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I suspect that the reliance on China for manufacturing combined with what sort of sanctions would be enacted when they attempt to invade Taiwan, would encourage

I suspect that the reliance on China for manufacturing combined with what sort of sanctions would be enacted when they attempt to invade Taiwan, would encourage the US and its European allies to insure they had a good manufacturing base to rely on. We have seen a number of things from the war in Ukraine but two that I think have been really impactful were the challenges of ramping up munition production in the US and the impact of factories rolling out thousands of inexpensive drones/week and those drones being deployed on the battlefield gave everyone a reassessment of some of the national security risks of globalization. Basically the lesson is that industrial war requires an industrial base. In WW2 the US had a vibrant industrial base that could be pivoted to providing war material. Industrial base takes time to spin up, but if you have solid economy (as the US currently does) then using monetary policy and other incentives to push capital toward industrial base development is good for the country. It also plays well on TV since these factories are revitalizing towns and cities that previously were suffering from a lack of industry. As a result, I don't see these shifts so much as a "reversal of Reganomics" so much as a realization from the Russian-Ukraine war that "globalism" isn't something authoritarians really like. And if you're primary trading partner is run by an authoritarian regime, that is bad.

obblekk 3y ago
Not blaming Reagan specifically, but the consensus that emerged in the early 80s was that all GDP growth was good, even if it skewed away from manufacturing toward finance, etc. This basic belief allowed us to write trade deals that reduced manufacturing capacity relative to non-manufacturing. Totally agree with you the Ukraine war has been incredibly important in previewing what would have been much worse in a Taiwan war.
eep_social 3y ago
Great comment. I think supply chain risk through peak COVID is also a huge factor giving this shift momentum. Supply chain shocks were comprehensible and visible to most Americans and impacted practically every business owner. It kickstarted renewed calls for localism and reassessments of worst-case scenarios for business continuity. Bringing up the home industrial base is a necessity for shortening those supply chains and bringing that risk under control. Reducing risk from suppliers based in countries where government policy is less predictable or west-aligned was also highlighted by the pandemic. Shanghai locked down in May 2022, for example, and I am sure many Americans were surprised and annoyed at the time. The one-two of COVID then the Russia-Ukraine war seems to have knocked us into a new alignment. Remains to be seen how it plays out against our current, difficult social backdrop.

obblekk 3y ago

Not blaming Reagan specifically, but the consensus that emerged in the early 80s was that all GDP growth was good, even if it skewed away from manufacturing toward finance, etc. This basic belief allowed us to write trade deals that reduced manufacturing capacity relative to non-manufacturing. Totally agree with you the Ukraine war has been incredibly important in previewing what would have been much worse in a Taiwan war.

eep_social 3y ago

Great comment. I think supply chain risk through peak COVID is also a huge factor giving this shift momentum. Supply chain shocks were comprehensible and visible to most Americans and impacted practically every business owner. It kickstarted renewed calls for localism and reassessments of worst-case scenarios for business continuity. Bringing up the home industrial base is a necessity for shortening those supply chains and bringing that risk under control. Reducing risk from suppliers based in countries where government policy is less predictable or west-aligned was also highlighted by the pandemic. Shanghai locked down in May 2022, for example, and I am sure many Americans were surprised and annoyed at the time. The one-two of COVID then the Russia-Ukraine war seems to have knocked us into a new alignment. Remains to be seen how it plays out against our current, difficult social backdrop.