With the way our politics is going, I worry about a whiplash of one administration getting us into trade deals and the next getting us out, ad infinitum, until the US is nothing but a laughingstock that no one in their right mind would do any deal at all with.
Ya. The worrying thing is not the challenges the West is facing. The worrying thing is how we are handling these challenges. We can easily win if we sit down together and do the intelligent common sensethings that we need to do. But we can't. We are too busy fighting within ourselves over racial, ethnic, and wealth differences.
I would say the above is preferable to Xi-Jinping thought in the medium to long-term. However, the benefit of an authoritarian regime is that you can easily organize yourself around one common goal.
If the chinese organise themselves around a military goal, we have a huge problem. Not just in the indo-pacific. But with Russia being a vassal state of China; the EU would be directly threatened by China's manufacturing base.
We are dicking around, and need to unite together, all of us. Every person, from whatever race and religion within any western state. Sadly, humans are apes.
Its also a question of Stability, Trustworthiness, Vision, Reliability in implementing the agreement.
If anyone thinks that these principals dont mean anything anymore , or carry any weight , I suggest you look at Brexit ,and the hurt that has caused to the English, Scots, the Welsh. Not just economically but in standing with its once full fledged partners the EU
What I believe you are saying is that " bad actor's" would be sanctioned for excluded from doing business, from within the group. And a more complicated and selective immigration policy.
Yes on the first, not sure I can agree on the second point.
As you mentioned, economists were all for foreign trade, comparative advantage was everything. Then important parts of America were ravaged by the China shock, causing the rise of anti democratic forces. This last requires a political response. Until this response gets things back in order the economists must be in service to the political needs of defending American democracy. Economic insight without political insight is dangerous to the survival of our country.
I think that's Noah's point. The workable alternative to free trade that abandoned political sense (in the neoliberal 1990s) is not "Fortress America" -- which is ever more a pipe dream with each passing year -- but "trade with political strategy consciously built in -- on worker, environmental, IP, etc., standards."
Doesn't international trade only operate according to comparative advantage when capital is internationally immobile? When capital is free to move, it does move following _absolute_ rather than comparative advantage.
Yeah the claim that China was some sort of unforeseeable one-off event doesn't ring true. Pretty sure the actual factory workers knew exactly what would happen, and what about Mexico?
I'm convinced that neoliberals were agnostic or hostile to democracy per se but was a cover story intended for public consumption. The press, and in turn, the public took it at face value.
The US has the advantage that it's huge and very wealthy and everybody will always want to do a deal with you however much you flip-flop on trade. Spare a thought for us in the UK though, who really cannot afford to be engaging in the sort of 'Mouse that Roared' crap that saw us leave the EU.
Noah made the point that "the U.S. was in the mood to push back against free trade in 2016, and the TPP happened to be the trade deal that was on the table at the time, so it took the brunt of the backlash".
Similarly I'd argue that the British people threw away their EU membership because of grievances that weren't really about the EU per se: refugees from MENA, the long decline of Britain outside South East England (which began over a century ago, as electricity replaced on-site steam engines for industrial power), and perhaps even the UK's constitutional setup which does not allow England to exist as a coherent political entity.
I remember Sir James Goldsmith had a very out of the box proposal that I thought sounded interesting. It was decades ago so this is very big picture, and possibly wrong. But the general idea was that all the developed countries should create a 100% free trade zone, and put up essentially impenetrable trade barriers against all manufacturing from the rest of the world. that means essentially no real competition on the basis of environment and wages, but still plenty of competition in the vast developed market. Emerging markets would be free to deal with the free trade zone as they prefer. they can erect 100% tariffs in the hope that they develop homegrown champions. Or they can keep markets open and benefit from the productivity and lifestyle improvements from more technologically advanced products. Then, and this is where it gets fuzzy, there needed to be huge transfers of wealth to developing countries, who should all be following their own development models. Not sure how the wealth transfers would work, and who doled it out. but the basic idea was to speed up their development and reduce the wage difference to the point where these countries could be admitted to the DM free trade zone.
The whole idea was to ease into free trade for all, recognize that initially we're on vastly different playing fields and give everyone more time to adjust. Anyway, it will never happen, would have had major foreign policy implications and lots of unanticipated economic side effects too. But I thought it was an interesting approach to at least ponder.
"essentially impenetrable trade barriers" sounds like a recipe for a massive global black market. After all that's the war on drugs. Even current trade barriers are hard to enforce, not sure how you'd genuinely cut yourself off like that.
1. The war on drugs significantly reduced drug trade (not thst it was worth the side effects, just pointing out for the sake of completeness)
2. *some* amount of drugs will survive any restriction because their value per weight is simply unlike anything else. Before drugs, smugglers and tariff dodgers traded spices, tea, coffee and the like, which at the time allowed similar margins.
Nobody is going to build clandestine submarines, deal with murderous thugs, and risk jail at the very best just to take advantage of a 10$ /unit arbitrage opportunity on t-shirts, come on
he just meant high tariffs which countries have been using for thousands of years to shield industries. We're talking about cars and computers here, big, complicated things. Tariffs do what they're supposed to do, reduce or eliminate trade. Whether that's a good idea or not is the age old question. I thought Goldsmith's idea was an interesting way to approach it.
To my ear the phrase "essentially impenetrable trade barrier" implies a complete embargo (similar to what the US enforced against Cuba) not mere tariffs.
ok sorry for using the wrong phrase. I meant tariffs so high that it wouldn't make sense to import them. Maybe I should have said economically insurmountable or something.
It was very difficult to try to get the TPP done and even if it did get completed, the EU would never join because they are very protectionist within their union, but maybe Britain would join. Even that wouldn’t work now that all the developed countries are dependent on Chinese manufacturing.
We have a conflation of events happening. US washing machine manufacturer closes factory in the US to make washing machines in China cheaper. American consumers may benefit from a lower cost machine but local factory workers are out of a job. The emotion of this issue, cheaper product for American consumers to buy vs workers losing jobs is the crux of the issue.
Americas problem is that it is not competitive in manufacturing in certain areas.. For example, the Detroit 3 automakers a few years ago told American that they would no longer sell sedans. Ceding that market to foreign makers. The reason? American car manufacturers cannot make a $25,000 car profitably.
They can make money selling trucks and SUV’s but not anything resembling a Corolla.
Biden with his push using the power of the State to force Americans to buy an EV has set the big 3 on a path to destruction. They will not be able to make an EV for $25,000 that is profitable and certainly not with the new contracts.
Legacy costs, Union benefits, environmental issues all conspire against making steel here. If you are building a skyscraper and you can buy steel cheaper somewhere else you do so. Steel is a commodity. It is nothing special. NUCOR does well cause it uses scrap metal and a particular production technique. USS is an anachronism.
Japan is our friend, someone we’ll need as a fulcrum against the hegemony of China....Japan buying USS would be no different than Canada buying USS. Would be feel the same way or is it pure bigotry?
Was it an American Washing Machine mfg, or the one that was closed down in the east end of Montreal , and moved to the US ( alabama) and Mexico ( 2014) MABE closed the plant and over seven hundred lost their jobs.
Electrolux closed down in l'assomption Quebec and moved operations in 2014
1300 jobs lost .
Relocated to Tennessee.
A few years back the only remaining TV screen mfg in the US was being squeezed by Walmart and foreign competition. At the hearings Walmart went to bat for the Foreign MFG not the US company?????
That's the Econ 101 (first part of the course) view of tariffs: the choice between a smaller but more concentrated welfare loss among domestic producers and a larger but more distributed welfare loss among consumers.
But! Already in the second part of course, one starts talking productivity. Comparative advantages and all that. And yes, reality is more complicated. And yes, market are not as good at repurposing labor and capital as we naively thought, so we should avoid sudden shocks and there is a scope for public action to smooth the transition. But the fundamental kernel of truth remains that if your policy is "let's take the most sophisticated economic machinery in the world, with the best paid workers and the most expensive capital, and force it to make low-value garments on the consumers' dime", you are not helping anybody, least of all the workers who are now herded into jobs much less productive than the ones they could have
Ford had tremendous interest for the F-150 Lightning, with more than 200,000 deposits intended for shipping. Then the Inflation Reduction Act happened, which changed the incentive structure for the tax credits (the $7,500 was split in two, half for U.S. manufacturing and half for batteries not sourced from China or Russia) as well as a maximum MSRP for eligibility.
In addition to Ford only able to produce about 4,000 or so Lightnings a month, meaning a long time from deposit to delivery, it's the MSRP cap that poured water on the interest. A lot of contractors and construction workers were really keen on the Lightning, in part because of all of the power outlets that allow the truck to be an electric generator. The full-fat version with high range and high tow comes out to be $120,000, putting the truck out of the money for most buyers.
The $7,500 tax credit is making the market for EVs more than anything else.
The Japanese and Korean carmakers were locked out of the tax credits, and Hyundai and Kia were the ones who did a hack by encouraging customers to lease an EV with the carmakers fronting them $7,500 as a lease discount. The Japanese makers did the same.
So over the next 3-6 years, Americans will have a $25,000 EV. They'll be used Ioniqs, EV6s, Leafs, Ariyas, etc. when they'll be returned from their leases.
I agree that the loss of IPEF trade components and opposition to Nippon Steel are both bad for the US and its partners, but disagree that this is all the fault of Trump. The only one to blame is Biden being too feeble and pandering to go against the unions and progressives who oppose any trade or globalization. Obama and Biden could have removed the bad IP provisions of the TPP but didn’t seem to really want to work too hard to get it approved when they had the chance. Trump is bad on trade, Biden is barely better.
Asking a lot of unions and progressives given only *now* is the elite admitting that free trade with China was a boneheaded move that they should’ve pivoted on much much sooner.
An important thing about capitalism is that crappy companies must die. Government intervention to prop them up should only happen with strings attached to make them uncrappy or exempt from future subsidies or favors. See “GM”.
What do you think of the idea of the government propping up a company because it is the last domestic producer of a given product, and it is considered dangerous to depend on foreign imports?
Chances are they aren’t a crappy company if they have managed to be the only domestic company to stay in business, but, of course it would be in the national interest to partner with them. Again, strings should be attached. A private equity company does extreme due diligence, takes an equity position, and usually control of the board when it bails out a crappy company. This is to manage the risk of the people providing the financing. Their goal is for the company to succeed, allowing the equity holders to exit with a reward for their service. Why this risk and reward structure isn’t available to publicly provided equity is a pet peeve of mine. We could fund a lot of good stuff with the zillions of dollars we have given away for private bailouts, startups, and R&D.
I'm sure that's true. The decline of the North and West of the country was hastened by the rapid de-industrialisation of the 1980's. This this was linked to the wider free trade policies of the Thatcher government with its very visible European dimension in all the shiny, new German and French cars replacing the ageing Austins, Hillmans and Minis on British streets. And whilst the freely moving labour that Brexit supporters were most concerned about was probably not that originating in the EU, the referendum offered a proxy target, in the form of Poles and Latvians, for the type of immigrant worker that they were most suspicious of - those from Muslim countries.
Another big factor was the right wing press which had been attacking the Brussels bureaucracy and plans for greater European political integration since the final years of the Thatcher government. This media discourse was part of a wider set of political interventions by members of the British elite made wealthier by globalisation and seeking political power or influence by appealing to that part of the working class who felt they had lost out as a result of these very same processes. Peter Turchin's cliometry-based model of current political upheavals fits the UK very well. Most of the key agitators for Brexit were multi-millionaires/ billionaires and / or privately / university educated. All of them were rich enough not to have to worry too much about the impact of Brexit on the UK economy and willing to ingratiate themselves with the immiserated working class as the table stakes for gambling with British political institutions and economic stability.
The English identity question feels to me more like a consequence of these other issues than a cause of them, something amplified or exacerbated by these events. Just as Trump insulting US veterans and other previously venerated US national institutions didn't affect his popularity, Nigel Farage's star was undimmed by saying that if Brexit cratered the UK economy he'd go and live in Germany!
Maybe this is off topic, but is there anything that the governments of the US and other Free World countries could do to make it easier for their _consumers_ to find non-Chinese goods, either online or in bricks-and-mortar stores?
I suspect many Western consumers would happily pay more for alternatives to "made in China" goods, if only they knew where to find them!
Maybe the West needs to learn from India, given how often India shows up when I search for stuff about boycotting China? Or perhaps Western governments need to encourage their corporations to make India (whose population now exceeds China's IIRC) into a "Factory of Democracy"?
Your government won't need to do anything other than not placing the same tariffs on India that they are placing on China.
Modi is already working on growing manufacturing.
He has been starting infrastructure projects like crazy for the last 10 years & doing reforms that directly affect the ease of doing business ( the two major things when you want to run a factory along with cheap labor).
But it takes a LOT of time, a couple of decades at least.
&
We won't be able to fill the whole gap (other growing economies can fill the rest) left by China cause manufacturing probably won't exceed 30% of India's GDP (China is at 40%) because of democracy which leads to rights for laborers & most importantly Modi's economic planners/advisors have already said that their plan for the future doesn't include too big of suppression of wages like China so we could switch to a consumption-led growth model when the investment-led model stops working (China has reached this point in the last decade, but they don't want to/can't transition) which means we won't be able to provide large subsidies (our prices of goods won't be as competitive as China when we reach this point).
But-
A couple of decades later, manufacturing becoming even 30% of the Indian GDP (in 2044 ~ $16T÷3.33= $5T ) would be considered a MAJOR success.
But a major geopolitical event in-between could change everything so nothing is 100% sure.
If I recall correctly, there was huge furor on reddit over the copyright extension provisions of the TPP, which were seen as an attempt to get ACTA in another form. I never hear about this when I read writeups on why TPP failed to be ratified, which is weird, because it seemed center of mind at the time. Am I overestimating the importance of the internet people?
I'm just here to object to the weird American neologism where factory workers are "middle class". Sorry, but apart from senior management you're not going to find many middle class jobs in a factory.
And that's fine, we have to stop pretending that everyone is, or needs to be, middle class.
Well, they were middle class in the 1950s, and skilled manufacturing workers whose skills are in demand (welders, for example) can still make good money.
Wasn't the middle-class status of US factory workers in the 1950s a temporary aberration, resulting from World War II ruining the rest of the industrialized world?
Welding is never a middle-class profession, no matter how much money you might make doing it. It's solidly, even canonically, working class. If factory workers are middle class then who the fuck isn't?
It's definitely an American thing to use "middle class" as if it covers everyone who has access to a toilet but not a private jet, but I'm pretty sure it's also a new American thing.
Those who aren't are the low rung of service work. The people cleaning houses and offices, cooking hamburgers, serving you cocktails, giving tender care to your Amazon package so that you get same day delivery etc. And yes, some factory jobs that still look more like "do one operation all the time", and pay accordingly
Definitions are made for man and not man for definitions, and if somebody consistently making more than median income, with benefits etc is not middle class, then nobody is really.
“The global chips industry is poised to almost double in size by 2030 with revenues passing the $1 trillion mark, consultancy McKinsey forecasts. As a unique supplier to this industry, there’s no doubt that ASML will grow too.”
Going forward, I think ASML will build new facilities in other countries with business-friendly governments. With chip production doubling in the next 5-6 years, it makes more sense to geographically diversify manufacturing and corporate training campuses.
This was a great read as usual. A couple of questions/comments. I've been looking into several startups/existing industries that are wanting to decarbonize. Green steel is on the move. So it makes sense. Aside from the paradigm of the fighting the Chinese juggernaut (I know you don't buy into it). Diversification is just good for business and the global economy. I'm surprised the US isn't looking more closely at Canada, Mexico and South America as a block for untapped potential. I entirely agree with strengthening ties, collaboration, partnerships, statecraft. Particularly, Vietnam, Indonesia, new Zealand, & Australia. With labor shortages still occurring and a shift in industrial/healthcare/service jobs the fear seems unwarranted. Actually it seems like a growth opportunity. A peons two cents. ;-D
With the way our politics is going, I worry about a whiplash of one administration getting us into trade deals and the next getting us out, ad infinitum, until the US is nothing but a laughingstock that no one in their right mind would do any deal at all with.
Ya. The worrying thing is not the challenges the West is facing. The worrying thing is how we are handling these challenges. We can easily win if we sit down together and do the intelligent common sensethings that we need to do. But we can't. We are too busy fighting within ourselves over racial, ethnic, and wealth differences.
I would say the above is preferable to Xi-Jinping thought in the medium to long-term. However, the benefit of an authoritarian regime is that you can easily organize yourself around one common goal.
If the chinese organise themselves around a military goal, we have a huge problem. Not just in the indo-pacific. But with Russia being a vassal state of China; the EU would be directly threatened by China's manufacturing base.
We are dicking around, and need to unite together, all of us. Every person, from whatever race and religion within any western state. Sadly, humans are apes.
Dustin ,Agree wholeheartedly with your assessment
Its also a question of Stability, Trustworthiness, Vision, Reliability in implementing the agreement.
If anyone thinks that these principals dont mean anything anymore , or carry any weight , I suggest you look at Brexit ,and the hurt that has caused to the English, Scots, the Welsh. Not just economically but in standing with its once full fledged partners the EU
Great Article
Get the damned agreements signed.
Or we are doomed
Im speaking as a Canadian.
Yes... What the west needs to do are these two things:
1. Intelligent, comprehensive and discriminatory international trade reform
2. Intelligent, comprehensive and discriminatory immigration reform
Where I use 'discriminatory' in the mathematician's sense.
If we can't do these two things. We lose. If we do these two things. We win.
What I believe you are saying is that " bad actor's" would be sanctioned for excluded from doing business, from within the group. And a more complicated and selective immigration policy.
Yes on the first, not sure I can agree on the second point.
As you mentioned, economists were all for foreign trade, comparative advantage was everything. Then important parts of America were ravaged by the China shock, causing the rise of anti democratic forces. This last requires a political response. Until this response gets things back in order the economists must be in service to the political needs of defending American democracy. Economic insight without political insight is dangerous to the survival of our country.
I think that's Noah's point. The workable alternative to free trade that abandoned political sense (in the neoliberal 1990s) is not "Fortress America" -- which is ever more a pipe dream with each passing year -- but "trade with political strategy consciously built in -- on worker, environmental, IP, etc., standards."
Doesn't international trade only operate according to comparative advantage when capital is internationally immobile? When capital is free to move, it does move following _absolute_ rather than comparative advantage.
Yeah the claim that China was some sort of unforeseeable one-off event doesn't ring true. Pretty sure the actual factory workers knew exactly what would happen, and what about Mexico?
I think the real miscalculation was that the neoliberals believed that making China more prosperous would also nudge it in the direction of democracy.
I'm convinced that neoliberals were agnostic or hostile to democracy per se but was a cover story intended for public consumption. The press, and in turn, the public took it at face value.
Exactly George same as Putin and Russia, both used the opportunity to undermine the west
The US has the advantage that it's huge and very wealthy and everybody will always want to do a deal with you however much you flip-flop on trade. Spare a thought for us in the UK though, who really cannot afford to be engaging in the sort of 'Mouse that Roared' crap that saw us leave the EU.
Noah made the point that "the U.S. was in the mood to push back against free trade in 2016, and the TPP happened to be the trade deal that was on the table at the time, so it took the brunt of the backlash".
Similarly I'd argue that the British people threw away their EU membership because of grievances that weren't really about the EU per se: refugees from MENA, the long decline of Britain outside South East England (which began over a century ago, as electricity replaced on-site steam engines for industrial power), and perhaps even the UK's constitutional setup which does not allow England to exist as a coherent political entity.
I remember Sir James Goldsmith had a very out of the box proposal that I thought sounded interesting. It was decades ago so this is very big picture, and possibly wrong. But the general idea was that all the developed countries should create a 100% free trade zone, and put up essentially impenetrable trade barriers against all manufacturing from the rest of the world. that means essentially no real competition on the basis of environment and wages, but still plenty of competition in the vast developed market. Emerging markets would be free to deal with the free trade zone as they prefer. they can erect 100% tariffs in the hope that they develop homegrown champions. Or they can keep markets open and benefit from the productivity and lifestyle improvements from more technologically advanced products. Then, and this is where it gets fuzzy, there needed to be huge transfers of wealth to developing countries, who should all be following their own development models. Not sure how the wealth transfers would work, and who doled it out. but the basic idea was to speed up their development and reduce the wage difference to the point where these countries could be admitted to the DM free trade zone.
The whole idea was to ease into free trade for all, recognize that initially we're on vastly different playing fields and give everyone more time to adjust. Anyway, it will never happen, would have had major foreign policy implications and lots of unanticipated economic side effects too. But I thought it was an interesting approach to at least ponder.
"essentially impenetrable trade barriers" sounds like a recipe for a massive global black market. After all that's the war on drugs. Even current trade barriers are hard to enforce, not sure how you'd genuinely cut yourself off like that.
1. The war on drugs significantly reduced drug trade (not thst it was worth the side effects, just pointing out for the sake of completeness)
2. *some* amount of drugs will survive any restriction because their value per weight is simply unlike anything else. Before drugs, smugglers and tariff dodgers traded spices, tea, coffee and the like, which at the time allowed similar margins.
Nobody is going to build clandestine submarines, deal with murderous thugs, and risk jail at the very best just to take advantage of a 10$ /unit arbitrage opportunity on t-shirts, come on
he just meant high tariffs which countries have been using for thousands of years to shield industries. We're talking about cars and computers here, big, complicated things. Tariffs do what they're supposed to do, reduce or eliminate trade. Whether that's a good idea or not is the age old question. I thought Goldsmith's idea was an interesting way to approach it.
To my ear the phrase "essentially impenetrable trade barrier" implies a complete embargo (similar to what the US enforced against Cuba) not mere tariffs.
ok sorry for using the wrong phrase. I meant tariffs so high that it wouldn't make sense to import them. Maybe I should have said economically insurmountable or something.
It was very difficult to try to get the TPP done and even if it did get completed, the EU would never join because they are very protectionist within their union, but maybe Britain would join. Even that wouldn’t work now that all the developed countries are dependent on Chinese manufacturing.
This was decades ago; I should have made that clear.
We have a conflation of events happening. US washing machine manufacturer closes factory in the US to make washing machines in China cheaper. American consumers may benefit from a lower cost machine but local factory workers are out of a job. The emotion of this issue, cheaper product for American consumers to buy vs workers losing jobs is the crux of the issue.
Americas problem is that it is not competitive in manufacturing in certain areas.. For example, the Detroit 3 automakers a few years ago told American that they would no longer sell sedans. Ceding that market to foreign makers. The reason? American car manufacturers cannot make a $25,000 car profitably.
They can make money selling trucks and SUV’s but not anything resembling a Corolla.
Biden with his push using the power of the State to force Americans to buy an EV has set the big 3 on a path to destruction. They will not be able to make an EV for $25,000 that is profitable and certainly not with the new contracts.
Legacy costs, Union benefits, environmental issues all conspire against making steel here. If you are building a skyscraper and you can buy steel cheaper somewhere else you do so. Steel is a commodity. It is nothing special. NUCOR does well cause it uses scrap metal and a particular production technique. USS is an anachronism.
Japan is our friend, someone we’ll need as a fulcrum against the hegemony of China....Japan buying USS would be no different than Canada buying USS. Would be feel the same way or is it pure bigotry?
You decide.
Earl
Was it an American Washing Machine mfg, or the one that was closed down in the east end of Montreal , and moved to the US ( alabama) and Mexico ( 2014) MABE closed the plant and over seven hundred lost their jobs.
Electrolux closed down in l'assomption Quebec and moved operations in 2014
1300 jobs lost .
Relocated to Tennessee.
A few years back the only remaining TV screen mfg in the US was being squeezed by Walmart and foreign competition. At the hearings Walmart went to bat for the Foreign MFG not the US company?????
Its not just the US
That's the Econ 101 (first part of the course) view of tariffs: the choice between a smaller but more concentrated welfare loss among domestic producers and a larger but more distributed welfare loss among consumers.
But! Already in the second part of course, one starts talking productivity. Comparative advantages and all that. And yes, reality is more complicated. And yes, market are not as good at repurposing labor and capital as we naively thought, so we should avoid sudden shocks and there is a scope for public action to smooth the transition. But the fundamental kernel of truth remains that if your policy is "let's take the most sophisticated economic machinery in the world, with the best paid workers and the most expensive capital, and force it to make low-value garments on the consumers' dime", you are not helping anybody, least of all the workers who are now herded into jobs much less productive than the ones they could have
Ford had tremendous interest for the F-150 Lightning, with more than 200,000 deposits intended for shipping. Then the Inflation Reduction Act happened, which changed the incentive structure for the tax credits (the $7,500 was split in two, half for U.S. manufacturing and half for batteries not sourced from China or Russia) as well as a maximum MSRP for eligibility.
In addition to Ford only able to produce about 4,000 or so Lightnings a month, meaning a long time from deposit to delivery, it's the MSRP cap that poured water on the interest. A lot of contractors and construction workers were really keen on the Lightning, in part because of all of the power outlets that allow the truck to be an electric generator. The full-fat version with high range and high tow comes out to be $120,000, putting the truck out of the money for most buyers.
The $7,500 tax credit is making the market for EVs more than anything else.
The Japanese and Korean carmakers were locked out of the tax credits, and Hyundai and Kia were the ones who did a hack by encouraging customers to lease an EV with the carmakers fronting them $7,500 as a lease discount. The Japanese makers did the same.
So over the next 3-6 years, Americans will have a $25,000 EV. They'll be used Ioniqs, EV6s, Leafs, Ariyas, etc. when they'll be returned from their leases.
I agree that the loss of IPEF trade components and opposition to Nippon Steel are both bad for the US and its partners, but disagree that this is all the fault of Trump. The only one to blame is Biden being too feeble and pandering to go against the unions and progressives who oppose any trade or globalization. Obama and Biden could have removed the bad IP provisions of the TPP but didn’t seem to really want to work too hard to get it approved when they had the chance. Trump is bad on trade, Biden is barely better.
Asking a lot of unions and progressives given only *now* is the elite admitting that free trade with China was a boneheaded move that they should’ve pivoted on much much sooner.
The Autor, Dorn, and Hanson paper that is linked says:
"Developing effective tools for managing and mitigating the costs of trade adjustment
should be high on the agenda for policymakers and applied economists."
What does that mean?
I aim to find out!
An important thing about capitalism is that crappy companies must die. Government intervention to prop them up should only happen with strings attached to make them uncrappy or exempt from future subsidies or favors. See “GM”.
What do you think of the idea of the government propping up a company because it is the last domestic producer of a given product, and it is considered dangerous to depend on foreign imports?
Chances are they aren’t a crappy company if they have managed to be the only domestic company to stay in business, but, of course it would be in the national interest to partner with them. Again, strings should be attached. A private equity company does extreme due diligence, takes an equity position, and usually control of the board when it bails out a crappy company. This is to manage the risk of the people providing the financing. Their goal is for the company to succeed, allowing the equity holders to exit with a reward for their service. Why this risk and reward structure isn’t available to publicly provided equity is a pet peeve of mine. We could fund a lot of good stuff with the zillions of dollars we have given away for private bailouts, startups, and R&D.
I'm sure that's true. The decline of the North and West of the country was hastened by the rapid de-industrialisation of the 1980's. This this was linked to the wider free trade policies of the Thatcher government with its very visible European dimension in all the shiny, new German and French cars replacing the ageing Austins, Hillmans and Minis on British streets. And whilst the freely moving labour that Brexit supporters were most concerned about was probably not that originating in the EU, the referendum offered a proxy target, in the form of Poles and Latvians, for the type of immigrant worker that they were most suspicious of - those from Muslim countries.
Another big factor was the right wing press which had been attacking the Brussels bureaucracy and plans for greater European political integration since the final years of the Thatcher government. This media discourse was part of a wider set of political interventions by members of the British elite made wealthier by globalisation and seeking political power or influence by appealing to that part of the working class who felt they had lost out as a result of these very same processes. Peter Turchin's cliometry-based model of current political upheavals fits the UK very well. Most of the key agitators for Brexit were multi-millionaires/ billionaires and / or privately / university educated. All of them were rich enough not to have to worry too much about the impact of Brexit on the UK economy and willing to ingratiate themselves with the immiserated working class as the table stakes for gambling with British political institutions and economic stability.
The English identity question feels to me more like a consequence of these other issues than a cause of them, something amplified or exacerbated by these events. Just as Trump insulting US veterans and other previously venerated US national institutions didn't affect his popularity, Nigel Farage's star was undimmed by saying that if Brexit cratered the UK economy he'd go and live in Germany!
Maybe this is off topic, but is there anything that the governments of the US and other Free World countries could do to make it easier for their _consumers_ to find non-Chinese goods, either online or in bricks-and-mortar stores?
I suspect many Western consumers would happily pay more for alternatives to "made in China" goods, if only they knew where to find them!
Maybe the West needs to learn from India, given how often India shows up when I search for stuff about boycotting China? Or perhaps Western governments need to encourage their corporations to make India (whose population now exceeds China's IIRC) into a "Factory of Democracy"?
Your government won't need to do anything other than not placing the same tariffs on India that they are placing on China.
Modi is already working on growing manufacturing.
He has been starting infrastructure projects like crazy for the last 10 years & doing reforms that directly affect the ease of doing business ( the two major things when you want to run a factory along with cheap labor).
But it takes a LOT of time, a couple of decades at least.
&
We won't be able to fill the whole gap (other growing economies can fill the rest) left by China cause manufacturing probably won't exceed 30% of India's GDP (China is at 40%) because of democracy which leads to rights for laborers & most importantly Modi's economic planners/advisors have already said that their plan for the future doesn't include too big of suppression of wages like China so we could switch to a consumption-led growth model when the investment-led model stops working (China has reached this point in the last decade, but they don't want to/can't transition) which means we won't be able to provide large subsidies (our prices of goods won't be as competitive as China when we reach this point).
But-
A couple of decades later, manufacturing becoming even 30% of the Indian GDP (in 2044 ~ $16T÷3.33= $5T ) would be considered a MAJOR success.
But a major geopolitical event in-between could change everything so nothing is 100% sure.
If I recall correctly, there was huge furor on reddit over the copyright extension provisions of the TPP, which were seen as an attempt to get ACTA in another form. I never hear about this when I read writeups on why TPP failed to be ratified, which is weird, because it seemed center of mind at the time. Am I overestimating the importance of the internet people?
I'm just here to object to the weird American neologism where factory workers are "middle class". Sorry, but apart from senior management you're not going to find many middle class jobs in a factory.
And that's fine, we have to stop pretending that everyone is, or needs to be, middle class.
Well, they were middle class in the 1950s, and skilled manufacturing workers whose skills are in demand (welders, for example) can still make good money.
Wasn't the middle-class status of US factory workers in the 1950s a temporary aberration, resulting from World War II ruining the rest of the industrialized world?
It certainly could have been! I don't know enough to say either way.
Welding is never a middle-class profession, no matter how much money you might make doing it. It's solidly, even canonically, working class. If factory workers are middle class then who the fuck isn't?
It's definitely an American thing to use "middle class" as if it covers everyone who has access to a toilet but not a private jet, but I'm pretty sure it's also a new American thing.
Those who aren't are the low rung of service work. The people cleaning houses and offices, cooking hamburgers, serving you cocktails, giving tender care to your Amazon package so that you get same day delivery etc. And yes, some factory jobs that still look more like "do one operation all the time", and pay accordingly
Definitions are made for man and not man for definitions, and if somebody consistently making more than median income, with benefits etc is not middle class, then nobody is really.
Samsung Predicts 10-fold Increase in Profits
https://www.marketwatch.com/story/samsung-predicts-10-fold-increase-in-profits-as-ai-boom-sees-chip-prices-recover-6a214259
https://www.politico.eu/article/the-netherlands-business-asml-technology-election-geert-wilders/
“The global chips industry is poised to almost double in size by 2030 with revenues passing the $1 trillion mark, consultancy McKinsey forecasts. As a unique supplier to this industry, there’s no doubt that ASML will grow too.”
Going forward, I think ASML will build new facilities in other countries with business-friendly governments. With chip production doubling in the next 5-6 years, it makes more sense to geographically diversify manufacturing and corporate training campuses.
This was a great read as usual. A couple of questions/comments. I've been looking into several startups/existing industries that are wanting to decarbonize. Green steel is on the move. So it makes sense. Aside from the paradigm of the fighting the Chinese juggernaut (I know you don't buy into it). Diversification is just good for business and the global economy. I'm surprised the US isn't looking more closely at Canada, Mexico and South America as a block for untapped potential. I entirely agree with strengthening ties, collaboration, partnerships, statecraft. Particularly, Vietnam, Indonesia, new Zealand, & Australia. With labor shortages still occurring and a shift in industrial/healthcare/service jobs the fear seems unwarranted. Actually it seems like a growth opportunity. A peons two cents. ;-D