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America's manufacturing capacity has been largely destroyed in all but the highest end goods where there actually is protectionism in place (we may lose high-en

America's manufacturing capacity has been largely destroyed in all but the highest end goods where there actually is protectionism in place (we may lose high-end semi-conductors soon) The supply chain is now firmly planted in Asia. We've papered this disaster over with debt and asset bubbles. And still these people act as if we are going to fall for the same old wine & wool just-so story from 18th century England again.

alistairSH 5y ago
IIRC, manufacturing output reached an all-time high in 2018. We're doing that in higher-margin industries with fewer workers. So, I'm not sure "capacity has been destroyed" is even remotely accurate in any general sense.
- Retric 5y ago
  Measuring manufacturing output in dollars isn’t a counter argument. A Yacht may be worth 1,000,000 TV’s, but it doesn’t represent anywhere near the same industrial capacity. Especially if the components of said yacht / car / etc where imported. It’s not even purely a question of economics. In a crisis like COVID you can easily prevent exports to meet local demand. Trying to force imports on the other hand doesn’t work.
underseacables 5y ago
Globalization destroyed America’s manufacturing base. At some point politicians decided we had plenty of manufacturing to spare, so we should give it to other countries who need it more. Now, we are paying for it.
- knownjorbist 5y ago
  Manufacturing is not some magical thing we should be exclusively trying to court.
  - hellbannedguy 5y ago
    Unless your collecting food stamps in the rust belt?
    - knownjorbist 5y ago
      The overall economic cost of trying to maintain generation after generation doing the same thing with the same results far outweighs the people experiencing some pain of having to re-train, go to school or move elsewhere. If anything that's where the government should be trying to help, not trying to prop up industries with our tax dollars.
      - systemvoltage 5y ago
        I think it’s also about resilience of global reliance and disruptions. “Someone’s gotta make stuff” as Elon puts it. Manufacturing of stupid trivial things like buttons and pins is still important to keep high volume manufacturing knowledge and knowhow.
        knownjorbist 5y ago
        With select exceptions(defense, mainly), disruptions of the kind you're describing are best handled with multilateralism.
        systemvoltage 5y ago
        Definitely defense, if you study history - how bacon grease was collected from homes to make lubricant for cartridges during WWII; making pins and buttons for clothes was turned into component manufacturing for airplanes almost overnight. Within a few days, people worked to convert equipment, draft new mechanisms, turn them at the machine shop, fixer-upper some machines - converted the entire enterprise into making shaft pins and washers. There were countless examples of how quickly manufacturing of A was converted to manufacturing of B. Ken Burns documentary goes much deeper into this and I find it totally fascinating. Chinese populace has an insane level of "jerry-rigging" capability because of how they bring costs down. This is a huge advantage in war manufacturing theater. This is now questionable as Americans (and Europeans alike) are constantly in consumption mode.
- azinman2 5y ago
  I wouldn’t blame politicians. It was very in vogue for businesses to outsource in the last 20 years, and if you didn’t do it, your competition would. It was a race to the bottom that the stock market reacted to, adding to the pressures. That’s the real driver.
- hellbannedguy 5y ago
  Wealthy private manufacturers lobbied politicians to make their widget in the cheapest country. I just wanted to make it clear it was greedy wealthy manufacturers whom abandoned their country in order to make a bigger wad.
- AnIdiotOnTheNet 5y ago
  That's disingenuous. What happened is that economists created models that suggested open trade would be beneficial to everyone even if it caused temporary disruption and politicians implemented their ideas, likely with not insignificant prodding from businesses looking to cut costs. Whether or not those models are accurate is matter for debate.
knownjorbist 5y ago
This is both ignorant of reality & basic economic principles. The US is still the second largest manufacturer in the world(unless you consider the EU as a single entity in that regard), and comparative advantage is a very real(and good) thing.
- yourapostasy 5y ago
  > ...and comparative advantage is a very real(and good) thing. Comparative advantage is a fine model in a one-shot static analysis. But when modeling in reflexivity, and adjacency, from my perspective as a business operator is comparative advantage is a terrible analytical model. There are all sorts of industrial activities that supply soft power projection into an adjacent industry. As long as I'm not bleeding money on them, I don't care they don't fit some economists' vision of "highest, best use of capital". That approach to capital-efficiency-über-alles has for a long time now struck me like working physics problems with zero friction. An example I give is IBM selling its x86 laptop and server division to Lenovo. They weren't consistently hemorrhaging red ink. And given hardware refresh cycles and new projects, those affiliated IBM sales teams were invited in behind the curtains to talk new orders at least once every other quarter with the customers. You cannot buy that kind of access for blood or money these days, and my personal take is as long as it doesn't net you a negative balance sheet at the end of the day, I've seen way worse use of capital on "marketing expenses". For example, IBM definitely has the sophisticated financing/leasing/etc. structures to have set up sales incentives that enabled customers to start on their x86 hardware, and then seamlessly p2v into their cloud as the initial onboarding of customers' cloud initiatives, and helping them re-design and re-factor for the cloud. This pattern plays out over and over in many businesses. When leveraged, it constructs a moat out of an ecosystem of inter-related economic activities.
JumpCrisscross 5y ago
> America's manufacturing capacity has been largely destroyed We are at record high real output levels in manufacturing [1]. China and the EU are bigger, and employment in the sector is down, but it’s false to say our industrial capacity has been decimated. [1] https://en.m.wikipedia.org/wiki/Manufacturing_in_the_United_States https://en.m.wikipedia.org/wiki/Manufacturing_in_the_United_...
- systemvoltage 5y ago
  This entire thread is full of “But it’s not declining”. You need to look deeper into what US is producing. Most of which is Oil, Petroleum Products, Cars, Aeroplanes and Defense equipment based on the article you’ve linked. There has been a massive decline in many other sectors, would be interesting to find a source of industry breakdown. I’ll look for it.
chrisseaton 5y ago
> America's manufacturing capacity has been largely destroyed Where do people get this myth from? It's just flat out untruthful. https://en.wikipedia.org/wiki/Manufacturing_in_the_United_States https://en.wikipedia.org/wiki/Manufacturing_in_the_United_St... > The United States is the world's third largest manufacturer (after China and the EU) with a record high real output in Q1 2018 of $2.00 trillion (i.e., adjusted for inflation in 2009 Dollars) well above the 2007 peak before the Great Recession of $1.95 trillion. US manufacturing capacity keeps going up and up and up. Maybe you're thinking of employment in manufacturing? Yes that's going down. It's also reducing as a proportion of GDP, but that's not 'capacity', and it's because other sectors have grown even faster.
- systemvoltage 5y ago
  This goes against the basic experience of most people that went through the 80’s and remember how basically everything in their living room was made in the US including the TV from Western Electric Co. While statistically, it may be true, literally 99% items in my house are made in China. Paint on the walls is probably still made in US. Small business and manufacturing industry statistics would be interesting to evaluate here without the rhetoric “Where do people get this myth from?” - daily experience of millions of people does not align with reality of 30 years ago. That’s why.
- falcolas 5y ago
  But isn't most of the fiscally significant US manufacturing limited to the final assembly of inexpensive components imported from Asia?
  - jsmith99 5y ago
    Exactly. That's the high value part of the chain: assembling commodity raw materials into specialist goods that poorer countries cannot match.
    - username90 5y ago
      No, the high value part of the chain is putting your brand label on the final box. There isn't much USA is manufacturing that Asian manufacturers cannot do today except the branding.

alistairSH 5y ago

IIRC, manufacturing output reached an all-time high in 2018. We're doing that in higher-margin industries with fewer workers. So, I'm not sure "capacity has been destroyed" is even remotely accurate in any general sense.

Retric 5y ago
Measuring manufacturing output in dollars isn’t a counter argument. A Yacht may be worth 1,000,000 TV’s, but it doesn’t represent anywhere near the same industrial capacity. Especially if the components of said yacht / car / etc where imported. It’s not even purely a question of economics. In a crisis like COVID you can easily prevent exports to meet local demand. Trying to force imports on the other hand doesn’t work.

underseacables 5y ago

Globalization destroyed America’s manufacturing base. At some point politicians decided we had plenty of manufacturing to spare, so we should give it to other countries who need it more. Now, we are paying for it.

knownjorbist 5y ago
Manufacturing is not some magical thing we should be exclusively trying to court.
- hellbannedguy 5y ago
  Unless your collecting food stamps in the rust belt?
  - knownjorbist 5y ago
    The overall economic cost of trying to maintain generation after generation doing the same thing with the same results far outweighs the people experiencing some pain of having to re-train, go to school or move elsewhere. If anything that's where the government should be trying to help, not trying to prop up industries with our tax dollars.
    - systemvoltage 5y ago
      I think it’s also about resilience of global reliance and disruptions. “Someone’s gotta make stuff” as Elon puts it. Manufacturing of stupid trivial things like buttons and pins is still important to keep high volume manufacturing knowledge and knowhow.
      - knownjorbist 5y ago
        With select exceptions(defense, mainly), disruptions of the kind you're describing are best handled with multilateralism.
        systemvoltage 5y ago
        Definitely defense, if you study history - how bacon grease was collected from homes to make lubricant for cartridges during WWII; making pins and buttons for clothes was turned into component manufacturing for airplanes almost overnight. Within a few days, people worked to convert equipment, draft new mechanisms, turn them at the machine shop, fixer-upper some machines - converted the entire enterprise into making shaft pins and washers. There were countless examples of how quickly manufacturing of A was converted to manufacturing of B. Ken Burns documentary goes much deeper into this and I find it totally fascinating. Chinese populace has an insane level of "jerry-rigging" capability because of how they bring costs down. This is a huge advantage in war manufacturing theater. This is now questionable as Americans (and Europeans alike) are constantly in consumption mode.
azinman2 5y ago
I wouldn’t blame politicians. It was very in vogue for businesses to outsource in the last 20 years, and if you didn’t do it, your competition would. It was a race to the bottom that the stock market reacted to, adding to the pressures. That’s the real driver.
hellbannedguy 5y ago
Wealthy private manufacturers lobbied politicians to make their widget in the cheapest country. I just wanted to make it clear it was greedy wealthy manufacturers whom abandoned their country in order to make a bigger wad.
AnIdiotOnTheNet 5y ago
That's disingenuous. What happened is that economists created models that suggested open trade would be beneficial to everyone even if it caused temporary disruption and politicians implemented their ideas, likely with not insignificant prodding from businesses looking to cut costs. Whether or not those models are accurate is matter for debate.

knownjorbist 5y ago

This is both ignorant of reality & basic economic principles. The US is still the second largest manufacturer in the world(unless you consider the EU as a single entity in that regard), and comparative advantage is a very real(and good) thing.

yourapostasy 5y ago
> ...and comparative advantage is a very real(and good) thing. Comparative advantage is a fine model in a one-shot static analysis. But when modeling in reflexivity, and adjacency, from my perspective as a business operator is comparative advantage is a terrible analytical model. There are all sorts of industrial activities that supply soft power projection into an adjacent industry. As long as I'm not bleeding money on them, I don't care they don't fit some economists' vision of "highest, best use of capital". That approach to capital-efficiency-über-alles has for a long time now struck me like working physics problems with zero friction. An example I give is IBM selling its x86 laptop and server division to Lenovo. They weren't consistently hemorrhaging red ink. And given hardware refresh cycles and new projects, those affiliated IBM sales teams were invited in behind the curtains to talk new orders at least once every other quarter with the customers. You cannot buy that kind of access for blood or money these days, and my personal take is as long as it doesn't net you a negative balance sheet at the end of the day, I've seen way worse use of capital on "marketing expenses". For example, IBM definitely has the sophisticated financing/leasing/etc. structures to have set up sales incentives that enabled customers to start on their x86 hardware, and then seamlessly p2v into their cloud as the initial onboarding of customers' cloud initiatives, and helping them re-design and re-factor for the cloud. This pattern plays out over and over in many businesses. When leveraged, it constructs a moat out of an ecosystem of inter-related economic activities.

JumpCrisscross 5y ago

> America's manufacturing capacity has been largely destroyed We are at record high real output levels in manufacturing [1]. China and the EU are bigger, and employment in the sector is down, but it’s false to say our industrial capacity has been decimated. [1] https://en.m.wikipedia.org/wiki/Manufacturing_in_the_United_States https://en.m.wikipedia.org/wiki/Manufacturing_in_the_United_...

systemvoltage 5y ago
This entire thread is full of “But it’s not declining”. You need to look deeper into what US is producing. Most of which is Oil, Petroleum Products, Cars, Aeroplanes and Defense equipment based on the article you’ve linked. There has been a massive decline in many other sectors, would be interesting to find a source of industry breakdown. I’ll look for it.

chrisseaton 5y ago

> America's manufacturing capacity has been largely destroyed Where do people get this myth from? It's just flat out untruthful. https://en.wikipedia.org/wiki/Manufacturing_in_the_United_States https://en.wikipedia.org/wiki/Manufacturing_in_the_United_St... > The United States is the world's third largest manufacturer (after China and the EU) with a record high real output in Q1 2018 of $2.00 trillion (i.e., adjusted for inflation in 2009 Dollars) well above the 2007 peak before the Great Recession of $1.95 trillion. US manufacturing capacity keeps going up and up and up. Maybe you're thinking of employment in manufacturing? Yes that's going down. It's also reducing as a proportion of GDP, but that's not 'capacity', and it's because other sectors have grown even faster.

systemvoltage 5y ago
This goes against the basic experience of most people that went through the 80’s and remember how basically everything in their living room was made in the US including the TV from Western Electric Co. While statistically, it may be true, literally 99% items in my house are made in China. Paint on the walls is probably still made in US. Small business and manufacturing industry statistics would be interesting to evaluate here without the rhetoric “Where do people get this myth from?” - daily experience of millions of people does not align with reality of 30 years ago. That’s why.
falcolas 5y ago
But isn't most of the fiscally significant US manufacturing limited to the final assembly of inexpensive components imported from Asia?
- jsmith99 5y ago
  Exactly. That's the high value part of the chain: assembling commodity raw materials into specialist goods that poorer countries cannot match.
  - username90 5y ago
    No, the high value part of the chain is putting your brand label on the final box. There isn't much USA is manufacturing that Asian manufacturers cannot do today except the branding.