3 ms·

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 singl

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.

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.