3 ms·

What do you see being the potential negative outcomes?

whatshisface 3y ago
Well, since the defense production act was created to allow the government to divert capacity the most obvious negative outcome would be the loss of whatever the capacity was doing to begin with. Perhaps the more dangerous outcome for as long as the budgets remain small is the government playing favorites. "You better donate to the right party and hire the right retiring regulators, or the government won't start a defense production program for your industry." Now that companies have an incentive to bend the administration's picture of what products will help the climate you can guess what will happen. Once the relationships are built up the effects will extend beyond individual programs. Also, the defense industry is one of the least efficient and most lobbyist-driven/build-fifty-parts-in-fifty-states/friends-with-the-colonel institutions in our system. We begrudgingly accept it because, what's the alternative? - but if you wish that on the rest of the economy you must want the terrorists to win. ;-)
- dralley 3y ago
  >the most obvious negative outcome would be the loss of whatever the capacity was doing to begin with. As long as VC is lighting money on fire on obviously stupid ventures like Juciero and subsidizing Uber/Lyft rides to far below cost for a decade, NFTs, and transparent frauds like FTX, it's hard to get worked up about government deciding to make sure our basic national security needs are covered. VC has not proven themselves to be paragons of free private market efficiency for the past decade.
  - whatshisface 3y ago
    There's almost no overlap between VC and anything involving sheet metal. In fact the way manufacturing events never make it out of industry press is a good sign the troubles will need to get very bad indeed before the feedback in the democratic system begins to control them.
    - dralley 3y ago
      Kind of proves the point. Private capital is more willing to invest in stupid shit that they can convince themselves will 10x than in something worthwhile that probably can't be 10x'd easily, like manufacturing.
      - deleted 3y ago
        [deleted]
      - whatshisface 3y ago
        Venture capital is a small fraction of private capital. If you stretch the definition to its limits, you could say that tech companies are a big fraction of the total stock market cap, but the majority is still accounted for by companies like P&G.
  - caseysoftware 3y ago
    > "As long as VC is lighting money on fire on obviously stupid ventures" The difference is that I'm not forced to fund those idiots.
    - no_wizard 3y ago
      In some ways you are, since we all pay the cost of monetary policy and 0% interest rates didn't happen in a vacuum. They're interconnected and in more ways than monetary policy but its the most obvious example. Now I'm not debating the merits here, simply stating that the speculation VCs engaged in was in large part due to the "cheapness" of money, which is directly the result of monetary policy since 2008 or so. This drives things like safe returns vs riskier returns, which can in turn fuel bubbles since safe returns[0] can't pace inflation, the money goes elsewhere, into riskier things over time, creating bubbles and over-investment as people chase better returns. This makes it more expensive over time to do things, like holding safe investments vs riskier ones, because your future value is eroded. This also translates into other societal issues, and while it may not always be the main cause it will exacerbate existing problems, particularly in markets where financing is prevalent, like housing. [0]: Such as Certificates Of Deposit, which are all the rage again now that interest rates are higher than have been in ~15 years
- jauntywundrkind 3y ago
  I have a hard time being scared that we're not going to be able to make enough weapon systems because we started making heat pumps. Industry isn't zero sum; investment can create jobs. Even if that weren't the case, I still would not be quaking in my boots. I agree there is a risk of favoritism. Still, I think the consumer benefit is worth the risk. Ideally in my view, the government can set some base standards like they do with EV batteries and tax credits. And over time they can raise the bar on requirements, on efficiency and reliability and install cost requirements. Third, the money is coming from the Defense Spending Act, but it's not like companies have to be paid up gold star members of the defense industry consortium to play here. Defense Production Act. I think the GAO has a pretty good review of what happened with emergency Defense Production Act spending under COVID, and it doesn't give me fear at all that this is some crazy Military Industrial Congressional Complex boondogle. It makes me feel like mostly this stuff works fine & is well done, and agencies are tuning things responsibly. https://www.gao.gov/assets/gao-22-105380.pdf https://www.gao.gov/assets/gao-22-105380.pdf This is $63m spending. Being afraid of this level of spending feels absurd to me. I cannot imagine being against some basic government investment in trying to do better in a key sector like this. I have faith we'll find and do great things with some of this money, and set a path that will keep yielding improvements in American's lives. I wish we weren't all so afraid of this shit.

Well, since the defense production act was created to allow the government to divert capacity the most obvious negative outcome would be the loss of whatever the capacity was doing to begin with. Perhaps the more dangerous outcome for as long as the budgets remain small is the government playing favorites. "You better donate to the right party and hire the right retiring regulators, or the government won't start a defense production program for your industry." Now that companies have an incentive to bend the administration's picture of what products will help the climate you can guess what will happen. Once the relationships are built up the effects will extend beyond individual programs. Also, the defense industry is one of the least efficient and most lobbyist-driven/build-fifty-parts-in-fifty-states/friends-with-the-colonel institutions in our system. We begrudgingly accept it because, what's the alternative? - but if you wish that on the rest of the economy you must want the terrorists to win. ;-)

dralley 3y ago
>the most obvious negative outcome would be the loss of whatever the capacity was doing to begin with. As long as VC is lighting money on fire on obviously stupid ventures like Juciero and subsidizing Uber/Lyft rides to far below cost for a decade, NFTs, and transparent frauds like FTX, it's hard to get worked up about government deciding to make sure our basic national security needs are covered. VC has not proven themselves to be paragons of free private market efficiency for the past decade.
- whatshisface 3y ago
  There's almost no overlap between VC and anything involving sheet metal. In fact the way manufacturing events never make it out of industry press is a good sign the troubles will need to get very bad indeed before the feedback in the democratic system begins to control them.
  - dralley 3y ago
    Kind of proves the point. Private capital is more willing to invest in stupid shit that they can convince themselves will 10x than in something worthwhile that probably can't be 10x'd easily, like manufacturing.
    - deleted 3y ago
      [deleted]
    - whatshisface 3y ago
      Venture capital is a small fraction of private capital. If you stretch the definition to its limits, you could say that tech companies are a big fraction of the total stock market cap, but the majority is still accounted for by companies like P&G.
- caseysoftware 3y ago
  > "As long as VC is lighting money on fire on obviously stupid ventures" The difference is that I'm not forced to fund those idiots.
  - no_wizard 3y ago
    In some ways you are, since we all pay the cost of monetary policy and 0% interest rates didn't happen in a vacuum. They're interconnected and in more ways than monetary policy but its the most obvious example. Now I'm not debating the merits here, simply stating that the speculation VCs engaged in was in large part due to the "cheapness" of money, which is directly the result of monetary policy since 2008 or so. This drives things like safe returns vs riskier returns, which can in turn fuel bubbles since safe returns[0] can't pace inflation, the money goes elsewhere, into riskier things over time, creating bubbles and over-investment as people chase better returns. This makes it more expensive over time to do things, like holding safe investments vs riskier ones, because your future value is eroded. This also translates into other societal issues, and while it may not always be the main cause it will exacerbate existing problems, particularly in markets where financing is prevalent, like housing. [0]: Such as Certificates Of Deposit, which are all the rage again now that interest rates are higher than have been in ~15 years
jauntywundrkind 3y ago
I have a hard time being scared that we're not going to be able to make enough weapon systems because we started making heat pumps. Industry isn't zero sum; investment can create jobs. Even if that weren't the case, I still would not be quaking in my boots. I agree there is a risk of favoritism. Still, I think the consumer benefit is worth the risk. Ideally in my view, the government can set some base standards like they do with EV batteries and tax credits. And over time they can raise the bar on requirements, on efficiency and reliability and install cost requirements. Third, the money is coming from the Defense Spending Act, but it's not like companies have to be paid up gold star members of the defense industry consortium to play here. Defense Production Act. I think the GAO has a pretty good review of what happened with emergency Defense Production Act spending under COVID, and it doesn't give me fear at all that this is some crazy Military Industrial Congressional Complex boondogle. It makes me feel like mostly this stuff works fine & is well done, and agencies are tuning things responsibly. https://www.gao.gov/assets/gao-22-105380.pdf https://www.gao.gov/assets/gao-22-105380.pdf This is $63m spending. Being afraid of this level of spending feels absurd to me. I cannot imagine being against some basic government investment in trying to do better in a key sector like this. I have faith we'll find and do great things with some of this money, and set a path that will keep yielding improvements in American's lives. I wish we weren't all so afraid of this shit.