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What-username-999's avatar

I’m all for reshoring and a strong industrial policy. Comparative advantage only makes sense in a perfect world. We don’t live there, so it’s best to leave simplistic models behind.

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DxS's avatar
Jan 25Edited

These reindustrialization successes almost look too easy. At this rate, focused tariffs might be outright profitable. You just have to assume there are positive externalities to new business clusters in your country. Spillover benefits in new industries seem real enough - just look at Silicon Valley.

It's the same logic as the old "Dutch disease" or "resource curse", except America's distorting resource export isn't oil but Treasury bonds.

I think Michael Pettis' reasoning makes a lot more sense when you think about how resource exporters often underperform, and then apply the same logic to American exports of sovereign bonds.

We've been deindustrializing ourselves as a favor to China and the other surplus countries' employment policies. It's time to start growing our own industries again.

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