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Does government allocation of funds make a difference when competing with China? It would seem that the Chinese government would simply match/re-up the industri

by lumost 5y ago

Does government allocation of funds make a difference when competing with China? It would seem that the Chinese government would simply match/re-up the industrial policy to be more competitive. If we're concerned about over reliance on Chinese manufacture, why not create a tariff?

cherioo 5y ago
Tariff may help US company to buy US product, but it won’t encourage anyone else to buy potentially uncompetitive US product. At some point, we need to increase product competitiveness, which ultimately benefits everyone. That or sanction china so they can’t build competitive product, like Huawei.
- paxys 5y ago
  And in this case there is no US product to buy. US semiconductor manufacturing simply cannot compete on the global stage, hence the need for this investment.
- beaconstudios 5y ago
  the US can't compete with China's artificial suppression of the Yuan price to help export prices, or the high levels of exploitation and lack of rights & regulations to benefit Chinese workers.
  - sudosysgen 5y ago
    Of course, it can. The solution would be to depress the USD. It's just that the US decided it is more profitable to extract value by holding the reserve currency.
    - beaconstudios 5y ago
      the US government isn't in control of the dollar rate - the central bank is private.
      - kelnos 5y ago
        Right, but the US government is in control of who gets to run its central bank. Certainly it would take longer to change policy than in a country where the central bank is run directly by the government, but it's more than possible to do.
      - sudosysgen 5y ago
        We both know that this isn't true. First, the US government gets to run an arbitrary deficit, which is essentially the same as printing money. Secondly, the Fed's board is appointed by the government and can be recalled by the government. Thirdly, if the US government wanted they could change all of the rules governing the fed. It has nothing to do with not being able to. The US just decides it's more profitable to have the reserve currency. You can't have it both ways, and it's senseless to complain about not being able to have a cake after eating it.
        beaconstudios 5y ago
        who said they wouldn't be able to take absolute control of the fed? My point was only that they aren't currently. They'd have to make some serious changes in order to do so!
        sudosysgen 5y ago
        They currently have more than enough control over the fed to be able to plan this kind of policy. They simply need to choose the next head of the fed to be one that agrees, as they already do.
epicureanideal 5y ago
Maybe WTO restrictions? But yeah I would just do both.
selectronics 5y ago
It surely would still make a difference, even though China's reaction would partially negate it, right? When there's government stimulus money to be had, someone's going to jump on the opportunity to use it up, even if prices are lower from China.
- kesor 5y ago
  Someone's pocket is going to get fat, but I highly doubt that any real competitiveness can come out of it. As any government subsidy, it usually not only does not bring the desired result, but whatever it does bring costs much more than any free market participant would be willing to pay for it. Unless that is subsidised as well. China very successfully was able to reduce whole industries to nothing by subsidising those industries in China and subsidising the price of their output. One example is Rare Earth, there used to be some production of those things outside of China, there are none today. Want a magnet for your motor? China!
colechristensen 5y ago
If we build fabs, we have fabs. We also have less technology development leaving the country. Even if there was a tariff, new fabs would still cost billions. Also, how you manipulate trade is governed by lots of treaties and some basic economics (i.e. a tariff would just make more or less everything more expensive and not change the situation much for quite a while)
rileyphone 5y ago
Yes, because our marginal returns should be much higher than China’s given how far we’ve fallen. We can, just like China did, copy the leader to catch up, while they pour investment into unexplored and speculative frontiers.

by lumost 5y ago

cherioo 5y ago

Tariff may help US company to buy US product, but it won’t encourage anyone else to buy potentially uncompetitive US product. At some point, we need to increase product competitiveness, which ultimately benefits everyone. That or sanction china so they can’t build competitive product, like Huawei.

paxys 5y ago
And in this case there is no US product to buy. US semiconductor manufacturing simply cannot compete on the global stage, hence the need for this investment.
beaconstudios 5y ago
the US can't compete with China's artificial suppression of the Yuan price to help export prices, or the high levels of exploitation and lack of rights & regulations to benefit Chinese workers.
- sudosysgen 5y ago
  Of course, it can. The solution would be to depress the USD. It's just that the US decided it is more profitable to extract value by holding the reserve currency.
  - beaconstudios 5y ago
    the US government isn't in control of the dollar rate - the central bank is private.
    - kelnos 5y ago
      Right, but the US government is in control of who gets to run its central bank. Certainly it would take longer to change policy than in a country where the central bank is run directly by the government, but it's more than possible to do.
    - sudosysgen 5y ago
      We both know that this isn't true. First, the US government gets to run an arbitrary deficit, which is essentially the same as printing money. Secondly, the Fed's board is appointed by the government and can be recalled by the government. Thirdly, if the US government wanted they could change all of the rules governing the fed. It has nothing to do with not being able to. The US just decides it's more profitable to have the reserve currency. You can't have it both ways, and it's senseless to complain about not being able to have a cake after eating it.
      - beaconstudios 5y ago
        who said they wouldn't be able to take absolute control of the fed? My point was only that they aren't currently. They'd have to make some serious changes in order to do so!
        sudosysgen 5y ago
        They currently have more than enough control over the fed to be able to plan this kind of policy. They simply need to choose the next head of the fed to be one that agrees, as they already do.

epicureanideal 5y ago

Maybe WTO restrictions? But yeah I would just do both.

selectronics 5y ago

It surely would still make a difference, even though China's reaction would partially negate it, right? When there's government stimulus money to be had, someone's going to jump on the opportunity to use it up, even if prices are lower from China.

kesor 5y ago
Someone's pocket is going to get fat, but I highly doubt that any real competitiveness can come out of it. As any government subsidy, it usually not only does not bring the desired result, but whatever it does bring costs much more than any free market participant would be willing to pay for it. Unless that is subsidised as well. China very successfully was able to reduce whole industries to nothing by subsidising those industries in China and subsidising the price of their output. One example is Rare Earth, there used to be some production of those things outside of China, there are none today. Want a magnet for your motor? China!

colechristensen 5y ago

If we build fabs, we have fabs. We also have less technology development leaving the country. Even if there was a tariff, new fabs would still cost billions. Also, how you manipulate trade is governed by lots of treaties and some basic economics (i.e. a tariff would just make more or less everything more expensive and not change the situation much for quite a while)

rileyphone 5y ago

Yes, because our marginal returns should be much higher than China’s given how far we’ve fallen. We can, just like China did, copy the leader to catch up, while they pour investment into unexplored and speculative frontiers.