| HN Mirror

> The general economics of economies of scale is you split 1 facility in 2 you add 20-50% overhead due to duplication.

There is no general figure for this, it depends both on the type of facility and the size of it to begin with. At hyper-scale the incremental efficiency gains are much smaller because a medium-sized facility is large enough to have captured most of them already. Where you get 20-50% is where you have a single small facility and try to split it in two.

The general premise of economies of scale is that there are costs that don't depend much on scale, so at increased scale, the amortization of those costs over all units contributes less to the cost per unit.

However, at very large scales, three things happen.

First, many of those costs look like "you need this piece of equipment that can handle 1000 units per year" and then the facility that produces 1000 units can amortize it over 1000 units but the facility that only produces 100 units has to amortize it over 100 units. However, the facility that produces 100,000 units then has no advantage over the one that produces 1000 because they then need a hundred of those pieces of equipment and have no advantage in unit cost.

Second, some costs only have to be paid once regardless of the number of units. If you sell each unit for $1000 and have a fixed overhead of $10,000, at 100 units the over per-unit overhead is $100 (i.e. 10%), but at 1000 units it's already down to 1%, at 10,000 units it's 0.1%, etc. The incremental advantage of doing millions of units instead of thousands is thereby negligible because it was already under 1% of the unit cost by the time you were doing thousands. The number of industries where you need to be producing some double digit percentage of the entire national capacity of some product before those costs get down to a manageable percentage of the unit cost is extremely uncommon, to the point that it may well not even exist for a country the size of the US. Especially when you're talking about costs that specifically can't be amortized over more than one facility.

And third, some costs actually increase with scale, e.g. coordination costs. So once you pass the point that those costs exceed the diminishing incremental benefit from amortizing costs of the second type over more units, increased scale reduces efficiency even before you consider the consequences of reduced competitive pressure on incentives.

> Sure, economy of scale good for consolidator being net bad is valid, but this wasn't discussion on optimal macroeconomics, this discussion on what US politically able to do. There are things US should do, but systemically can't.

"Systemic" means that in order fix problem A, you first have to fix problem B. That is not a formal proof that A is permanently unsolvable, it's a just a dependency graph for the order in which they have to happen.

> Cold war dispersion for nuclear math and precise conventional strike math is different. Spreading 2 factories apart so they draw 2 nukes vs 2 factories get 2 conventional packages regardless of spatial separation.

Sure, but the first is the stricter requirement because "2" is an insufficient number in both cases. The USSR definitely had more than two nukes. And if you need 100+ facilities, in the second case it's fine to have multiple facilities in each of a handful of cities, whereas in the first case you need them to be in 100+ different cities, which is harder to do but effective against both.

> Is US going to dismantle gulf oil infra and move it inland.

The original premise was it would rely less on petroleum, so in that sense, yes.

> Most physical infra processes are not fragmentable or self healing like internet.

That's not actually that uncommon. Transportation networks, power transmission, etc. map to the same sorts of designs where in the common case the multiple independent paths increase capacity and efficiency and in the damage case they keep the system running for critical infrastructure by redirecting critical uses from the damaged route to the operating one.

Meanwhile most infrastructure is inherently fragmented. There is no single water treatment plant in DC that runs the whole country because you need them to be closer to the point of use.

> How much are Americans willing to pay, coldwar was eating 15% of GDP.

Starting from the status quo, getting to the scenario where there are a larger number of competing suppliers for various things would lower the costs people are paying.

> All this ultimately secondary to the point that doing all this costs US more (because everything in US costs more)

Which brings us back to, that's the real problem we need to solve. If your problem is that it's now easier for someone to blow stuff up and you've made it excessively expensive to build another one, the solution is to focus on lowering the cost of building things in the US, which would benefit people independently of this anyway.