23 Comments

Chris Anderson was the editor of Wired (after me). He later quit Wired to run his emerging drone business when drones were just a do-it-yourself hobby space. Once he got his 3DR company up funded and running, for a brief moment the US *was* the leading drone company in the world. Then DJI came along and ate his lunch. Now Chris runs Kittyhawk the person-sized drone (flying car) company. You should interview him about the reality and possibilities of the US regaining a lead in drones. -- KK

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Good idea!

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I’ve long thought that Los Angeles should try to position itself as a leader in drone development. It has a historic aerospace industry (partly due to weather), and it also has a weird quirk of city policy that, from about 1970 to 2010 required all buildings over 75 feet tall to have a helipad on the roof for fire safety but which could serve as a built-in supply of takeoff/landing sites for crosstown delivery operations.

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Yeah!!

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I'd love to see you do an interview with Adam Bry of Skydio! Happy to connect you.

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Oh boy that would be awesome! Please do!!

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To what extent is environmental regulation and permitting an obstacle to a domestic mineral refining industry? It seems like the sort of possibly dirty thing for which NEPA etc would be a particular barrier, but I don't know enough about the processes involved to know how big a deal that is.

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Environmental regulation is tighter in the US than China, but the US has lots of miner friendly laws on the books. The real problem has been the existence of supplies elsewhere and the lack of a local market. Why would anyone build a lithium mine when there was plenty of lithium already being mined and by miners who were amortizing their capital rather than spending it? Why when there was no nearby market for it?

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My understanding is that Skydio is primarily designed for industry/commercial use even after coming out of the gate as the only affordable autonomous consumer drone for outdoor adventurers. It is a better autonomous product than DJI. But your larger point remains and I would add channels for young engineers to focus on software rather than hardware (what percent of Y Combinator winners are in the drone or battery space? I'm guessing minuscule but I could be wrong) is part of the problem.

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If a nation wants to become independent from its enemy in production of key components the government of the nation has to lead the way providing the environment and incentives to achieve it.

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Hey Noah what do think about the prospect of producing critical battery materials from domestic resources, like brine and clay deposits in Nevada?

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Endorse! We just have to get past the NIMBYs

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You'd think that some of the places that historically were centers of stuff like steel refining would be interested in getting their material refining businesses back... And there are lots of mid-size cities, with some manufacturing history, in states that have a ton of wide-open spaces, that could be good places to start up these kinds of industrial businesses.

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Those steel refineries were located near the coal and iron ore. Detroit became the motor city because it was an easy barge ride from those refiners.

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Yeah

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Battery metal refining / mining seems ripe for Republican wheelhouse - chance for some West Virginia refineries that Repub House champions?? Anti-China/Pro-Mining, what the hell could be better?

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Usually, you want to do the refining near the mining. I don't think that West Virginia has the ore. Another problem with the metal refining is that it doesn't employ all that many people. Mining is a business done by machines. Once the ore is refined, things can get interesting. Processing and manufacturing might be heavily automated, but there are lots of opportunities for brain power to come doing research and development. A collection of companies with a good supply of materials and some government driven direction can build an area economically. This works best if there is already a university there to provide brain workers.

That's how a place like Cambridge, MA works today as a biotech hot house. It's also how parts of the Midwest worked. Army procurement was in Dayton, OH. It provided a customer for all sorts of innovative products ranging from ball bearings to rubber raincoats. Iron ore and coal were mined and processed nearby. There was no university back then, but the technologies were simpler to understand. K-8 and some on the job training were good enough.

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Dear Noah Smith great article and it seems where political economy issues are going between US and China, your article and its recommendation takes the central stage. However, I would like to present a development economics concept. First, the rule is that industries can be protected and subsidized based on strategy as it happens in utilities. Today Paul Krugman has written a great article contextualizing price controls based on war economy, and I agree with him, and he agrees with himself for being a free market neo classical economist of exceptional class. IN your earlier article you have quite made it clear that we are entering a new global order where competition and cooperation would based on political ideology and that as an economist I thought was a bygone approach since its been decades that US and Europe allowed China to build its commercial and technological clusters by not protecting their industrial sectors and served the consumers in US and EU with best price deals. Well world is a big place for more than 6 billion people and half of them are poor despite many developing countries practicing democracies for example in India and Pakistan. Through SDGs and that I accept that progress is lukeworm at best, the economic circumstances of the poor are to raised by 2030 so that we should be saying that at least another 3 billion people would be consuming all the consumer products with the share of American technologies doing business with the new middle class further increasing. Similarly countries are asked to be assisted to develop indigenous markets and business clusters with the process of learning by doing. For example imagine that as US companies outsourced to China and India, they would to countries like Pakistan and the government there would atleast perform as Good as the Chinese government to take best benefit and demoractic Pakistan witness growth rates higher than 6 percent and phenomenal increase in middle class. Same work is being done in African region. Thus SDGs have provided the framework for future human progress. But to achieve it, now that the ideology seems to matter and both Russia and China proving that economic prosperity doesn't necessary bring political and democratic empowerment to the people that is fundamental to take benefit from economic prosperity, developing countries in Asia like Pakistan and in Africa need to take sides with the most progressive tools of human and material development and it seems democracy is central to it. Thereby, when as how you present the roadmap for indigenous industrial landscape for the US, the friendly countries would be the countries like Pakistan where the power should be delegated to the people and it is also important then to test how the values within these developing countries coincide with the modern and secular values. Yes friends need to believe in common values and there is a lot of potential for countries like Pakistan. But the best is if China and Russia would also embrace the democratic values or show more patience towards competition within economics and do not manipulate it with ideology and all work under the umbrella of United Nations to sincerely work to achieve SDGs by 2030. At least that is the principled stand I am working on through my writings and teaching in university when ever I get a chance.

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That's definitely the message that the leaders of Russia and China will continue to advocate to developing countries with leaders that hold anti-Western sentiments. Pakistan will need to make a choice. It appears India hasn't and won't. I'd wager the links between the US and Pakistani militaries should lead to continued US support provided Imran Khan doesn't stage a comeback.

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What about tariffs?

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As various technologies go, drones are pretty straightforward to design, and manufacture. Much of the silicon smarts in many drones already comes from the U.S. Motors, batteries, plastic parts, etc are manufactured cheap in China, that's why they are the leader. But it is not a difficult technology to master. I'm not sure I would lose sleep at night wondering if we need industrial policy for drones.

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Noah makes good points about the outcomes if we move production of most/all key components in war to our economy. Sure, it worked well for many nations over millennia to have more battle ready war capital and ongoing war production. But there is the constant risk of a war based industrial policy to be inherently corrupt by many standards but a key component of not just autocratic regimes as seen in Kalecki's work, but the more common military-industrial complex mentioned by an outgoing president who oversaw the great application of industry to win WWII in western Europe. An interesting anecdote on the local sourced or sourced from an ally is the new standard US infantry weapons (XM5 XM250) which are designs from the USA equity owned company formed from parts of a long standing Swiss and German military industrial company merger. Sig-Sauer has committed to a supply rate, and a US manufacturing supply rate, that will require for some time manufacturing from our allies for parts of delivered weapons systems. At least to date the optics for the new weapons are coming from a US company (Vortex) that has previously done all its manufacturing in China. This is where the economic impact of political decisions are substantial for "connected" entities in the defense space (see again Kalecki and Eisenhower). There is no simple resolution to the arms dilemma. The value of a weapon is proportional to the inverse of knowledge the opponent has about said weapon. HIMARS are a classic example, unit mobility reducing the ability of the opponent to have knowledge of current location. I would like to see an inventory of required chips for all current and pending weapons systems and future production ranges for required chips. Weapons often/usually use older simpler chips because they provide documented reliability.

But ultimately it is nearly impossible to decouple politics, choosing winners and losers, with industrial policy choices. To me that is the Achilies Heel of industrial policy. Who decides?

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