it come down to how MUCH money is provided, say, as a percentage of overall production costs?

Bill Ford, whose family name is often invoked in public schools as one of the founders of modern American capitalism, is calling for large U.S. government subsidies for the auto industry. He talks about "development costs". Have the Fords suddenly morphed into Japanese-style, American "fascists"?

Or is his just a reasonable request, taking into account the "maturity" of many American industries, as well as the challenges presented by the emerging global economy?

If the U.S. is to re-establish any manufacturing capability, is it in the "national interest" for us to establish a bold and straightforward policy that, yes, we will selectively provide support to ANY industry that those in power (ultimately, elected officials) believe should be granted a "competitive edge?

Or is all talk of subsidy, pure and simple, a corruption of American capitalism?