4 ms·

“there is more to an economy than manufacturing” Not really, no. If China cut off the US, for any reason, who gets hurt more? Who has a bigger house of cards t

“there is more to an economy than manufacturing” Not really, no. If China cut off the US, for any reason, who gets hurt more? Who has a bigger house of cards to collapse? Who will have a harder time rebuilding? If the next leader is bolder than Xi, and is of the same kind that once killed tens of millions of people, losing an arm and a leg to behead an enemy might be a viable strategy.

ryandamm 2y ago
Arguing that manufacturing is strategic is not the same thing as manufacturing being “all that matters in an economy.” There’s a logical fallacy in your rebuttal.
- gjsman-1000 2y ago
  How about I put it this way: Manufacturing is the bedrock of power. Everything else above it, particularly fiat currency, is built on that bedrock. While those cards can be mighty attractive, losing the bedrock for any reason would destroy everything. Apple isn’t going to be worth $3 trillion when they can’t sell an iPhone for the next decade. Heck, General Mills won’t be selling much breakfast cereal, when the parts to the equipment can’t be imported. How much do you think a bare shelves Walmart is worth? Heck, how will American manufacturing rebuild when the CNC motors are made in China? When even a Prusa uses motors from China (LDO)? Will software sales save us with no hardware to run it on? The value of everything on the stock market collapses in such a scenario, and the power of the US Dollar goes with it.
  - throw678937 2y ago
    [dead]
  - ryandamm 2y ago
    The endpoint of this argument is pure self-reliance, for strategic reasons. And that endpoint is North Korea. https://en.wikipedia.org/wiki/Juche https://en.wikipedia.org/wiki/Juche
- corimaith 2y ago
  Exactly, people forget we build things for the sake of consumption, not the other way around. You can build a thousand factories for some good but it's dead weight if there is no one to buy their outputs.
  - almaight 2y ago
    The Soviet Union had strong consumption power, but they did not know how to manufacture. The final result was obvious.
    - philipkglass 2y ago
      I would say that the Soviet Union had strong manufacturing power but they manufactured too many units of things that their citizens didn't want, and not enough of what they did want. By the end they could make more tanks and tractors than anyone needed but household goods were in short supply.
    - ryandamm 2y ago
      Yeah I think this might actually be backwards; the Soviet Union had explicit production targets, and (iirc) in like the 70s they actually had more industrial output than the US. Remember the "missile gap," when the US was concerned that the industrial might of the USSR would bury the US? But the output was mismatched to demand; it was a classic example of "when the measurement becomes the target, it ceases to become a good measurement" -- the centrally-planned industrial targets were inefficient, so a lot of that industrial production went to waste. And to be fair, this is what's hard about economics: you can't just count tractors, or tons of steel, or whatever, as the output of an economy. Because every marginal ton of steel matters a different amount based on demand. The genius of capitalism (yes, I said it!) is it is an extremely elegant system for optimizing an incredibly high-dimensional system with a slippery, dynamic cost function, by incentivizing a bunch of independent agents to collaborate in price setting (and therefore sending signals about production via pricing, vis a vis supply and demand). This is also why China's economy has done better than the USSR; let's not forget that Deng Xiaoping's "limited market reforms" helped unleash the modern Chinese economy. The structural issues in the Chinese economy now stem from the lack of development of consumer demand, which does echo some of what the USSR struggled from. But China has come very far; the criticisms of its current economy that I like best are well-articulated by Michael Pettis, fwiw. But I'd encourage you to do your own reading and form your own opinions.
- janalsncm 2y ago
  There are other important outcomes of an economy, like better healthcare, education, housing, and well-being. But it seems like those real, tangible outcomes have become decoupled from “the line goes up” economy. I think the original reply was itself a strawman of the point the article was trying to make. Manufacturing isn’t the only important thing about an economy but it’s an important one.
  - ryandamm 2y ago
    I don't think my point was straw-manning the article. The article directly conflates economic output with manufacturing output, by using manufacturing signals (like power consumption!) as a corollary for some hidden, Real Economy. That's crackpottery. I was succinct in my criticism, but there is plenty of room for elaboration. If the essay instead took those economic indicators and delved into why manufacturing output should matter more than other output in determining the Real Economy, then hey, we've got an essay to discuss. But just eliding that and saying "manufacturing is real because atoms are real, everything else is b.s." -- that's not really an argument, that's just laying your biases extremely bare. Which I pointed out. That said, geohot is close to some real points, I just don't think he has the background to articulate it rigorously. And for the record, I do think the US economy is entirely too financialized. But again, that's a different -- likely better -- essay.
paxys 2y ago
> Not really, no. If China cut off the US, for any reason, who gets hurt more? China gets hurt more. They are an export economy. US will face some temporary pain, sure, but other countries build stuff as well. Meanwhile what does China do with all the materials piling up, millions out of jobs and a half a trillion dollar hole in their economy?
- gjsman-1000 2y ago
  China’s current government quite literally killed 30 million people under the cultural revolution and Great Leap Forward, and until 2015, killed all children past the first. China is not motivated by what makes economic sense. The party openly says this - the very fact corporations exist is a concession to not having achieved pure communism yet. The party openly hates the fact they need an economy, after having failed for the first few decades to operate without one. All it takes, quite literally, is one hardcore communist after Xi who isn’t afraid of a second cultural revolution. Maybe a chance to fix all their consumption, housing, and youth issues once and for all in one painful societal restructuring? The very economic and social issues we point to as why they would never do it, I fear, might actually become reasons they will do it.
  - tokioyoyo 2y ago
    I swear, “Chinese collapse” has been on the news headlines since 2000s. At some point people need to give up on the idea that their system doesn’t work. Yes, it sucks from our perspective, because we would have less rights and freedom. But quality of life of an average Chinese has been increasing YoY, despite some hiccups. They obviously screw up big time (pandemic lockdowns, current above average youth unemployment), but they don’t mind pivoting hard. Baseless hate when a country fails to compete is just sad to watch as an outsider who has no skin in the game.
    - cookiemonsieur 2y ago
      It's a coping mechanism that needs to be parroted to keep the people in the west from questioning the status quo. "Look china/russia/iran/india bad ! Sure, we're not doing well and your quality of life is eroding year on year but hey ! In china you can't question tienanmen square so there's that" It's sad, but as long as people continue to believe in this mythology of "absolute freedom", it will continue to work.
Aeolun 2y ago
I daresay the US has all the resources it currently gets from China on its own landmass as well. It’s just not doing anything with it.

ryandamm 2y ago

Arguing that manufacturing is strategic is not the same thing as manufacturing being “all that matters in an economy.” There’s a logical fallacy in your rebuttal.

gjsman-1000 2y ago
How about I put it this way: Manufacturing is the bedrock of power. Everything else above it, particularly fiat currency, is built on that bedrock. While those cards can be mighty attractive, losing the bedrock for any reason would destroy everything. Apple isn’t going to be worth $3 trillion when they can’t sell an iPhone for the next decade. Heck, General Mills won’t be selling much breakfast cereal, when the parts to the equipment can’t be imported. How much do you think a bare shelves Walmart is worth? Heck, how will American manufacturing rebuild when the CNC motors are made in China? When even a Prusa uses motors from China (LDO)? Will software sales save us with no hardware to run it on? The value of everything on the stock market collapses in such a scenario, and the power of the US Dollar goes with it.
- throw678937 2y ago
  [dead]
- ryandamm 2y ago
  The endpoint of this argument is pure self-reliance, for strategic reasons. And that endpoint is North Korea. https://en.wikipedia.org/wiki/Juche https://en.wikipedia.org/wiki/Juche
corimaith 2y ago
Exactly, people forget we build things for the sake of consumption, not the other way around. You can build a thousand factories for some good but it's dead weight if there is no one to buy their outputs.
- almaight 2y ago
  The Soviet Union had strong consumption power, but they did not know how to manufacture. The final result was obvious.
  - philipkglass 2y ago
    I would say that the Soviet Union had strong manufacturing power but they manufactured too many units of things that their citizens didn't want, and not enough of what they did want. By the end they could make more tanks and tractors than anyone needed but household goods were in short supply.
  - ryandamm 2y ago
    Yeah I think this might actually be backwards; the Soviet Union had explicit production targets, and (iirc) in like the 70s they actually had more industrial output than the US. Remember the "missile gap," when the US was concerned that the industrial might of the USSR would bury the US? But the output was mismatched to demand; it was a classic example of "when the measurement becomes the target, it ceases to become a good measurement" -- the centrally-planned industrial targets were inefficient, so a lot of that industrial production went to waste. And to be fair, this is what's hard about economics: you can't just count tractors, or tons of steel, or whatever, as the output of an economy. Because every marginal ton of steel matters a different amount based on demand. The genius of capitalism (yes, I said it!) is it is an extremely elegant system for optimizing an incredibly high-dimensional system with a slippery, dynamic cost function, by incentivizing a bunch of independent agents to collaborate in price setting (and therefore sending signals about production via pricing, vis a vis supply and demand). This is also why China's economy has done better than the USSR; let's not forget that Deng Xiaoping's "limited market reforms" helped unleash the modern Chinese economy. The structural issues in the Chinese economy now stem from the lack of development of consumer demand, which does echo some of what the USSR struggled from. But China has come very far; the criticisms of its current economy that I like best are well-articulated by Michael Pettis, fwiw. But I'd encourage you to do your own reading and form your own opinions.
janalsncm 2y ago
There are other important outcomes of an economy, like better healthcare, education, housing, and well-being. But it seems like those real, tangible outcomes have become decoupled from “the line goes up” economy. I think the original reply was itself a strawman of the point the article was trying to make. Manufacturing isn’t the only important thing about an economy but it’s an important one.
- ryandamm 2y ago
  I don't think my point was straw-manning the article. The article directly conflates economic output with manufacturing output, by using manufacturing signals (like power consumption!) as a corollary for some hidden, Real Economy. That's crackpottery. I was succinct in my criticism, but there is plenty of room for elaboration. If the essay instead took those economic indicators and delved into why manufacturing output should matter more than other output in determining the Real Economy, then hey, we've got an essay to discuss. But just eliding that and saying "manufacturing is real because atoms are real, everything else is b.s." -- that's not really an argument, that's just laying your biases extremely bare. Which I pointed out. That said, geohot is close to some real points, I just don't think he has the background to articulate it rigorously. And for the record, I do think the US economy is entirely too financialized. But again, that's a different -- likely better -- essay.

paxys 2y ago

> Not really, no. If China cut off the US, for any reason, who gets hurt more? China gets hurt more. They are an export economy. US will face some temporary pain, sure, but other countries build stuff as well. Meanwhile what does China do with all the materials piling up, millions out of jobs and a half a trillion dollar hole in their economy?

gjsman-1000 2y ago
China’s current government quite literally killed 30 million people under the cultural revolution and Great Leap Forward, and until 2015, killed all children past the first. China is not motivated by what makes economic sense. The party openly says this - the very fact corporations exist is a concession to not having achieved pure communism yet. The party openly hates the fact they need an economy, after having failed for the first few decades to operate without one. All it takes, quite literally, is one hardcore communist after Xi who isn’t afraid of a second cultural revolution. Maybe a chance to fix all their consumption, housing, and youth issues once and for all in one painful societal restructuring? The very economic and social issues we point to as why they would never do it, I fear, might actually become reasons they will do it.
- tokioyoyo 2y ago
  I swear, “Chinese collapse” has been on the news headlines since 2000s. At some point people need to give up on the idea that their system doesn’t work. Yes, it sucks from our perspective, because we would have less rights and freedom. But quality of life of an average Chinese has been increasing YoY, despite some hiccups. They obviously screw up big time (pandemic lockdowns, current above average youth unemployment), but they don’t mind pivoting hard. Baseless hate when a country fails to compete is just sad to watch as an outsider who has no skin in the game.
  - cookiemonsieur 2y ago
    It's a coping mechanism that needs to be parroted to keep the people in the west from questioning the status quo. "Look china/russia/iran/india bad ! Sure, we're not doing well and your quality of life is eroding year on year but hey ! In china you can't question tienanmen square so there's that" It's sad, but as long as people continue to believe in this mythology of "absolute freedom", it will continue to work.

Aeolun 2y ago

I daresay the US has all the resources it currently gets from China on its own landmass as well. It’s just not doing anything with it.