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The US is building factories at a wildly fast rate
(www.businessinsider.com)
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this post was submitted on 06 Jul 2023
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it's good in the short term but realistically this news is a canary in the coal mine moment
we are decoupling our economies from the global system - increasing the chances for cold and/or hot war
The US is not decoupling from the global system, they're just lessening their dependence on their adversaries and countries vulnerable to their adversaries for key sectors. The US can only stay prosperous if they remain a central player in the global economy and they know it.
Imagine you're Farmer Bob in a temperate region great for growing apples and I'm Farmer Fred in a tropical area ideal for bananas. We each like bananas and apples, so tried growing both fruits, each of us harvesting 12 of our specialty and 6 of the other, making a total output of 36 fruits.
But then, we learned about the power of trade. We focused on what our lands did best: I harvested 24 bananas, you 24 apples. We swapped half our produce, and like magic - We both had 12 bananas and 12 apples each, totaling 48 fruits, a 25% increase just from trade.
But what if we stopped trading due to trust issues? We'd revert to the less efficient system, losing out on the additional produce.
Now, think of this on a global scale. When countries specialize and trade, we all gain. But as governments decouple from global trade, they're choosing to lose these benefits, making economies less efficient. It's a dangerous path where everyone ends up poorer.
And for our governments to deliberately choose a path that makes us all poorer - that means there's an unchecked growing tension. It's almost palpable. We're already living through a Gilded Age nearly a century after the last one... what happened after the Gilded Age?
Call me a doomer but this is alarming news, even if understandable from a national security perspective
Yep. This is exactly what they teach in Econ classes along with the idea that by being economically entangled no country will want to behave badly because it will ultimately hurt them (so it will help keep peace and avoid wars).
Unfortunately they gloss over some key parts of reality. First is that this is all “long term” change. Until that point, however, there are going to be lots producers that will have huge losses in the interim as their businesses are offshored. Some people might win, but that’s not much of a consolation to everyone who’s now jobless.
Second is it’s important from a national security perspective to be self sufficient - or at least have to capability to be self sufficient without major disruptions. Unlike the examples in Econ classes, we’re not just talking about apples and bananas. We’re talking about things like semiconductors, rare earth metals, etc. If we have to get into a conflict with another country, we’ll be screwed if we’re dependent on that other country for key inputs.
Which brings us to #3 - economic entanglement hasn’t prevented countries from behaving badly. It’s actually done the opposite by enabling bad actors to behave badly. Look at China & Russia. China has been committing genocide against the Uighurs and we should have cut them off until they stopped, but we can’t because we’re dependent on them for so many products. It’s a similar situation with Taiwan - we tiptoe around the issue of them taking over the island because we need them financially. And the EU was hesitant to go up against Russia because of their dependence on their natural gas exports.
While ideally a rising tide lifts all boats, we’re seeing that it’s not exactly playing out that way - partly because the “assumptions” Econ professors talk about miss key points of human nature. The primary one is that people will act in a way to maximize wealth. But that’s not true. Power and social status can be much bigger motivators than cash - especially when you already have enough cash to live an extravagant lifestyle (like Pooh and Putin).