[CoffeeDregs]

"Instead of drawing down our gold reserves, however, we gradually draw down our domestic manufacturing base and it gets replaced piece-by-piece in foreign countries."

To me, this is the money shot. I hadn't seen this expressed before and it makes perfect sense. I'm baffled that we (the US) caused this to happen to the US. I'm (unhappily) registered Republican but I argued vociferously to a Dem friend in 2000 that our inability to manufacture critical components was going to kill us. Kind of literally: AFAIK, the last LCD panel manufacturer in the US closed around then and we could no longer manufacture LCD for our military vehicles... (Even if this anecdote is untrue, the point remains valid...) I argued that, even in the presence of free trade, a country should have the ability to tariff imports to the extent that that country could maintain a 25% (or something) domestic market share.

[lettergram]

My father was one of the last tool makers in the US working for Molex. They spent years teaching the Chinese, the Chinese would disassemble all molds sent over to China and often break them, so my fathers team would have to fix / rebuild them.

They spent years training the Chinese side-by-side in the US.

In the end they still haven’t exactly caught up to the quality we had in the US. However, they now have 5x the tool & die makers in China.

To compete, you really do have to cut minimum wage. You have to loosen regulations, and importantly, you have to do massive tariffs / sanctions on China for the next decade.

There are enough people still here to teach and expand the Industry. However, if you don’t start now. Like today. We won’t ever recover. Once enough manufacturing is gone, it’ll be impossible to come back - we are almost there.

You are competing against a foreign power who uses slaves. You either let free people work for what ever wage they can achieve or we risk becoming slaves ourselves.

[AnthonyMouse]

> To compete, you really do have to cut minimum wage. You have to loosen regulations, and importantly, you have to do massive tariffs / sanctions on China for the next decade.

Part of the problem here is that the existence of some kind of universal "more regulations / less regulations" slider is an illusion. It allows the problem to be cast in partisan terms when that isn't the problem at all, because the problem isn't more or less lines of regulatory code but rather higher or lower regulatory efficiency.

Some regulations save a thousand lives at a 0.02% increase in costs. Repealing those is bad. Enacting them is good. Some regulations save two lives at a 5000% increase in cost, which could equally be saved by some less expensive regulation. Enacting those is bad. Repealing them is good.

The real problem is that politicians lack the qualifications and incentives to do this well. If good rules don't exist, then someone gets hurt and there is a call for "more rules" rather than "better rules". Politicians who don't know what they're doing pass bad rules. The bad rules cause costs to exceed what they are in China, so manufacturing moves to China. Then the local lobby for improving the rules evaporates because there are no longer local manufacturers to propose or lobby for more efficient rules, and the continued existence of those rules on the books causes no more to form.

We clearly need to throw away the existing rules -- they're not working -- the question is, how do we actually get better ones?

[readams]

The problem here -- and perhaps the main problem in all our politics -- is that large swaths of the electorate do not understand the concept of second order effects. Regulations are always good because they consider only the first order effect. That is, the goal of the regulation is usually a laudable one that everyone would support. But you have to look at the costs and unintended consequences of the regulation to really know whether it's a good idea.

This is something that eludes most people, especially among progressives.

[dv_dt]

The long term studies say our political leadership largely ignores the desires of the electorate. This make the problem more likely that our political leadership likely understands the second order effects, but ignores the long term effects chasing short term gain.

[phkahler]

They think you can legislate outcomes. The reality is they need to design a system to produce that outcome.

[Lammy]

I think many more people understand second-order effects than you imply, but I think they understand that those second-order effects hurt certain groups of Americans more than others.

[umvi]

> Some regulations save a thousand lives at a 0.02% increase in costs. Repealing those is bad. Enacting them is good. Some regulations save two lives at a 5000% increase in cost, which could equally be saved by some less expensive regulation. Enacting those is bad. Repealing them is good.

Not to get political but this reminded me of covid-19. Masks and social distancing are an obvious 0.02% increase in costs that save a thousand lives. Lockdowns and extended stay-at-home orders and shutting down businesses so that we start needing to send out trillions upon trillions of stimulus cash to keep companies and people afloat start to cross into "save 2 lives at a 5000% increase in cost" territory

[NZGumboot]

I totally agree that lockdowns are super expensive, and should only be used as a last resort, but I think you're missing the purpose of lockdowns. The purpose is not to save the lives of <however many people are dying right now>. The purpose is to bring the R number <https://www.bbc.com/news/health-52473523> below one, so that the number of sick people doesn't increase to the point where the health care system is overwhelmed (which would lead to a substantially increased death rate).

Taiwan is an example of a country that managed to eliminate covid-19 without lockdowns, so it is possible, but part of their success is likely due to the fact that the authorities acted very early to impose strict quarantine rules and contact tracing (when there were fewer than 10 new cases per day!) AFAIK every other country that has managed to eliminate community transmission has done so via lockdowns.

[slaw]

The purpose of lockdowns and other methods to fight with covid-19 was to keep old people alive for few more months.

'The observed temporary excess mortality likely arises because people in vulnerable groups die weeks or months earlier than they would otherwise, due to the timing and severity of the unusual external event.' https://www.medrxiv.org/content/10.1101/2020.11.11.20229708v...

[ldng]

That is not the point and never was ! When your hospital is saturated by people that ultimately will survive but need 3 to 4 weeks to recover, you're going to die from anything but covid.

You're in a car crash? To bad hospital is saturated. You got 4th degree burn in a burning building? To bad hospital is saturated.

Do you realise that is the problem?

[nemothekid]

I agree with your view wrt to regulations, but doesn't the article paint a different story? I'm wondering if I understood the article wrong -

As I understand it, the US status as a global reserve currency requires us to maintain a perpetual trade deficit - other countries need dollars and we must give it to them. This is done by buying goods from overseas which has eroded our manufacturing base, as the foreign demand for the dollar is greater than the local demand (which means there is a cheaper manufacturing market).

I'm not sure what regulation you could enact here that wouldn't severely depresses other sectors as they exist today.

[AnthonyMouse]

The status as a reserve currency requires dollars to flow into other countries, but that doesn't mean it has to be in exchange for manufactured goods. Example: US individuals or businesses buy real estate or stakes in local businesses in foreign countries with US dollars, causing US dollars to flow into those countries. Rents collected from the properties or businesses are used to buy more properties or businesses rather than being extracted from the country.

[nemothekid]

Labor is likely the most plentiful asset any developing country has as well as it's a system that doesn't require much legal overhead. Manufacturing goods would be the easiest asset any country could produce - trying to own an asset in a foreign nation is an expensive endeavor that requires military might (the middle east probably being the most pertinent example). Trying to collect rents requires the maintenance of an international legal system that will rule fairly. I'm not saying it's impossible, but that manufacturing requires way less overhead to maintain.

[zozbot234]

The flip side of a current account deficit is a capital account surplus. To the extent that the informal notion of a "global reserve currency" means anything economically, that's perhaps the best description of it. Such an investment surplus would tend to improve the country's economic base over time, far more than implied by any direct effect of the trade deficit.

[tekknik]

I agree with you, but one point is (and clearly these are not accurate numbers you posted) these 0.02% cost increases add up. One regulation may only increase the cost 0.02%, but 1000 at the same industry increases it 20%. And all of them increase the cost of entry. If you increase the cost of entry, then you’ll get less competition as smaller business that could turn into flourishing enterprises simply never take off or even get started because someone in their garage can’t find a profitable path. Or afford a lawyer to explain the legal hoops you have to jump through. Recently I was quoted $10k to have a lawyer explain to me 2 points about importing liquor. The result, I didn’t start the business. This is more of a problem IMO

[specialist]

I'm adopting Michael Lewis' "market referee" rhetoric.

https://atrpodcast.com

Fused with Graeber and @dredmorbius phrasing where "deregulation" means "pro-monopoly" and "anti-competitive".

I'd like to learn more about "regulatory efficiency".

--

Law (et al) is much like source code. Technical debt, path dependencies, tooling stack, managing complexity and risk. You get the idea.

So of course there's evergreen debates about refactoring, rewrites, paradigms.

[rpier001]

I wonder if import taxation that reflects externalities (pollution) and costs that we carry to reduce suffering (child labor, minimum wage) would make a difference.

[a3camero]

Rules on paper aren’t rules in reality. Enforcement of law, and the way it’s experienced (or not) is far more important than what’s written in the law books, and the enforcement part is much less transparent, and impossible to know at the time the rule is passed.

[complexmango]

Google ‘regulatory capture’

[diryawish]

Very well put - efficient and diligent deregulation would be a great thing to see.

[namdnay]

Without a very strong (and therefore expensive) social security net, “Letting people work for whatever wage they can achieve” is slavery. See 19th century Britain

Germany still has a strong industrial base, without a race to the bottom and with strong unions. So it is possible :)

[inglor_cz]

"Germany still has a strong industrial base, without a race to the bottom and with strong unions. So it is possible :)"

A lot, and I mean a LOT, of German industrial base is now located abroad, in Poland, Czechia, Slovakia, Hungary, Romania. These countries are rather close, but because they belonged to the Soviet Bloc, their economic development was retarded so much that local wages are 20-30 % of wages in Bavaria, but the workforce is qualified and the infrastructure adequate. This is a historic anomaly you do not have in the U.S.

Come here (I am in Czechia) and look around, the countryside around cities is absolutely dotted with German-owned factories that mostly produce parts. Those parts are then moved by trucks to Germany where the final product is assembled - and so the miracle of higher "work productivity" in BRD is created. Of course you have nominally higher productivity if you finalize products.

This is, by the way, how Viktor Orbán gets his political way. Hungary is absolutely vital part of German industrial base and German industry gets premium conditions on the ground. So for all the shouting about values and rule of law, German CDU/CSU and Orbán always find a way to coexist.

And as for race to the bottom, look to former East Germany. There, people want German wages from German bosses. They do not get them, most of the industry moved abroad where cheaper workforce is. Former GDR is an economic periphery where anti-system parties command majority of the vote.

[cloudinshape]

You have to square the circle.

Wages in the US are artificially high because of the dollar's position, but the US needs to either a) match the wages of the countries producing similar stuff or b) increase productivity and value to the levels of countries like Germany.

Since b) requires decades in factories, supply chains, trade agreements and most importantly training in actually producing things which means science and engineering, exactly the occupations an increasingly large portion of the US population has been taught to abhor, it is very unlikely to happen. The US has spent the last decades destroying all those things, so the only real option is to sadly let wages fall to levels markets are willing to pay for. It will bring a lot of suffering but is the consequence of decades of mismanagement and complacency, and it is unavoidable so it will either happen by will or by force. And we know it won't happen by will.

Of course there is always c) keep forcing the rest of the world to pay for the US standard of living while they themselves live beneath their means, but that is the actual problem now so how much longer can it last?

[8note]

There is also d) the owners take smaller profits

[CountSessine]

The average operating margin for the S&P 500 is 10.53% (although that may have been 2018). And economists are worried that even that is high - traditional manufacturers like Ford typically manage operating margins of ~5%. Workers are already getting 95%. And then everything after that like R&D, marketing, and capital amortization has to come out of that 5%. And then finally a bit is left over for earnings for the owners. You’re mistaking wealth for income. Surely the workers could use more wealth, but what we’re discussing is the price of goods and this is operating revenue and income. And workers already get the lions share of this.

If you’re going to make US manufactured goods cost competitive with foreign goods, much of it has to come out of that 95% operating revenue that is operating expenses, most of which will be employee wages. There’s no way around this.

[hannasanarion]

workers are not getting 95%. Corporate profit and revenue is at an all time high, but wages are down since the 1980s. All that corporate growth goes into price fixing schemes and mergers to establish monopoly, and "consulting fees" to suspiciously named LLCs in the Caymans.

[sudosysgen]

This isn't a correct way of looking at it. You're assuming that the sum total of profit generated is in that one manufacturer. It isn't the case. You have subcontractors that also make an additional ten percent, then materials coming from a supplier that takes another ten percent, which comes from raw material suppliers that make yet another 10%, and then you're going to have consultants in R&D and marketing that might make even more than 10%, and so on. So it really can end up quite a bit higher than that.

[cloudinshape]

I know these discussions always end up in worker vs owner debates, but what I'm talking here is about the nation.

Factories will need to adjust their prices, now you take that as you will, and if one is naive one can think it means executives will take a pay cut while workers do not, but in the end it mean less wealth for everyone, less money for taxes, less money for shareholders, less money for executives, and of course less money for workers. That is less wealth for the nation.

So yes, owners will take smaller profits, along with everyone else.

[southeastern]

>keep forcing the rest of the world to pay for the US standard of living while they themselves live beneath their means, but that is the actual problem now so how much longer can it last

Our entire society is built on this, though. Silicon Valley wouldn't exist if electronics couldn't be produced for comparatively cheaper overseas. You bring up an interesting moral point, but if you're serious about that there's a lot of reckoning society will have to deal with. It's not just going to affect minimum wage lol. It'll affect wages across the board. You're really talking about totally reforming the economy

[tomcam]

> Silicon Valley wouldn't exist if electronics couldn't be produced for comparatively cheaper overseas

Silicon Valley literally exists because it was an electronics manufacturing center.

[CountSessine]

When someone is beating you, the least you can do is copy them. We could start by copying German worker councils (unions) - but no one in management or labour here wants that. Labour hates company unions and still dreams of building labour monopolies like they had in the 60’s and that’s exactly what worker councils were designed to prevent. And managers want to be able to bust unions which isn’t legally allowed with worker councils.

So I guess not?

[stjohnswarts]

In the traditional sense, it is not the same as slavery, not by a long shot. I do agree with unions becoming prominent again. Not everything has to be a bargain basement priced items. I personally try to hit something in the middle, and often look for an American made version (or European) it can be extremely hard though, and impossible for 99% of electronics.

[RhodoYolo]

Do you think the 19th century is a good anecdote for what would happen nowadays? Setting minimum wage seems to create this standard that may do more harm than good. Increasing the 'standard' harms the 'middle-class' and this 'standard' may set the wages lower than entitled per job.

[birdyrooster]

Wealth inequality is a problem you can’t fix by reducing the income of the poor.

[cloudinshape]

Which is exactly the problem: wealth inequality can't be solved by fixing wages.

Asian or "factory" countries (not necessarily from Asia but for illustration) have an "artificially" held minimum wage, which indirectly subsidizes the US minimum wage. This is happening to all wages not just minimum wages mind you, so the market needs rebalancing. Wages need rebalancing, taxes need rebalancing, but most wages, including the minimum wage need to come down (in real terms not necessarily in fiat terms).

[RhodoYolo]

I never said that or really proposed a solution, simply stated a problem as i saw it - Which makes sense why i got downvoted. I don't really know the answer with minimum wage but i tend to lean more 'darwinistic' in my philisophies. I wish there was more inherent economic incentive, where everyones salary was more closely tied to their contribution and efforts but I guess thats too much to ask for in this world where non performers and non-productive members of society are given this 'unalienable right' to live off the products of society just for being human.

[nemothekid]

>I wish there was more inherent economic incentive, where everyones salary was more closely tied to their contribution and efforts but I guess thats too much to ask for in this world where non performers and non-productive members of society are given this 'unalienable right' to live off the products of society just for being human.

It's hard to parse what you are asking for - what more economic incentive would you imagine there to be; I think the problem with this line of thinking is that you are taking a far too simplistic model of the world where our problems are caused by people being "lazy". I think the world you are wishing for existed - it's probably the hunter/gatherer model; any more sophisticated organization of civilization requires some level of socialization. I think your "darwinistic" approach is a flawed philosophy upon which it build a nation or a global superpower.

It's interesting because the article posits, and makes a very good case for, systemic issues that has caused the erosion of manufacturing base - however politically we are unable to move beyond simply understood talking points such as "minimum wage".

[bawolff]

As a general rule, yes, i think all things being equal, history tends to repeat itself.

Of course, all things aren't always equal, but if you're going to argue its going to be different this time around, i think there is some onus to argue why the present would be different from the past.

[hourislate]

>Germany still has a strong industrial base

It's because they build the machines to build the product the Chinese manufacture. The Germans have forced themselves to be at the top of the Manufacturing Food Chain (engineering, etc) while letting the Chinese/Rest of the world build the crap we buy.

I don't think we could get there manufacturing the "Trinkets" the Chinese mostly manufacture, that is a a race to the bottom where either automation or cheap labor win.

[incrudible]

Your impression of China manufacturing "mostly Trinkets" is decades out of date.

Chinese manufacturing is now at a very high level, to the point where many western brands have effectively become "fabless", leveraging the fact that Chinese brands still struggle with poor reputation even domestically. In this symbiotic relationship, the fact that Germany is literally "the land of virtue" in Chinese might play a role.

Chinese labor has now too become relatively expensive, its economy is moving to become a service economy, and manufacturing gets outsourced from China to even cheaper countries.

[hakfoo]

What I always wondered: are German products that much better, or is it a meme?

The thought that comes to mind is when American railways tried to import German locomotives in the 1960s. They were appealing because they offered higher horsepower ratings than anything domestic, but they required too much babying and maintenance to keep healthy and were quickly scrapped. I hear strikingly similar things from people buying German cars today-- everything tends to be expensive to keep running after the warranty expires.

I wonder if American manufacturing needs to develop its own meme. I'd suggest the old line about GM products-- they'll run poorly for a lot longer competing products run at all. That could be a compelling argument when you're selling to a manufacturing sector that's rolling out in low-development countries with unstable infrastructure, poor environmental conditions, and low-training staff.

That gives us a niche we can target and use as a base to re-bootstrap ourselves into competitiveness. We need to be decidedly better than bottom-bit Chinese (etc.) tooling, which is probably still within our abilities, and if we overdeliver there, we can begin to position American-made as a premium choice.

[count]

A large part of the expense on the cars is import tariffs and shipping/freight expense. Upkeep on a German car in Germany is substantially less expensive.

[geitir]

All I know is I've been in an Audi and the center console had so much unnecessary stuff going on. It's a stereotype for a reason German stuff is performant and precise but over engineered

[tachyonbeam]

Tesla is trying to do exactly what you describe. Build "the machine that builds the machine", as Elon Musk would say.

I agree with you that trying to compete on low-cost, low-margin is a race to the bottom. We could conceivably bring manufacturing of iPhones back to America. I would also imagine that manufacturing of silicon is largely automated, so the US could try to build the best fabs.

[te_chris]

Tesla has done some reverse Chinese equity investment swap thing and is now at least somewhat a Chinese company building manufacturing capacity and innovation in EVs. Musk is a lot of things, and one thing is clear: he’s an opportunist more than a US economic nationalist. He will not be the saviour of American industry.

[kamaal]

>>one thing is clear: he’s an opportunist more than a US economic nationalist. He will not be the saviour of American industry.

Reading this as a non-American. Isn't 'opportunity' the whole reason behind immigration?

If your country relies on continuous supply of heroes and not sound systems and policies, no one single person can save you.

[tachyonbeam]

Please clarify what you mean by "Chinese equity investment swap thing".

[andrekandre]

> he’s an opportunist more than a US economic nationalist

its called being a capitalist; anyone leaving money (capital) on the table by favoring thier home country will get squashed by those who dont...

[roenxi]

The number of powerful economic nationalists in US history can be counted - if the US is lucky - on one hand.

Assuming that the goal is saving the American industry (whatever that means) - if the plan is 'good people will save it' then failure is already baked in. That plan never works. The plan should be 'whoever saves it will become fabulously and disgustingly wealthy' - then greedy opportunists will save it for you and people can go protest about how greedy they are.

Relying on good people to act is dicey. Relying on greedy people to act is a safe path.

[sgnelson]

I've got to add my two cents to this discussion...

You discuss tool and die makers, a very highly skilled profession; one that I would argue takes many years of training and labor to master. I would further argue that in the manufacturing world, when it comes to hands on work, tool and die guys are near the very top.

Yet at the same time, you talk about cutting the minimum wage. Tool and die makers (of any sort) aren't going to be working for minimum wage.

While I don't disagree with the importance of American manufacturing, I think your prescription is wrong. We don't need lower wages, we need better education, more apprenticeships, more buy in from industry to spend money on training their employees. Because sooner than people think, China will have labor cost parity with the US, and we'll find that labor cost isn't solely the reason they are a manufacturing power house.

[ralph84]

China treats workers like shit and the environment like shit. The US wouldn’t win a race to the bottom and shouldn’t try.

Instead companies who manufacture in China should be taxed at much higher rates to account for the negative externalities they benefit from otherwise.

[stjohnswarts]

we could if environmental and personal costs were factored into prices. The woudl take a lot of political will that I don't think we have though

[alex_anglin]

Competing in a race to the bottom ought to beg the question about what alternatives and options are. Focusing on efficiency and quality are two examples that would probably be a better long-term bet, with fewer negative secondary effects.

[southeastern]

I don't know why more people aren't saying this. Is it really a majority opinion on this site that a race to the bottom is a good, or even tenable idea?

[nextweek2]

That's the strategy of the Germans.

[koolba]

We all want to be like Germany, but do we have the sheer force of will?

[simonh]

They aren’t slaves, they’re just people extremely happy to get a wage of $10k per year, which would be unobtainable for most of them any other way. The fact that this means they under cut US manufacturing wages by more than half isn’t really their fault.

As for bringing back manufacturing home, you need to find two things to make that work. First massive subsidies and tariffs to drive up the cost of foreign imports, imposing huge costs on tax payers and consumers; and tens of millions of people willing to work in factories. The US long term unemployment rate in 2019 was about a third of a percent. Where are you going to find the money, and where are you going to find the people?

[pnutjam]

I say taxes aren't necessary. Just hold companies accountable for every step in their manufacturing chain. They need to audit and ensure factories address meeting or standards for the workers.

I don't mean wages, I mean safety, overtime, etc. Labor needs to be valued at home and abroad.

[simonh]

I'm all for holding companies accountable for their supply chain management, but within reason. I can't see the US government accepting EU employment contract, health, safety and business practices imposed on the US arbitrarily. There has to be some flexibility. Let's be clear, the west has reaped _staggering_ economic benefits from opening up China. Of course there have been costs too, some of them painful, but that's always the way with economic change.

[pnutjam]

It's not the other country accepting, it's ensuring the company adheres to certain standards in it's supply chain. Any penalties would be assessed against the US based company.

[onepointsixC]

He's not referring to all Chinese laborers, but Uyghurs who were first sent to re-edcation camps and then sent off to factories all against their will.

[simonh]

A reprehensible and horrific crime for sure, which I don’t want to trivialise, but not an economically consequential one in the grand scheme of things.

[schemescape]

> To compete, you really do have to cut minimum wage

The article points out other ways to reduce the cost of domestic labor: namely, shifting away from high payroll taxes and severing the link between health insurance and employment.

[CraigJPerry]

>> To compete, you really do have to cut minimum wage. You have to loosen regulations

That’s not what Germany has done but there’s little doubt that Germany’s manufacturing ability is held in a higher regard globally.

So i challenge the “have to”. It’s the unproven talk of a particular tribe but i stress unproven since economics is a social science. That means there’s lots of science but is fundamentally stories we tell each other and not akin to, for example, the unassailable truth of gravitational pull.

[kevingadd]

How will cutting the minimum wage help in the long run? People earning the current minimum wage already struggle to afford rent and food. Can you really expect to get quality work from someone who has to work 4 jobs to be able to pay rent and is sleeping 4 hours a night?

You're not going to defeat China by cutting wages unless you address the societal issues that cause US wages to be high. We already haven't raised the federal minimum wage in decades.

[ClumsyPilot]

> "You either let free people work for what ever wage they can achieve or we risk becoming slaves ourselves."

We should work for slave-like wages voluntarily or have it forced upon us?

This is a poorly thought out argument. Cost of living, housing, etc. is obviously different in US, you might end up with less income than is necessary for survival. What makes you think you will be able to find any workers at all, let alone those trained to the necessary standard and skill?

It should be obvious that appropriate responce to a crime (slave labour) being committed is not to commit the same crime yourself.

Any products with stolen materials, stolen labour, or stolen taxes should not be allowed on the market at all.

[zhdc1]

In all fairness, the same is happening to China as well. Manufacturing as a percentage of GDP has been declining every year since 2010, and iirc manufacturing in total value has stagnated entirely in many provinces over the last couple of years.

Manufacturing is still moving to SE Asian countries (Viet Nam in particular), but even there producers are increasingly moving production in India and East Africa because of rising costs (e.g., wages).

[confidantlake]

I am not so sure about the loosen regulations thing. The US had periods of time with virtually no regulations. Rivers caught on fire, people were maimed and died of industrial accidents at much higher rates, water was unsafe to drink, ect. The countries now without much regulation are usually poor, dirty and dangerous. I want to live in a safe, clean, healthy environment.

I agree with you on the tariffs. China should not be able to outcompete us because they pollute and use slave labor. Force them to compete on fair terms.

[sanp]

This is missing the point of the article. The main reason for the current state of affairs is the petro-dollar system and the need for US to run deficits. Changing regulations for domestic manufacturing has very little to do with it.

There are quite a few European countries with very robust manufacturing bases who are far more regulated (both from a labor and capital perspective). So, minimum wages, labor unions etc have little to do with the US' manufacturing base. In fact, one could argue that weaker unions, if anything, have contributed to the decimation of the manufacturing base.

[Zenst]

>To compete, you really do have to cut minimum wage. You have to loosen regulations, and importantly, you have to do massive tariffs / sanctions on China for the next decade.

Not so, import taxes and one avenue that should be explored is true carbon costs/impact factored in. Why should something made locally be more expensive than something made the other side of the World and shipped all that distance. Clearly some impact costs not being factored and the whole carbon aspect should be utilised for many benefits - balancing out imports for one.

[momokoko]

Banning or taxing out of existence foreign investment on real estate and pegging the fed rate to zero will accomplish the same thing without needing to care about minimum wage. Shenzhen minimum wage currently provides workers in China with a higher standard of living than US minimum wage does in the US.

Only difference is that the wealthy in the US will carry more of the burden instead of the working class.

And that’s why we don’t have many advocates for it even though it will solve the manufacturing problem almost overnight

[cloudinshape]

The reason foreign real estate investment is so high is because the dollar is the reserve currency of the world, and since those countries produce so much they have a huge excess of dollars but the US produces so little they have nothing to buy with those dollars. The only thing the US can realistically offer is land, if you ban it it will only accelerate the collapse.

[momokoko]

Banning foreign investment in real estate forces foreign investors into more productive investments while simultaneously lowering the cost of living for workers and cost of business for companies.

Moving inflation to 6% will create millions of working class jobs in the US due to both a weaker dollar and cheaper money supply for value creation.

The losers in all of this are wealthy Americans. They will see their assets depreciate and buying power diminish. And that’s why we don’t do it.

[cloudinshape]

Banning foreign investment will force them to dump dollars and treasury bonds and will accelerate the development of an alternative to it for international trade.

But I guess since what you want is inflation that is one way to get it, tho it will not be 6% but closer to 30%.

Yield curve control has not worked for anyone, it is a death spiral that results in zombie economies, at best.

[momokoko]

> Banning foreign investment will force them to dump dollars and treasury bonds and will accelerate the development of an alternative to it for international trade.

How does this harm a working class American that derives all of their income from working wages as opposed to assets?

> it will not be 6% but closer to 30

Cite and example where a country did not default/print money for their debt payments and inflation went to 30%

> Yield curve control has not worked for anyone, it is a death spiral that results in zombie economies, at best.

How does this harm a working class American that derives all of their income from working wages as opposed to assets?

Lastly, address how any of the above prevents an increase in manufacturing jobs, which was the intent of the measures originally listed.

[imtringued]

>Banning foreign investment will force them to dump dollars and treasury bonds and will accelerate the development of an alternative to it for international trade.

Only if they don't find a better alternative than real estate.

[blueblisters]

Moving inflation to 6% will almost certainly not impact any wealthy American with most of their net worth in equity. It will impact working class Americans who have their savings, however little, in bank accounts.

[Gibbon1]

> It will impact working class Americans who have their savings, however little, in bank accounts.

I have about $20k in bank accounts. I owe $450k at 2.5%

6% inflation? Don't throw me in the briar patch!

[imtringued]

It would be more sensible to just build more housing. That way Chinese dollars will end up employing Americans instead of just changing the title on a home. It's quite funny how backwards America is in this regard. They are unwilling to produce more of their primary "export" even though there is no way for production of it to be moved to any other country. Instead every property owner wants a larger slice at the expense of everyone else.

[pbourke]

I am surprised that no one has mentioned punitive taxation of companies that engage in offshoring/higher taxes on foreign direct investment as an alternative to tariffs.

[namdnay]

Taxing companies that offshore favours foreign competition even more, because they won’t be taxed.

[southeastern]

>You either let free people work for what ever wage they can achieve or we risk becoming slaves ourselves.

Minimum wage already isn't really a living wage in much of the country. Rolling back regulations is jumping headfirst into slavery, whereas.. I'm very critical of China but don't see the connection between their expanding industry and slavery. Businesses are diversifying their supply chain in the face of this pandemic.

[coolgod]

> In the end they still haven’t exactly caught up to the quality we had in the US.

Arrogance, this is one of the factors that killed US manufacturing.

[Guthur]

I'm not disagreeing on the spirit of your statement but I wonder if labour costs are really the prime driver of profitability with high tech manufacturing. It may be, but I'd love to see some of the figures, there could be other factors at play such as environment protection for example.

[etc-hosts]

> To compete, you really do have to cut minimum wage.

Minimum wage workers do not think they are making too much money, also there are a lot more of them then you.

[downrightmike]

This happened in part thanks to bain capital, those following the same business model of theivery, and the deregulation in the 80's. https://en.wikipedia.org/wiki/Bain_Capital Republican lawmakers and party members have been destroying America for generations. Goes back even further to 1971 when Nixon opened talks with the CCCP and then went there in 1972 cutting the ground out from beneath American workers. And now if we even wanted to rebuild our manufacturing base, we have to deal with the same problems the few remaining factories do, finding people not on some kind of illegal substance that can work. The bodies are there, but they aren't in any shape to bring back what we had.

[User23]

Trump was the first president in my lifetime to even admit gutting our manufacturing base is a problem. Neither Democrats nor establishment Republicans did anything but line up for their shockingly paltry share of the loot while mouthing platitudes about efficiency.

[hedora]

True, but he said he said that simply because Bernie did, and it played well against Hillary in the primaries.

He didn’t do anything that actually slowed the loss of our manufacturing base while president.

[omgwtfbyobbq]

He ended up reversing the steady gain we've had in manufacturing jobs since 2010, albeit indirectly, because he botched the response to covid.

https://data.bls.gov/timeseries/CES3000000001

[AnthonyMouse]

The argument against his covid response was in not using more aggressive lockdowns. Which is the thing that increases unemployment. You seem to be arguing that more lockdowns, which increase unemployment in the short term, would have reduced unemployment in the short term (i.e. the period measured in that data).

[omgwtfbyobbq]

More aggressive lockdowns initially could have limited the initial spread, and from there reasonable precautions could have been effective. Disparaging mask use is also generally considered to be harmful.

Cutting funding to certain CDC programs may also have been detrimental.

https://fortune.com/2020/02/26/coronavirus-covid-19-cdc-budg...

[appleflaxen]

uniform lockdowns that were widely enforced for 2 weeks and then followed by masks, social distancing, and hand washing would have been more effective, and harmed the economy less.

[cycrutchfield]

If you have a more aggressive lockdown, you can control the disease instead of letting it rage unabated for months. Trump’s covid response has been an unmitigated disaster for businesses.

[AnthonyMouse]

> He didn’t do anything that actually slowed the loss of our manufacturing base while president.

Come on now. Say what you will about the effect of the tax changes on inequality, they're clearly designed to make it more attractive to do business in the US, e.g. lower corporate rates and allowing capital expenditures to be deducted immediately rather than amortized over a period of years. It's hard to argue that tariffs on goods from China don't make it less attractive to buy goods from China.

[jfim]

> It's hard to argue that tariffs on goods from China don't make it less attractive to buy goods from China.

It's true that tariffs will make buying goods from China less appealing, but if you look at the outcome, it's not really a win. Consumers are paying more for the same goods, companies are scrambling to move their production to India and Malaysia, and there's not a significant increase in US manufacturing.

A properly executed initiative to increase US-based manufacturing would address all of the factors necessary to restart manufacturing:

- Not only tax cuts, but subsidies and investment aimed at increasing manufacturing in specific industries

- A concerted program to identify labor and skills shortages, and address them

- A program to identify the missing parts of manufacturing ecosystems and address them. One reason why electronics are made in China is not only cheap labor, but access to a whole ecosystem of suppliers and other manufacturers. Need one million PCBs assembled, plastic casings made, half a million cardboard boxes printed, instruction manuals printed and bound, well, there's a whole ecosystem of partners ready to get all of these things done with the capacity to have a relatively short turnaround time.

- A clear bipartisan commitment that this is something that won't get deprioritized or axed one or two administrations later, but something that is of national interest and that both parties agree to push forward

- A national focus on a key differentiator from other countries' manufacturing. China has cheap, Japan, Switzerland, and Germany have good, the US has big and sturdy maybe?

- Tariffs to protect newly formed manufacturing businesses, but only in conjunction with all of the above

This is what a solid plan for restarting US manufacturing would look like.

[AnthonyMouse]

> It's true that tariffs will make buying goods from China less appealing, but if you look at the outcome, it's not really a win. Consumers are paying more for the same goods, companies are scrambling to move their production to India and Malaysia, and there's not a significant increase in US manufacturing.

If you look at the actual outcome, it was that China devalued their currency or otherwise lowered prices to eat the tariffs, because their nightmare is manufacturing getting a foothold anywhere else, whether it's India or the US. Which is a win for the US because we have China paying us billions of dollars in tariffs without paying significantly higher prices for goods.

That doesn't help US manufacturing directly, but it gives the US a lot of leverage in trade negotiations because now China wants that situation to stop happening. And in the meantime the money can be used for tax cuts or subsidies to US businesses.

We could also just raise the tariffs more, for as long as China decides they want to keep paying them instead of letting them push manufacturing out of China.

> Not only tax cuts, but subsidies and investment aimed at increasing manufacturing in specific industries

Tax cuts and subsidies are equivalent. And it's not clear why targeting specific industries is useful rather than giving the same incentives across all industries.

> A concerted program to identify labor and skills shortages, and address them

Address them how? With more subsidies, which is really just equivalent to tax cuts again? This is the sort of thing markets are better at than governments.

> A program to identify the missing parts of manufacturing ecosystems and address them. One reason why electronics are made in China is not only cheap labor, but access to a whole ecosystem of suppliers and other manufacturers. Need one million PCBs assembled, plastic casings made, half a million cardboard boxes printed, instruction manuals printed and bound, well, there's a whole ecosystem of partners ready to get all of these things done with the capacity to have a relatively short turnaround time.

This is certainly a problem, but it seems to imply the opposite of your other proposed solutions. You would then not want to target specific segments but rather have broad incentives to engage in all different kinds of business activity, i.e. general tax cuts.

> A clear bipartisan commitment that this is something that won't get deprioritized or axed one or two administrations later, but something that is of national interest and that both parties agree to push forward

This seems like something you need Democrats to do rather than something you need Trump to do.

> A national focus on a key differentiator from other countries' manufacturing. China has cheap, Japan, Switzerland, and Germany have good, the US has big and sturdy maybe?

What does this even mean? Countries don't need to differentiate like this. How is it even differentiation when three of the four countries you listed are using the same one?

[ggggtez]

> It's hard to argue that tariffs on goods from China don't make it less attractive to buy goods from China.

Disagree. I think this is small minded. So you add a tariff on chinese goods. If they are not the cheapest, then you buy from elsewhere... which still isn't the USA.

And then China does the same thing: retaliating with tariffs, and then buying goods from elsewhere, which isn't the USA either.

So in this game, tariffs probably hurt businesses in both countries.

And, anecdotally: I still buy products from china. More today than 4 years ago. The products for sale on Amazon are often just chinese imports that have been marked up or re-branded. I think it's the exception, rather than the rule, that tariffs did anything positive for someone.

[AnthonyMouse]

> So you add a tariff on chinese goods. If they are not the cheapest, then you buy from elsewhere... which still isn't the USA.

But that's still good. It provides for supply chain diversity even if it isn't in the US. Now you can buy from China and Mexico instead of only China.

Then you get a functional supply chain operating in Mexico, which has geographical proximity to the US and has greater overlap in language and culture, and you're one step closer to manufacturing in Arizona and Texas.

> And then China does the same thing: retaliating with tariffs, and then buying goods from elsewhere, which isn't the USA either.

But the US has a 3:1 trade imbalance with China, so we can use a third of the money to cancel out their tariffs on our stuff. Or threaten to raise ours 33% if they don't stop.

The US has leverage here, but only if they use it.

> And, anecdotally: I still buy products from china.

Manufacturing left the US over the course of 50 years. It isn't going to all come back in less than 5 years. We're talking about long-term here.

[disown]

> True, but he said he said that simply because Bernie did, and it played well against Hillary in the primaries.

To be fair, Trump has been saying that since the 80s... Of course that didn't stop him from manufacturing in china himself. The guy talks the talk but rarely walks the walk.

> He didn’t do anything that actually slowed the loss of our manufacturing base while president.

And that's why he lost. But boy did he make israel safe. How many arab states did he force into recognizing israel? 4 or 5?

Trump's achievements were making israel great again and forcing mexico to extend intellectual property rights by a few years so that he can selling his "Trump" name in mexico for a few more years? Not that things are going to get any better with biden.

But then again, it's naive to think the president hold any true power. The power are held by those behind the scenes. Politicians nowadays are entertainers to keep the populace distracted. Presidents come and go, but the powerful remain.

[EricE]

Oh really? I'm sure it's just a coincidence that after getting repeatedly browbeat Apple dramatically ramped up iPhone production in India and Brazil? That's just one example.

I guess we will know for sure - if they slow or reverse (especially in India) under Beijing Biden that will be confirmation Trump was successful at least at moving manufacturing away from China. It was a start. I don't expect it to continue with the establishment Democrats and Republicans back in charge. Yippie.

[hpkuarg]

> Apple dramatically ramped up iPhone production in India and Brazil

Increased production in India and Brazil don't do anything for the loss of U.S. manufacturing.

[stjohnswarts]

I agree and that was one of the few things I liked about him, but you know it's all BS when he doesn't support unions. Plus everything else about him is just heinous and basically a ruse to just get people to like him and stroke his ego.

[beamatronic]

Not to mention these factories would pollute the environment again

[eggsmediumrare]

Confused about this illegal substances thing, can you elaborate?

[daniellarusso]

US opiate/heroin crisis.

[recursivedoubts]

There was a recent youtube of a Chinese professor discussing how china has gotten along so well with the US while the great migration of manufacturing occurred. It boiled down to wall street being fine with moving manufacturing abroad, as they don't identify with, and in fact despise, the American working class.

Pretty depressing.

[arminiusreturns]

"When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain." - Napolean Bonaparte

"I sincerely believe with you, that banking establishments are more dangerous than standing armies; & that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale" - Thomas Jefferson

"I have two great enemies, the southern army in front of me and the financial institutions in the rear. Of the two, the one in the rear is the greatest enemy" - Abraham Lincoln

[blix]

Do you have a link to this?

[eli_gottlieb]

Did we not expect capitalists to despise their class enemies, the workers?

[TruthHurts44]

If they despised the working class they would've pushed for removal of the useless rules the West has - health and safety, generous pensions for hard jobs(like miners), minimum wage, etc.

[kamaal]

That assumes they want to help those people.

In reality they just want to help themselves in the easiest way they can.

[mbesto]

> the last LCD panel manufacturer in the US closed around then and we could no longer manufacture LCD for our military vehicles

And funny enough our gov't (I'll let you guess which political party) struck a deal with Foxconn to produce LCDs in Wisconsin. It has failed miserably: https://www.theverge.com/2020/4/12/21217060/foxconn-wisconsi...

[southeastern]

Basically amounted to corporate handouts, with the way the money was mispent. I don't think the issue is that the labor class is getting too big a share, cases like this should make it clear that inequality that's at the root of these problems

[jtbayly]

So an attempt was made to bring back manufacturing, and that’s so terrible? Let’s all roll our eyes at the Republicans.

[GcVmvNhBsU]

It’s fair to eye roll at ineffective agreements that don’t pan out. Racing to the bottom with tax incentives is not the only way to bring back manufacturing and hasn’t seemed to work when it’s tried.

[jtbayly]

I don’t mind eye rolling at corporate handouts and deals that are mirages. But the parent comment only seems to be mocking the idea of bringing manufacturing back and saying how dumb Republicans are for wanting to do it.

[mbesto]

> mocking the idea of bringing manufacturing back and saying how dumb Republicans are for wanting to do it.

At what point did I ever say Republicans were dumb for wanting it? I'm mocking the idea that Republicans actively denounced corporate welfare (saying it's a Democratic thing), yet just do it themselves (and then fail at actually make the change for that matter).

Take your triggered self over to Reddit.

[jtbayly]

The discussion was about manufacturing and whether it was a good idea to bring it back and if so how.

I don’t think your comments have added anything of value to that discussion, just bringing politics in for the sake of mocking.

[mbesto]

You pretty much just made my point.

[vinniejames]

This is 100%, the fact the US can barely manufacturer face masks during a global pandemic is embarrassing.

On the other end, how do you compete with slave labor in the Chinese factories?

[kurthr]

It's not about slave labor, it's about manufacturing equipment. I suspect it was turned down, because helping the northeast survive a pandemic was not perceived as worth any political risk/capital.

https://www.washingtonpost.com/investigations/in-the-early-d...

[swswsw]

Wait. According to that article, the last major mask manufacturer in US offered to increase production and was turned down by government.

> "In the end, the government did not take Bowen up on his offer. Even today[May 9, 2020], production lines that could be making more than 7 million masks a month sit dormant."

That article was published in May 9. Even on May 9, the production lines were dormant. How could this happen? It is unfathomable. The country probably had masks shortage since March. It is so hard to believe some of the things that happened this year.

[hungryhobo]

You are never gonna compete with chinese manufacturing if you believe their secret to success is slave labour.

There are plenty of countries with worse working conditions yet but people seem to stick with china.

[liquidify]

The consequences of that slave labor are far more on Chinese society than just the manufacturing dominance. There are a lot of things that are negative such as hatred of the CCP, that these policies are creating in China. The facade may look good, but there are cracks in China's foundation because of these decisions.

[vsskanth]

> how do you compete with slave labor in the Chinese factories?

Trading blocs that ensure minimum working conditions. Companies which pay the worker a decent wage should get favorable tax treatment and procurement.

[justinzollars]

Or technological improvements

[u801e]

Some industries in China follow the 996[1] working hour system.

[1] https://en.wikipedia.org/wiki/996_working_hour_system

[sumedh]

> Trading blocs that ensure minimum working conditions.

So China will just ship the goods to another country and change the Made in label. Some middle man will make money and nothing will change.

[Thinkx220]

By lowering taxes and deregulating the economy.

[rjbwork]

Depends on the face mask you're talking about here. A friend of my brother works for a company that makes unrelated clothing, furniture, and other comfort type items. They make all of their products here in the USA. They started up mask production in march. They're high quality washable cloth masks. I bought a few and have been using them when I need to go out. They're about twice the price of similar ones on amazon but much higher quality.

As for mass produced surgical masks? Yeah we don't have the manufacturing base for that sort of thing anymore unfortunately.

[cactus2093]

This is somewhere near the very bottom of a ranked list of US problems in this pandemic. Manufacturing takes time to significantly ramp up regardless of where it is, it’s not clear there would have been a major difference between what we did in waiting until we could buy more masks overseas vs waiting for US production to ramp up. And we had supposedly already alleviated this problem anyway with national stockpiles, except that those had not been maintained. Fixing that mistake is much easier and probably even more effective than undoing the globalization of the past few decades.

And honestly, by about April this year when China started having the virus under control and reopened their manufacturing sector at full capacity, it’s a good thing they were equipped to manufacture so many essential items. The US started running into capacity problems with some of the industries we do have like meat processing plants, if we relied more heavily on domestic manufacturing we actually would have been worse off over that period.

[daniellarusso]

US prison labor?

[renewiltord]

Shenzhen factory labour is more expensive than America. The labour is higher quality, though.

[zhdc1]

Average salary in Shenzhen (2019) was 127K yuan, or about $18K usd. Average salary (manufacturing) in the US is about $30K usd.

I'm sure that after you adjust for cost of living, the numbers more or less look equal. However, keep in mind that manufacturing is leaving Shenzhen because of rising wages.

Sources:

Shenzhen Annual Salaries: http://www.sz.gov.cn/en_szgov/news/latest/content/post_78894...

US Annual Salaries: https://www.bls.gov/oes/current/oes519199.htm

Shenzhen Manufacturing (it's a news story, but you can find a ton of them with the same theme): https://www.scmp.com/economy/china-economy/article/3108207/c...

[aquaticsunset]

Got a citation for this?

[PKop]

>compete

Have as your "goal" less the desire to "win" the global competition for corporate profits & corporate headquartering of multinationals in your nation simply on grounds of labor/profit competitiveness, and take a more nationalist view of, where necessary, having state run enterprises or "free market" competition within your borders but not complete free trade in a global sense.

In other words, do no necessarily pursue as your goal to structure economy either to have most profitable companies that reduce costs by moving labor around the world to find cheapest workers, or those which try to export the most. Have as your goal at least to produce domestically as much as possible to satisfy domestic consumption demands, as well as having some minimal threshold of employed domestic workers.

As it stands, US has a massive trade deficit, and a decades long decline in working age male population, especially in "flyover" US regions where manufacturing has declined the most while not being replaced by equivalent jobs. These regions also have declining population, rising suicide & opiate death rates, declining family formation / birthrates.

The "telos" of our society should not put as its "end" an economy, especially one which pursues profit above all.

The economy should be a tool in service to outcomes we actually desire.

Like software built to do a job, not simply designed for the production of specific features.

This is where global financial capitalism (as the US has a giant capital surplus which balances its trade deficit) needs to be called into question.

Internal free markets is one thing. But not having a national industrial policy which prioritizes the well being of domestic workers and their families over well being of multinational corporations and banks makes our system quite degenerate over time.

People should really take a few minutes and watch these 2 videos explaining the current account[0] and capital account[1] relationship, and understand that how we operate now is a political choice, which has massive consequences on who benefits of this system accrue to, and who pays the costs of this system.

This system is maintained by having the reserve currency and the state using strong efforts over many years to not only maintain this GRC but strengthen it, not allowing the natural devaluation of the $ that would close these 2 imbalances and more closely balance capital and labor.

Also, it is not a requirement to have a well developed economy and run massive trade deficits or not have a thriving industrial sector. Germany and Japan are 2 examples that do not run giant trade deficits like the US [3]

https://youtu.be/dirBYVjDk7A [0]

https://youtu.be/AimYG1jYD0A [1]

https://www.conradbastable.com/essays/the-germany-shock-the-... [3]

[pbourke]

This is an insightful comment that clarifies and distills some of my own thinking on the subject.

The blind pursuit of efficiency optimizes for the macro numbers at the expense of gutting the structure of the labor market and lived experience of people.

It’s far better to have a lower per capita GDP with a more equitable distribution of resources (such as a higher household income across quantiles)

It seems clear that some level of tariffs, caps on FDI, etc are “good inefficiencies” if done correctly.

[pjlegato]

In efficient, highly optimized economies such as the United States and most of the European Union, the border guards' job is to prevent people from entering and participating in those economies illegally.

In the countries with low GDPs and highly equitable distribution of resources -- North Korea, East Germany, Cuba, the Soviet Union, for example -- the border guards' job is to prevent people from escaping.

[andy_ppp]

I think people are starting to realise that globalisation needs to be balanced with other kinds of security especially around tech, hence TSMC being given a stack of cash to build a fab in the US.

I wouldn’t say globalisation is dead more that it’s going to be more balanced going forward with local concerns.

[flatline]

So much of globalization up through the 2000s was exploitation of emerging markets for cheap labor and lax environmental and safety standards. This was not wholly without benefit to the people in these countries though: it has dragged a lot of the third world out of abject poverty despite some of the dystopian aspects. Hopefully the next three decades will be better on a number of fronts.

[ehvatum]

Consider Elon's move from California to Texas. His energy costs are vastly reduced, expenses generally are reduced, and he can continue to hire directly in the US and draw directly on US machine shop production capacity.

There should be more machining and making in the US; everyone would like to have solid US-made hardware, but success in small-business machining and manufacturing, and scaling to large scale without off-shoring, requires a discipline and commitment to self-improvement that is difficult to cultivate.

[hanuman]

This monetary policy, and the consequent industrial policy ("free trade"), is, more than any other factor, the cause of the so-called "Great Stagnation." Its persistence is why the Great Stagnation is not over, despite some recent noises to the contrary. US growth will not resume until energy production does. With shale seemingly spent, nuclear too scary for most, and fusion perpetually 10 years off, growth is unlikely. The US will continue to "print" oil by printing dollars (h/t to Luke Gromen), care of Saudi Arabia, until it can't. The US will do anything and everything to ensure this continues, history is proof of that. When the US finally fails there will be a war. Not like Vietnam or Iraq or Afghanistan. A very, very bad war. And the winner will determine monetary policy for the next century or so.

[paulpauper]

Had you shorted the US stock market in 2000 on that prediction/hunch, you would be down a lot. The economy has moved beyond manufacturing. Data, payment, and information processing and intellectual ropery have taken over manufacturing in importance.

[seibelj]

There is national security interest in being able to manufacture our own weapons, computers, and infrastructure components. Otherwise if a war happens we may be in trouble.

[CoffeeDregs]

I wouldn't have shorted the market based on that but I've not been sanguine about the US economy since then. Financial engineering, not productivity[1], has really been the driver of our economy...

[1] https://voxeu.org/article/industry-anatomy-transatlantic-pro...

[imtringued]

Shorting the stock market makes no sense because central banks prop up stocks. All that newly created money goes into your pocket if you go long.

[908B64B197]

It's a bi-partisan issue. Hell, I would agree it's not even a exclusively US issue but is pretty much generalized throughout the west.

Shifting manufacturing to China makes absolute sense when you look and care about the the quarterly/yearly performance. And if you decide not to do it well tough luck because your competitor is and will have better results than you.

If you look at it with a 20/30 years perspective then it becomes obvious that outsourcing is completely the wrong move. You basically get rid of your local expertise, train your replacements, slim down your middle class (the folks buying the products!). Then your manufacturing partner starts vertically integrating and designing it's own competing products and you are pretty much left out of the equation. It's almost as if, thanks to support from the party, Chinese businesses can plan for 20 years ahead but western companies can't because they HAVE to maximize the quarterly results!

> I argued that, even in the presence of free trade, a country should have the ability to tariff imports to the extent that that country could maintain a 25% (or something) domestic market share.

Tariffs and trade wars seem completely useless to me when done between G7 countries because we're all in the same situation regarding China. To achieve any sort of paradigm shift we'd need to stop each having a 1:1 relationship with China and start negotiating as a block.

[jaredklewis]

I agree with some part of what you are saying, but tariffs are a miserably blunt instrument.

Think of the supply chain of something immensely complex like the Boeing 787, which has, quite literally, millions of parts (including LCD screens). Many if not most of those parts are imported. If there are tariffs on imports, either:

1. Boeing will pay tariffs, increasing the cost of each plane. Great for Airbus, bad for Boeing.

2. The parts are sourced locally instead. These parts will invariably be more expensive, as if there were cheaper local options, they would have been sourced locally before. Again, Boeing planes get more expensive, great for airbus, bad for Boeing.

3. Boeing, to avoid raising prices and giving market share to airbus, decides to move manufacturing outside the US.

What applies here for Boeing, is also going to apply to Tesla, Caterpillar, and hundreds of other companies. Tariffs create incentives to source locally, but they simultaneously create incentives to manufacture abroad. It is a very thin tightrope to walk and I haven't seen any evidence that Washington can.

On the topic of national security: “When goods don’t cross borders, soldiers will.”

I'm far less concerned about a war breaking out between two countries with healthy trade relations and cultural exchange. Do we want China to be our enemy? Why?

[passerby1]

Correct me if I'm wrong, but it seems like the US does not need any factories, as it can print any amount of money and buy whatever it wants from any country has factories. Money talks. Or not?

It has enough military for safely making this again and again for tens of years at least.

[biggermike]

What happens when the other country isn't willing to sell? Consider a war or other disaster e.g. in the months before the pandemic, China stopped the export of face masks and other PPE, resulting in shortages in hospitals around the world.

[southeastern]

There at other manufacturing centers than China. I don't know why people keep it repeating this line. Where do you think China gets their things made? It SE Asian countries. And they're making in roads to Africa. That's what we should be doing. We have a president talking about shhole countries-- destroying international relations is gonna do a lot more damage in a war. We should be building diverse business relationships with competing economies.

[notahacker]

Countries are virtually never 'unwilling to sell', and there are quite a few different countries out there.

PPE shortages in hospitals were because of unprecedented demand levels, not because China didn't continue to export it. A country is actually a lot more likely to have problems handling that kind of short term demand shock if it relies entirely on domestic manufacturing

[passerby1]

Free market - money decide.

If not - the politics is involved in selling decision making - then the US starts a sanctions war, as China example shows. It sells in the end, but after being economically punished.

[Reggi55]

It was done for 2 reasons and planned out by Paul Volcker, and there is a speech to go with it if someone can find it.

1) USD reserves allow us to import more value than we export so it offers a better standard of life for the consumer than otherwise.

2) It allows us to have a bigger consumer market than we would otherwise have and incentive for countries to partner with us to sell their stuff to. If you've lived outside the US you know every business wants to sell their stuff here either as #1 or just after their home market.

Under those purposes it seems to have worked very well. Of course theres the risks of crashes along with it too.

[throwanem]

I agree, but this seems to me to be something which unfortunately requires a generational strategy to repair, and I don't see how any government that's possible in this country could achieve it. The time horizons aren't long enough and the incentives aren't aligned enough to permit even a credible start.

[CryptoPunk]

The uncompetitiveness in manufacturing is due to two factors:

1. Regulations. Both the OSHA and EPA had a measurable negative impact on manufacturing productivity growth. [1] I suspect the most harmful regulations are those that constrain contract freedom by requiring employers to give unions a negotiating monopoly, aka collective bargaining, over any work unit where they emerge. This would devastate any of the bright spots in American industry today, whether it's Tesla, or Amazon, or Google. The threat of unionization also discourages these firms from expanding into areas that require employing high concentrations of less-skilled workers in immobile capital intensive projects, as these are the most susceptible to unionization.

2. The massive rise in social welfare spending [2], diverting capital from productive uses to unproductive ones.

[1] https://www.jstor.org/stable/1810223?seq=1

[2] https://fivethirtyeight.com/features/what-is-driving-growth-...

[jayd16]

Tariffs just cause US buyers to pay more without much help. Tariffs have no way to make a US manufacturer competitive globally. US made goods would just be that 25% more expensive. At its best its a regressive subsidy from one set of Americans to another.

Why not just a direct subsidy to US manufacturing under the usual tax code?

[stdbrouw]

> Even if this anecdote is untrue, the point remains valid...

I mean, I guess the point remains valid in that everyone can see that a lot of manufacturing has left the US in the past, I dunno, fifty years. But if you don't even know whether the anecdote you mention is true, why bring it up? Why comment at all?

[stjohnswarts]

This was actually one of the good things that I thought -might- happen with the Trump regime despite all the other negatives. Guess what, nothing happened :( . We're still losing the ability to make stuff which is very scary in a world that is becoming China vs. The USA . There is price that isn't easy to express in $ that goes with the national security lost through losing a manufacturing base.

[kopakabana]

> To me, this is the money shot.

In which sense?