No. of Recommendations: 12
And how did that work out? We've literally been feeding the dragon with money for 30 years or so now.
It's worked out pretty well, actually. As I pointed out, China's economy has become deeply dependent on its trade with the rest of the world. Which in no small part has contributed to China almost entirely refraining from military belligerence over the last 30-35 years. Unlike most of our other national security threats over the decades (Iraq, Iran, Libya, Russia, Afghanistan, etc. - to say nothing of various failed states and internal conflicts like Bosnia-Herzegovina), China has remained domestically stable and engaged in almost no direct military conflicts. Exactly what you want in a major military and nuclear power - to avoid military adventuring and compete economically and diplomatically.
Meanwhile, like most national governments, the Chinese federal government maintains a sizable debt - about $13 trillion (or 74% of GDP) officially on the books. Estimates are that they've got another $6 trillion off the books, which would put their debt load very close to that of the U.S. The dragon is not especially well-fed.
Or...you provide incentives to source things domestically, which is...what the tariffs are about.
And the mineral deal with the Ukraine, btw.
Neither of which is at all large enough to be fit for purpose. Oh, sure, the 145% tariffs on China and the 40-50% for nearly everyone else in the world would have had a major impact, but that's not what we're actually going to do, since it would impoverish us immensely. Tariffs aren't going to drive the free market bring back the type of manufacturing sufficient to make us self-sufficient in "critical goods" like you are advocating. To do that, you need to get closer to the state-run centrally-planned economy of China. "Capitalism with Sanders characteristics" - a dominating industrial policy that can force the reallocation of capital in this U.S. into industries and fields that there is no market reason to invest in.
The Ukraine mineral deal is a nothingburger - at least strategically. There's a reason why the Ukraine had a relatively modest mining and minerals industry before the Russian invasion - it's got some reserves, but the country isn't especially well-suited for them to be extracted, processed, and transported. The Ukraine deal just means that the U.S. will get it's beak wetter if that extraction and processing ever starts picking up again, but we always could have invested in Ukraine at arms-length terms for those minerals to get brought to market.
It's a bit more complicated than that. Somebody who works in a textile mill isn't going to go down the street and suddenly invent a new manufacturing process.
Not the line workers, no - but that's looking at the wrong population at the wrong level. There's a limited number of people in the U.S. who are in the business of working on new manufacturing processes and other projects that require very advanced and capable design skills. If you're trying to bring textiles back to the U.S., you're going to need some of those people to go into that industry in order to come up with a way to make textile manufacturing work with $20 per hour labor. That's going to be a fiendishly difficult and complicated task, and it will take a lot of good minds working very hard to make it happen. We'd be much better off if those very good minds are working on solving other problems, rather than trying to get apparel plants to make sense in the U.S.
Interesting...because this is what the CHIPs Act and the "Inflation Reduction Act" were all about. So were those bad things?
Not if trying to reshore certain industrial operations to the U.S. is a goal, no. But that's the point - the GOP heavily criticized both the CHIPs Act and the IRA, because it that type of industrial policy is anathema to the (sizable) free market wing of the party. And you'd have to 10x or 100x those measures in order to get close to the scale of government intervention in the economy necessary to get private parties to start reallocating their capital into building the type of manufacturing clusters you see in China. You can't replicate - or compete with - something like Shenzhen with just some tariffs or modest tax incentives. You would need the federal government replicating something like the New Deal level of stepping in. And there's no appetite in the GOP, even among the China hawks, for anything like that.
