5 ms·

> US manufacturing capabilities regressing in other key aspects, such as machine tools, injection molding, shipbuilding, consumer goods, and so on. But this is

by mlyle 2y ago

> US manufacturing capabilities regressing in other key aspects, such as machine tools, injection molding, shipbuilding, consumer goods, and so on. But this is exactly what Econ 101 tells you to expect to happen (and I teach Econ 101 ;) . Countries specialize to maximize comparative advantage. If you are the US and can manufacture high value items at a lower opportunity cost (or high value services at a lower opportunity cost), you will, but this means giving up on doing other things you could use the resources for. The net result is that US manufacturing output in real dollars has increased 4x, in the past 70 years. At the same time, its share of the economy has shrunk (because other sectors have outgrown it), and many lower value manufacturing subsectors have been largely abandoned.

lotsofpulp 2y ago
> but this means giving up on doing other things you could use the resources for. Aka giving up the security and being more vulnerable to volatility. The pendulum can swing too far, as resilience cannot be measured in dollars.
- mlyle 2y ago
  Sure. As I pointed out, something like the CHIPS Act may be good for US resilience and national security, but is unlikely to be good for US economic output.
- _DeadFred_ 2y ago
  Up until recently we all naively believed 'a rising tide lifts all ships' meant we'd all choose to get along and everyone would benefit.
  - t-3 2y ago
    It wasn't a naive belief, people did choose to get along economically and everyone benefited. The naive part is thinking that economic interdependence means political submission and that political and economic development are necessarily related.
mitthrowaway2 2y ago
Maybe our economic policy should go deeper than 101-level economics then! Because comparative advantage is a dynamic quantity which changes over time, and while some advantages (like geography) are fixed, others are built by investment. Here's a video [1] which explains why, in 1955, manufacturing household goods was cheaper to make in the US than in China (and why, at the time, they thought this manufacturing dominance was the thing that backed the US position as a global superpower). It's not because Americans worked more cheaply than Chinese workers, it's because American factories had a well-developed tool-and-die expertise, which meant that when anyone in the world wanted to make something, they were well-advised to travel the US to get it made. Econ 101's comparative advantage is true at an instantaneous point in time, which is a good start, but if perhaps it's just "knowing enough to be dangerous". Economic policymakers (and company leaders) would do well to think about comparative advantage as planning an optimal trajectory over time, which can mean sacrificing a short-term optimum in exchange for a long-term optimum, and if there even is a textbook solution for that, it's going to look less like a 101-level intersection of straight lines, and more like an iterative optimization over nonlinear differential equations. [1]: https://www.youtube.com/watch?v=QU6nsfoNWDI https://www.youtube.com/watch?v=QU6nsfoNWDI
- mlyle 2y ago
  I think you're missing the point of what I'm saying. The US has steadily moved away from those past competencies because there was more profit to be made elsewhere. And, sure, there are absolutely network effects with related goods and industries that have steepened that movement. If it was a win to change the allocation of resources when e.g. steelmaking was strong in the US, it's even more of a win after steelmaking withered. > and if there even is a textbook solution for that, It's not quite what you're saying, but the closest work I have read is 'Dynamic Optimization: The calculus of variations and optimal control in economics and management' by Kamien et al. It is all about estimating gradients and plotting trajectories in dynamical economic systems.
  - mitthrowaway2 2y ago
    The feeling of misunderstanding is mutual! I agree that there was more profit to be made elsewhere. But I'm arguing that those profits were short-term profits which may well have come at long-term expense. If you follow the local gradient of profitability, you'll always find great short-term returns selling off your seed corn. Unlike what Econ 101 asserts about maximizing comparative advantage being the most profitable strategy, there is absolutely no guarantee that following a locally-optimal comparative-advantage strategy is globally optimal over a long-term window, where advantages are path-dependent. Manufacturing is the core example of path-dependent advantages, because (unlike what any econ 101 textbook teaches), marginal costs decline with increasing production quantity in the manufacturing sector. This means the more you make, the better you are at making more things!
yndoendo 2y ago
I don't teach economics 101 nor taken a class. What about the other corporate departments that are being outsource? The company I previously worked for not only outsourced product manufacturing to South Korea with assembly in the USA, after I left. They also outsourced customer service (CSR) to south Asia. Texas VCs bought the company and are trying to maximize all returns on their investment. Companies like American, that produce branded products, have a whole department that helps their sales reps with moving customer support, be it email, physical letter, and or phone, to south Asia to reduce office management costs in the USA. They also could just be outsourcing invoicing while CSR is a local provider. Manufacturing is a simple concept that is heavily politically pushed. The other departments that are needed to support products seem to be ignored. ML has a great likelihood of perpetuating this with real-time vocal transitioning. The CSR in India can sound like some person from New Jersey and break the accent barrier. This would put the customer at ease when sharing the same vocal tones. Consumers would be none the wiser.
- eitally 2y ago
  At the end of the day, everything but 1) product development (R&D) and 2) corporate leadership are fungible and prone to outsourcing to the lowest cost locations until they get moved to a place where quality drops off enough that the company backpedals a bit. All those corporate departments are largely filled with commodity staff, so this shouldn't be surprising. I'm not saying that in a judgmental or harshly negative way -- I've personally worked in cost centers for most of my career, and although I think highly of myself and my peers, we're still just assessed bluntly as part of COGS.
  - p_l 2y ago
    Product Development, R&D, etc is absolutely fungible and outsourced, even by some ostensibly big names. If C-level could be outsourced while keeping shareholder returns, it would be
    - mrkstu 2y ago
      See IBM
mitthrowaway2 2y ago
> The net result is that US manufacturing output in real dollars has increased 4x, in the past 70 years. All of that manufacturing growth is semiconductors, and most of that measured semiconductors growth is simply Moore's law. I don't think anybody would say that the US is worse at making transistors today than it was in 1970, but that's table stakes; everybody is better at making transistors than they were in 1970. Automotive manufacturing has also done well (in part thanks to trade barriers). When it comes to everything else -- vacuum cleaners, fans, washing machines -- that manufacturing output is not doing so well.
- kevin_thibedeau 2y ago
  The US is worse at manufacturing discrete transistors. It is almost all offshore with all the other commodity parts.
  - kragen 2y ago
    i'm pretty sure the small fraction of transistors that are made in the usa are cheaper, better, and more diverse than they were in 01970, even if those made elsewhere are far more abundant and cheaper still
hakfoo 2y ago
They didn't do a very good job of pricing in politics. Just because they're "lower value" subsectors doesn't mean they have significant real-world impacts. This sort of announcement will inevitably be used shortsightedly for political reasons. Someone will interpret "We have 3nm at home" as "We can do something foolhardy with Taiwan" or "We can throw up a big, non-surgical tariff". This will soon be followed by "did anyone mention that the 3nm chip is useless without a galaxy of half-cent supporting parts that we outsourced decades ago?" or "people consume products other than highly binned silicon dies, and now we have supply crunches and price spikes from televisions to toasters to turmeric?"
kranke155 2y ago
Econ 101 is mostly nonsense. Read up Steve Keen.

by mlyle 2y ago

lotsofpulp 2y ago

> but this means giving up on doing other things you could use the resources for. Aka giving up the security and being more vulnerable to volatility. The pendulum can swing too far, as resilience cannot be measured in dollars.

mlyle 2y ago
Sure. As I pointed out, something like the CHIPS Act may be good for US resilience and national security, but is unlikely to be good for US economic output.
_DeadFred_ 2y ago
Up until recently we all naively believed 'a rising tide lifts all ships' meant we'd all choose to get along and everyone would benefit.
- t-3 2y ago
  It wasn't a naive belief, people did choose to get along economically and everyone benefited. The naive part is thinking that economic interdependence means political submission and that political and economic development are necessarily related.

mitthrowaway2 2y ago

Maybe our economic policy should go deeper than 101-level economics then! Because comparative advantage is a dynamic quantity which changes over time, and while some advantages (like geography) are fixed, others are built by investment. Here's a video [1] which explains why, in 1955, manufacturing household goods was cheaper to make in the US than in China (and why, at the time, they thought this manufacturing dominance was the thing that backed the US position as a global superpower). It's not because Americans worked more cheaply than Chinese workers, it's because American factories had a well-developed tool-and-die expertise, which meant that when anyone in the world wanted to make something, they were well-advised to travel the US to get it made. Econ 101's comparative advantage is true at an instantaneous point in time, which is a good start, but if perhaps it's just "knowing enough to be dangerous". Economic policymakers (and company leaders) would do well to think about comparative advantage as planning an optimal trajectory over time, which can mean sacrificing a short-term optimum in exchange for a long-term optimum, and if there even is a textbook solution for that, it's going to look less like a 101-level intersection of straight lines, and more like an iterative optimization over nonlinear differential equations. [1]: https://www.youtube.com/watch?v=QU6nsfoNWDI https://www.youtube.com/watch?v=QU6nsfoNWDI

mlyle 2y ago
I think you're missing the point of what I'm saying. The US has steadily moved away from those past competencies because there was more profit to be made elsewhere. And, sure, there are absolutely network effects with related goods and industries that have steepened that movement. If it was a win to change the allocation of resources when e.g. steelmaking was strong in the US, it's even more of a win after steelmaking withered. > and if there even is a textbook solution for that, It's not quite what you're saying, but the closest work I have read is 'Dynamic Optimization: The calculus of variations and optimal control in economics and management' by Kamien et al. It is all about estimating gradients and plotting trajectories in dynamical economic systems.
- mitthrowaway2 2y ago
  The feeling of misunderstanding is mutual! I agree that there was more profit to be made elsewhere. But I'm arguing that those profits were short-term profits which may well have come at long-term expense. If you follow the local gradient of profitability, you'll always find great short-term returns selling off your seed corn. Unlike what Econ 101 asserts about maximizing comparative advantage being the most profitable strategy, there is absolutely no guarantee that following a locally-optimal comparative-advantage strategy is globally optimal over a long-term window, where advantages are path-dependent. Manufacturing is the core example of path-dependent advantages, because (unlike what any econ 101 textbook teaches), marginal costs decline with increasing production quantity in the manufacturing sector. This means the more you make, the better you are at making more things!

yndoendo 2y ago

I don't teach economics 101 nor taken a class. What about the other corporate departments that are being outsource? The company I previously worked for not only outsourced product manufacturing to South Korea with assembly in the USA, after I left. They also outsourced customer service (CSR) to south Asia. Texas VCs bought the company and are trying to maximize all returns on their investment. Companies like American, that produce branded products, have a whole department that helps their sales reps with moving customer support, be it email, physical letter, and or phone, to south Asia to reduce office management costs in the USA. They also could just be outsourcing invoicing while CSR is a local provider. Manufacturing is a simple concept that is heavily politically pushed. The other departments that are needed to support products seem to be ignored. ML has a great likelihood of perpetuating this with real-time vocal transitioning. The CSR in India can sound like some person from New Jersey and break the accent barrier. This would put the customer at ease when sharing the same vocal tones. Consumers would be none the wiser.

eitally 2y ago
At the end of the day, everything but 1) product development (R&D) and 2) corporate leadership are fungible and prone to outsourcing to the lowest cost locations until they get moved to a place where quality drops off enough that the company backpedals a bit. All those corporate departments are largely filled with commodity staff, so this shouldn't be surprising. I'm not saying that in a judgmental or harshly negative way -- I've personally worked in cost centers for most of my career, and although I think highly of myself and my peers, we're still just assessed bluntly as part of COGS.
- p_l 2y ago
  Product Development, R&D, etc is absolutely fungible and outsourced, even by some ostensibly big names. If C-level could be outsourced while keeping shareholder returns, it would be
  - mrkstu 2y ago
    See IBM

mitthrowaway2 2y ago

> The net result is that US manufacturing output in real dollars has increased 4x, in the past 70 years. All of that manufacturing growth is semiconductors, and most of that measured semiconductors growth is simply Moore's law. I don't think anybody would say that the US is worse at making transistors today than it was in 1970, but that's table stakes; everybody is better at making transistors than they were in 1970. Automotive manufacturing has also done well (in part thanks to trade barriers). When it comes to everything else -- vacuum cleaners, fans, washing machines -- that manufacturing output is not doing so well.

kevin_thibedeau 2y ago
The US is worse at manufacturing discrete transistors. It is almost all offshore with all the other commodity parts.
- kragen 2y ago
  i'm pretty sure the small fraction of transistors that are made in the usa are cheaper, better, and more diverse than they were in 01970, even if those made elsewhere are far more abundant and cheaper still

hakfoo 2y ago

They didn't do a very good job of pricing in politics. Just because they're "lower value" subsectors doesn't mean they have significant real-world impacts. This sort of announcement will inevitably be used shortsightedly for political reasons. Someone will interpret "We have 3nm at home" as "We can do something foolhardy with Taiwan" or "We can throw up a big, non-surgical tariff". This will soon be followed by "did anyone mention that the 3nm chip is useless without a galaxy of half-cent supporting parts that we outsourced decades ago?" or "people consume products other than highly binned silicon dies, and now we have supply crunches and price spikes from televisions to toasters to turmeric?"

kranke155 2y ago

Econ 101 is mostly nonsense. Read up Steve Keen.