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America's advanced manufacturing problem and how to fix it

americanaffairsjournal.org

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Re: America's advanced manufacturing problem and how to fix it

#51

Post by aragonite »

goodluckchuck wrote: post #35
wonder_er wrote: post #34

Earlier quoted context omitted.

when two people are playing a game, and one of them is willing to use violence, it's quite a bit harder for the other person to not use violence as well. The US uses violence and coercion as a matter of fact, continuously, in every way, shape, and form. If you tried to 'play' with the US from a position of mutuality and co-creation... you get colonized and cleansed and westernized.

Exactly. If England would have left the colonies alone, not imported enslaved people, not attacked when we declared independence, then they wouldn’t have seen violence from us. Insert list of subsequent wars.

> Insert list of subsequent wars.

Like the Mexican–American War? OP's explanation of why US is the top-dog can't be whole story, but there's something to it. For example, it's hard to imagine the US would be half as powerful without the territorial gains made as a result of the conflicts surrounding the Mexican–American War (for example, by far the most economically important states are California & Texas!), yet at the same time virtually everyone agrees that the War was completely indefensible (Grant in a diary called it "one of the most unjust [war] ever waged by a stronger against a weaker nation").

Re: America's advanced manufacturing problem and how to fix it

#52

Post by ramblenode »

serf wrote: post #19
roenxi wrote: post #9

Earlier quoted context omitted.

When did China ever rely on protectionism? I'm sure they have bouts of it here and there but the overt part of their strategy has been a willingness to work hard for low wages combined with refusing to let Chinese land or companies be sold to overseas buyers. But I claim no expertise. There should be a more serious effort to figure out what China's strategy was before there is a conversation about how best to copy it…

Production in China has included benefit from the opposite side of protectionism for some time now; when most countries abide by trade laws, those that don't gain increased exposure to international markets by virtue of offering cheaper goods via production-sans-design. China itself may not, but the production groups within China have a pretty exhaustive recent history of largely ignoring IP regulations whenever prof…

The main problem with this take is that the US and China simply have different standards and rules for IP.

China is not "ignoring IP regulations"; they have different regulations. Both the US and China are parties to the WTO and Berne Convention and cases can and have been tried. The US has won many cases against China in the WTO; it hasn't done as well making cases for IP theft and protectionism, which is notable as this is a (relatively) neutral forum.

Re: America's advanced manufacturing problem and how to fix it

#53

Post by twoodfin »

yurishimo wrote: post #50
twoodfin wrote: post #46

Earlier quoted context omitted.

A financial transaction tax is a terrible idea. I own a 100 shares of Apple. Tim Cook goes on CNBC and says he’s all in on printers. So I want to sell my Apple shares and buy Microsoft, where Satya Nadella is pushing Cloud and AI. I’m being a smart investor, moving a small bit of capital allocation intelligently. Taxing this decision discourages making it—even if only marginally—and makes capital markets dumber and l…

You can have transaction taxes without penalizing small/micro investors. It’s criminal how the people who trade stocks for a living get away with paying less taxes as a percentage than their janitors.

The drag on efficient capital allocation doesn’t get better if it only applies to large investors, if anything probably the reverse.

Re: America's advanced manufacturing problem and how to fix it

#54

Post by polygamous_bat »

twoodfin wrote: post #46
Animats wrote: post #12

Note the absence of tax policy changes that favor manufacturing. Here are a few: * A tax on financial transactions. This is sometimes called a "Tobin tax". The US financial services sector has doubled in size as a fraction of the economy. It's currently around 12%. That's an overhead cost, and a big one. Could be half that. * A tax on advertising. The tax deductiblity of advertising as a business expense should be li…

A financial transaction tax is a terrible idea. I own a 100 shares of Apple. Tim Cook goes on CNBC and says he’s all in on printers. So I want to sell my Apple shares and buy Microsoft, where Satya Nadella is pushing Cloud and AI. I’m being a smart investor, moving a small bit of capital allocation intelligently. Taxing this decision discourages making it—even if only marginally—and makes capital markets dumber and l…

> Taxing this decision discourages making it—even if only marginally—and makes capital markets dumber and less efficient.

Or it encourages making longer term investment decisions rather than trading like a jittery cocaine addict (which by no small amount of irony a nonnegligible number of traders are already.)

Re: America's advanced manufacturing problem and how to fix it

#55

Post by yterdy »

liquidpele wrote: post #43
joe_the_user wrote: post #14

Earlier quoted context omitted.

Yeah, "financialization" is absolutely the answer and the articles' claim of lack institutional integration (or whatever) seems wrong. You can look at how Boeing gutted it's highly skilled Pacific North West operations to move lower skilled, lower paid areas elsewhere and generalize this to a multitude of similar industries.

I think that’s only half right… the financialization is driven via a priority of short term profits that are incentivized by the market to executives. They play the BS game to just get rich and then dip, company be damned in the long run.

Not quite. As GGP mentioned, the necessity of keeping stock prices (and property values, and anything else securitized) high so as to not impoverish pension funds, 401Ks, IRAs, etc., is real. That is, if you care about Silent, Boomer, and Gen X retirees - who invested, but didn't save - being able to cover their myriad outlays. Millennials and younger need not apply, of course; we're just never going to be able to retire (Or afford a house. Or...). You are right about one thing: "get rich and then dip" is the mantra. Not just for executives, but for the elder half-ish of Americans in general.

Re: America's advanced manufacturing problem and how to fix it

#56

Post by twoodfin »

polygamous_bat wrote: post #54
twoodfin wrote: post #46

Earlier quoted context omitted.

A financial transaction tax is a terrible idea. I own a 100 shares of Apple. Tim Cook goes on CNBC and says he’s all in on printers. So I want to sell my Apple shares and buy Microsoft, where Satya Nadella is pushing Cloud and AI. I’m being a smart investor, moving a small bit of capital allocation intelligently. Taxing this decision discourages making it—even if only marginally—and makes capital markets dumber and l…

> Taxing this decision discourages making it—even if only marginally—and makes capital markets dumber and less efficient. Or it encourages making longer term investment decisions rather than trading like a jittery cocaine addict (which by no small amount of irony a nonnegligible number of traders are already.)

What you’re suggesting is that markets are more efficient when they’re less liquid. That’s both intuitively and empirically wrong.

Re: America's advanced manufacturing problem and how to fix it

#57

Post by Aunche »

mschuster91 wrote: post #7
mdorazio wrote: post #6

Here are the key points the article suggests (it spends quite a long time explaining how we got here): 1) Improve the [government sponsored] Manufacturing Institutes 2) [federally] Back R&D for manufacturing technologies 3) Provide scale-up financing [by the government] 4) Use government procurement power to promote new manufacturing technologies 5) Direct production support [to sectors deemed critical] 6) Provide bo…

> On the second point, the elephant in the room is that smart people in the US can make 2-3X as much in software or finance as they can in manufacturing, so what do you think they're going to pick? Make unions stronger and kill off all of Wall Street finance shenanigans that's purely devoted to creating money out of thin air or skimming (especially HFT). That house of cards is going to crash hard anyway, so best tear…

> Wall Street finance shenanigans that's purely devoted to creating money out of thin air

Creating money out of thin air has literally been the primary economic function of banks since the Renaissance. You have some people willing to provide useful goods and services, but there aren't enough standardized IOUs to pay them, so you issue new standardized IOUs.

Re: America's advanced manufacturing problem and how to fix it

#58

Post by polygamous_bat »

twoodfin wrote: post #56
polygamous_bat wrote: post #54

Earlier quoted context omitted.

> Taxing this decision discourages making it—even if only marginally—and makes capital markets dumber and less efficient. Or it encourages making longer term investment decisions rather than trading like a jittery cocaine addict (which by no small amount of irony a nonnegligible number of traders are already.)

What you’re suggesting is that markets are more efficient when they’re less liquid. That’s both intuitively and empirically wrong.

Why? We already have regulations such as circuit breakers in our markets because unlike what you are claiming, absolute liquidity is not the god you think it is. There can absolutely be such a thing as over-optimization.

Re: America's advanced manufacturing problem and how to fix it

#59

Post by mdorazio »

nibab wrote: post #23
mdorazio wrote: post #6

Here are the key points the article suggests (it spends quite a long time explaining how we got here): 1) Improve the [government sponsored] Manufacturing Institutes 2) [federally] Back R&D for manufacturing technologies 3) Provide scale-up financing [by the government] 4) Use government procurement power to promote new manufacturing technologies 5) Direct production support [to sectors deemed critical] 6) Provide bo…

“Which company is private investment going to fund - the SaaS co. with 40% margins and rapid growth or the manufacturing co. scraping 10% margins and 5% CAGR?” 2 of the most valuable companies started in the last 20 years in the US are SpaceX and Tesla. You can still build a huge amount of value with non-SaaS margins. I think part of the problem here is how structurally unfit VCs are to fund such companies (ie invest…

These are great examples. SpaceX is an aerospace company and Tesla's price and hype are based on not being a manufacturing company (Elon touted it as a transportation tech company and not a car company from the beginning). If either were valued as manufacturing companies, their valuations would be in line with traditional peers.

My point is, if you want manufacturing to return, we need American FoxConns, and that means literally 2% margins [1]. We can't rebuild onshore manufacturing with overhyped companies alone.

[1] https://www.foxconn.com/en-us/investor-relations/financial-i...

Re: America's advanced manufacturing problem and how to fix it

#60

Post by goodluckchuck »

aragonite wrote: post #51
goodluckchuck wrote: post #35

Earlier quoted context omitted.

Exactly. If England would have left the colonies alone, not imported enslaved people, not attacked when we declared independence, then they wouldn’t have seen violence from us. Insert list of subsequent wars.

> Insert list of subsequent wars. Like the Mexican–American War? OP's explanation of why US is the top-dog can't be whole story, but there's something to it. For example, it's hard to imagine the US would be half as powerful without the territorial gains made as a result of the conflicts surrounding the Mexican–American War (for example, by far the most economically important states are California & Texas!), yet at t…

It’s not fair to call that a war of aggression on our part. Mexico claiming to own vast swaths of land including California and Texas in the 1840s was about as legitimate as Spain’s prior claim over the same “New Spain” which Mexico merely inherited… again by violence.

It’d be as if the US claimed to own Antartica, the moon, or mars. Perhaps there may have been a few people there, but it was never a serious enough population that anyone could think their claim of ownership was competitive. I mean, they had a stronger claim than Spain, but that’s not saying much.

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