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This is CHIPS and IRA at work, largely. The government decided we needed more manufacturing, paid people money to do that, and... now we have more factories an

by ajross 3y ago

This is CHIPS and IRA at work, largely. The government decided we needed more manufacturing, paid people money to do that, and... now we have more factories and manufacturing jobs. People get all balled up over policy decisions like this because of politics, but the truth is that Keynesian economics is pretty simple to understand and it works exactly the way you'd expect it to work.

Kon-Peki 3y ago
> This is CHIPS and IRA at work, largely That's what the article says, but the chart in the article casts quite a bit of doubt on that explanation (it's obviously an accelerator). Indeed, two paragraphs later, the article states "Census Bureau data reveals manufacturing construction spending has escalated from January 2020 until April 2023 in every region except New England and the Mid Atlantic." If you assume that people make plans before spending a lot of money, you would think that the tipping point was back in 2019 or so. In fact, I know people that make machines that are used to make and outfit factories and they've been running at capacity for a long time. You might think it's crazy looking at that chart, but factory construction in the USA is currently constrained by availability of parts and people. People want to spend more than they're currently spending...
- ajross 3y ago
  First, the rise in spending is 2x. That's a huge effect, and there's nothing in 2019 that would explain it reasonably. And it only leads the bills' enactment by a few months. Isn't the more obvious hypothesis that people started investing speculatively a few months ahead of the bills? I mean, these bills largely amounted to campaign promises. It was abundantly clear after November of 2020 ensured a trifecta government that something along these lines was going to pass. Second: you're basically making stuff up with that 2019 argument. That's not the way incentive spending works at all. If you have free money on the table as a corporate executive you record that revenue immediately, you don't put it in the bank to "plan". In fact, most bills like this make it largely impossible to "save" the funding anyway, and for exactly this reason: politicians want their results now, now in the next administration.

by ajross 3y ago

Kon-Peki 3y ago

> This is CHIPS and IRA at work, largely That's what the article says, but the chart in the article casts quite a bit of doubt on that explanation (it's obviously an accelerator). Indeed, two paragraphs later, the article states "Census Bureau data reveals manufacturing construction spending has escalated from January 2020 until April 2023 in every region except New England and the Mid Atlantic." If you assume that people make plans before spending a lot of money, you would think that the tipping point was back in 2019 or so. In fact, I know people that make machines that are used to make and outfit factories and they've been running at capacity for a long time. You might think it's crazy looking at that chart, but factory construction in the USA is currently constrained by availability of parts and people. People want to spend more than they're currently spending...

ajross 3y ago
First, the rise in spending is 2x. That's a huge effect, and there's nothing in 2019 that would explain it reasonably. And it only leads the bills' enactment by a few months. Isn't the more obvious hypothesis that people started investing speculatively a few months ahead of the bills? I mean, these bills largely amounted to campaign promises. It was abundantly clear after November of 2020 ensured a trifecta government that something along these lines was going to pass. Second: you're basically making stuff up with that 2019 argument. That's not the way incentive spending works at all. If you have free money on the table as a corporate executive you record that revenue immediately, you don't put it in the bank to "plan". In fact, most bills like this make it largely impossible to "save" the funding anyway, and for exactly this reason: politicians want their results now, now in the next administration.