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-_-_-_-_-  13d ago (noahpinion.blog)   1800 thread views

Noah Smith: Manufacturing is a war now

noahpinion.blog

Industrial policy has been a frequent subject on Smith's blog, for those who don't follow it. (He's for it, and thinks that Biden's industrial policy was mostly good - it's worth following the links in this post.) This post focuses on defense-related geopolitical industrial policy goals and pros and cons of anticipated changes under the incoming Trump administration and Chinese responses. Particularly, he highlights two major things China can do: Restrict exports of raw materials (recently announced) and use their own industrial policy to hamper the West's peacetime industrial policy (de facto policy of the last 30 years). These are not extraordinary insights, but it's a good primer on the current state of affairs and policies to pay attention to in the near-future.

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Why is China now the world capital of industry? Because we let them build up earlier as opposed to hammering them back when they were weak.

Or in other words, because American industry couldn’t compete with Chinese industry on an even footing. I’m open to tariffs and other things but the idea that America should pre-emptively destroy anyone who looks like they might be able to do better is not one that brings me joy.

What is an even footing?

China plays all kinds of games with its currency, industrial policy and so on. They have cards to play due to their privileged position in terms of size and talent pool. Since Deng Xiaoping they play the hand that they're dealt pretty well - not without mistakes of course but pretty well.

Western countries also have cards to play, we also have tariffs, industrial policy, currency manipulation and a privileged position in terms of a pre-built capital base and advanced technology. China was spending 1% of GDP on their military for many years as they focused purely on building up economically, that would've been a great time to impose military pressure.

If we don't play our cards, how can we expect to win? If we play our cards too late, how can we expect to win? Do we want to face weak enemies or strong enemies? Do we expect our enemies to show us the same level of mercy that we show them, if they have the upper hand?

Let's not forget that China has been a ruthless one-party state the entire time. The reformists got crushed in '89. They had a Taiwan Straits Crisis in the mid 90s. It really takes a world-historically stupid elite class to stay deluded about Chinese ambitions until the mid-2010s.

I’m fine with tariffs or industrial policy. Those strike me as ‘fair’ cards to play, preserving and/or improving your own industry. (I don’t approve of China’s dumping either fwiw).

What I don’t like is the idea that America should economically and/or militarily destroy anyone who might ever become its peer. I am not interested in living under a tyrant to protect me from living under a tyrant.

At this rate we're going to be living under a tyranny that fails to protect us from living under a tyrant.

But look back over US history. You guys stomped the Native Americans, conquered much of Mexico, ripped various colonies off Spain because you could, mandated that an entire hemisphere was yours alone to dominate. You took steps to crush Germany and Japan before they could even potentially threaten you (defanging Britain and France along the way). You then fought a fifty-year campaign to contain and eventually eliminate the Soviet Union. That ignores all the little wars, going in on Panama and Grenada, all the regime changes around the world, Operation Gladio, Iraq of all places...

The history of the last two hundred years is dominated by the US destroying real or imagined threats, wherever they are. Why stop when you face by far the biggest threat? For the first time in US history, you're up against someone as big, or even bigger than you guys. There won't be any allies that can do much of the heavy lifting this time, it's down to you. This is the final boss and it requires full commitment.

Do remember that a lot of Chinese industry uses semi-slave labour and that there's substantial government support - Smith actually mentions the latter in the linked article.

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