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The US is building factories at a fast rate

businessinsider.com

101–110 of 309 posts

Re: The US is building factories at a fast rate

#101
post #3

This is CHIPS and IRA at work, largely. The government decided we needed more manufacturing, paid people money to do that, and... now we have more factories and manufacturing jobs. People get all balled up over policy decisions like this because of politics, but the truth is that Keynesian economics is pretty simple to understand and it works exactly the way you'd expect it to work.

> This is CHIPS and IRA at work, largely

That's what the article says, but the chart in the article casts quite a bit of doubt on that explanation (it's obviously an accelerator). Indeed, two paragraphs later, the article states "Census Bureau data reveals manufacturing construction spending has escalated from January 2020 until April 2023 in every region except New England and the Mid Atlantic."

If you assume that people make plans before spending a lot of money, you would think that the tipping point was back in 2019 or so. In fact, I know people that make machines that are used to make and outfit factories and they've been running at capacity for a long time. You might think it's crazy looking at that chart, but factory construction in the USA is currently constrained by availability of parts and people. People want to spend more than they're currently spending...

Re: The US is building factories at a fast rate

#102

Earlier quoted context omitted.

Compared to A Tier cities in some Asian countries? Does Santa Barbara or NYC really look antiquated compared to Mumbai? Or Da Nang? Or Fukuoka? Maybe if you're trying to compare Detroit to Shenzhen or Tokyo.

Fuka What you say to me?

Guess the play on words with Fukuoka wasn't funny.

Re: The US is building factories at a fast rate

#103
post #46

Earlier quoted context omitted.

That's a bold claim. Coming out of WWII the US had virtually the only operational factories in the world. Arguably protectionism caused incumbents to become moribund and fall behind foreign firms. The steel industry is a great example. By the time tariffs came down US steel plants were half a century out of date and producing steel that was either too expensive or too low in quality compared to competition. For anoth…

Underlying your perspective is the idea that economic activity is only about growth or efficiency or "winning". Governments have very different interests, such as maintaining social order, protecting vital industries and spurring innovation. A government doesn't care if their industrial policy is sub-optimal from a growth-uber-alles perceptive. Only a tiny sliver of libertarian-types think that way and those people r…

So my point is that protectionism undermines things like innovation by creating protected industries that don’t need to be innovative.

Maintaining order is an odd goal for an economic policy no? But on that note, France is probably the most protectionist among developed western nations. Yet they have created a situation where a third of young people can’t find work and social cohesion is unraveling.

Re: The US is building factories at a fast rate

#104

Earlier quoted context omitted.

Yes, exactly.

>> Yes, that was the point? The original post's point seemed to me to be "Reaganomics was bad for manufacturing jobs", and listed tariffs and subsidies as two things that are good for manufacturing jobs that were a reversal of Reagonomics. Do you agree that was the original point? But Reagan implemented both tariffs and subsidies that were good for manufacturing jobs. So how are tariffs and subsidies a reversal of Re…

My point is this part: "Outside of the more immediately-public-facing stuff like tax cuts, Reagan's legacy is very much a "do what we say, not what we did" situation."

A common definition is something like "widespread tax cuts, decreased social spending, increased military spending, and the deregulation of domestic markets" - https://www.investopedia.com/terms/r/reaganomics.asp - and in common parlance it is heavily associated broadly with "trickle down" ideas. Subsidizing manufacturing and putting more regulation around trade run counter to that. Especially when you're subsidizing not-immediately-defense-focused manufacturing. Reagan and the neoliberal era as a whole was very bad for most manufacturing, the existence of one area that Reagan invested in doesn't disprove that, but it should've led its supporters to say "hey, that worked, maybe it would be useful in other areas too."

Even the tax stuff, right? The idea being pitched was that lower rates would result in higher government revenues but in practice the old tax rates were not at such a point that they were strangling productivity in the ways that would've been required for that to be true. Yet the legacy is simply "tax less" instead of any associating remaining with the "we actually think we can get more revenue to fund our spending" part.

Re: The US is building factories at a fast rate

#105
post #86

Earlier quoted context omitted.

I doubt these are the stable union jobs with decent benefits from 50 years ago. If we really want to reverse Reaganomics we need to increase taxes on corporate profits, capital gains, and inheritance.

How do you see that working? I mean what’s the operational mechanism that drives union jobs from wealth taxes?

If you increased tax receipts you could justify more government building and partnerships or grants. Make those grants pay union scale or require union contracts.

Re: The US is building factories at a fast rate

#106

In order for this to be effective, these factories need to be able to produce at a desirable profit. The reason so much manufacturing drained out of the US in the first place was corporations seeking improved profits. That's not to say many won't succeed, but we need to ensure that global competitiveness is imbued into these operations. Southeast Asia and India remain inexpensive.

I think this is accurate. I also think the EPA had a lot to do with it as well.

Re: The US is building factories at a fast rate

#107
post #86

Earlier quoted context omitted.

I doubt these are the stable union jobs with decent benefits from 50 years ago. If we really want to reverse Reaganomics we need to increase taxes on corporate profits, capital gains, and inheritance.

How do you see that working? I mean what’s the operational mechanism that drives union jobs from wealth taxes?

I never implied a causal relationship, they are two sides of the same coin.

Re: The US is building factories at a fast rate

#108

In order for this to be effective, these factories need to be able to produce at a desirable profit. The reason so much manufacturing drained out of the US in the first place was corporations seeking improved profits. That's not to say many won't succeed, but we need to ensure that global competitiveness is imbued into these operations. Southeast Asia and India remain inexpensive.

Geopolitical risk is a thing too. Making less on profit now offsets the potential disruption on all exports if China were to fight a proxy war with the US.

Re: The US is building factories at a fast rate

#109

Meanwhile in China: - exports plunge by 7.5% in May, far more than expected https://www.cnbc.com/2023/06/07/chinas-exports-plunge-by-7po... - profit tumbles 18% in April https://www.reuters.com/world/china/china-industrial-profits... - chip progress stagnating. Oppo chip design unit completely shut down https://techcrunch.com/2023/05/12/oppo-chip-disbands-phone-c... . Japan stops shipping semiconductor equipments to…

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Re: The US is building factories at a fast rate

#110
post #74

Earlier quoted context omitted.

That doesn't really make sense. In no universe can you expect people to buy more expensive products. Government intervention (tarrifs, taxes, regulations, whatever) or some other measure is needed to protect local companies.

I don't think GP was implying we should expect it. But it's fair to point out that there's a certain hypocrisy in complaining about jobs being lost to overseas while simultaneously buying goods made offshore in preference to those made locally. Note that I certainly accept on average this has been a beneficial arrangement for both sides, but it's the unevenness of how the wealth has been spread around that strikes me…

hypocrisy, perhaps, but a ready analogy might be the heroin addict who, lucid at the moment, pleads with you to send them to rehab.
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