The general idea is that when you buy stuff you're losing wealth so if you never buy anything then you never get poorer. Since we constantly dig gold up from the ground we still get richer over time even if nobody buys our stuff.
This is also why its importantly to gain colonies (Greenland/ Canada) or mineral rights from other countries so that the amount of stuff we have increases.
IMO, it's a theory that's missing the forest for the trees but it's historically very popular.
The EU loves protectionism. The single market is totally dysfunctional with a recent study saying it was equivalent to a 45% tariff between member states for manufacturing, a 110% for services.
If this is the cohort you expect to save the world economy with free trade I certainly wouldn’t be betting real money on it.
Between 1861 and 1933, they had one of the highest average tariff rates on manufactured imports in the world. After 1942, the U.S. began to promote worldwide free trade.
Within the EU single market, there are no tariffs or customs duties between member states for manufactured goods, services, capital, and people, fostering free movement and trade.
The report(?) you a paraphrasing badly talked about within Europe (not the EU) and referred to figures between, say, Germany and Russia.
\? At a guess (thanks for not citing the report) you meant the IMF Regional Economic Outlook report titled “Europe: A Recovery Short of Europe’s Full Potential” (October 2024) ?
The US did this because of the free trade treaties between west European states after WW2. This eventually led to the EU. The US, not wanting to be isolated, pushed for their own treaties.
I would advise you to look the current US foreign trade policy in this instance. Compared to 104% tariffs, EU policy looks positively welcoming.
I would have thought Japan and China hated each other more than they hated Trump but it seems otherwise.
I believe they still hate each other much more than Trump, but under the given circumstances even archenemies can reach temporary (likely unstable) pragmatic agreements as long as these agreements are clearly advantageous to all of the involved archenemies involved.
I wonder if Putin would have still invaded Ukraine, knowing the extent of sanctions that would hit them. He might have been lulled into thinking that the EU would not care, given the existence of people like Gerhard Schröder and his ilk.
edit: I am not sure that the reason for the Russian-German energy alliance was an attempt at pacification. It seems more likely to me that it was simply in the economic interest of Germany. Countries which are East of Germany certainly complained about it, for strategic reasons.
kraut made some intresting videos on this topic recently. both the start of ostpolitik and their failure in recent hears compared with Polish politics towards Russia
https://youtu.be/XjvrbnEMNVk?feature=shared https://youtu.be/bWJeNVzqBZI?feature=shared
This is a bad take on the cause of alliances. large wartime coalitions had been a thing since the consolidation of power into monarchies in Europe: the 7-year war had involved all of Europe's significant actors, as did the napoleonic wars, the war for the spanish succession, the 30-year war, etc. This was much earlier than the development of cross-border trade.
In an imperialist era, diplomacy was the way to coordinate European nations' colonial efforts without repeating that kind of conflict. It was only temporary, though, since expansionist policies can't last forever peacefully.
The reason WW1 felt so different from previous wars was technological development. That aspect was already present in earlier wars, WW1 was just the first major European conflict in a long time.
The E.U. is clearly an example of the economic interdependency theory. It evolved in post-WW2 Europe from the European Coal and Steel Community. Mineral richness is why the Saarland was given to France after WW2. The idea is that economic integration will lead to political integration from the ground up.
My understanding of the pre-WW1 alliances is that they were deals made between a lot of people with “Habsburg” in their names.
Dynastic politics were by and large dead in the 1800s with few exceptions (but generally kings/queens were just pawns in the hand of the politicians unlike in the preceding centuries).
The last dictatorship was in the 1970s? The last World War the 40s? The US might have had a civil war but it went in and came out the other side with the same borders, government, and constitution. Still going strong since the 18th century.
> The relationship would benefit both sides: Germany would supply the machines and high-quality industrial goods; Russia would provide the raw material to fuel German industry. High-pressure pipelines and their supporting infrastructure hold the potential to bind countries together, since they require trust, cooperation and mutual dependence. But this was not just a commercial deal, as the presence at the hotel of the German economic minister Karl Schiller showed. For the advocates of Ostpolitik – the new “eastern policy” of rapprochement towards the Soviet Union and its allies including East Germany, launched the previous year under chancellor Willy Brandt – this was a moment of supreme political consequence. Schiller, an economist by training, was to describe it as part of an effort at “political and human normalisation with our Eastern neighbours”.
"Why don't presidents fight the war? Why do they always send the poor?"
Those in power right now have no personal disincentive to real kinetic war. It doesn't affect them personally, or so they think up until the moment it does.
For all his positive attributes former senator McCain was known as a hawk. There have always been men who after fighting come away with a firm belief in military power. If you made service a requirement you wouldn't necessarily get fewer hawks just ones you can't criticize for not participating in war themseu
Interesting that Trump, Elon, and DOGE haven’t mentioned Fort Knox yet
Case in point, the EU with its internal markets.
Most modern wars don't make financial sense when accounting for everything but they are still fought. Often over stupid reasons.
For example Russia invaded Ukraine despite trade partnership with Ukraine and EU.
https://en.wikipedia.org/wiki/Democratic_peace_theory has a better run
I don't think so: for example the Weimar Republic is a counterexample. Or a modern example is the current war between Ukraine and Russia (both are democracies even though in Russia some particular president and party has a lot of influence). Both of these examples show that even in a democratic country under specific circumstances it can happen that a particular group or party can gain lots of power.
--
If you want to see another interesting "peace theory", consider the madman theory:
> https://en.wikipedia.org/wiki/Madman_theory
It basically says that if a country has access to atomic weapons, and the president or person in power radiates the image that he is sufficiently "mad" that in case of an aggression against the country they are willing to use them and escalate the conflict into a global nuclear holocaust, other stakeholders will strongly attempt not to upset this country, i.e. seek more peaceful and diplomatic solutions with this country.
This theory explains well why the USA have not yet invaded North Korea and are hesitant to invade Iran.
> “Free trade is God’s diplomacy. There is no other certain way of uniting people in the bonds of peace than by the bonds of interest.” - Richard Cobden
When? Not for a long time. Slavery and witchcraft were historically very popular ...
> when you buy stuff you're losing wealth
That's a incredible failure of understanding. I can't believe that's the basis of mercantilism. Why would anyone buy something?
If you buy a house for $100,000, your wealth remains the same - you replace $100,000 in cash with a $100,000 house (ignoring complexities like a mortgage, transaction costs, etc.). That is basic accounting, of course.
In fact, your wealth probably increases: The house's value is <$100,000 to the seller and >$100,000 to the buyer, or else they would be disinclined to make the effort of making the deal - it would be like trading a $10 bill for a $10 bill, with lots of time and transaction costs. Market value - the value to others - may remain the same or vary, of course.
The economy works because people make these value-increasing transactions. I take $10 of inputs, manufacture $20 worth of output, and sell it to you for $15. We both gain $5. If your business isn't producing more output than its input, you're going to be out of business soon.
Many transactions are better with people who happen to be outside the borders of your country - why wouldn't they be?
But if Louis had known modern economic theory, it would have been ridiculous. He would know that the wealthiest, most powerful nations ever on Earth - universally, with no others competing - were built on free trade.
It really depends on the context. Roman Empire wasn't built on free trade.
The Romans worship us, or would if they could have known. There is just no comparison. The worship of them is bizarre.
You still have to spend money on materials and labor - they are never free. You need to take them from other uses, and people may outbid you for them. There isn't infinite lumber and labor lying around the US for free - building houses is expensive!
The core of economics is there is a scarcity of resources and we want to allocate them as efficiently as possible. Money's fungibility allows us to move resources easily and rapidly. I can send you $50,000 much more easily than my car - you might be on a different continent; you might not even want my car or agree on its value, but I can count on you wanting $50K because you can buy whatever you need with it (a car, a few servers, a trip around the world ...).
It turns out in reality that someone with better skills and capital (hard resources, such as heavy equipment) can build a house so much more efficiently than you, that you would save money by hiring them rather than doing it yourself. That's specialization, another economic fundamental. Think of most work - orthopedists, C developers, pipe fitters, etc. They are so much more efficient than you are, you wouldn't dream of trying to do it yourself (on any significant level) - even if you are in the same domain, such as internists or Python developers.
You don't lose out at all, because they also hire you to do what you are specialized at. Then instead of the farmer building a house and the carpenter growing squash, both get better and more houses and squash for much less money.
> If you can take resources from some part of the world that you don't really care about, then you are adding wealth to your own country for basically free.
If you shoot someone on the street, you can take their wallet for 'free'!
... You are arguing against fundemental economics and even basic accounting. If you care about these things, learn about them a little. Microeconomics is actually fascinating, and basic double-entry accounting is essential.
> When? Not for a long time. Slavery and witchcraft were historically very popular ...
The wikipedia article places it as 16th to 19th century which is a longer time period than Globalism was popular.
If the end of my post wasn't clear, I'm not a fan of Mercantilism but one does need to understand the other side. Although a big critique I have of Globalism is that the gains from trade are not evenly dispersed automatically so countries like the US really need to raise the top tax rate and increase (or at least not lower) redistribution otherwise you get high income equality.
Also, slavery and witchcraft are still practiced to this day although maybe not globally popular.
> > when you buy stuff you're losing wealth
> That's a incredible failure of understanding. I can't believe that's the basis of mercantilism. Why would anyone buy something?
Economic theories like Mercantilism are on the country level so individuals would still buy stuff because they're not practicing Mercantilism.
On the country level, yeah you don't buy stuff. If your citizens love coffee and your climate doesn't support growing coffee beans then you get a South America colony so now your climate does support growing coffee beans.
Somebody's answer to the house example is pretty good to read as well - https://news.ycombinator.com/item?id=43630218
> Many transactions are better with people who happen to be outside the borders of your country - why wouldn't they be?
At the macro-level sure. However, if the USA had continued to practices mercantilism post-WW2 then we wouldn't have complaints about the lack of manufacturing.
The industrial plants in China would've never been built by US investment because that's literally handing money away to another country. If China doesn't have a factory its irrelevant if their labor is cheaper; the only labor with access to a factory is the USA.
When did globalism stop being popular?
> Did you happen to miss recent US news?
1. Not every reader lives in the USA
2. In my observation (not in the USA) in the last years (and also months/weeks) it has rather been a strong veering round back and forth of "globalism is good" vs "globalism is bad" with no clear observable direction at which side the pendulum will stop.
I agree with that critique, though it may be a problem with this specific version of Globalism, not globalism itself.
But do you think there is more equitable distribution with mercantilism or protectionism? Why would that be? In those systems government officials choose who gets the benefits; you can't get them for yourself. Also, they tend to oppress less powerful countries - globalism's astounding record of raising people from poverty all over the world is absolutely unmatched. People take for granted the relative prosperity in China, India, Brazil, ... - nothing like it ever happened before.
> if the USA had continued to practices mercantilism post-WW2 then we wouldn't have complaints about the lack of manufacturing.
You assume this mercantilist government can effectively manage manufacturing, and that it wouldn't deteriorate, having no competition. Industry without competition tends to do that. Basically, enshittification is doing that intentionally.
With only 5% of the population the US would not have nearly enough manufacturing capacity to meet modern needs.
Finally, keeping people in manufacturing (how? by force?) would prevent them from taking the newer, higher productivity jobs that followed.
The US was much less wealthy - order of magnitude at least - in the 1950s (or whatever golden age people think of). You don't want to go back to that economy.
> The industrial plants in China would've never been built by US investment because that's literally handing money away to another country.
If it was handing away money, then why would someone invest in it? They invest because the investment generates returns, in this case massive returns that changed hundreds of millions of lives and provided wealth that was used to buy and invest in yet more things.
Well, there's nothing about Globalism that enforces this so it's really a complaint about most if-not all Globalism.
> With only 5% of the population the US would not have nearly enough manufacturing capacity to meet modern needs.
Expand your borders to include say Canada or all of South America. The UK moved up the value chain into industrial jobs while delegating out the cotton farming to their North American _Colony_ (as well as their South East Asian colony).
> If it was handing away money, then why would someone invest in it? They invest because the investment generates returns, in this case massive returns that changed hundreds of millions of lives and provided wealth that was used to buy and invest in yet more things.
Sending over capital goods in exchange for future considerations is not a Mercantilism argument. The reason why somebody would invest in it is because they're a Globalist.
The reason why "we" switched from Mercantilism to Globalism is because it generates more growth but you can't use Globalism arguments in a Mercantilism framework unless you're making the argument to switch frameworks.
(Also Mercantilism is also causing income equality by having an underclass in your colonies to support a wealthier main land; but the mainland isn't going to be complaining about being poor).
A house in the middle of Sahara desert is worth a negative amount.
You pretty much nailed the arguments in favor of trade protectionism right there. Import cheap unprocessed raw materials, export expensive finished goods, capture the majority of value created in the process.
Maybe the argument for colonialism? Regardless, countries that largely operate without protectionism or colonialism have become the wealthiest in the history of the world, without any real competition. There's not much argument remaining.
This is manufacturing economy 101 and how the US built and defended it's manufacturing base before the pivot to a "service" economy. China's trade strategy mirrors this, as is evidenced by the last 30-ish years of constant bitching by trade wonks and pundits.
What is? You haven't spelled out your theory. And I know economics well, and class 101 is free markets and specialization.
> how the US built and defended it's manufacturing base before the pivot to a "service" economy
Who wants to return to an economy of decades ago? The US was much poorer then. I want to move to the future. Services are much easier on people physically - you don't want to work in a coal mine.
Then something must have changed with the introduction texts at some point because the one I had to slog through covered the concept of manufactured goods being inherently more valuable shortly after defining basic terms like "product", "value", and "manufactured goods". Literally 2nd chapter in the book.
"Who wants to return to an economy of decades ago?"
Literally everyone who works for a living making shit or who are stuck in bullshit service industry McJobs that aren't paying the bills. Also every small business owner in the country, although admittedly not all of them realize it.
"The US was much poorer then."
The oligarch class was certainly much poorer then, the same can't be said for the other 99.9% of the population.
"Services are much easier on people physically"
You might want to look into the long term health effects of poverty and stress before you float that statement. Additionally "I'm too soft to actually work" only becomes a compelling argument when you can prove the condition applies to a simple majority of working age Americans. Good luck with that.
The wealthiest economies now are those of China and US. And both used colonialism and protectionism.
The further we look in history, the more we see most powerful economies practicing both colonialism and protectionism. From British Empire to Roman Empire.
China is not, unless you just add up the large number of people and their bank accounts (those who have any savings). Per capita, the "countries that largely operate without protectionism or colonialism have become the wealthiest in the history of the world, without any real competition.", as I said.
> both used colonialism and protectionism
Could you give examples? I mean, they used some, but not substantially. Unless you mean the distant past.
Note how this discussion is framed - for countries. I'm concerned with, and I think we should be concerned with, people.
> The further we look in history, the more we see most powerful economies practicing both colonialism and protectionism.
If you look at history, we are overwhelmingly nomadic hunter-gathers with stone tools - ~190,000 of 200,000 years of Homo sapiens. We are well beyond that history, and the history you name. Our economies far outstrip those empires, as well as our freedom and human rights and the benefit our economies provide to those outside aristrocracy.
Why do you keep trying to go backward to a relatively poor, oppressive time.
The same thing happened with both the California and Yukon gold rushes.
The same thing happens when the government prints lots of money.
What creates wealth? People creating goods and services that people want to buy. Things like making planes, trains, and automobiles. Making hamburgers. Making search engines. And so.
P.S. I always laugh at Jackson's Smaug who has a hoard of gold amped up to 11^11. It was so large it was beyond absurd. If even a portion of it was dumped into the Middle Earth economy, it would promptly become worthless.
Any scarce resource people want is worth very much. Be it gold or bitcoin.
You can't make gold (technically you can by transmuting elements but it will cost you more gold than the gold you will produce) but you can mine it with great cost.
Why do you think Amazon warehouse workers are payed less than Amazon coders? Because it's easier to find a warehouse worker than a coder.
What something is "worth" is dictated by the market. Which means it is dictated by the laws of supply and demand.
If we're both on a secluded island and you have 10 tons of gold and I have one hundred kilos of potatoes, my potatoes are worth more.
If we're both in NY City, my potatoes are almost worthless and you are incredibly rich.
Looting S America of gold did not make Spain wealthy.
Most of us value goods more than services. We need food, we need shelter, we need a vehicle.
I’d rather have a great doctor, lawyer, or accountant when I need one than a great car.
Having an average car is always just fine, having an average lawyer might not cut it.
So many people would benefit from reading his works.
Often quotations from him are taken wildly out of context to support a 'progressive' viewpoint. An example (From David Friedman's blog):
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.
(https://daviddfriedman.substack.com/p/discovering-what-is-tr...)
Theory is incredible - when it's right, it's right everywhere for all time. I don't know why people disparage it (other than to signal their anti-intellecutallism).
So, basically, blueprint for the new opium wars. Or, more likely, WW3.
And how come that always seems seem to come wrapped in ways that inexorably seems to concentrate wealth, so that the benefits of those exports seem to be less evenly distributed?
Wealth concentration has been a deliberate US domestic policy for decades. This is, to a large degree, separate from the stability of our currency or military protection. It's the stated intent and logical result of relaxing taxes on the rich while enacting policies designed to hurt the working classes (e.g. reducing union power, not indexing minimum wage to inflation, refusal to address healthcare & housing costs, increasing fees at public universities, cutting existing safety net programs, etc.).
Concentration of wealth is a choice. America is a very rich country and has not always chosen to distribute our wealth this way. Other countries make different choices. We are also allowed to make different choices.
Wealth is not concentrated in a market society. It is created. Some people creating more wealth than others is not "concentrating" wealth in their hands.
Another way to put it is it is not a fixed pie, where if one gets more another necessarily gets less. If I buy some art supplies for $20, and paint a masterpiece I sell for $100,000, wealth was not "concentrated" in me.
The stock market itself is a shining example of regulatory capture - a perma-bubble due to fake "fiscal responsibility" political marketing that causes massive streams of newly printed money to be handed out to banks to dump into the asset bubble (that newly printed money representing the gains from technology and offshoring that would have otherwise caused price deflation)
But sure, I'll also agree that some of Musk's riches are due to actual wealth creation - before the crippling social media addiction and subsequent spiral into lunacy, anyway.
But that's all focusing on the problematic ways wealth concentration can arise (the context it was originally brought up in). The other critique (likely what you're referencing about Sanders) is about the corrosive effects that concentrated wealth tends to have. And surely you can see how that applies pretty strongly to Musk...
SpaceX is worth around $390 billion.
> some of Musk's riches are due to actual wealth creation
Very generous of you! LOL
Wut? SpaceX's largest customer is the government. If you're just looking to play semantic games where that revenue isn't a "subsidy" then I don't see how it's possible to have a conversation.
You also didn't address the other point, which is especially salient given that Musk has now spent a chunk of his concentrated wealth lobbying to gain significant control of the government that gives him funding. But I guess revolving doors, corruption, and grift is just normalized good behavior in 2025 as long as the person is wearing the right color hat?
Respectfully, you should do some reading of basic economics. Absent of external forces to correct for it, wealth absolutely concentrates in unregulated markets.
> wealth absolutely concentrates in unregulated markets
The US had more or less unregulated markets for well over a century since its founding. The result? The most stupendous wealth creation, pushing scores of millions of people from poverty into the middle class and beyond.
There was no "transfer" of wealth from the poor people to the wealthy (there couldn't have been, because they, being poor, didn't have wealth).
You're ignoring value created through labor. The poor may not have wealth but they have their labor to sell on the open market. The returns on that exchange have been steadily declining since the post-war period thanks to flat wages and inflation. Meanwhile increases in productivity (as demonstrated by increases in GDP) by definition have to go somewhere. Since it isn't going into working folks savings accounts then it's accumulating somewhere. Also worth considering, the middle class has been declining for the last 40 years.
Consider the vast increase in government spending and entitlements.
As for the declines, the US free market has steadily become less and less free market.
https://www.ceicdata.com/en/indicator/united-states/tax-reve...
Claims that the market has become less free are perfectly baseless and a non sequitur here as even if that claim was true and verifiable it does nothing to explain the decline of the middle class or why increases in GDP aren't reflected in either household buying power or real wages.
> Claims that the market has become less free are perfectly baseless
So the mountains of new regulations have no effect?
Consider all the thousands of burned out houses in LA. So far, only 4 building permits have been issued.
In Seattle, constant burdens by the City Council heaped on the rental business have driven out a lot of landlords (things such as free lawyers for tenants), resulting in a shortage of affordable housing. Those don't show up as government spending, but they retard the market anyway.
The same goes with minimum wage hikes.
"So the mountains of new regulations have no effect?"
Difficult to say until there's a few specific examples to examine. I've just spent the last half hour digging around for evidence that suggests there's been a spike in enforcement actions by the government at any point in the last three presidential terms and I'm not coming up with anything so until some evidence surfaces I'm going with probably not.
As for local goings on in LA and Seattle, neither are "the market". This isn't the first time I've been exposed to the apparent self-absorption of West Coast politics but I gotta tell you, y'all aren't the singularity around which the US economy or global markets pivots around. That'd be the oil and gas industry.
Inflation is the result of the deficit, and it is the equivalent of a tax. This is why politicians work so hard to deny that inflation comes from the deficit.
Want more examples of burdensome regulation? Try Lina Kahn of the FTC with her frivolous (but very expensive) lawsuits. Regulation is why the California high speed rail failed to be built, and why Biden's big spending program to install car charging stations resulted in zero chargers being built. Nearly every aspect of a car is subject to regulation, which is why they pretty much all look the same (unlike the variety in earlier years). EV regulation have been resulted in massive costs for the auto industry.
As for oil and gas, Biden blocked the pipelines that would have saved a ton of money.
The only unregulated market in the US is the software industry. And look how spectacularly successful it has been!! Prices have been driven down to literally zero! I'm in the software business, and I do not need approvals, permits, licenses, or any regulations pertaining to the software I write and sell.
(Other than laws against fraud, theft, etc.)
This is extremely myopic.
Price inflation is the result of the explicit government policy that says price inflation must happen, and that enough new money will be created (monetary inflation) to make it happen. The part of the deficit that is debt owed to non-government entities is those entities wanting the large-scale equivalent of a savings account, and is not any more inflationary than a savings account. The part of the deficit that is "debt owed to the Fed" is monetary inflation. The other nongovernmental "debt owed to the Fed" like home mortgages is also monetary inflation. If the monetary inflation from that part of the deficit did not occur, then the Fed's technocratic mandate would be to lower rates even further to send even more new money to the banking industry so that price inflation would still occur.
This is the dynamic we've been suffering for the past 40+ years of fake "fiscal responsibility", that has seen the government starved of being able to spend for deliberate purposes like mitigating the damage to our industrial base from offshoring. Meanwhile all that monetary inflation still had to occur, so most of that money was just dumped into the banking sector. This mainly bid up the asset bubble, but to close the feedback loop that new money still has to get back to the consumer price index. This happens through consumer goods that can be financialized (housing, cars, insurance, education). Which is why those things have shot up in price - to bring up the average while manufactured goods have continued to go down in inflation-adjusted terms.
Why?
In one society, a marginal tax rate system taxes the artist with an upper rate of 92%, and they end up retaining about $50,000 of the income, with the rest flowing back into the control of the society (via its government).
In the other society, a margin tax rate system taxes the artist with an upper rate of 28%, and they end up retaining about $70,000 of the income. In this society, the artist retains control over twice as much of the income as flows back into the control of society.
"Wealth concentration" is not a policy related to markets, production, and trade. It's a policy related to taxation.
I agree with most of what you say, but the pre-tax results of income are not some single natural outcome, but the results of policies about business, economy, education, healthcare, international relations, trade, immigration, monetary policy (of course), regulation, government budget, etc. - pretty much everything.
Those things can be adjusted to result in less or more wealth concentration.
They also depend heavily on capital gains tax in particular.
That is why I gave two different societies as examples - both have managed to construct a social context where this happens, but what happens next is different in each of them.
Put more crudely, wealth concentration is about not taxing high levels of income at high marginal rates. It is not about the specifics of how those high levels of income arise, who they happen to, etc. etc.
Thus the first society tends to create less value overall, since value creators are demotivated by punishing taxation. Because of that, prospective buyers for that piece of art will be overall poorer so they will bid less for it, pushing the artist's reward even lower.
The first society ends up poorer than the second, from its own policy. And that’s how you get inequality between nations, which you can’t “redistribute” away. Which inequality sooner or later leads to wars, as we can clearly see these days.
I live near the (supposedly) largest art market in the USA, and I know a large number of artists here for whom two things are true:
1. they cannot make a living from just their art. 2. they will create art whether they make a living from or not.
Thus, the claim that taxes on their art income act as a disincentive to create just holds zero water for me. In fact, less than zero. It betrays a fundamental lack of understanding of why all the artists I admire actually do what they do.
This also applies to most of the people I admire in almost every field. I don't know of any example where the motivation was such that increased taxation would have acted as a disincentive. That's true even for Bezos @ amzn.
It didn’t work. The society produced less and less value, crappier and crappier quality, uglier and uglier and grayer and grayer.
There are numerous books on this topic. Obviously not everyone agrees with them, but Alfie Kohn's "Punished by Rewards" is an excellent starting point for reading about what we know about the connections between motivation, creativity and rewards.
At $100 million, $1 billion, $10 billion, or $100 billion, the argument you put forth does not make sense.
There is no motivational quantum for attaining the second, or third, or fourth billion, much less the 200th.
Incidentally, most of the people who might be considered to be concentrating wealth do not and have not done so primarily on the basis of their labor and creativity like in the example. There is no credible argument that Jim Walton ($119 billion net worth) ever built or created anything of value anywhere near commensurate with his wealth. His path from $30 billion to nearly $120 billion had nothing to do with rewarding him for value creation.
That's probably correct. However, if you tax $100b at 40%, then the person has only $60b to invest in creating more wealth.
And while the $100B winner may have had some insight that contributed to the $100B, there also had to be a $100B winner in an economy structured the way ours is. Consequently, we don't really know whether there's a reason to prefer their investment choices over the ones the state will make.
It currently remains unclear, for example, whether what Musk or Bezos have done with their vast wealth thus far will, in the medium or long term turn out to be a net benefit to society (it certainly has not been so in the short tem).
The belief in the business genius really is overblown. Yes, some folks are better at it than others, but when we run the economy like a casino, there will always be big winners no matter what personal qualities the players bring to the game.
Defense spending is not an investment in the economy, neither are entitlements.
The returns on government investments that are legitimate investments, however, are quite a bit less than the returns on the investments of rich people. The reason is simple - people who get rich off of investments are very, very good at it. Government bureaucrats are not.
Government investments are socialism, which have an inglorious history of poor returns.
> The belief in the business genius really is overblown
4 out of 5 business ventures fail. The survivors tend to be pretty good at it. You'd be very hard pressed to find a dummy who grew a business to a billion dollars. The ones who have done it more than once are very, very rare. (Like Steve Jobs, who did it 3 times.) If you want to argue that Jobs, Gates, Musk, Bezos, etc., just fell into it, go right ahead!
In my younger days I used to argue for a non-inflationary currency, and how that would have gone a long way towards not concentrating the wealth from offshorting and technological progress (instead enough money was printed to make price inflation keep occurring in spite of the fundamentals, and most of that new money was just given to banks to pump up the asset bubbles)
These days I've kind of just accepted the monetary inflation (cf Gresham's law), like other centralizing but perhaps inevitable dynamics like the economies of scale for electronics manufacturing.
That has been true for every economic system ever - some are just more transparent and fair about it.
Would you rather it be people taking bribes, a king, a hereditary merchant class, oligarchs, or people setting up companies?
It has been as true about the USSR and Cuba as it has been about Venice, Canada, the USA, etc.
It's completely backwards from how people usually perceive empires. And from what it is. Which is a projection of power to ensure the supremacy of American capital interests.
Which is why US GDP per capita etc is incredibly high compared to the rest of the G7. It's not because they're smarter or better than the rest of us. It's because they've built the world order around themselves. By, as you say, exporting that military protection.
The US exports military dominance, and it gets paid in having its currency, regulatory needs / environment, etc. dominate almost everywhere.
(Whether this actually benefits the regular American worker vs its own wealthy business class is a whole other discussion, and may explain why this has become such a fertile ground for rage and frustration among Americans)
There are lots of importers all over the world, some very large.
1) They don't know how.
Specialization is a thing. But this is a thing that applies to individuals rather than nations. You don't need every person to know how to mine ore or hang drywall as long as somebody does. But a country the size of the US could certainly contain someone who knows how to do any given thing.
2) They get paid more to do something else.
This is the argument that you get paid $200,000 to be a doctor and people who mine ore get paid $80,000 so it's better for you to do $2000 more work as a doctor and then pay someone $800 for ore than to put on a miner's hat yourself.
But this is again something that applies to individuals rather than countries. There are people in the US who already get paid less than $80,000, or less than $30,000, or even who are unemployed. It makes no sense to convert doctors into miners but it makes plenty of sense for the people who are currently doing something that pays even less.
Employed Americans largely earn a lot more than employed chinese people, and there just aren't very many unemployed Americans. Based on the value of imports to the US from China vs Chinese GDP($440B vs $17.8T), we import about 2.5% of their output, or the equivalent of ~20M people's output if we naively scale. I don't think there is any way around the fact that significantly reducing imports from other countries means we significantly reduce our consumption in absolute terms (i.e. we have a poorer standard of living), just out of spite for other countries.
Or about 12% of the US labor force. Meanwhile the 12th percentile US income is ~$22,000, i.e. less than the $32k median in China, and half of the jobs there are above that median.
Obviously these numbers are all useless napkin math and none of it really works like that, but the premise isn't inherently absurd. If China is subsidizing manufacturing in order to capture manufacturing jobs and those jobs pay more than what many in the lowest quartile of the US are currently making, there are people who could be made better off by having those jobs back, and they'd still only be paid about what we're currently paying to China.
And this before considering the general arguments about advantages to proximity of manufacturing, e.g. being able to talk to the people in the factory in your timezone in your language assists in product development so the location of the factory has an easier time developing new products. Which allows not just the manufacturing jobs but the whole rest of the company to be there, instead of those jobs starting to get eroded going forward.
More of what, exactly? I looked at steel production data (in metric tonnes, not dollar value), US production has been flat or slightly declining since 1970.
People normally show a slowly increasing graph to claim that the US manufactures more than ever- but it's primarily because of hedonic adjustments for Intel chips. If you take that out it falls off a cliff in the 2000s during the China Shock.
Steel is something where value matters. US steel is usually higher grade or recycled with more value. Korea churns out tons and tons of low value low margin rebar.
You bring back manufacturing by investing in clustered industries. New York has a bunch of semiconductors. There’s a ton of chemical industries around Philly and Houston.
The iPhone is made in China because they have the best manufacturing for precision products. If you want that here, you have to invest.
It’s like wishing all of America would return to farming jobs, which once employed the majority of people. Then farming got automated such that now only a few percent of workers produce vastly more than those ancient hordes.
That’s where manufacturing went, and the rest of the world is as surely automating out those jobs too.
Tariffs are going to put our high tech industries under enormous pressure. There are two reasons. It makes sense to import parts and lower tech components of everything we manufacture because our trading partners have developed an economic advantage in the production of those types of parts. If we make materials and those lower tech factors of production more expensive, we kill ourselves. It’s economic suicide. And high tech industries live by exporting. In equilibrium, the market outside the U.S. is much larger than the internal market. As we are to China and the rest of the world, as Germany, roughly, is to us, we will prosper only by exporting high tech, advanced design products. Everything we do has to cultivate that process.
When you scale up the thinking past rudimentaries like 'hanging drywall', it still applies to nations - instead of "do we have enough people who know how to mine ore" it's "do we have the capability of mining enough ore to meet our needs" and the various intricacies that come with those massive-scale problems - problems that are much more easily solved when backed by a global economy.
Suppose you have enough mining production to meet half of domestic demand. Then you still have mining production, and know how to do it, and if it was necessary you could scale it up or reduce domestic consumption somewhat from the uses that aren't as important. Whereas if you outsource all of it or nearly so, i.e. actual specialization, it's a vulnerability whether to enemy action or just a single point of failure that subjects the whole world to unexpected localized turmoil in the only place that makes that.
It applies to countries too. It’s the core argument of comparative advantage, and it’s been mainstream economic theory for over 200 years. Your argument is incomplete because you’re not considering the wages paid in other countries, and crucially, the exchange rate.
We can argue some nations have been pretty unfair with their tariff rates over the years, but let’s not ignore 200 years of economic science.
The US is more on the scale of a continent than a country.
the rate of profits can never be increased but by a fall in wages [...] If, therefore, by the extension of foreign trade, or by improvements in machinery, the food and necessaries of the labourer can be brought to market at a reduced price, profits will rise.
I.e., use trade to get to lower wages
I can frame, but I'm a disaster at hanging drywall. I finally hired a craftsman to do it, and zip slap bang he had hung it and it was straight and the joints were tight and even and I could hardly believe it.
> a country the size of the US could certainly contain someone who knows how to do any given thing.
Ore may be much cheaper to mine in another country - maybe because of geology or weather or because they have a great tradition of mining including more local skills, or because their economy is better structured for it - financiers with expertise in financing it, laws and regulations that are better designed (because of greater local knowledge).
Those things actually happen.
And don't think such specializations are transferrable; nobody really succeeds in doing that - just try changing one company's culture. Why haven't other Silicon Valleys and Apple Computers been developed, despite so many efforts?
What is the sense of wasting resources on things the country doesn't do well, so some nationalists can ... do what?
It isn't. The point of specialization is that people can become experts in things, so that not everyone has to be able to do everything. But the goal explicitly isn't for there to be only one person or only one company that knows how to do something -- that's a monopoly, and it's very bad. And if there are going to be a dozen companies that know how to do something (rather than needing every individual at every company to know how to do it), at least one of those companies can be in the US.
> Ore may be much cheaper to mine in another country
Ore isn't really specialization at all, it's resource availability. You simply cannot mine something in a country that doesn't have any. But the US is big enough to have almost everything and even to the extent that it doesn't, it can a) sell mining equipment to those countries that have it and b) ensure that it's more than one country acting as a supplier of those things, instead of allowing a dependency to form on a single one.
> Why haven't other Silicon Valleys and Apple Computers been developed, despite so many efforts?
Apple is an abnormal edge case because in the middle of their existence there was a monopolist (Microsoft) excluding all other competitors while keeping Apple around in an attempt to fend off antitrust scrutiny for their unlawful practices. That allowed Apple to a) invest in designing high quality products while Microsoft was stamping out any other competitors and b) build a strong brand (because the alternative was Microsoft).
To replicate that in other circumstances you have a chicken and egg problem, because you need the scale to have the resources to design high quality products and build a strong brand, but you don't have those resources or that brand with which to achieve that scale. The only ones who do are the other large behemoths, but large incumbent bureaucracies tend to become mismanaged and there aren't actually that many of them.
You also don't want others to replicate Apple, because Apple is a vertically integrated conglomerate. Everyone keeps trying to because they see Apple making a lot of money, but what they should be doing is playing "your margin is my opportunity" and establishing a competitive market where devices are made of fungible components using open standards, because that's how you defeat Apple instead of becoming Apple. It's no coincidence that PCs still have more desktop market share than Android has mobile market share, because the PC platform is still more open than mobile and to the extent that Microsoft has been losing market share it's because they're increasingly trying to lock down the platform and abuse their customers. If you have two closed platforms, the one with more resources is going to win, because then it's Apple vs. just you and Apple is bigger. But if you have an open platform, then it's Apple vs. everyone and everyone is bigger.
> What is the sense of wasting resources on things the country doesn't do well, so some nationalists can ... do what?
Not be dependent on a single supplier for 80-100% of the global production of some important product.
> Ore isn't really specialization at all, it's resource availability.
You just made that up. What is it based on? Also, resource availability is definitely part of specialization - countries specialize in what they can do more efficiently than other places, which depends partly on resource availability. It also depends on infrastructure, capital, laws, regulations, skills, labor, and many other variables.
People haven't copied Apple and SV because it's very hard to do it. Nobody does it with any successful company. You just can't copy those things.
> Not be dependent on a single supplier
Again, by reducing suppliers - and essentially worldwide in this case - you reduce competition. Now the public subsidizes a local supplier who is not good enough to compete, and therefore the public also gets a substandard product with little hope of competition arising.
or: If all you sell are financial services, and a pandemic hits and you need to protect your people, where will you find masks?
We don't need to build literally everything ourselves, that's a reductionist argument, we just need to become a lot more productive than we are now.
The John F Kennedy—built in the U.S.!—is in sea trials this year to become the 12th nuclear aircraft carrier in the U.S. fleet. No other nation has more than two carriers. The U.S. has more aircraft carriers operating as museums than other nations have in military service.
What about subs? Again, the U.S. has more than anyone else and Australia just cancelled a deal with France in order to buy subs built in the U.S. We build the best in the world.
I belabor this to make a point: a lot of what people think we need to do… we already have. Our nation and our economy is already the most secure on Earth. We are already the best in the world at making weapons. That never got outsourced, so we don’t need to dramatically reconfigure our economy to bring it back.
We very slowly build a small number of incredibly expensive ships. For any other value of "manufacturers warships", Korea or Italy are better and more reliable.
Also, it's not clear if aircraft carriers are survivable in a vaguely peer context. Missiles and drones have come a long way.
> Australia just cancelled a deal with France in order to buy subs built in the U.S. We build the best in the world
We won't be sending them because we can't build them because our defense shipbuilding industry is moribund, and there is no civilian shipbuilding industry to do double duty.
It's not clear if the planet is survivable in a vaguely peer context. What do you want, build a second planet and make Mexico pay for it?
Nobody does everything.
In 2025, is the word “ally” even a legitimate term in the U.S. political lexicon?
LMAO does the Navy pay tariffs?
But theoretically speaking, the time when a strong manufacturing industry is needed is if you get into a lengthy WW2 style conflict, where both sides burn through their stockpiles of tanks/shells/missiles/whatever.
Then whoever can deliver tanks to the battlefield fastest has the numerical advantage. In 1942 the allies had retooled their car/locomotive/tractor manufacturing plants to make tanks and they were literally producing 9x as many tanks as the axis powers. Which is obviously a very good thing, militarily.
So there is historical precedent for the idea that a strong domestic car/locomotive/tractor industry being very helpful in wartime.
Of course, the question you've got to ask is: Will we ever see another WW2 style conflict? Because in a nuclear conflict there's no time to retool and manufacturing plants, and in lower-intensity conflicts like Vietnam/Iraq/Afghanistan there was no desire to.
Except when the threat to your economy and security isn’t something against which those weapons will ever be effective. Even the USS John F. Kennedy, as wonderful as I’m sure it is, won’t fix the giant foot gun that is presently threatening your economy and security.
To nitpick about terminology:
productivity = output / input
If we insist on building ships in the US, we spend more money on the same ships, and - unavoidably - we must shift more productive resources to these less productive tasks. If your neighbor is a great carpenter and you are a great farmer, wouldn't it be smart to trade your vegetables for carpentry, instead of you trying to do carpentry and the carpenter trying to grow vegetables? If you are a Linux maintainer end and the business down the hall back end, do you try to do back end and they try to design OSes? Why?
(Of course, you probably trade your skills indirectly through the wonderful fungibility of money.)
Not really. Most of the complexity and value and technology lies in the difference between a civilian ship and a warship. Guns, radars, missiles, gas turbines - all that much more complex and involved tech than just a metal bathtub with a diesel that a regular civilian ship is. Nuclear aircraft carrier has even less common with a civilian ship. Submarine - pretty much nothing in common.
>or: If all you sell are financial services, and a pandemic hits and you need to protect your people, where will you find masks?
Well, we know that emergency stockpile wasn't maintained as a money saving measure. When you sell finservices you actually have more money to maintain stockpile than when you're manufacturing masks. Yet if you're choosing to not maintain the stockpile ...
The counter to this thinking is that if you intertwine your economic wellbeing with your "enemy" to the point that neither side wants to sever the relationship, you won't need to build many warships. Reversing course back towards isolation in order to give yourself the option to build warships increases the odds that you will end up having to build those warships because you have now made it easier for both countries to go to war.
Yes you can. People have a moral obligation to help others, including when they have to sacrifice, and they do it all the time. People make sacrifices all the time for the greater good.
In fact, many of the extreme self-interest capitalist crowd argues that others should make sacrifices for the greater good of 'the economy' (i.e., for the good of the extreme capitalist). Musk has argued that people need to sacrifice so the economy will be better in some unspecified future.
The new commonplace phrase that 'you can't blame them' is an embarassment. I don't blame you for using it because it's so common, but it's like a core, fundamental belief that humans should not and cannot care anything about anyone else, (or often, anyone but their family). Obviously false and entire, widespread moral beliefs are built on the opposite.
First, to clear things up, I don't at all mean doing it to maximize profit. Notice that we expect a great degree of selflessness here - they should not be maximizing profit during the pandemic. We require it - we put them in jail otherwise.
It's all hands on deck.
> It would be a tough sell
There are definitely challenges here; I agree about that.
I think what sells to most people is to appeal to fairness. Democracy's foundation is fairness - rights to all, all get a vote. Fairness actually sells very well everywhere, despite the modern authoritarian's false critique. Law of the jungle is highly undesireable to most people; they like having civilization and rights.
But not universally; some will fight it. You need leaders and neighbors standing up for what's right. Also, enlightened self-interest can be convincing - help those in need, and you'll get help when you are in need.
You also need a way to determine what is fair; good leaders build consensus and navigate the politics - that is their job definition. Probably you put supplies where they do the most good. Start with hospitals and nursing homes, where contagion and vulnerable patients combine for the greatest risk. Then other vulnerable people (e.g., elderly or ill in private homes), then the first healthy recipients being front line workers like firefighters.
I think most healthy people would happily give up their medical supplies for those who need them more. There are always some malcontents, but we can't hold up society and progress for them.
> convince the person who is actually making these supplies to put the needs to an arbitrary person above the needs of their immediate community
Manufacturers provide them outside their employees, and health care professionals help strangers all the time. If we asked someone in downtown SF to provide them to someone across the Bay, would that be too far? To LA? NY? Rural Georgia? What about from Seattle to Vancouver? Belgium to the Netherlands? To Germany? To Turkey? To Japan?
My probably obvious point is, ''community' and 'us' are amorphous, changing concepts. Of course people in LA and Toronto and anywhere deserve the medical supplies as much as people next door.
The only logical way forward is to ensure that your own nation is taking care of its own needs before helping others.
I have always found it interesting that if everybody focused on improving their own conditions first then helped others locally the world would be objectively better for everybody. The better you make the lives of those around you the more you can expand the reach of your goodness.
You just made that up. First, what defines morality? Second, by what morality are you not obligated to help others? That is amorality, greed, evil. And empirically, countries have long felt, talked explicitly about, and acted on, sometimes at great cost, the moral need to help other countries. Leaders have long made that argument to their fellow citizens (or subjects).
The parent claim is a transparent fiction of nationalists. You can do better!
> I have always found it interesting that if everybody focused on improving their own conditions first then helped others locally the world would be objectively better for everybody.
An even more obvious fabrication with not even an attempt basis. As is often the case with this stuff, the only 'basis' is saying it like it's a fact.
A functioning society cannot be built around people being selfless.
But a functioning society can be built around selfishness - free markets - and irony of ironies, free markets also do a great job of helping the less fortunate, a much better job than the selfless attempts.
(In the news a couple days ago, the CEO of an NGO charity funded by the government had awarded herself a $750,000 salary.)
Enforcing equity means nobody has freedom. When people are free, there is no equity.
(Obviously a simplistic binary system, but appropriate for HN comments where time and space is limited.)
The religion and worship of selflessness is a cult - who ever followed such an ethos; even what great American? Did Washington? Lincoln? King? Eisenhower? Who before Trump? Who anywhere at any time is admired for it? Any religious figures? Saints? Moses/Jesus/Mohammad? Siddhartha Gautama?
Step back, stop drowinging in Internet ideology, take a even slightly broader view than the immediate tide of ideology - the concept is an absurdity for its simplicity and morality. Wake up sooner, rather than later.
A functioning society can't be built around either extreme, and because no human fits either extreme, it's a pointless debate about science fiction.
Markets are great tools and work with a mix of selfishness and selflessness - markets are destroyed by the too selfish, parasites who, for example, undermine the essential trust, safety, and integrity of the market for their own profit. The tools of selflessness are also great and built a society of freedom, which creates markets, innovation, opportunity, and social stability - universal education, for example; much healthcare is funded that way; many people wouldn't have effective rights without pro bono legal help and advocacy.
They are different tools each relatively better for different problems. Obviously 'free markets' leave a lot to be desired; obviously we can't function solely on selflessness.
> (In the news a couple days ago, the CEO of an NGO charity funded by the government had awarded herself a $750,000 salary.)
C'mon; that is a silly point and you know it (though it actually supports my claim in this comment).
Some do extremely well, many don't do well at all.
> with a mostly free market.
We both know there are massive social programs, and the market is unfree in many ways - powerful participants often make markets very non-free for others, and of course some are highly regulated to the point of distortion.
I actually favor using the free market whenever possible, most importantly because of the first word - people should be free to do as they like in business too, as much as possible - and because it works very well for the great majority of things.
I think we need freer markets - open to all competitors. Extreme capitalism is destroying the free market because capitalists are driving out competition. It's become capitalistism - an economy allocating things for the capitalists, not for capital.
Some people don't like ice cream, too.
When one makes general statements, replying that it isn't 100% is pointless.
You mean like how Europe has made themselves completely dependent on Russia for energy? How's that working out?
As a society, we’re more productive than we ever have been. We’re not breaking society to create a nation of workshops. This is a cynical power play.
That's what Mao tried in the Great Leap Forward: They tried to shift steel production to a cottage industry in back yards. You can imagine the results.
And also relevant: Everyone learned to say whatever Mao wanted to hear, so they all reported high and increasing production. It turns out that disinformation isn't economically productive, even if it feels that way - you can't make cars out of it.
https://www.washingtonpost.com/investigations/in-the-early-d...
https://www.cbsnews.com/news/n95-mask-shortage-melt-blown-fi...
The solution to the problem posed here is for the USA to use its incredible wealth deriving from its incredible productivity to buy the warships from Poland etc.
There's been a great sucking sound from all the electrical and mechanical engineers switching to writing CRUD apps because the pay is double.
I would have been much happier as an engineer working next to the shop where I could partner with the machinists.
A key point was that volume really matters in what you can onshore. Whether you go for full automation or not, dies, tooling, machinery etc. all need to be amortized across what you sell. High-volume, low-end products are relatively easy to amortize, being both less demanding to manufacture and having higher volume. Such products are usually made in several factories around the world. Specialized, high-end stuff tends to be much harder to sell in large enough quantities to be economically viable. In many cases, one factory serves the entire world and barely makes a profit.
The Tariffs and counter-tariffs currently being implemented create a barrier around the U.S. market. If a product is low-end and high-volume, then it may make sense to manufacture it in the U.S. if it wasn't made there before, primarily to bypass the barrier and serve the U.S. market as profitably as possible. Exporting from within the U.S. may not necessarily make sense. Not all low-end, high-volume products will be onshored either. For low-end products in which manufacturing costs are a small portion of the consumer price, simply paying the tariffs may make more sense.
Manufacturers of high-end, low-volume products that rely on access to world-wide supply chains and markets are unlikely to move to the U.S.. The U.S. is a big market, but the rest of the world is bigger. High-end, niche manufacturers currently in the U.S. may be forced to consider moving abroad or shutting down. Many high-end, specialized products will become more expensive in the U.S. and there will be no domestic competitor. Some products that are barely profitable now will simply be impossible to make with significant trade barriers around the U.S. market and will cease to be offered anywhere.
Dividing up the world market into walled off economic regions is, ultimately, likely to reduce the range of high-end, specialized stuff that the world can produce. If countries insist on a higher degree of self-sufficiency and throw up trade barriers, there will be things we all simply stop making.
And we didn't pay for re-skilling, re-training, re-education. We didn't give them welfare benefits to hold over while they learned these new things. We did near nothing, and expected these areas simply to pick themselves back up organically.
Of course that failed. When you do little to nothing, you get little to nothing in return.
Tariffs and manufacturing aren't going to solve this fundamental problem, which is as industry demands shift they externalize the cost whenever possible, which leaves workers, cities and states with a poor deal. If you instead plan around the fact you can't micro manage the economy, but you can setup a meaningful floor that catches people when industry shifts and allows them to invest in themselves - without fear of losing their livelihood - to take advantage of the next opportunities or better yet, create new ones - you wouldn't have this problem in the first place.
Tariffs won't help. Bringing manufacturing - in whatever capacity does get brought back, it remains to be seen if this will even happen - won't help alleviate this in any meaningful way.
On top of all this, the tariffs are here, and there is little plan beyond simply implementing them and...waiting for industry to magically start manufacturing in the US again? What is the actual plan here?
I frankly can't understand the undeserved optimism. If we wanted to make things better for formerly industrial cities, we should have invested in them and their citizenry decades ago. We failed to do this meaningfully. Thats the real problem, and they aren't fixing that problem at all
In a healthy free market, companies go bust. It just happens: better competitors show up, services or goods aren't needed, plans don't pan out. But we've created a system that keeps companies afloat ala Weekend at Bernie's, instead of what people actually want: keep families afloat.
This was the old "learn to code" moment. You are going to take a 50 year old auto worker with a high school degree and train them to do what? We have tried it, we have invested in it, is just doesn't work well.
Trade Adjustment Assistance (TAA) Workforce Investment Act (WIA) Workforce Innovation and Opportunity Act (WIOA) American Recovery and Reinvestment Act (ARRA)
You are better off using trade policy to at least slow down offshoring to give people a chance to move, retrain, retire if they are close.
Have jobs been lost to outsourcing? Sure. But far more jobs have been lost to automation and the elimination of obsolete industries. While companies might have avoided investing in automation through the use of cheap labor in other countries, there is little doubt that will change if they re-shore.
The age of the mega corp killed all of that stuff. NYC had a few thousand factories, all crushed by bigger, subsidized by tax policy competitors in the US south and then offshored.
When one limits the choices for purchases or sales, one reduces efficiency, whether it’s limiting to products made at your home, in your city, in your state, or even in your country. It’s failed for so many centuries across hundreds of countries and attempts that it’s not even a question except among politicians stoking fear to gain votes.
Ask these questions. Besides maximizing monetary efficiency:
Does free trade maximize a nation's resiliency?
Does free trade maximize a nation's employment?
Does free trade maximize a nation's security?
Does free trade promote equitable distribution of a nation's wealth?
Unless the question is yes to every answer, it is fair to have a policy debate about how much you are going to limit free trade. Every nation does it to some degree, no matter how much free trade rhetoric they promote.
- We’re the richest nation on the planet and have been until recently been adept in response to many types of disasters. - Unemployment has been <5% for a few years. - The US military reigns supreme. Our 5 air forces are the top 5 in terms of airframes. - We actively pursue fiscal policy to promote inequitable wealth distribution
The idiocy of conflict with China is just that. We’re better and richer together.
But you don't see free trade as a policy promoting inequitable wealth distribution? As designed, free trade is literally moving jobs overseas for lower wages. The primary benefit is higher profits for big companies, and the primary loser is middle to lower class that loses jobs. The best case argument is that the people who lose jobs, and end up underemployed, enjoy cheap imports.
You can check this via BLS, or Census, or on FRED.
And those lower class Americans are higher paid than a huge part of the planet. US poverty level is at the 85th percentile in global income.
You forgot maximizing income on the list. The others are important too.
> security
Far more of an issue after the nationalists destroy the order that provided peace for generations, the most peaceful world in history.
The article is saying that the US should desire to have advanced manufacturing. I don't think the article is saying that the US should manufacture everything.
But that doesn't work. You need economies of scale and technological advancement for an industry to be competitive. Once you sellout an industry (what government and corporations spent the last half century doing) you've lost a capability forever unless drastic shifts happen and even then it would take years/decades to recover.
Why care? I guess I would say, as someone who works with physical products, it's hard to see a good future when we build nothing and buy everything. That is the direction we've been going. It's not about building everything ourselves it's just about building stuff ourselves. I think you touch on this talking about "the right balance".
Does this mean you need to build “everything”? No, that would be inefficient (and probably unrealistic). But the more critical something is the “closer to home” (geopolitically speaking) it should be able to be sourced.
Buying semiconductor manufacturing equipment from Germany and the Netherlands? Fine (same for the rest of the EU, UK, Canada, Australia, etc).
Buying it from Taiwan? Probably ok but riskier cause China can impact it in the future (either by conquest, destruction or blocking access).
Buying essential equipment or resources from China, Russia or Iran? That’s a risk, long term at least. You don’t want to depend on them.
This is not absurd: 3D printing is a possible (next) stepping stone towards enabling this long-time dream.
The problem rather is (as very, very often) the huge amount of red tape and regulations that prevents individuals from experimenting with such ideas and bringing them forth.
So, if you look for the root of an evil in the world, it can often be found in the laws and regulations, and the politicians who passed them.
On the day any of that is allowed I built my hut and leave society for good.
> I should be allowed to build a helicopter and fly to new york!
To me, both of these suggestions don't sound like bad ideas that you make out of them. :-)
EDIT: Yes, I am a hacker.
Their primary ideology is "Juche": "Juche posits that a country will prosper once it has become self-reliant by achieving political, economic, and military independence." https://en.wikipedia.org/wiki/Juche
Maybe America can do it better?
Here's another idea. A country should build whatever makes economic sense and it should be able to produce almost anything. It should not depend much on others for key technologies or industries.
The idea is not to isolate from others but extract the maximum economic benefits while surviving with if a war starts or alliances start shifting.
No. There needs to be balance. We are way past the balance point, by far. When I say "we" I mean the US and Europe. We have the same problems, and I believe Europe is in far greater danger to be absolutely decimated in the next two to five decades.
Example: We are currently working on a robotics project. Just-about the only thing we can buy in the US (or Europe, for that matter) is the aluminum and steel, and only if we are ready to do the fabrication --machining-- ourselves (which we can do). If we have to rely on third parties to manufacture the parts we are sunk. Making anything in the US (and Europe) has become impossible. Wires, cables, circuit boards, motors, encoders, chips, displays, cast iron or aluminum parts, gears, belts, injection molded parts, filters, lubricants, etc. The list is massively long. Again, US and Europe, same problem.
The massive imbalance in tariffs and trade restrictions has collapsed entire industries. Try to print books or manuals in the US or Europe at scale. Good luck. Try to make packaging materials. Same problem.
I've been manufacturing for about four decades. It has never been worse. It's horrible. And we need to fix it or we'll be left with nothing. You cannot have an economy that is purely based on providing services and writing software.
A couple of decades ago, I used to buy a specially-treated antireflective type of glass from the last company making it in the US. The Chinese started to dump and created pricing pressure. Five years later they were out of business. I then bought the same type of glass from the sole remaining western factory in Germany. A couple of years later they discontinued the product. I then had to buy from China. A couple of years later they increased their prices --nearly doubled.
That's what we've been dealing with (US and Europe). A predatory and destructive "machine". This isn't about making everything. It's about making enough to have a viable economy in the long run. I find that people who are not in manufacturing cannot grasp this. It isn't about hating China either. They are doing exactly right by their people. I admire their dedication and focus. We (US and Europe) are the idiots.
Not sure what that means. There are many potential outcomes that could be defined as "equalizes".
At one limit, no country in the world, except for China, has a solid industrial base. In other words, nobody makes anything except for China.
OK, then their standard of living continues to increase. Got it.
In, say, 50 years, the cost of doing business in China starts to become less competitive. This, assuming no manipulation. This creates an opportunity for other nations to return to participation in various industrial sectors. However, this also means fifty years of utter destruction around the world. This also comes with loss of skilled workforce, manufacturing plants and the infrastructure necessary to support industrial activities.
Regrettably, by that time, most industrial capacity around the world would have been utterly destroyed. So, this reentry into manufacturing will likely be characterized by making low value products. For example, making screws, wire, some types of clothing, etc. Assembly operations might also make sense for lower tech products. This will only make sense if shipping parts from China to country X and then assembling there is economically viable. Tough to predict five years from now, much less fifty.
This process of "equalization" (in quotes because it really doesn't have a solid definition) most likely brings with it a further and non-trivial destruction of economic drivers in the US and Europe (and everywhere else). This, in turn, will result in terrible outcomes and economic collapse of the kind these societies are not used to (this is certainly the case in the US, Europeans have gone through serious consequences of the world wars).
I will not claim to be smart enough about these things to understand what the solution might be. Go to Walmart or shop on Amazon and it is impossible not to come out thinking that the damage is done and must of this is not reversible. I don't know. What I do know is that something has to change or things are going to get worse, much worse. We are not going to float entire economies on the back of AI and data centers.
I have always found the aspects of the history of Argentina have serious parallels with how large western economies have damaged themselves from the inside. Coincidentally, I just came across a nice and concise historical perspective of how this country went from being one of the top economies in the world to barely having the industrial output and economy to survive. Here it is:
Not the case for Europe, etc. but most Americans are better off without competing against slave labor so billionaires can become trillionaires while they lose social security, healthcare, etc. I'll pay an extra 20 percent for well-made things that aren't produced by indentured servants.
Eh, China has 20x-ed its GDP per capita in a generation. They're not slaves.
Maybe not according-to-hoyle slaves, but they're not in a great spot either:
https://www.theguardian.com/technology/2017/jun/18/foxconn-l...
When a country doesn't control the world reserve currency, and there is no global demand for their currency, they cannot sustain a significant imbalance of importing more than they export without devaluing their own currency and causing hyperinflation.
The US controlled the world reserve currency through the bretton woods era with a fixed currency, successfully transitioned to neo liberal era with a floating currency, and is now going through another transition into something new.
If the USD loses its reserve currency status, or if it's extremely weakened, then the US may need to reconfigure its economy accordingly in order to prosper again.
The administration may say they are doing what they are doing for one reason, the media may make up another, and the actual reason may be yet another.
“Everything” may be a bit extreme, but seriously, have you already forgotten the lessons learned during the Covid supply shocks? It’s important to be at least somewhat self-reliant as a nation, especially when the country we are VERY reliant on is not a friendly one.
I don't why the mainstream media isn't focusing more on this angle. Five years ago the richest, most powerful, country in the world couldn't get basic medical supplies to its citizens during a public health crisis. That should have terrified us into making major policy changes, but instead everyone just seems to have shrugged it off and gone back to business as usual.
And in the not so general case, over national security.
Is manufacturing the real problem here? Or is it a symptom of decades of systemic mismanagement of opportunity by a culture that values short-sighted opportunism over strategy?
Imagine if Russia produced their own technical components - how much of an effect would sanctions have on them? If Russia relies on our computer chips, we have leverage over them. If we rely on Asian factories and silicon, they have leverage over us. President Biden wouldn't have had to go begging to Prince Mohammad for oil if we had enough production at home. It's the way the world works.
My brother is an extremely skilled machinist, the sort who could build machine tools if he had the resources. And let me tell you there ain’t many of them, especially not young ones. Why? Because the US has emphasized college as the only respectable education path, as well as the only path to well paid jobs. That’s how you end up with a manufacturing industry full of lazy knuckleheads (and believe me I’ve got the stories to back this assertion).
There's this idea that the shift to college and white collar jobs was some artificial push, but it seems more like an incredibly natural and obvious move to me. A lot of blue collar work is just not super great from a working conditions and pay perspective and while not every white collar job is awesome, the pay and conditions are generally better and at their best can be incredibly intellectually stimulating. My Dad started out working in an industrial plant but pretty quickly ended up going to college to get a computer science degree because that job sounded way better than what he was doing...and that was way back when those kind of factory jobs were still a reasonable way to make a living.
I can somewhat agree with the Dirty Jobs philosophy that non-college careers can be valuable and the right choice for some people, and the world after all still needs crab fishermen. But it's really easy to slip into overly romanticizing those careers even to the point of suggesting they're better than getting a degree.
I'm giving a very high level synopsis here, but the snowball effect wouldn't have happened without the policy interventions by the government, in particular the student loan shenanigans
Well they are better in the sense that you can’t really outsource HVAC or plumbing work to India. The downside of course, and the reason that so many Americans fell out of love with the trades, is that we’re extremely eager to import foreign labor, legally or otherwise, to suppress wages.
The future of manufacturing is in automation, but in order to do automation you need machinists and computer science. You need people who can design a machine that makes other machines, which is a physical device that operates under the direction of software.
Getting people to learn to code instead of learning how to build machines doesn't get it.
Writing code is sitting in an office and typing stuff into a computer, all the way into production.
Making machines is a physical thing. You can do a lot of the design on a computer, but to do even that you need a handle on the physical reality of the thing that benefits from experience with the physical object. If you want a prototype it's something you build with your hands rather than something you run in a container on your commodity PC.
It's not just a matter of whether you call it white collar or blue collar. It's that the physical work is considered dirty and vulgar, even though it's something valuable and important.
There was lots of "making stuff" but the value of the company was largely the "office work" that happened off the shop floor, in the sales, support, development, etc. I'm not sure but I'd guess that 2/3rds of the employees were "white collar" jobs, even at a company that made machine tools
If I could make as a machinist what I make as a software monkey, all other things being equal, I'd go back in time and train to be a machinist. People will go where the money is.
They're right that they've been alienated from labor, they're so alienated they don't know that Fred Flintstone spent all day scheming to get promoted into working behind a desk.
This feels like a justification for slavery and slave-like conditions. I assure you the conditions and salary in most manufacturing countries would cause riots in the US; but as long as it’s out of sight, it’s out of mind, who cares what happens to their children.
Imagine if I used this argument for 1850s plantations (the conditions in many factories not being much better). “Do you really want your children working on the plantations? Is this what you dream of for your children?”
The answer is, of course not; but that sure as hell doesn’t justify enslaving other people (whether literally in chattel; or implicitly with meager wages, long working hours, no other opportunities, and no time to learn alternative skills).
- you shouldn't want that for your children
- you shouldn't want that for their children
In a geopolitical context, those are separate discussions. It's not really fair to accuse someone of promoting slavery when they did no such thing.
Pundits are going on fox news and saying that having a job where you primarily use a computer turns you into a woman. These people are not coherant.
At the end of the day if you want quality products and innovation you need to pay for it.
Outsourcing this ability to other countries saves you money up front but it costs you the institutional knowledge to do it at home and all the costs that losing this entails.
But let's be charitable and assume that you're saying that the price of Apple products will double if the cases are machines in America -- I don't think that would be the outcome.
What percent of the cost of an apple product goes to towards the aluminum case? What percent of that cost is the material, what percent of that cost is the milling machine, and what percent is the labour?
It's not foolish to want to maximize manufacturing capacity in America and minimize it in China. If you want to be able to beat China in an armed conflict then manufacturing is what will do it -- not software development.
Computers used to be made like this. The hardware cost the modern equivalent of tens of thousands to tens of millions, partly because the assembly workers were well-managed, well-trained, and well-paid. This was DEC's business model, and it worked well for a couple of decades.
Offshoring from the early 80s on allowed US corporates to double dip and explode their margins. Local workers were laid off and replaced with cheaper offshore workers, wages for most jobs were cut in real terms (with a few critical exceptions, like software dev), but the people who did have jobs had access to much cheaper imports.
Property became catastrophically expensive, but other sectors, including consumer goods, electronics, non-premium clothes, and domestic essentials like furniture became much cheaper in real terms - which took the sting out of the loss of the better-paying jobs.
You can't reverse that overnight without catastrophic damage, because prices will explode but wages will still be depressed.
You will be making domestic commodity products that have no market.
Reindustrialisation is a fantasy. You can't bring the factories back without reinventing the economy from the ground up and making all of the parts fit together in new ways.
That would take decades, and a level of strategic insight the US is completely unable to imagine for political reasons.
https://www.apple.com/newsroom/2001/08/24Apple-Offers-Aggres...
more than $5000 in 2025 dollars!
Plenty of people still work in the data entry mines, even though that’s a desk job. In a lot of ways being an Uber driver about as cushy as a desk job in terms of physical demand on the body, but it certainly isn’t a status position.
Working the lathe is probably not any easier to learn than "vibe coding" or generic office work like customer support or data entry.
The unspoken problem is that it's enormously expensive to re-educate adults to do something different. Adults just have worse brain plasticity and don't pick things up as quickly as younger workers. Some just refuse to learn thanks to the pervasive culture of ignorance that permeates USA.
And adults cost more as well (even just the basics such as food, which children eat less of) and if they have aging parents or kids, have additional responsibilities that distract them from learning.
No one is taking this risk on and why should they? If I was starting a company, and you suggested to me that I should indiscriminately hire minimum wage workers to work in a machining workshop, but first I have to educate them about machining from scratch, you'd be (rightfully) laughed out of the room, because you're dooming this business to failure.
Once you break that link (e.g. skip a generation of a profession), it's incredibly hard to bring that back. It's like losing institutional knowledge, because your genius employee was hit by a bus, or moved countries.
I would argue they know..
Office work is so easy on the body compared to almost any job.
some places like it when we remind the kids that this new thing has been around several times before under different names.
It is one of the most baffling thing I have seen our government do in our lifetime.
So why the broad spectrum tariffs? Why are we blowing up our trade relationships with Canada, the EU, UK, Mexico, Taiwan, Japan, Australia, New Zealand, South Korea and many many other countries who have been good, honest trade partners?
This isn't about China's sins in economic dealings. If it was, the tariffs would only target China and there is an explicit case to be made that indeed, we should be putting tariffs on Chinese made goods, the same pattern may hold true for India as well FWIW.
But our other trading partners have been very good to the American economy, and we blew that up overnight.
We left a vacuum for another economic force to fill now. All the nations we put tariffs on, not only will the tariff US made goods, they're now overnight going to be looking for a place to transact hundreds of billions worth of units, and China can now offer sweetheart deals to absorb that trade, and that weakens the US (and as consequence, western) alliances.
If if comes to pass that the 21st century is a Chinese one, it will be this long con that launched the whole thing: "We'll manufacture anything you want real cheap, just show us how to do it."
The U.S. outsourcing it's manufacturing to China is likely to go down as one of the biggest economic and political self-owns of the modern era.
Now if they are pissed and totally lost trust then we are totally fucked. But if they are pissed and willing to negotiate then maybe something can be salvaged out of this. It would be nice to have 20th century hong kong esque zero duty free trade between the US, EU, Mercosur, Canada, and all the other friendly nations as a result of us all learning how dumb this is. But I won't hold my breath.
https://financialpost.com/news/stephen-miran-economist-trump...
> Miran.. points to Trump’s application of tariffs on China in 2018-2019, which he argues “passed with little discernible macroeconomic consequence.” He adds that during that time the U.S. dollar rose to offset the macroeconomic impact of the tariffs and resulted in significant revenue for the U.S. Treasury.. “The effective tariff rate on Chinese imports increased by 17.9 percentage points from the start of the trade war in 2018 to the maximum tariff rate in 2019,” the report said. “As the financial markets digested the news, the Chinese renminbi depreciated against the dollar over this period by 13.7 per cent, so that the after-tariff USD import price rose by 4.1 per cent.”
> The deepening trade war is raising speculation in financial markets that China may resort to aggressively devaluing the yuan against the dollar in a break of their policy of pursuing a stable currency.. A weaker yuan would make Chinese goods cheaper abroad, offsetting some of Trump’s tariff impact, and make it costlier for local consumers to buy US goods.. One big consideration for Beijing is the risk of foreign investors pulling their money out of China if the currency sinks.
That's just a myopic regurgitation of free trade dogma that misses much. For instance: 1) the previous sock of American widget makers didn't become engineers, they got laid off with poor prospects; 2) it assumes a friendly free trade regime, which is unrealistic oversimplification; and perhaps 3) that "comparative advantage" is something real and not just lower living standards and laxer environmental and labor regulations.
> It is one of the most baffling thing I have seen our government do in our lifetime.
The part you're baffled about is only baffling if you're ignorant of everything except free trade dogma.
The real baffling thing is why little to no distinction was made between allies and adversaries, low wage countries and high wage countries.
But then the question is - do you think going backwards to an earlier time is a solution?
Go far enough back to individual homesteads doing some light farming, hunting, fishing. You'll be self sufficient, but you won't be able to afford a phone or television!
It's going to be a difficult problem (always) solving for the future of individual contributions to society as labor gets replaced by automation, and even knowledge work gets replaced by machine learning.
But I still think great minds (and also the minds that get put in charge) should look forward and try to build a good future, rather than cling to a dying past.
It's not "backwards in time." The need for machine tools didn't disappear. There's an essential machine-tool industry that the US depends on very much, it's just in places like China.
That's not a permanent situation, proven by the fact that the countries that are now ahead in machine tools used to be behind the US in machine tools.
> So it’s “backwards in time” because you have to start manufacturing the shovel to start digging when your competitor has a backhoe. And even if you could somehow steal the design and build it you don’t have anyone who could operate it.
As aptly demonstrated by China: it's a lot easier to catch up than to develop at the cutting edge. All you need is a little bit of investment and will.
And personally, I think the government should conscript some crypto and adtech startups (and their employees) to build up an operator pool, because they're obnoxious and those people should be doing something useful instead.
We’re cooked then. To give you some perspective I had some Chinese sales reps visiting my shop, they saw us working on some designs and casually asked about working hours i told them about 40hs/wk they laughed and said “in China engineers work 12hs a day 7 days a week”.
Oh, the fallacy that grinding harder and longer leads to more and better results. Do you think you do your best work when you're exhausted?
Also, 996 is more typical in China, hated, and I believe illegal too. That kind of thing is one of the (many) reasons their population is starting to collapse.
Please not a non-sequitur like "some Chinese grind, so here's some thing from China, therefore grinding is good."
Show me the reason for Deepseek's success is people grinding for longer hours.
Even if all of US became homesteaders this would likely still be at least a little bit the case, because foreigners would simply buy the property instead. Take a look at places like Spain, Portugal, etc and the high land prices are based on global competition not vs the low local wages.
What is this stereotype? Government retirees aren't some elite wealthy class. IIRC government pensions haven't been anything to write home about since 1982 (or something), and are roughly equivalent to private sector retirement benefits.
In any case in my rural homestead region there are mainly three classes
1) .gov pensioners 2) successful professionals 3) inherited property
The key to government pensions here I think is that they get benefits early enough in life that they are young enough to build and live a homestead life. At age 65+ you might be able to maintain an established property but buying something affordable (read: rough or vacant land) out and getting it up and running would be pretty rough for most at that age.
Military is a unique subset of government, and IIRC most people who join don't stay long enough to draw a pension.
When you said "government retirees," that brings to mind the civil service, which I believe is larger.
This argument of "fuck others' jobs, I got mine" works if you're OK with having a handful of prosperous cities full of multinational conglomerates with smart/educated people in the service industry, surrounded by slums of poverty, crime and homeless people on drugs who can mug you, as their industry blue collar jobs got offshored and they couldn't "just learn to code bro".
There's a reason countries with a solid industrial base like Germany are livable almost everywhere with a lot less income inequality, poverty and homelessness, and try to hold on to these jobs.
UK's deindustrialization is also another point on the map. Great if you work at some bank/tech company in London, not so great otherwise.
>Go far enough back to individual homesteads doing some light farming, hunting, fishing.
No one's arguing about going back to the stone age. But having moved nearly all manufacturing to Asia was a mistake, not only we lost jobs but also scale, competencies and bargaining power.
Remember the covid pandemic when you couldn't get masks initially because most were made in China and they were hoarding them all for themselves? What then? Use stonks as masks?
Not everyone can be a good software engineer, sure.
Among people who cannot be a lawyer, or a doctor, or a good software engineer, there are also very few people who can be a good machinist.
Competent machinists require an extremely similar set of problem-solving skills as competent software engineers.
Bolting a bumper to a Ford is different from manufacturing the metal shape of the bumper itself, and a competent machinist is the person who both figures out how to turn a piece of raw metal into a piece of bumper-shaped metal, and also the person who figures out how to do so in an easily replicable way.
That doesn't mean you'll get hired as one. Especially in the current market. There's a lot of shitty politicians out there, that doesn't mean anyone can just become a politician.
>Competent machinists require an extremely similar set of problem-solving skills as competent software engineers.
Every job has some critical thinking aspects to it, even landscaping and construction workers, crane operators, truck drivers, etc that doesn't mean everyone wants to code, or can be a productive programmer.
I have plenty of friends form technical university, mostly mechanical engineers, who did everything they could to avoid getting into SW development because they just don't like it and they weren't good at it.
You're taking a swipe at factory workers, and elevating Software Engineers to the intellectual strata of doctors?
Most working-age adults can be a contemporary Software Engineer (even without LLM cheating).
For that matter, I could teach bright 12 year-olds to apply the technical skills that your average Software Engineer does (though that would be mean, and stunt their development).
You'd better pray that your doctor is much more capable and professional than your typical Software Engineer.
Replace 'machinist' with a choice of other hands-on 'blue collar' professions for the same effect. Even better is to replace it with a profession which allows you to combine manual dexterity with software development.
Or do as I did and buy a farm which allows you to flex all your muscles - mental as well as physical.
$40 an hour in Austin Tx, a city with construction going on in every corner.
Less than I make currently, and I don't live in one of the S/HCOL cities either.
I went to college and eventually got a PhD in physics. I've built specialized machine tools. Yet I'm considered a schmuck because I didn't go into software development, and the software developers are considered schmucks if they didn't go into financial services or advertising. And none of that was about emphasizing college. Becoming a programmer doesn't require college.
And lazy knucklehead stories are part of the workforce culture in virtually every occupation and industry. I'm sure I'm the lazy knucklehead in some of those stories.
Manufacturing is what builds up strong economies and it's what saves lives by preventing wars as long as possible and minimizes casualties on your side in war by fielding troops with more/better equipment.
A war with China won't be won with manufacturing. It'll be won by having allies.
If it actually comes to pass, you'll probably declined fighting the hot war, and opt for a cold one. But without allies it'll get real cold.
Canada could have been an ally too ... now it mostly hates USA.
What Europe doesn't is the ability to quickly agree on anything. But when America calls consensus can be reached quickly.
At times 40% of the contingent in Afghanistan were allies.
Does America or Europe have the industrial capacity to produce enough ships to stop China from taking Taiwan?
Most of the good machinist knowledge in America has retired, if not already literally died.
And mechanical engineers in the US largely don’t have the hands on skill to really understand making these machines. Not that that can’t gain it.
But to achieve truly high precision (the pinnacle from which all other percussion is derived) is an extreme art form. CNC doesn’t come close. The state of the art (and has been for eons) is hand scraping: https://www.krcmachinetoolsolutions.com/machine-tool-scrapin...
Things used to be made better because people cared about making a good product and took pride in their work. This is especially true in the machine tool industry: don’t try to make it in the field if you don’t really legitimately care.
No, it absolutely is not. Optics machine tools make things flat and accurate within a few atoms. Cheap surface plates are more precise than any human could hope to achieve by hand.
Hand scraping is remarkable- skill can get you ~micron cutting depth. It would be totally obsolete except that the rough crosshatch pattern it creates is useful for retaining oil. Modern tools, especially the most precise tools, are not hand scraped. Cheap clone knee mills are hand scraped. Single-point diamond cutters run on air bearings with no oil, because the oil gap in plain ways is too large.
Hand scraping is thoroughly limited by the viscosity of the marking fluid. You identify high spots by painting a flat blue and rubbing it on another flat part. If the whole surface rubs off then you can't tell where to scrape. The fluid does not spread out in single atom thickness.
Machine tools are not designed by extremely skilled machinists, they are designed by engineers. Machinists do not know how frames deflect or resonant modes or overconstraint or the other things that are critical in machine tool design. Machine tools are inherently dynamic systems where moving cutters cause feedback into the system. Being able to make something accurate under static conditions is very different.
When they make it, they often have questions that turn into suggestions. I would say that any engineer that does not listen to their machinist is a bad one.
But they're built by extremely skilled machinists. I've practiced engineering for decades but I wouldn't even want to be in the same room as any object I've personally made being spun up the first time.
Their time is much better spent creating new processes or making low-run jigs and things.
Likewise the average machinist is not "skilled" in the way that most here are implying.
It looks really hollow, like we will be over a barrel when we experience a real embargo. I wish your brother all the luck in the world, I think his time will come soon because at the very minimum having guys like him on our team keep us from getting gouged to death.
There’s the kind that focuses on simplicity and avoiding unnecessary work to achieve the same goal (the good kind); and there’s the kind that just ignores necessary work and drags out the process delaying the goal (the bad kind).
There are plenty of programmers, and machinists, in both camps. Many programmers actually are lazy knuckleheads in the worst sense of the word - and, according to recent researchers, 10% of programmers self-admit to doing nothing at their jobs.
The US manufacturing base is extremely broad, deep, and strong. The onus is on you to try to prove otherwise.
You each made claims. You each have onus for them because you made the claims, not because someone says you do. That's how the burden of proof works.
Until this administration kicked in, historically high?
You mean the worlds strongest, most developed and most successful economy?
Sure services may be great when things are going well, but you can’t ONLY have services, and then go and blow up international trade and expect to have a good time.
https://fred.stlouisfed.org/series/IPMAN
https://www.brookings.edu/articles/global-manufacturing-scor...
> Manufacturing constitutes 27 percent of China’s overall national output, which accounts for 20 percent of the world’s manufacturing output. In the United States, it represents 12 percent of the nation’s output and 18 percent of the world’s capacity. In Japan, manufacturing is 19 percent of the country’s national output and 10 percent of the world total. Overall, China, the United States, and Japan comprise 48 percent of the world’s manufacturing output.
I suspect it's this:
> Advanced manufacturing technology development can be found throughout the United States. In Indiana for example, Rolls Royce, which makes jet engines, employs thousands of engineers. Zimmer Biomet makes surgical products in Warsaw, Indiana, a city that has become a national hub for orthopedic products.
So much of what I buy as an individual is imported. My fruit comes from South America, my electronics come from Asia, my outdoor equipment comes from Canada (and the raw fabrics probably sourced from China).
If the USA doesn’t have a secure industrial base and can’t reliably enforce the international order then there is no international trade.
Sources?
>If the USA doesn’t have a secure industrial base and can’t reliably enforce the international order then there is no international trade.
The US reliably enforces international order and global trade now. Source where this is an issue?
> The US reliably enforces international order and global trade now
Yes, which is why many believe now is the time to revamp our industrial capacity while we still have strategic dominance.
The war in Ukraine has illustrated the importance of mass drone production, and we currently lack a lot of the direct capacity to make them. A lot of our military supply chains are also based too heavily on components assembled and manufactured in China and in parts of east Asia that could easily be disrupted and cripple our ability to project power and play the role we currently play.
Tariffing close allies at the same time as likely or actual foes especially doesn’t make sense. And rather than this weird roundabout approach, the government can just… pay for things to happen. Like, they used to run weapons factories. If that’s the actual reason for this, it would have been a ton cheaper to just fire up a few government factories, continue and expand the chips act, and maybe ramp up some targeted tariffs and other controls, which would have been way more effective with allies on board. Or, they can start placing drone orders and handing out r&d contracts with specifications that they be entirely made in the USA.
You may be presenting a real perspective, and it could be entirely correct, and this still would be extremely stupid.
I also don’t think even a moderate introduction of tariffs would have been viewed favorably. Reindustrialization is I think necessary/I agree with the desire to ramp up domestic production and secure supply chains in both America and Europe, but we haven’t done it yet because it’s going to be painful to reverse the current trajectory.
This could very well be a part of a kind of shock deal to get allies to know we’re serious as we negotiate down.
I’m not saying I agree with that tactic, either, and the complaints about the damage in trust are extremely valid.
Also, here its US who is doing massive 'violations of international order'. You know which order I talk about? WTO for example, US is founding member, an org specifically designed and accepted to handle this. Various international agreements between close allies. And so on, news are full of whims of one bipolar old man stomping left and right.
What is actually and already happening is that US will lose a lot of customers world wide. That Amazon cloud or tesla car or weapons (machinists heh) or literally any other US product ain't so cool or even acceptable anymore. What will happen actually that rest of the world will replace US products. Not just government, but regular people. Nobody wants to drink US whiskey or wine anymore. Nobody wants any US product or service anymore.
If you think 4% of global population (and just 26% of global GDP) can on whims dictate lives of 96% of mankind by force, well, that's like your opinion man.
I also realize how incredibly complex modern supply chains are and how disruptive these tariffs are. While it seems clear to me the previous trade situation was unsustainable and going to break down without some sort of change of course, that doesn’t mean I’m in favor of the blanket tariffs or the way this was executed, and I don’t know whether it will work. I’m simply explaining the logic behind it, which is also more complex than just “a bipolar old man stomping left and right”.
> That’s part of the intention. Europe specifically is underproductive and the hope is that these tariffs and the change of tone for defense agreements will bolster Europes domestic industrial and defensive capabilities
So, rather than sell Europe weapons that we create in the United States, part of the “intention” of this policy is to cut off the European demand for our weapons systems and cause them to manufacture their own? How is that helpful to the United States and our bottom line? How is that at all in the US interests?
I agree that’s what is going to happen, but I see no evidence that it was part of the intention.
Are you asking why a single point of failure is a bad thing?
To restate what you asked: “if the USA weapons manufacturing capability is compromised and cannot sell weapons to approved parties, and said parties also cannot manufacture their own weapons, how is this in the interest of the US?”
What do you think?
You can't equate weapons manufacturing to server uptime or data center diversity -- it's fundamentally different.
In terms of what is in the best interests of the United States -- yes, having a single point of weapons manufacture and having that be the United States would very much be in the US interests. It would allow the US to dictate, even more than we do today, how the rest of the world operates. Although we have not been a single source for weapons (Europe does make their own), our role as primary supplier would be (and has been) very profitable.
How is it that we can afford to create the advanced weapons that we do? F-35, Patriot, etc? It's because we can spread that research and development cost across other (allied) countries, because they buy our gear instead of developing their own. Reduce the market for our weapons, and you're going to reduce the quality of our weapons and increase their per-unit cost -- both things that are very much not in the interests of the United States.
This was sparked by the remark that this was all part of the "intention" of the policy. Since that intention would by definition be very contrary to US interests, both financial and strategic, it seems dubious that this was the intention.
> I’m simply explaining the logic behind it
I really disagree most strongly that this is the logic behind it. You genuinely think Trump and his base want these tariff wars to encourage more manufacturing in Europe?
As a foreigner, the message that comes across loud and clear from the US is "America first".
I can't speculate what is really going on inside Trump's head or inside his administration, but one thing I'm 100% sure of, they really don't care in the slightest about Europe or any other country in the world for that matter.
The desire to eventually back out of defense commitments in Europe is not in contradiction to that.
The political will to commit troops and to defend Ukraine simply isn’t there, especially not while Taiwan is looming. Wanting Europe to reindustrialize and handle it’s own defense allows America to focus more domestically and on potential wars more aligned with American interests (disruption of chip manufacturing affects America much more than Russian occupation of Ukraine).
I linked to a hoover institute interview with Niall Ferguson explaining a lot of the thinking. You can also just listen to what the administration has been saying themselves. You don’t have to agree with it, but the goal is reindustrialization of both America and Europe so America doesn’t lose it’s defense capabilities and so Europe can defend itself without relying on American support.
I'm still sceptical. It's pretty clear that there is real distaste for Europe in the MAGA sphere. I really find it hard to believe that this is all an act, a ploy, to boost Europe's own economy. Everything I've witnessed about MAGA suggests this type of long range thinking is just a coping wish. I think it's much simpler than that. I think they have a real distaste for Europe, for a variety of reasons.
Again, I don’t think it’s an either or, and I don’t believe this is a ploy. The desire to reduce commitments in Europe and to have long term changes in trade is genuine.
The core motivation of the base is simple: middle America wants their industrial jobs back.
The motivation of advisors like the people at Hoover, military strategists and other intelligent higher ups is to deal with the weaknesses (present and future) that both Covid and Ukraine made obvious.
These are in alignment.
And yes, the MAGA base desire for a return of manufacturing came before the understanding of strategic weakness. That doesn’t mean the strategic motivations are a cope: I don’t think it’s a coincidence the bureaucracy were only willing to go along with this after both Covid and Ukraine discredited a lot of previously held beliefs about the state of the global order and the need for a course correction.
It’s also important to note politics and “cope” are basically the same thing. Everything is compromise.
MAGA won't sell that though, it needs a different narrative. And this is the narrative it feels like this little exchange is pushing too, though forgive me if I'm misinterpreting you.
MAGA is acting as though the world isn't buying trillions of dollars worth of its services every year, that it hasn't controlled the global economic policy for decades, enriching itself in the process. Nope, MAGA is now claiming victim status.
I believe the reason it feels like I'm pushing is that in a sense, I am: I'm not adding any caveats or disclaimers to that narrative or explaining why other narratives do or don't matter. I think counter narratives to the ones supporting these tariffs are already well understood by most people here. The original person I was responding to was asking why this happened (presumably because it seemed irrationally stupid, as I think it does to most people here), and what I'm pushing for is an understanding of the point of view which explains it. If you understand the concerns of MAGA and the strategic concerns of the US Military the tariffs make sense. They might not make sense in relation to other concerns, and maybe it's wrong to be so focused on those concerns at the expense of other concerns like relationships with allies. But they do make sense from that point of view.
In order to repair international relations with allies, the root causes of these tariffs first needs to be understood and addressed. If this is simply viewed as a madman irrationally leading a horde of rednecks to punish allies, and the other strategic concerns are just considered window dressing to excuse that madness, the grievances of those who empowered Trump will remain and the strategic weaknesses will continue to be an anchor weighing the US down and interfering with our capacity to maintain relationships and enforce international law.
The narrative of the MAGA base is that middle America and the rust belt was in fact victimized by global economic policy. The benefits you mention about the world buying American services and getting into foreign wars didn't benefit the MAGA constituency, it hurt them. Yes, everyone benefits from cheaper goods and America in particular is able to buy more of them due to the fact we issue the global reserve currency, but on net the average middle class American family in an industrial town lost more than they gained.
That narrative is not the whole narrative. I am well aware that there are more people in the world than just MAGA that are feeling the opposite about all of these tariffs, and they have legitimate grievances. But the MAGA narrative is not false. Just like the narrative about betrayal on the part of allies and economic partners is not false. Just like the narrative I presented about domestic supply chains and strategic weakness is also not false (and is the narrative I'm most biased towards/what I care about most). In order to look for a balance point that maximally benefits everyone, all of the different narrative threads need to be understood.
In order to prevent a repeat of this situation in the future (if any semblance of the previous order can be re-established after the US secures it's domestic supply chains and repairs it's middle class, and I have no idea what the likelihood of that is), any re-establishment of global supply chains needs to ensure it doesn't erode domestic capacity and that there's an actual plan for how to maintain the middle class through either some degree of protections for domestic industry or a more effective plan to transition the middle class into services.
For what it's worth, being an immigrant to the UK, I've watched kind of from the sidelines as similar events unfolded here around brexit. I tried very hard to have sympathy for the views of brexit voters. The problem I have, and I have the same problem with MAGA, is despite having real grievances, is the overall narrative is just lie after lie. The MAGA administration lied to the whole world about "trade deficits", completely ignoring services. Maybe the story rings true for a particular voter, but it is a misrepresentation of the whole truth, or more bluntly, is a lie.
I understand very well that certain people have not felt the benefit of deindustrialisation. I do get it.
You say this:
> The original person I was responding to was asking why this happened (presumably because it seemed irrationally stupid, as I think it does to most people here), and what I'm pushing for is an understanding of the point of view which explains it. If you understand the concerns of MAGA and the strategic concerns of the US Military the tariffs make sense.
No. I just don't agree. They make sense if Europe wasn't consuming billions of USD a year of US services, and the US wasn't growing increasingly wealthier than Europe each year.
Trump is pandering to his base. That makes sense. But the tariffs are just a means to that end, and trying to ratonalise the tariffs in other terms, I just don't agree with.
In any case, I have learned stuff from this conversation. I'm not even saying I am definitely correct, there is a chance I'm wrong and you're correct, and I will keep an open mind about that. Thank you.
I’ll keep an open mind as well. I hope things eventually work out for the best, but we’ll see what happens.
This seems like a coping narrative. The unwillingness to stand by commitments, groveling before Putin without receiving anything in return, threatening long-standing allies with annexation, and now the utterly moronic trade war (which is not based on any economic plan but apparently on chatbot output) are all weakening the US politically, economically and militarily, and giving countries like China a window of opportunity to act against it.
China has no strong allies, and its long-term goal has therefore been to isolate the US from its own allies in order to level the playing field. With each passing day, the US under Trump can indeed expect less and less support from its allies in the event of a Chinese invasion of Taiwan. Despite all the hollow rhetoric against China, Trump is setting the stage for the invasion.
Had the US played its cards better, it could have had a booming economy, motivated allies across the globe, and tens of thousands of highly experienced soldiers from Ukraine's battlefields willing to return the favor in the war with China. Ideally, that would've led to China shelving the invasion plans. Instead, we see an embarrasing clown show, which serves as an open invitation to invade Taiwan.
If capital doesn't get very mad and do something fix the fallout immediately, it will get very bad. You can't wait for things to work themselves out; they will not. It's as stupid as it appears on the surface. These people are sociopathic, vengeful idiots, they're mad at anyone smarter than they are, and they're going to destroy everything that's good and replace it with much, much worse.
There is no logic behind it, no matter how badly everybody wants there to be. Trump's brain is stuck in the early 1980's when he first had a subliterate fixation on tariffs, and he's never let go of the idea. I'm sorry that's it not more complex than that -- it would be reassuring if there was an actual plan that anyone not MAGA-infected would thought would work! But there isn't. This is them destroying America and taking down as much of the global economy as America can reach.
Any system will fail if you deliberately put it into it's failure mode...
https://en.wikipedia.org/wiki/Manufacturing_in_the_United_St...
I mean .. obviously yes? It's just that you don't make all the chips and cars on the planet. Or even all the locally used ones.
The US is mostly an astonishingly wealthy country that has somehow convinced itself that it's in the middle of a decline, while simultaneously avoiding facing up to any of the QoL questions which people routinely fight over on HN where the US average or poorer citizen might actually be worse off.
It turns out production of most goods is commoditized and a race to the bottom (assuming free trade), so if you want margins that can support high salaries, you have to move up the value chain (read: services).
If we keep tariffs high enough for long enough, we will bring back manufacturing jobs. They will not be high paying unless unions artificially constrain labor supply. The cost of everything will be higher (relative to people’s incomes), implying a lower standard of living.
tl;dr: If we want to withdraw from the world economy we mostly can, but don’t expect to have as nice of a life afterward.
I know, right? When you go home and sit down on your Oracle database to relax, then go to the kitchen to cook your evening meal in an AWS Lambda, then afterwards relax a little more by changing into some spreadsheets, it really puts it into perspective: everything a person needs is technology and software, and who wouldn't want to dominate that industrial sector?
>If we keep tariffs high enough for long enough, we will bring back manufacturing jobs.
Sure, but we don't have a commitment from Trump's eventual successors that they will continue, let alone from the opposition party. In other words, everyone knows that it will not continue long enough... the only real question is how do they best mitigate the pain while it does continue short-term? Trump could easily drop dead of a stroke or heart attack tomorrow, he is not a young man or in great health. But even should he survive the full term, the clock's already ticking. Why would anyone commit to an expensive long term investment today, when January of 2029 it will no longer be necessary?
>They will not be high paying unless unions artificially constrain labor supply.
The labor supply is already constrained... demographic implosion is well underway. The only way to unconstrain it would be to import millions of people from foreign countries.
>If we want to withdraw from the world economy we mostly can,
Why would this be withdrawing? Who do you think we'd want to sell the products to anyway? No, I believe we're talking about switching our role from consumer in the global economy to producer. What do you think the Chinese could even buy with all the trade deficit cash they're squirreling away, when we don't make anything? Some large chunk of it is buying up stock, real estate, etc. Give them something else to buy.
>but don’t expect to have as nice of a life afterward.
I'm like a 8th class (or lower still) software engineer in a fly-over city, and even my salary's six figure. The rest of you I always figured were doing better still. So I can understand why you don't get that for most people in the United States, "nice of a life" hasn't been a thing for generations, it's mostly stories they tell each other that have been repeated since the 1960s that originated with their great-grandparents. I mean, I would've thought some of that leaked through reddit and other such forums, where they complain about working 3 Uber-Eats-style jobs and never having a day off, only to be able to scrape by in some shit apartment while wondering how to keep their crappy used car from being repossessed.
You swim in this little bubble of atypicality, never noticing that the cheap clothes on the Walmart shelf show up from the distribution center looking what we would've called threadbare just 30 years ago. That no one you know (even those earning like you do) owns real furniture even if they earn a salary like yours. Even the "fancy" McMansions that you see from time to time are garbage, constructed as if no one cares that they last longer than 20 years. How many of the consumer goods in your home can you lay hands on that aren't 50% plastic or more?
Nice of a life. Haha.
Did you know you can buy premium clothes made in China? You can. Check out producers like Bob Dong or Bronson. Ironically, they make a lot of thick, quality clothes inspired by vintage US work-wear. The reason you probably never heard of them is buyers have to pay extra for that quality, and the appetite isn’t there.
The fact that everything you buy is cheaply constructed of cheap materials is entirely due to that being what sells. Most consumers won’t pay a premium for quality, so you have to go out of your way to look for it. Moving mass-market garment manufacturing back to America won’t change that.
If you just want to pay fistfuls of dollars for quality American-made clothing, you can do that today. Go buy yourself a $70 t-shirt from Lady in White. I’m sure we’ll be able to make shittier clothing cheaper, but it’s still going to be a lot more than shoppers are used to paying. You’re never going to get any American-made shirt for $4.98.
As to why tariffs constitute withdrawing: other countries can and will retaliate. China is not going to buy our expensive American-made commodity products, especially when they’ve got a 55% import duty on them, when they can buy equal or better quality things made at home or in SE Asia for half the price.
Even if successful, tariffs will make goods expensive. There’s no way around that. There is 0 reason to believe they will make goods any better. With reduced competitive pressure, quality is more likely to drop, if anything.
[1] https://www.space.com/mountain-discarded-clothes-chile-satel... [2] https://www2.hm.com/en_us/productpage.0568593005.html
Meanwhile over at the People's Daily, someone starts to type up "Why should we accept the Americans stealing good Chinese manufacturing jobs?"
> for most people in the United States
Now we start to talk about income inequality, and who exactly is having a nice life; but the minute you mention some of the policies of less unequal European countries, Americans go absolutely bananas and call you a communist. You might as well suggest doing something about the mass shootings, that's even more unpopular.
If everyone is educated, who is going to collect your garbage, fix your car, replace your broken pipe in the wall, cut down the rest of the tree that fell across the street, stock your groceries, sell you fast food, drive trucks across the country, build houses and buildings, pump septic tanks… I can keep going.
I don’t get it, never have. Education is not some magical bullet. In fact, having attended college and graduated with a now-lucrative job as an sw engineer, I can say I learned almost nothing at all in college because of the institution itself. At best it made me teach myself whatever was in the class textbooks. The professors mostly spoke English as a second or 3rd language and the TAs were even worse.
“Oh the culture, the diversity!” Meant absolutely nothing to me, I’ve had diverse family and friends since I was a child.
No one is saying to get rid of the jobs you mentioned. The goal is to make it so people working those jobs can provide for their families, have health care, have appropriate time off, and generally work with dignity.
And I should clarify that most of what you mentioned fall in the "middle class" category, including building houses, driving trucks, serving food, and pumping septic tanks. Cost disease (especially in housing and healthcare) has made these less stable occupations than they should be.
College education should be accessible and affordable for people who want to pursue it. I agree that it has been way over-emphasized in recent decades and had a similar experience to you. "Get an education" was a cop out excuse to paper over the structural problems occuring underneath (while tuition costs ballooned). For sure the pendulum has already started to swing the other way though.
Why is HN in English and always talking about FAANG?
Why do kids all around the world play with Spiderman?
Asking for "vital" and "21st century" is a paradox, so maybe it's not what you really meant. But the proof of our success is all around if you're willing to actually look.
So we sell children's stories, in a world where technology makes it possible to copy not just any single story, but pretty much all of humanity's stories since time began onto a tiny little plastic doohickey that you can hang on a keychain. And then anyone in the world can also make up a new story with those same characters, or draw a picture, or whatever...
That's our wealth? Wow. Even if I had stock in that intellectual property, it seems like it never really was property to begin with and that I'm heading for ruin.
Get a slice of humble pie.
The proof of American failure is also all around if you're willing to actually look. Urbanism, health, environment, MAGA, Vietnam, Irak, Afghanistan. Easy to cherry pick, turns out many of us who have the luxury of being able to work in the US if they wanted to chose not to do so, maybe with good reasons? "Most successful" is very subjective. "Dominant", yeah, you are.
[0] https://m.youtube.com/shorts/0dKrUE_O0VE
U.K. and Sweden followed closely by Germany?
In fact we (being Americans broadly) eat only a tiny, tiny, tiny fraction of the absolutely gargantuan amount of value we (being Americans broadly) create.
Strong, yes. Strongest by nominal, yes. But not strongest by PPP: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
https://fred.stlouisfed.org/release/tables?rid=50&eid=4881#s...
raising the marginal cost of labor lessens the amount of labor hired. there is no scenario in which it leads to more people working the job. unionized labor did not make it harder to offshore - in fact it accelerated offshoring, automation, and a shift to manufacturing in the South of the country.
having lower costs of goods usually benefits the economy more than more prosperous labor (not necessarily the local economy), although the net welfare increasing thing is context dependent. in competitive markets, vast majority of labor cost decreases are captured by the consumer.
Indeed, the three countries listed in the report as being better than the US all have EXTREMELY strong machinist/metalworking unions.
Japan: JAM
Italy: FIOM
And Germany, with probably the most powerful union in the entire world: IGM
The problem isn't unions.
The problem is the parasite MBA class, shuffling memos and spreadsheets around to make it look like they're doing something.
The US isn't producing much manufacturing machinery.
Machine tools last a long time, many decades. Replacement of worn-out machine tools does happen, but slowly. Because of this, the market for new machine tools is mostly driven by the growth rate of manufacturing, not the total level of manufacturing activity. If manufacturing is flat or in decline, new machine tool sales become rare. The US does have a big used machine tool market, and much demand is filled from there.
China now makes quite good machine tools. (Plus many crappy ones.) Search Alibaba for "CNC mill". There are decent 3-axis machines below US$20,000, and 5-axis machines below $30,000. Haas, the biggest machine tool builder in the Western world, has almost nothing below $70,000.[1]
As a rule of thumb, 10x the volume cuts manufactured product cost in half. It's hard to come back from being a small volume producer.
These days not many Screw machine shops left, very few in the USA. Material costs were too high, and the Chinese could make it for 1/10th the cost. To bring it all back is very difficult since even the products that the parts were being made for are no longer manufactured in the USA.
On a tangent, watch Ives speak about trying to build the iPhone in America. When you understand what it takes, you quickly figure out it is impossible. The supply chains make it impossible when none of the 1000's of parts from screws to glue to chips are not manufactured in the USA.
It won't hurt if we try to bring it all back, but it will take the same amount of time and sacrifice China put in to take it. Who thinks our Gov has what it takes to do it?
> It won't hurt if we try to bring it all back, but it will take the same amount of time and sacrifice China put in to take it.
I think this is missing a huge aspect: Chinese workers are very cheap compared to US levels of income ($25k/15k with and without adjusting for purchaising parity!).
Those differences are gonna be paid by the average American, but not only that: Inputs for all those industries are gonna become more expensive than they are (because of retaliatory tariffs), and everything else (retail, restaurants, craftsmen, etc.) is gonna become more expensive, too, because the onshored industries compete for labor (and there is not a lot of unemployment in the first place).
Compare agriculture: Faces similar pressure (wages lower elsewhere), but is harder to offshore (goods expire, food safety)-- the US still pays ~20 billion every year just to prop the sector up (and I recon that is money well spent). But I would not want to spend similar amounts in direct/indirect taxes (i.e. tariffs) on mining, ore refining, metalworks, textile processing, electronics assembly and a dozen others, just to have "more self-sufficiency"- you could maybe make an argument for it in some cases (involving Russia or China), but what is the actual problem with buying some machine-tools from allies like Germany or Japan?
I'm very confident that we are NOT gonna see a large, self-sufficient American manufacturing industry in 4 or 10 years; people may continue with the current approach for a bit, but will realize at some point that the situation is not improving (prices rising faster than wages, as well as government debt and/or median effective tax burden spiraling out of control).
My prediction is that we're either gonna see Trump declare "mission accomplished" at some random point, or reverting on the ~20% average import tariff because of mounting pressure.
In conclusion: It will hurt to try to bring manufacturing back, and there probably won't be much to show for it in the end.
Oh well, good luck to you guys.
Defenders of these tariffs say they might bring back manufacturing or say they are a response to some bad effect of the current state of America... They don't accept what the experts say, but what their authority says, and their authority says that these will bring manufacturing back. The current argument in the face of backlash is "let's wait and see."
Mao Zedong, another populist authoritarian who didn't like to listen to experts or acknowledge reality implemented the four pests campaign. Sparrows were eating Chinese crops, much like trade deficits eat American labor. Mao decided it would be wise to kill these pests to protect the crops, failing to predict that the death of these sparrows would cause even worse pests to damage crops.
This led to one of the worst famines the world has ever experienced.
China's cultural revolution (our project 2025) and great leap forward (liberation day) had truly disastrous effects like the four pests campaign for those who lived through them.
If there are no checks on this administrations power soon, we are likely to see even more short sighted incompetent policy that radically changes society that will damage us for generations.
In china they erase history because history gives you a foundation to judge your leaders. "Purifying" the Smithsonian is an admission that understanding history there there would make you dissent from what will happen or be dissatisfied with some of your leaders in the past who might be similar to current leaders. We should take the lesson's of history and understand that what is happening now rhymes with everything the America I grew up in, including the conservative America, stands against, like unchecked power.
It might get better... but it can also get much much much worse.
It's not gone nearly as far as in that period, but we ought to be careful not to get closer. When information countering government policy is suppressed, the mistakes keep growing bigger until the consequences become so grave they can no longer be ignored.
Mao's "backyard" steel furnaces might be an even better comparison:
There are no manufacturers of screw cutting lathes (a variant of engine lathes and what most people think of as a manual lathe) left in the USA. If you look at old 60s/70s catalogs of lathes the basic models would cost around $15,000 in adjusted money. The Chinese imports are $3000.
Could someone make a competitive lathe for around $3000 in the USA? Perhaps. But it will take significant investment to make that happen. I'm not sure where that investment will come from as Wall Street has no interest in such things.
"U.S. firms are at a further disadvantage in that their foreign competitors benefit from sustained government incentives to invest in advanced industrial equipment."
True then, and true now. If you want to buy a machine, you are basically on your own, and machine financing isn't favorable, it's on the contrary somewhat predatory.
But this article was written prior to Haas really taking off in the 90s and 2000s, and I think Haas has been somewhat successful in selling into North America, if only for relatively cheap, low-quality, general-purpose machines.
And, if you extend the axis of that graph back past 1980, I think Germany, Japan and the UK were dominating advanced machine tool manufacture since their industrial revolutions. I am not convinced that USA was EVER a real leader in advanced machine tool manufacture, I think it was always traditionally imported. Correct me if I am wrong. Sure, the Americans made crappy low tech Bridgeport mills and engine lathes by the millions, then relied onto that technology for 100+ years (and are still trying to make it work). The Haas vertical mill is the new Bridgeport mill, it is 30 years behind state of the art, and American industry is still buying that en masse.
I think that the computer industry was successful enough in the 1990s, American policy makers were essentially OK with losing ground in the machine tool industry. Then the computer industry also got offshored.
But remember! The equipment and production lines were originally shipped offshore wholesale, the production lines can get shipped back, but American land, energy costs, wages, taxes and other input costs are too high to make it work (without protective tariffs).
1. Manufacturing takes time and money to setup. This is a software forum where changes are made at lighting speed. Manufacturing requires capital, years, and will. In software it might take a day to make an obvious change. Manufacturing hopefully 6 months. Working with physical systems takes time.
2. Manufacturing does not mean jobs. It will be automated with a fifth or less required to setup and maintain. Some technical jobs will come back, but nothing like what has been said.
The tariffs initially put in place will have the same level of effects as a war. This is At Covid levels. The effects take time, inventories are getting sold. You are responding to the news not the effects give it a few weeks for company CEOs to get through the meetings that their employees are pushing up the chains.
Outside of all of that. The biggest issue is consistency of action which this admin squirellllll.
Exactly. I think a lot of people who say they "want manufacturing to come back to the USA" have a picture in their imagination of a 1950s factory employing hundreds of middle class people standing along an assembly line picking up parts with their hands and working on them, or turning bolts on a car as it goes down the line. Then the old steam whistle blows, and all those workers exit the building and drive back to their middle class 1950s homes.
This world does not exist anymore and is never coming back. If manufacturing comes back, it's going to be heavily automated plants with a lean staff of robot technicians keeping the line going. Manufacturing may come back to the USA, but those Fred Flintstone jobs are not part of the picture.
The idea that one can be functionally illiterate yet afford a home, a car and a family by spending 40hr and no more riveting spring hangers onto Chevrolets, or whatever, is a legacy from a blip in time during which the US had a bear monopoly on state of the art for the time manufacturing.
Those men who worked comparable factory jobs in the 1870s through the 1930s had wives and kids doing piece work at home. And in the 1970s their wives all went back to work again, just outside the home.
And a stable political system. If I were in the manufacturing industry, I wouldn't make big bets on moving manufacturing back to the states unless I had some real guarantees that these tariffs weren't going to go away in the next week.
It is genuinely a hard problem. Even 50 years ago or so, simply having two hands and reasonable health was a gateway to a decent-paying job. These jobs have kind of evaporated, and aren't going back. That's a bit part of the nostalgia for manufacturing, I would imagine.
In an ideal world, you would ramp up free education, churn out more skilled labour. But for many reasons, this isn't happening and isn't likely to happen soon. So what should societies do with all this "unskilled surplus labour"?
UK has sort of given up, and since 1970s whole regions of England rely heavily on continued social transfers. I.e. the bankers and the oil rigs pay for the budget, the budget pays for former miners. But that's increasingly unsustainable, not to mention massively unattractive to everyone involved.
US seems to (maybe?) follow a note darwinian approach. But this is, it seems, also not working. Bringing back manufacturing, as you say, won't fix it either. It feels like there is a whole class of people without access to good jobs or education to reskill.
Other than spending a lot of money on this, like Switzerland, I don't really know how to fix it, it is genuinely a hard problem in a liberal country. Would be keen to hear suggestions.
Trump has 4 years if he survives that long. He's an old man. The trade war can't possibly last long enough for manufacturing to be forced to restart domestically. Even if this was his first term and he got a second, by the time the second rolls around everyone would just hope to wait it out until the Democrats retook the White House and they could import everything from China again. But now no one can even make the argument and be taken seriously that we need this, because if Trump's doing trade wars then it must be a bad idea.
Proof of the uncertainty is that Wall Street clearly thinks there's a good chance he'll back off. That's why the market still has room to keep falling, rather than having already fallen as far as it will for a while. It's got a lot of room left. All that room is people betting he's not going to keep this up.
The whole government has been bathing in the globalization alcohol for so many years that there is a huge interest group rooted for it to go forever. You can't do much without removing this group.
There is no "legal", "orderly" retreat from the current situation IMHO. It's going to be messy. The issue is whether Trump is doing the job or he is just faking it for whatever the reasons.
But Trump can only impact public sector at the moment, right?
.. so what's the point of this again?
Once the purge is done in the public and private sectors (yeah you can imagine that such interest groups exist everywhere), Trump and his allies need to install competitive people to create and execute policies to "bring manufacturing back".
Failing either of the two (purging and reinstalling competitive policy makers) fails the job.
No one in the United States feels rich, when we look around, we don't see wealth or prosperity. We suspect, though we'd feel silly to say it out loud, that if anyone ever busted into Fort Knox and looked in the vaults, those would be empty of the gold that it was once famous for.
>What's the US supposed to look like after this purge?
I imagine we'll look like what we really have been for a long while, instead of this illusion that everyone has of us.
It will get poorer economically in upcoming years thanks to gov moves, the wheels have been set in motion. Maybe dollar will tank so that my first sentence won't be valid anymore. Not sure it will be balanced with rest above though.
First you invite industry to reshore via subsidies and preferential access to government contracts. If necessary, the government must directly invest in new firms. (They already do this in a very small way with In-Q-Tel and others, so it's not totally beyond the pale. For a time there was even a US Army VC firm.) If you talk to a Chinese factory owner or mine boss, many of them will tell you that they got their start with a >$2M direct investment from their government.
Second you gradually tighten the screws on foreign finished products, not industrial inputs like metals, plastics, ores, etc.
Third you streamline export paperwork requirements and relax things like ITAR.
Then, when that's all humming along and the factories are working, you can launch blanket tariffs to protect your nascent industries, if need be. But you must exempt necessary industrial inputs from tariffs.
What's happening now is completely backwards/inverted and it's going to lead to total chaos.
Also, in most foreign countries, court cases are cheap. (They could literally be 100x cheaper to litigate than they would be in the US.)
If you're talking about in a US context specifically, then if absolutely necessary the federal government could either buy or nationalize the patents in dispute, just as all states nationalize land from time to time under eminent domain. Zvi recently wrote about this in the context of the state buying the Ozempic patent: https://thezvi.wordpress.com/2025/01/21/sleep-diet-exercise-...
> [The US Government] should buy out the patents to such drugs.
> This solves the consumption side. It removes the deadweight loss triangle from lost consumption. It removes the hardship of those who struggle to pay, as we can then allow generic competition to do its thing and charge near marginal cost. It would be super popular. It uses government’s low financing costs to provide locked-in up front cold hard cash to Novo Nordisk, presumably the best way to get them and others to invest the maximum in more R&D.
> There are lots of obvious gains here, for on the order of $100 billion. Cut the check.
That's not true at all. US companies register patents in all foreign jurisdictions as well. It wasn't legal for Chinese companies to copy all that US IP, they were just able to do it because to stop them, our diplomats would have basically had to persuade the Chinese government not to develop.
The difficulty lies in political will and execution. Either fails then the whole scheme fails.
That said, the US should never have gotten rid of industries that are critical for defense such as semiconductor manufacturing and ship building among others. That those industries left the US to go to Japan and then Korea and then now China- those were terrible mistakes that were made.
The first task is to rebuild our industrial commons. We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars—fight to win.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of the U.S. and make these sums available to companies that will scale their American operations. Such a system would be a daily reminder that while pursuing our company goals, all of us in business have a responsibility to maintain the industrial base on which we depend and the society whose adaptability—and stability—we may have taken for granted.
Manufacturing demands capital, tech, and execution, creating moats through scale and complexity. Returns could dwarf SaaS multiples if a startup nails a sector where efficiency gains translate to real massively scalable growth. The risk is higher (upfront costs, R&D, hardware flops), but it does scream classic venture asymmetry. Compared to, say, biotech's long timelines or consumer tech's saturation, this hits a sweet spot: tangible impact, massive macro tailwinds, and a shot at monopoly-like dominance.. The greatest returns of the next decade won't come from shuffling bits, but from reimagining atoms—and it will take our entire capital ecosystem working in concert to make it happen.As always, it comes back to the solution which pays executives and shareholders from taxpayer and consumer money. That's the system which gave America Boeing: too big to fail.
Maybe 2010-2024, but 2025 has seen CHIPS Act deprioritized in favor of foreign (e.g. TSMC $100B) investment in US manufacturing.
Obviously you don't know home depot.
There was a huge disruption to lots of industries between the 1950s and the 1990s. Lots of established machine tool companies (bridgeport and such) didn't modernize and went out of business or otherwise shrank.
But at the same time Haas automation started in the early 80s and is now quite large and successful.
The US economy is huge. Lots of other parts of it have made the US manufacturing part of it seem quite small.
If Canada invaded us very slowly, I'm sure we'd figure out (over the course of 2-3 years of massive disruption to our economy and lifestyle) how to make munitions and other engines of war at a much larger scale than we do right now.
Unless someone's willing to cut long-term contracts nobody is going to make this stuff in the USA when it's 10x more expensive to do so here than there. And right now, the counter-parties for any such contracts aren't trustworthy.
I think most people are happier just paying someone else to make these same things. "I want to wear nikes, not make them" is how people feel everywhere...
Financial power is a bad proxy for military power.
Military power is ultimately a bad proxy for industrial power.
The linked article is about the clear decline of US industrial power.