Comment by pavon

Comment by pavon 2 days ago

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Do you have a source for this? In the past when I've been told this, the statistics referenced where based on whether a company was classified as being in in the manufacturing sector, not based on which jobs were classified as manufacturing. This included companies that were classified that way due to historical inertia, or based on their global industry but actually had little to no manufacturing in the US. Based on that I have a hard time knowing what to believe, and would love to be pointed to more accurate information.

parhamn 2 days ago

If you go by manufacturing jobs, BLS seems to have the data going back to 1939. Peaks at 18.4m jobs in 1969. Currently at about 12.9m.

N.B. the current U.S. population is 1.6x the population of 1969.

https://data.bls.gov/timeseries/CES3000000001

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  • macleginn 2 days ago

    Average productivity per manufacturing worker in the US grew on average by 3% per year in the 1950–1980s and 4% per year in 1990s (https://www.bls.gov/opub/mlr/2002/06/art4full.pdf), i.e. its current output is comparable with that of ~50m people working in 1969, so a 30% decrease in total manufacturing employment was probably well compensated for (putting aside the social welfare point of view).

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eitally 2 days ago

There's a vibrant high-tech contract manufacturing segment of the economy, led by behemoths like Foxconn and several other Asian players who specialize in consumer electronics & computing gear (Compal, Pegatron, Quanta, etc). That doesn't mean manufacturing doesn't exist in the US, though, and there are still very large EMS firms with significant presence domestically, like Jabil, Flex, Celestica, Sanmina, and plenty of others. The difference between now and 25 years ago is that it hasn't been cost effective to manufacture high volume, low complexity electronics in the US for a full generation. But, the majoarity of high complexity, low volume (NPI, very large PCBs, PCBs with many complex layers) stuff is still made in the west, and there will always be meaningful demand for high tech manufacturing in regulated industries (defense, medical), too. For example, CGMs are made in Alabama & Ireland, avionics for Apache helicopters are made in Alabama, data center server racks for Meta are assembled in Finland, Germany & San Jose. Same for Netflix CDN racks.

It goes on and on. The majority of what has been outsourced to China (and Taiwan and Singapore and India and Vietnam) is the "face" of high tech electronics, and the majority of electronic piece parts components, but not final assembly and not much of the tricky stuff. I don't think we'll see a quick ramp of high-vol/low-mix mfg coming back anytime soon because too much of the supply chain is in Asia, but it could if there were sufficient demand.

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  • MichaelZuo 2 days ago

    How does this square with 5G radios being almost entirely made in Asia? As in the entire chain from antenna design to finished chip happens >90% in Asia by dollar value.

    None of the things you mentioned come even close in terms of complexity, on a per cubic volume basis at least.

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speleding 2 days ago

> Do you have a source for this?

There are reams of economic literature trying to estimate whether government intervention in the market was a good idea. Most of the time it doesn't turn out great. So the parent's suggestion "probably won't be a win for economic output" is a pretty safe bet.

Often governments will use "security" as an argument to keep steel, shipbuilding, etc, in the country. That argument is not really possible to evaluate on economic grounds.

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  • testrun 2 days ago

    A few counter examples:

    1. TSMC (supported by the ROC government[https://dominotheory.com/tsmc-and-taiwans-government-two-boa...])

    2. Korean chaebols (Samsung, Hyundai, LG etc, supported by ROK government[https://www.investopedia.com/terms/c/chaebol-structure.asp])

    3. Japanese heavy industries (Japanese government support)

    The government support are a combination of low interest loans, import controls and financial subsidies.

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    • eru 2 days ago

      That the favoured industry (or company) is doing well isn't necessarily a sign that the policy is overall good for the country's economy.

      As an analogy: weapons manufacturers do well when there's a war on, too, but that doesn't mean war is good for prosperity.

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      • smallnamespace 2 days ago

        > That the favoured industry (or company) is doing well isn't necessarily a sign that the policy is overall good for the country's economy.

        You are answering specifics with generalities.

        If Taiwan didn't support and nurture TSMC so that today it's a national champion that prints money, what development path do you think they could have taken that would've brought at least the same economic success? Please be specific.

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    • throw0101a 2 days ago

      > The government support are a combination of low interest loans, import controls and financial subsidies.

      There is a very well-understood formula on how to go for from an agrarian society to an industrial one, which has been used going back to the late 1800s:

      * https://www.goodreads.com/book/show/16144575-how-asia-works

      Of course you have to actually follow it, and not get sidetracked with cronyism and such, like the Philippines did:

      * https://en.wikipedia.org/wiki/Crony_capitalism

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      • eru 2 days ago

        'How Asia Works' is not exactly economic orthodoxy, to put it lightly.

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  • woodruffw 2 days ago

    Does “government intervention” include subsidies and R&D, in your account? I can think of more than a few industry segments (aerospace, biotech, etc.) that likely wouldn’t exist or be nearly as lucrative as they currently are without the extensive government intervention that helped build them.

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    • throw0101a 2 days ago

      > I can think of more than a few industry segments (aerospace, biotech, etc.) that likely wouldn’t exist or be nearly as lucrative as they currently are without the extensive government intervention that helped build them.

      This is the central thesis of Mazzucato:

      * https://en.wikipedia.org/wiki/The_Entrepreneurial_State

      Has an entire chapter on the iPhone and its technologies (GPS, touch screens, Siri, etc), which would be applicable to most smartphones.

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    • cogman10 2 days ago

      And continues to make. The NHS, for example, is a major source of funding for research into new drugs and treatments. mRNA vaccines came from decades of NHS funded research that the manufacturers are just now picking up and running with.

      It should also be pointed out that economic goodness is not and should not be the be-all end-all reason for government spending. Governments building parks, for example, is a social good with little economic value (or at very least hard to quantify benefits).

      In the case of things like medicine, government spending there has a social good of limiting communicable disease which is more important than how much money a drug company can make off a drug.

      For something like TSMC putting plants in the US, even if it's somewhat economically disadvantageous we are still talking about bringing onshore more jobs and training for US citizens which will generally increase our capabilities here and the satisfaction of those employees.

      Trying to get onshore development of electronics, the government basically has 2 levers to pull, either subsidizing building new manufacturing or applying tariffs to incoming tech goods. One of those levers has the negative consequence of raising prices on tech goods for everyone while we wait for manufacturing to build out.

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      • lostlogin 2 days ago

        > the government basically has 2 levers to pull

        That’s simplistic and assumes a baseline where the relationship with the government starts at zero.

        The company pays taxes. There can be negotiations over the tax rate, which is not a subsidy so much as a ‘tax you less’ type arrangement. This can happen at multiple levels for a company like Apple, even beyond the state/federal thing. The repatriation of billions of dollars of earnings is also in play.

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        • cogman10 2 days ago

          TSMC doesn't pay taxes to the US government (at least, not significant taxes until recently). And that's what we are trying to onshore, the fabrication capabilities.

          We could try and incentivize a company like Apple to fabricate in the US, but the simple fact is that (until recently with the new TSMC fabs) we did not have the fabrication capabilities in the US needed to make apple silicon. Apple does not have the capabilities to make these fabs either.

          You can cut taxes to 0 for US fabrication plants, but there are simple overhead costs that are hard to get away from. That's why an actual subsidy is needed.

          I mean, you could exempt fabrication plants from employment and environmental laws to allow them to operate cheaper... but that's sort of monstrous.

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      • trashtester 2 days ago

        The main reason for TSMC to build plants in the US is as a hedge against a Chinese invasion of Taiwan.

        That outweighs anything like jobs or economic efficiency (given no such war) by a couple of orders of magnitude.

        And this really applies whether or not the US would join the war on Taiwan's side. TSMC production would be likely to be shut down for 5-10 years, regardless.

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      • eru 2 days ago

        > For something like TSMC putting plants in the US, even if it's somewhat economically disadvantageous we are still talking about bringing onshore more jobs and training for US citizens which will generally increase our capabilities here and the satisfaction of those employees.

        And completely ignores customers.

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    • eonwe a day ago

      Out of the examples, aerospace engineering was helped by many government interventions such as war-time buying and development of titanium working.

      On the other hand, it's also hindered by government regulations making all new development much more expensive than what it could be.

      I'd think all the industry segments would exist as the do provide clear benefits to everyone but the development paths taken could be different from what they're now.

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    • Someone 2 days ago

      > I can think of more than a few industry segments (aerospace, biotech, etc.) that likely wouldn’t exist or be nearly as lucrative as they currently are without the extensive government intervention that helped build them.

      Likely, yes, but even if they are, it’s impossible to say whether that’s a net win for society. Possibly, if the government hadn’t subsidized them, but instead had had lower taxation, other industry segments would have blossomed, and gotten better benefits for society.

      As an example, US government support for the Internet may have led to larger automation, making labor relatively more expensive, and because of that decreasing the size of the middle class. Opinions will differ on whether that’s a net positive.

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      • woodruffw 2 days ago

        I think there’s too many layers of counterfactuals here: much of the government’s economic intervention stems from a (perceived) need that transcends ordinary economic concerns. Think wars, epidemics, famines, etc.

        In other words, I think we’d need to presume the absence of those concerns to intelligibly consider the absence of taxation-funded interventions. And that’s more of a minarchst fever dream than a thing that could actually happen.

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        • mlyle 2 days ago

          Sure. Maybe the market will provide food security in 98% of years on its own, but we need more 9's. And we obviously need our government to be coercive enough to protect us from outside, less benevolent, forms of coercion.

          At the same time, this isn't a "yes/no" question. This is thousands of sliders that we adjust for each industry.

          You always have to consider the opportunity cost. Sure, perhaps we've ended greater security and have also ended up with vibrant industry A at the end of it; but we maybe had to pay by hurting industries B, C, and D. It might be worth it; but it doesn't mean it makes sense to do it for industry Z where there is a smaller security benefit.

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    • eru 2 days ago

      And that's not necessarily a good thing.

      All those subsidies had to come out of some tax payers pocket, and they could have spent it on something more worthwhile (to them!).

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      • woodruffw 2 days ago

        A lot of people would prefer to pay no taxes, but that’s presumably not your point. Per-dollar, I think the average American taxpayer is probably very happy with the government’s investment in, for example, the Heavy Press Program (= modern airplane airframes) and resilient packet switched networking (= the Internet).

        Or more directly: it’s hard to even imagine a contemporary national or international industry without the economic interventions that produced those things.

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  • consteval 2 days ago

    > Most of the time it doesn't turn out great.

    I don't know why people say this. The reason China beat us out in manufacturing of many goods is BECAUSE of government interference. They have a much more top-down leadership style that allows these gains in efficiency. They've streamlined.

    But even looking at the US' history this hasn't been the case. The only reason we got out of the Great Depression was because of the most radical government-backed economic policy ever: The New Deal. Even today HUGE sectors of our economy, like defense, are paid for on government money. Those are jobs, companies, entire industries.

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    • chrisdhoover 2 days ago

      There is debate about the new deal. Its not clear it was a success.

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      • consteval 2 days ago

        There really, truly, isn't. Classical economists can't handle being wrong, but given an alternative reality did not happen, it was a success.

        We can speculate and play armchair economist all day. But the hard reality is that the New Deal revitalized the economy and created countless jobs to pull the US out of the Depression. Maybe a "do nothing" approach would've worked too, eventually. When I unlock the secrets to interdimensional travel, I'll let you know.

        Armchair economists set up an argumentative scenario where they cannot be wrong. You see, if they're wrong about a situation then secretly they're right, because if you did what they suggested instead it would've worked too (and better!). But if they happen to be right then of course they're right, and countering suggestions are obviously wrong and would've caught the economy on fire.

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  • CPLX 2 days ago

    > There are reams of economic literature trying to estimate whether government intervention in the market was a good idea. Most of the time it doesn't turn out great.

    These sentences are just propaganda. There’s no factual basis for them.

    There are no markets without government intervention. Statements like this are more like religious incantations than appeals to “research” of some kind.

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    • kloop 2 days ago

      > There are no markets without government intervention.

      Of course there are. Black markets pop up everywhere to route around government intervention

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      • chrisdhoover 2 days ago

        Yes they do. Consider weed. It was well established before being legalized. Legalization brought higher taxes and interference. The black market continues as an alternative to the free one.

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      • CPLX 2 days ago

        For obvious reasons a market for a product that is banned by the government is a poor example of a market that exists "without government intervention"

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    • eru 2 days ago

      > There are no markets without government intervention.

      David Friedmann (and others) would like to object, I am sure. See eg http://daviddfriedman.com/Legal%20Systems/LegalSystemsConten... for how many legal systems work without (or despite!) government intervention.

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      • mlyle 2 days ago

        Functional markets require a strong mechanism for protection of property rights. The fact that we have some historical systems where that has taken a different form than a conventional government doesn't negate that the only practical mechanism that we have to protect property rights and support markets is a government.

        Ancap fantasies aside, of course.

        And then, there's lots of situations where externalities exist. If I poop in the river and you're downstream, it costs me nothing; I have no reason to stop.

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        • eru 2 days ago

          > Functional markets require a strong mechanism for protection of property rights. The fact that we have some historical systems where that has taken a different form than a conventional government doesn't negate that the only practical mechanism that we have to protect property rights and support markets is a government.

          Even if we grant that argument, that's at most an argument in favour of a minimalist nightwatchmen state. Not the full blown Leviathan.

          > And then, there's lots of situations where externalities exist. If I poop in the river and you're downstream, it costs me nothing; I have no reason to stop.

          See https://en.wikipedia.org/wiki/Coase_theorem

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    • robertlagrant 2 days ago

      > There are no markets without government intervention

      What does this mean?

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      • dbspin 2 days ago

        It means that markets rely on the rule of law. From monopoly regulation to the prohibition on outright theft, markets literally cannot exist without governance.

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      • bottled_poe 2 days ago

        Someone must police the rules of the market I suppose? Also, a truly free market benefits those who own the market, no?

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  • corimaith 2 days ago

    Well I do think the security argument does stand, you don't want to outsource navy carrier construction to China for example. Just don't expect a thriving economy to be built around it.

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  • lostlogin 2 days ago

    > to estimate whether government intervention in the market was a good idea. Most of the time it doesn't turn out great.

    Is this really accurate? Most places regulate, surely there is a reason for that? It works pretty well compared to the infamous ‘self regulation’.

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  • edgyquant 2 days ago

    Yet the most successful nations on the planet go against this economic wisdom and do subsidize industries they deem important and/or protect them with tariffs. The US did this until the 1960s. China does this now.

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  • zztop44 2 days ago

    I have no idea what you could mean by this unless you have a very specific personal definition of “government intervention in the market”.

    The literature makes it clear that government intervention in markets is broadly necessary; the disagreement is around the how and what and why.

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    • speleding 2 days ago

      Sorry, I should have picked a clearer term. There is broad agreement among economists that _regulating_ markets is needed to have an optimal outcome for society. I was referring to government subsidies specifically, in that case the distortion is rarely beneficial. Especially when taking into account that the money could have been applied elsewhere with bigger gains to society.

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  • Spooky23 2 days ago

    There’s a lot of navel gazing around these sorts of analyses. Consider that the entirety of the tech industry exists in its current form due to federal spending.

    The Silicon Valley story is well known; the SAGE project really created the classic IBM.

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    • criddell 2 days ago

      One of the greatest examples is the DARPA VLSI project of the late 70's and 80's. The ROI of that program is crazy.

      If you are interested in this time, I 100% recommend the book The Dream Machine which is centered on J.C.R. Licklider but covers most of the people and projects that lead to personal computers. Stripe Press has a beautiful hardcover version of the book, but the font is tiny. I had to switch to an ereader version in order to read it.

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