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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

#71

Post by fastball »

mensetmanusman wrote: post #4

I work in one of the last remaining large industrial manufacturing labs in the US. Some of my colleagues worked at Bell before that was shuttered. My sense from talking to the previous generation is that financialization of the US has started (finally) failing the American people. The previous generation cashed in on major profits by off shoring (Kodak), but we overdid it. In a round about way our company is run by p…

Yes, I think the correlation between MBA popularity as a degree and failing of US industry is fairly causal.

It's the same in universities, where more and more time and money is spent on "management" (extracting value) and less and less is spent on actually teaching stuff (creating value).

Unsurprisingly, when a (somewhat large) portion of the population in a high productivity society realizes they can just skim off the top without doing any actually useful work, bad things happen.

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

#72

Post by lumost »

CPLX wrote: post #47
liquidpele wrote: post #43

Earlier quoted context omitted.

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.

This is the closest thing to an answer. The economy has essentially been ruined by looting. People finding ways to strip out assets from companies. Variations on this include private equity racking up debt and bankrupting companies. Executives doing stock buybacks to boost their options while hollowing out the company's resources. Hedge fund management fees. It's everywhere.

Is the looting behavior just a response to US industrial policy? US policy has made US manufacturing tenuous for decades. Meanwhile US policy has also provided the means and mechanisms to ship manufacturing abroad.

Given the above, isn’t the optimal strategy to maximize profit extraction in order to invest in new industries?

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

#73

Post by narrator »

Has anyone asked Elon how to fix manufacturing in the U.S? Has he given anyone any ideas. The guy probably does as good or better job at manufacturing in the U.S than anyone else, and he has plenty of plants in foreign countries, so he can compare and contrast. Alas, the current administration hates the guy, and you can't have a guy who's clearly on the wrong team get to take credit for anything these days.

Edit: He did have something interesting to say about the "idiot index" which is the price of a component over the cost of the raw materials. If that's very high, it means there are serious problems at that manufacturing organization.

https://officechai.com/stories/elon-musk-idiot-index/

There's so much inefficiency in American manufacturing. It cost SF $1 billion a mile to extend the subway for example.

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

#74

Post by seizethecheese »

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…

> Domestic US advertising is almost zero sum, anyway, because Americans are spent out. All advertising does is move consumption around a bit.

This is only true when productivity between firms is constant. Advertising helps direct consumption toward more productive firms.

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

#75

Post by 6kVShitPost »

narrator wrote: post #73

Has anyone asked Elon how to fix manufacturing in the U.S? Has he given anyone any ideas. The guy probably does as good or better job at manufacturing in the U.S than anyone else, and he has plenty of plants in foreign countries, so he can compare and contrast. Alas, the current administration hates the guy, and you can't have a guy who's clearly on the wrong team get to take credit for anything these days. Edit: He…

[flagged]

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

#76

Post by yterdy »

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? 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?

Ooh, this one's easy. Make software companies give back some of the money they make data-brokering and administering platforms where the vast majority of the advertiser-attracting content is provided, for free, by users. That's where the margin is coming from: users being scammed out of the true value of their contributions. Tax or regulation, pick your poison.

Someone brought up Tesla and SpaceX in another reply. The Tesla whose market share growth was driven largely by EV tax incentives, of course. The SpaceX that built heavily on gifted NASA research and expertise, of course.

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

#77

Post by [deleted] »

6kVShitPost wrote: post #75
narrator wrote: post #73

Has anyone asked Elon how to fix manufacturing in the U.S? Has he given anyone any ideas. The guy probably does as good or better job at manufacturing in the U.S than anyone else, and he has plenty of plants in foreign countries, so he can compare and contrast. Alas, the current administration hates the guy, and you can't have a guy who's clearly on the wrong team get to take credit for anything these days. Edit: He…

[flagged]

[deleted]

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

#78

Post by ramraj07 »

seizethecheese wrote: post #74
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…

> Domestic US advertising is almost zero sum, anyway, because Americans are spent out. All advertising does is move consumption around a bit. This is only true when productivity between firms is constant. Advertising helps direct consumption toward more productive firms.

No one said ban advertising, just penalize excessive spending on them.

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

#79

Post by chii »

CPLX wrote: post #47
liquidpele wrote: post #43

Earlier quoted context omitted.

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.

This is the closest thing to an answer. The economy has essentially been ruined by looting. People finding ways to strip out assets from companies. Variations on this include private equity racking up debt and bankrupting companies. Executives doing stock buybacks to boost their options while hollowing out the company's resources. Hedge fund management fees. It's everywhere.

> People finding ways to strip out assets from companies.

If those people don't own the company, what is the owner doing by allowing this to happen?

If those people _are_ the owners, then there shouldn't be a problem, since it's their own company, and they ought to be allowed to do anything they wish. Including short term reward for long term loss (if it is worth it in their eyes).

So i dont think it's "looting" (implying it's being stolen without knowledge of the owner).

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

#80

Post by polygamous_bat »

twoodfin wrote: post #67
stouset wrote: post #66

Earlier quoted context omitted.

They are likely suggesting that incremental, hypothetical increases in market efficiency appear to come at increasingly steep costs which primarily borne by the rest of society at large.

And the evidence for this is … ?

Front-running is an easy example.
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