Tariffs

[nctnico]

The core problem is that manufacturing is actually where least of the profit is made. You don't want a country to depend on manufacturing at all. Development and sales is where the money is to be made.

That's an extremely weak, and I'd say superfluous, argument against having manufacturing, if that's what that was.

It is not a weak argument at all. For example: it is a common rule of thumb that an electronics device may cost at most 25% of the retail price to produce. Manufacturing profit margin (when outsourced) is maybe 10% of that 25% (=2.5% of the retail price). 75% of the retail price goes into development and sales. So what is more profitable? Manufacture 10k units or sell 10k units? If you manufacture 10k units for a product which costs $100 to the final buyer, you made 25k (before costs). If you sell 10k units you made 750k (before costs). For clothes these numbers are even further apart (like 5% and 95%).

Isn't that where it's going wrong - looking solely at profit.

If you sell something made somewhere else, you make a lot of money but only you make the money. If, instead, you make the thing you'll have less profit but more people will benefit through having jobs making the thing. Isn't that what's need to be done: make stuff and share the benefits with lots of people, as opposed to sell stuff and be 4th richest man in the world.

You are missing the big picture. That 750k keeps way more people employed compared to the 25k. Think about people working in advertising, warehouses, delivery services, people working in the shops, cafes / food stalls in the shopping mall, etc.

And for sure some people get really rich but that is more an effect of having very uniform markets like in the US, China and India where you can really scale up production and sell more efficiently due to lack of trade and language barriers.

[Analog Kid]

There were (and still are) few countries that relied completely, or nearly completely, on local manufacturing. It did not work out well for the USSR. I can attest to that from personal experience. As for North Korea, I can’t say. If anyone has traveled there, please share your experience, especially how the economy is doing.

Just take a look at China for a counter-example.
Put aside any political or social objections you may have to them, and just look at their current economy and industrial base.
And tell me they're not a roaring success by those measures.
Yes, there are problems: there always are, always will be. Economies, especially ones of their size, are horrendously complex and unstable things.
But overall they've taken the good fortune that almost fell into their lap--other countries offshoring their manufacturing onto their shores--and made the most of it.

[vad]

You do not want to rely on foreign manufacturing for tanks and air defense systems.

and what if your  local manufacturer is owned by a foreign corporation?

Exactly. And this issue is beyond the scope of regulation through tariffs. Tariffs are concerned with where a product is made (its country of origin), not with who owns the business.

[Marco]

Tariffs. What's the alternative?

Import certificates are the only realistic alternative (Bancor while interesting is too utopian, trying to out-mercantilist China is not realistic either). Though letting trade deficits grow for decades and then suddenly trying to reverse it during a single presidency would still be disastrous regardless.

The advantage of tariffs from a political point of view is that it generates tax revenue.

[Marco]

manufacturing

Currents accounts imbalance has negative effects regardless of manufacturing. If all the money just went into government bonds that would be fine, but it also goes into shares and real-estate ... government has to have an increasingly redistributive fiscal policy and/or increasingly discriminative towards foreign investors (of course WTO and trade agreements are expressly designed to make the latter impossible).

The imbalances are inherently unstable. Investment bubbles have served to release some pressure, but it can't continue much longer.

PS. foreign ownership of domestic industry actually becomes more likely too with trade deficits. Mercantilist nations try offshore what they can from the target nation and use their profits in that nation's currency to buy whatever industry is left. Conquest by purchase, to quote Peter Navarro quoting Warren Buffet.

[vad]

There were (and still are) few countries that relied completely, or nearly completely, on local manufacturing. It did not work out well for the USSR. I can attest to that from personal experience. As for North Korea, I can’t say. If anyone has traveled there, please share your experience, especially how the economy is doing.

Just take a look at China for a counter-example.
Put aside any political or social objections you may have to them, and just look at their current economy and industrial base.
And tell me they're not a roaring success by those measures.
Yes, there are problems: there always are, always will be. Economies, especially ones of their size, are horrendously complex and unstable things.
But overall they've taken the good fortune that almost fell into their lap--other countries offshoring their manufacturing onto their shores--and made the most of it.

Just to clarify my argument about economic isolationism. China and the USSR are not comparable. I lived in one and have visited the other for business. China imports industrial equipment, machinery, instruments, technology, IP, consumer goods, food, luxury items, etc. The USSR, by contrast, was almost entirely economically self-reliant.

I’m not denying that Asia (not just China, but also Japan, Southeast Asia, East Asia, South Asia) benefited greatly from the offshoring of manufacturing. But it is also important to understand that offshoring wasn’t some evil scheme forced upon by dictators. It was free trade, in which both sides benefited.

Without offshoring, the average Joe might be making a $75 BBQ grill scraper, but would not be able to afford the BBQ grill itself because he would not have disposable income due to the high cost of locally made essential goods. The economy is incredibly complex, and I won’t get into all the ways Joe not being able to buy a BBQ grill could affect Jane, who works at the company that manufactures the grills.

And a final note: In a free market economy, there is one sure way to bring all manufacturing back from relatively poor countries to the US - make the US as poor as the average Asian country. There is also another way: abandon the free market altogether - see my earlier comments about the USSR and North Korea.

[Simon]

You do not want to rely on foreign manufacturing for tanks and air defense systems.

and what if your  local manufacturer is owned by a foreign corporation?

Ahem, sorry but that boat sailed long ago in many countries although the US has been very determined to source within the US. For example you can have your basic vehicle built somewhere cheap, bring it home and then get a local company to put all the clever stuff on it.

[Andy Chee]

You do not want to rely on foreign manufacturing for tanks and air defense systems. A hard lesson Ukraine is currently learning. On the other hand, there is no need to bring horse saddle manufacturing back onshore. Saddles are no longer strategic products that the armed forces depend on.

This still raises an interesting proposition, for example;

If the USA cannot currently maintain a strategic reserve for manufacturing critical semiconductors used in defense systems, does that mean;

a) USA should do everything to acquire the domestic expertise and domestic resources for advanced semiconductor manufacturing, or

b) USA should abandon advanced semiconductor technology and develop strategic equipment based on older technology (i.e. resume making semiconductors using 180nm wafers.... or go back to vacuum tubes.... and carburetors.... and horse saddles)

[krish2487]

This still raises an interesting proposition, for example;

If the USA cannot currently maintain a strategic reserve for manufacturing critical semiconductors used in defense systems, does that mean;

a) USA should do everything to acquire the domestic expertise and domestic resources for advanced semiconductor manufacturing, or

b) USA should abandon advanced semiconductor technology and develop strategic equipment based on older technology (i.e. resume making semiconductors using 180nm wafers.... or go back to vacuum tubes.... and carburetors.... and horse saddles)

I think USA will take the third option..

When USA needed / needs oil.. The countries that have oil needed "freedom".
Now when USA needs expertise / capabitilies in semiconductors, those countries (think south east Asia) will need freedom now..

Its nothing new... and Trump is not the first one to do this shit... US has had a long and proven history of destabilizing / destroying other countries for their benefit. Trump is just the latest one and the first one to do it so egregiously. 

[Zero999]

The race card doesn't work any more. It's just a way to shut down debate.

Another way is to use phrases such as "MSM".

Hesitate to show how clean my mind is.. what does that stand for?

Main-stream media. In other words the old media which had the habit of checking their sources before publishing. That's inconvenient for the rabble rousers, so they convince their followers that it is better to "open your eyes" and only read their "truth".

Oh, such as the likes of the BBC, who've actively covered up some of the most horrific peadophilia in the UK.

Selective reporting, or failure to report and manipulating stories to fit a certain narrative is common in the mainstream media. I'm not saying that we should blindly trust what some random says on Twitter, but it is those who throw their toys out of the pram and refuse to engage, at the mere suggestion we've been misled about a certain thing my the mainstream media, who are shutting down debate.

The reality is, news channels have to abide by government run regulator and even the more independent sources are reliant on advertising from big business, so it's hardly surprising that some things, which are inconvenient are ignored and downplayed, whilst others which are useful are exaggerated and spun a certain way.

[vad]

You do not want to rely on foreign manufacturing for tanks and air defense systems. A hard lesson Ukraine is currently learning. On the other hand, there is no need to bring horse saddle manufacturing back onshore. Saddles are no longer strategic products that the armed forces depend on.

This still raises an interesting proposition, for example;

If the USA cannot currently maintain a strategic reserve for manufacturing critical semiconductors used in defense systems, does that mean;

a) USA should do everything to acquire the domestic expertise and domestic resources for advanced semiconductor manufacturing, or

b) USA should abandon advanced semiconductor technology and develop strategic equipment based on older technology (i.e. resume making semiconductors using 180nm wafers.... or go back to vacuum tubes.... and carburetors.... and horse saddles)

This is a very interesting point, but it sounds as if the US had advanced 3nm technology for centuries, before greedy capitalists packed their bags and sent equipment manufacturing to Europe and product manufacturing to the Republic of China (Taiwan). Which, of course, is not the case.

If a country lacks the conditions to produce certain goods, whether it is 3nm chips or bananas, it is usually more beneficial to build economic ties with other nations than to sever them through blanket tariffs that make little sense.

[zapta]

If a country lacks the conditions to produce certain goods, whether it is 3nm chips or bananas, it is usually more beneficial to build economic ties with other nations than to sever them through blanket tariffs that make little sense.

That's the false dilemma fallacy.  There are additional options, for example creating the incentives and conditions for for domestic production of strategic technology such as 3nm.

[krish2487]

That's the false dilemma fallacy.  There are additional options, for example creating the incentives and conditions for for domestic production of strategic technology such as 3nm.

And so is this... this is trickle down economy fallacy... and how well did that work out for US again??
(waves around pointing to 2008 crash, recent IT layoffs and Boeing and others)

I would actually go one step further and say that these incentives, especially in a country like  US, are ridiculously counterproductive.
Time and again history has shown that in the US, such incentives are inevitably abused for the sake of shareholders and never for "greater good", so much so.. the companies start flouting and abusing laws with the notion that its easier to ask for forgiveness than permission - case in point MS layoffs last week, MS has had billions in profits in the last year yet they laid off 9K workforce. Similarly Meta and other AI companies outright used copyrighted materials as datasets stating others would do it if they didnt do it first.

[zapta]

That's the false dilemma fallacy.  There are additional options, for example creating the incentives and conditions for for domestic production of strategic technology such as 3nm.

And so is this... this is trickle down economy fallacy... and how well did that work out for US again??
(waves around pointing to 2008 crash, recent IT layoffs and Boeing and others)

I would actually go one step further and say that these incentives, especially in a country like  US, are ridiculously counterproductive.
Time and again history has shown that in the US, such incentives are inevitably abused for the sake of shareholders and never for "greater good", so much so.. the companies start flouting and abusing laws with the notion that its easier to ask for forgiveness than permission - case in point MS layoffs last week, MS has had billions in profits in the last year yet they laid off 9K workforce. Similarly Meta and other AI companies outright used copyrighted materials as datasets stating others would do it if they didnt do it first.

With all the respect, this is a meaningless pile of words.  Try again, what's wrong with incentivising strategic goals?

[krish2487]

With all the respect, this is a meaningless pile of words.  Try again, what's wrong with incentivising strategic goals?

Let me see if I can make it easier to understand.. none of the incentives achieve the goals of either
1. increasing the capabilities of the companies and consequently the country as a whole
2. ensuring more money gets into the hands of the lowest level of the working force, to combat the tariffs related inflation.

All those incentives just end up as benefits of the already rich and wealthy.

1. Govt bailouts to Boeing
2. Govt bailouts to banks after the 2008 crash
3. Wallstreet bailout (most recently gamestop if memory serves)
to name a few

These are a form of incentives to "better" the system, in hopes of preventing a similar occurence in the future.
1. Boeing is still clusterfuck ( and their outgoing CEO received a 3-500 milliion dollar golden parachute)
2. Housing gets more unaffordable for the working population day by day.
3. wallstreet (enough said)

In all these cases, where and how did the incentives make anything better ? They fattened already fat cats, while making people poorer.. and systems more brittle, less competent and more dangerous.

[nctnico]

If a country lacks the conditions to produce certain goods, whether it is 3nm chips or bananas, it is usually more beneficial to build economic ties with other nations than to sever them through blanket tariffs that make little sense.

That's the false dilemma fallacy.  There are additional options, for example creating the incentives and conditions for for domestic production of strategic technology such as 3nm.

You forget to mention that acquiring the technology to do so takes decades. Why do you think there is only one company in the world capable of building the required lithography machines? Setting up a second company with that ability would take tens to hundreds of billions of dollars and at least 2 decades. If the Chinese where able, they would have done it. In many cases the ship simply has sailed.

[zapta]

You forget to mention that acquiring the technology to do so takes decades.

That's make it an even more important goal.

[zapta]

All those incentives just end up as benefits of the already rich and wealthy.

The goal here is not to redistribute wealth but to build domestic capabilities.

Those socialist talking points are not relevant to the topic here.

[Analog Kid]

If a country lacks the conditions to produce certain goods, whether it is 3nm chips or bananas, it is usually more beneficial to build economic ties with other nations than to sever them through blanket tariffs that make little sense.

That's the false dilemma fallacy.  There are additional options, for example creating the incentives and conditions for for domestic production of strategic technology such as 3nm.

Maybe, but you'll never grow bananas in the continental US.

[themadhippy]

but you'll never grow bananas in the continental US.

If ya can grow em in the uk  i cant see wots stopping you.

[Zero999]

but you'll never grow bananas in the continental US.

If ya can grow em in the uk  i cant see wots stopping you.

The technology goes back to the Victorian era. The problem is making it commercially viable.

[Analog Kid]

but you'll never grow bananas in the continental US.

If ya can grow em in the uk  i cant see wots stopping you.

C'mon; you're not going to try to convince us that the UK is a major exporter of bananas, are you?
If they could be raised easily and profitably in Florida or Alabama or Texas instead of Ecuador, the Phillipines or Colombia, don't you think that would be happening, which it isn't?

[themadhippy]

C'mon; you're not going to try to convince us that the UK is a major exporter of bananas,

who said we were?I was just questioning your claim that  you'll never grow bananas in the continental US.

[Analog Kid]

C'mon; you're not going to try to convince us that the UK is a major exporter of bananas,

who said we were?I was just questioning your claim that  you'll never grow bananas in the continental US.

You'll never grow them profitably. Read what I wrote.
Of course, Trump's idiot Sec'y. of Commerce thinks we should try to grow them here (to sidestep the whole tariff thing on them), even though it's demonstrably true that they really can't be grown here. (Because things like temperature and humidity, which is why the vast majority of bananas are grown within 30 degrees of the equator.)

[themadhippy]

You'll never grow them profitably. Read what I wrote.

i did,heres wot you wrote

If a country lacks the conditions to produce certain goods, whether it is 3nm chips or bananas, it is usually more beneficial to build economic ties with other nations than to sever them through blanket tariffs that make little sense.

That's the false dilemma fallacy.  There are additional options, for example creating the incentives and conditions for for domestic production of strategic technology such as 3nm.

Maybe, but you'll never grow bananas in the continental US.

cant see any mention of profitably.

Anyways the bigger issue is how do the residents of hawaii feel about turning there islands over to fore fill yer coffee needs