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I have a sense that manufacturing is not coming back until there is a real Cold War 2.0 (or Hot War 3.0 which hopefully never realizes). I mean a real one, like

I have a sense that manufacturing is not coming back until there is a real Cold War 2.0 (or Hot War 3.0 which hopefully never realizes). I mean a real one, like the NATO-WP one when there was not a lot of trading between the two blocs.

A_D_E_P_T 2y ago
There's a way to do it. This playbook has been used repeatedly throughout the 20th century. First you invite industry to reshore via subsidies and preferential access to government contracts. If necessary, the government must directly invest in new firms. (They already do this in a very small way with In-Q-Tel and others, so it's not totally beyond the pale. For a time there was even a US Army VC firm.) If you talk to a Chinese factory owner or mine boss, many of them will tell you that they got their start with a >$2M direct investment from their government. Second you gradually tighten the screws on foreign finished products, not industrial inputs like metals, plastics, ores, etc. Third you streamline export paperwork requirements and relax things like ITAR. Then, when that's all humming along and the factories are working, you can launch blanket tariffs to protect your nascent industries, if need be. But you must exempt necessary industrial inputs from tariffs. What's happening now is completely backwards/inverted and it's going to lead to total chaos.
- whatshisface 2y ago
  Don't forget the step where you ignore intellectual property law so that it becomes temporarily legal to start companies without a "war chest" of patents to ward off disputes with.
  - A_D_E_P_T 2y ago
    I mean, patents only apply in the nation where they're granted. So "ignoring" IP is just a matter of refusing to recognize foreign patents, which is something that all nations do implicitly. Also, in most foreign countries, court cases are cheap. (They could literally be 100x cheaper to litigate than they would be in the US.) If you're talking about in a US context specifically, then if absolutely necessary the federal government could either buy or nationalize the patents in dispute, just as all states nationalize land from time to time under eminent domain. Zvi recently wrote about this in the context of the state buying the Ozempic patent: https://thezvi.wordpress.com/2025/01/21/sleep-diet-exercise-and-glp-1-drugs/ https://thezvi.wordpress.com/2025/01/21/sleep-diet-exercise-... > [The US Government] should buy out the patents to such drugs. > This solves the consumption side. It removes the deadweight loss triangle from lost consumption. It removes the hardship of those who struggle to pay, as we can then allow generic competition to do its thing and charge near marginal cost. It would be super popular. It uses government’s low financing costs to provide locked-in up front cold hard cash to Novo Nordisk, presumably the best way to get them and others to invest the maximum in more R&D. > There are lots of obvious gains here, for on the order of $100 billion. Cut the check.
    - whatshisface 2y ago
      >So "ignoring" IP is just a matter of refusing to recognize foreign patents, which is something that all nations do implicitly. That's not true at all. US companies register patents in all foreign jurisdictions as well. It wasn't legal for Chinese companies to copy all that US IP, they were just able to do it because to stop them, our diplomats would have basically had to persuade the Chinese government not to develop.
- ferguess_k 2y ago
  I think the playbook is easy, as you described multiple countries went through more or less the same process. The difficulty lies in political will and execution. Either fails then the whole scheme fails.
  - A_D_E_P_T 2y ago
    Direct government investment in new firms is politically complicated in the US, I think. Also, yeah, execution could be a problem. There'd need to be some sort of compliance mechanism to ensure that people don't just take the money and buy fancy cars. At the same time, it can't be too heavy-handed, or bureaucratic checks-and-balances will bog down the entire program and destroy any momentum it might have had.
elictronic 2y ago
Manufacturing will start coming back based on the high tariffs just with two big caveats. 1. Manufacturing takes time and money to setup. This is a software forum where changes are made at lighting speed. Manufacturing requires capital, years, and will. In software it might take a day to make an obvious change. Manufacturing hopefully 6 months. Working with physical systems takes time. 2. Manufacturing does not mean jobs. It will be automated with a fifth or less required to setup and maintain. Some technical jobs will come back, but nothing like what has been said. The tariffs initially put in place will have the same level of effects as a war. This is At Covid levels. The effects take time, inventories are getting sold. You are responding to the news not the effects give it a few weeks for company CEOs to get through the meetings that their employees are pushing up the chains. Outside of all of that. The biggest issue is consistency of action which this admin squirellllll.
- NoMoreNicksLeft 2y ago
  > Manufacturing takes time and money to setup. Trump has 4 years if he survives that long. He's an old man. The trade war can't possibly last long enough for manufacturing to be forced to restart domestically. Even if this was his first term and he got a second, by the time the second rolls around everyone would just hope to wait it out until the Democrats retook the White House and they could import everything from China again. But now no one can even make the argument and be taken seriously that we need this, because if Trump's doing trade wars then it must be a bad idea.
  - walterbell 2y ago
    > hope to wait it out This investment thesis is about to be tested at scale.
  - markus_zhang 2y ago
    IMO if Trump is serious about bringing manufacturing back to US, his No.1 job is to remove all middle-high managers from all government agencies. The whole government has been bathing in the globalization alcohol for so many years that there is a huge interest group rooted for it to go forever. You can't do much without removing this group. There is no "legal", "orderly" retreat from the current situation IMHO. It's going to be messy. The issue is whether Trump is doing the job or he is just faking it for whatever the reasons.

A_D_E_P_T 2y ago

There's a way to do it. This playbook has been used repeatedly throughout the 20th century. First you invite industry to reshore via subsidies and preferential access to government contracts. If necessary, the government must directly invest in new firms. (They already do this in a very small way with In-Q-Tel and others, so it's not totally beyond the pale. For a time there was even a US Army VC firm.) If you talk to a Chinese factory owner or mine boss, many of them will tell you that they got their start with a >$2M direct investment from their government. Second you gradually tighten the screws on foreign finished products, not industrial inputs like metals, plastics, ores, etc. Third you streamline export paperwork requirements and relax things like ITAR. Then, when that's all humming along and the factories are working, you can launch blanket tariffs to protect your nascent industries, if need be. But you must exempt necessary industrial inputs from tariffs. What's happening now is completely backwards/inverted and it's going to lead to total chaos.

whatshisface 2y ago
Don't forget the step where you ignore intellectual property law so that it becomes temporarily legal to start companies without a "war chest" of patents to ward off disputes with.
- A_D_E_P_T 2y ago
  I mean, patents only apply in the nation where they're granted. So "ignoring" IP is just a matter of refusing to recognize foreign patents, which is something that all nations do implicitly. Also, in most foreign countries, court cases are cheap. (They could literally be 100x cheaper to litigate than they would be in the US.) If you're talking about in a US context specifically, then if absolutely necessary the federal government could either buy or nationalize the patents in dispute, just as all states nationalize land from time to time under eminent domain. Zvi recently wrote about this in the context of the state buying the Ozempic patent: https://thezvi.wordpress.com/2025/01/21/sleep-diet-exercise-and-glp-1-drugs/ https://thezvi.wordpress.com/2025/01/21/sleep-diet-exercise-... > [The US Government] should buy out the patents to such drugs. > This solves the consumption side. It removes the deadweight loss triangle from lost consumption. It removes the hardship of those who struggle to pay, as we can then allow generic competition to do its thing and charge near marginal cost. It would be super popular. It uses government’s low financing costs to provide locked-in up front cold hard cash to Novo Nordisk, presumably the best way to get them and others to invest the maximum in more R&D. > There are lots of obvious gains here, for on the order of $100 billion. Cut the check.
  - whatshisface 2y ago
    >So "ignoring" IP is just a matter of refusing to recognize foreign patents, which is something that all nations do implicitly. That's not true at all. US companies register patents in all foreign jurisdictions as well. It wasn't legal for Chinese companies to copy all that US IP, they were just able to do it because to stop them, our diplomats would have basically had to persuade the Chinese government not to develop.
ferguess_k 2y ago
I think the playbook is easy, as you described multiple countries went through more or less the same process. The difficulty lies in political will and execution. Either fails then the whole scheme fails.
- A_D_E_P_T 2y ago
  Direct government investment in new firms is politically complicated in the US, I think. Also, yeah, execution could be a problem. There'd need to be some sort of compliance mechanism to ensure that people don't just take the money and buy fancy cars. At the same time, it can't be too heavy-handed, or bureaucratic checks-and-balances will bog down the entire program and destroy any momentum it might have had.

elictronic 2y ago

Manufacturing will start coming back based on the high tariffs just with two big caveats. 1. Manufacturing takes time and money to setup. This is a software forum where changes are made at lighting speed. Manufacturing requires capital, years, and will. In software it might take a day to make an obvious change. Manufacturing hopefully 6 months. Working with physical systems takes time. 2. Manufacturing does not mean jobs. It will be automated with a fifth or less required to setup and maintain. Some technical jobs will come back, but nothing like what has been said. The tariffs initially put in place will have the same level of effects as a war. This is At Covid levels. The effects take time, inventories are getting sold. You are responding to the news not the effects give it a few weeks for company CEOs to get through the meetings that their employees are pushing up the chains. Outside of all of that. The biggest issue is consistency of action which this admin squirellllll.

NoMoreNicksLeft 2y ago
> Manufacturing takes time and money to setup. Trump has 4 years if he survives that long. He's an old man. The trade war can't possibly last long enough for manufacturing to be forced to restart domestically. Even if this was his first term and he got a second, by the time the second rolls around everyone would just hope to wait it out until the Democrats retook the White House and they could import everything from China again. But now no one can even make the argument and be taken seriously that we need this, because if Trump's doing trade wars then it must be a bad idea.
- walterbell 2y ago
  > hope to wait it out This investment thesis is about to be tested at scale.
- markus_zhang 2y ago
  IMO if Trump is serious about bringing manufacturing back to US, his No.1 job is to remove all middle-high managers from all government agencies. The whole government has been bathing in the globalization alcohol for so many years that there is a huge interest group rooted for it to go forever. You can't do much without removing this group. There is no "legal", "orderly" retreat from the current situation IMHO. It's going to be messy. The issue is whether Trump is doing the job or he is just faking it for whatever the reasons.