One tension I’m curious to see unpacked further is whether uncertainty should always bias toward restraint. If some forms of productive capacity and know-how are slow to build and fast to lose, and if competitors are actively shaping ecosystems in that gray zone between t-shirts and magnets, then hesitation itself becomes a strategic choice rather than a neutral default. How to think about selective, probabilistic bets under those conditions seems like an open, and important question.
This is a silly analysis of a serious subject. The issue is not whether you should manufacture socks or bombs. The real issue is: do you want to have a workforce that is skilled at the disciplines of real world manufacturing, or do we want to have a workforce that cranks out stupid financial instruments and ways to sell debt? Since the 1980s, the US has been focusing on the latter to an increasing extent, with obvious results that we see all around us.
Manufacturing is not just deciding what you want to make. It's a whole field of interlocking disciplines and skills, that you eventually have on tap for future deployment as needed. The US's performance in World War II is a famous and well-worn example. A country already filled with machinists, tool and die makers, welders, and mechanical engineers is a very valuable and versatile thing to have on tap when needed. The issue was not specifically what people were making before World War II came along. The issue was that the entire economy was set up with the skills and processes needed to design, build, manufacture, and ship physical objects.
That's the state of affairs that we need to recreate in the US. The specific applications will become obvious when needed.
In a naval war, the US would be unable to replace destroyed ships (or even repair badly damaged ones) because it lacks the shipyard capacity, and the skilled labour. It can't even replace the ships it has in the current navy, which is why so many ships are decrepit, and the logistics arm of the navy has almost completely disappeared.
The same is not true of China.
Also, a significant chunk of the US parts for the US military come from China. Which would make a sustained war with China very interesting.
I work in silicon valley and an industrial tech startup. The majority of our employees are from Anduril, SpaceX, Tesla. A lot of silicon valley's narrative is "we must reshore ... american dynamism", but Chris' point on industrial policy is well-taken.
I appreciated 2 ideas you brought up
- Apple despite outsourcing a majority of its manufacturing to China is still a multi-trillion dollar company
- The idea that manufacturing is important for geopolitical influence, but is it worth the cost? There are real tradeoffs if we decide to invest resources into building back our industrial base.
Here's a thought experiment ... what if today we had China's industrial ecosystem and might (what if we had DJI, BYD, all their robotics companies), but we had to tradeoff our internet giants. I.e. We no longer have Google, Apple, Facebook. In other words, are we willing to swap places? It's naive to imagine that the US could dominate everything forever.
I'm not sure everyone would be happy with this position.
So you're right in asking the question : "what is the correct tradeoff?" Investing in industrial policy will probably make us poorer in the near-term, but 0 investment is probably the wrong answer. 100% investment is also the wrong answer. What is the right level of investment and what are our concrete goals?
Thank you for bringing these ideas to life ; i've been digging into industrial policy and reading China talk / Chris Miller's writing I feel like all of you are asking the right questions.
Anduril is a Potemkin defense company, so I'm not sure why anyone should care what they think on the subject. That they're taken seriously says a lot about where the US is right now.
The US cannot build its planes, or missiles, without Chinese chips and sensors. The US cannot replace its current (rapidly aging) naval fleet, due to a lack of shipyards and skilled labour. Those submarines you want in order to defend Taiwan. Can't be built. Those missiles - the US can't build enough to sustain Ukraine's fight against Russia (which has seriously depleted US stocks). Turns out that the US can no longer build shells for a sustained war, and nobody is quite sure how to restart that (given that the skills and factories required no longer exist in the US).
Maybe there's a larger point to be made about the necessity of manufacturing (though I think you overestimate how much the US has benefitted from controlling the global finance/trading system after world war 2), though the market value of US IT companies has more to do with an extremely frothy stock market in the US, which long ago shed any lingering relationship it had with the real economy.
Just a note to anyone else, this version is cut off compared to the full article on Chris’s substack. Apologies if that was stated somewhere, but I didn’t notice it at first.
One tension I’m curious to see unpacked further is whether uncertainty should always bias toward restraint. If some forms of productive capacity and know-how are slow to build and fast to lose, and if competitors are actively shaping ecosystems in that gray zone between t-shirts and magnets, then hesitation itself becomes a strategic choice rather than a neutral default. How to think about selective, probabilistic bets under those conditions seems like an open, and important question.
This is a silly analysis of a serious subject. The issue is not whether you should manufacture socks or bombs. The real issue is: do you want to have a workforce that is skilled at the disciplines of real world manufacturing, or do we want to have a workforce that cranks out stupid financial instruments and ways to sell debt? Since the 1980s, the US has been focusing on the latter to an increasing extent, with obvious results that we see all around us.
Manufacturing is not just deciding what you want to make. It's a whole field of interlocking disciplines and skills, that you eventually have on tap for future deployment as needed. The US's performance in World War II is a famous and well-worn example. A country already filled with machinists, tool and die makers, welders, and mechanical engineers is a very valuable and versatile thing to have on tap when needed. The issue was not specifically what people were making before World War II came along. The issue was that the entire economy was set up with the skills and processes needed to design, build, manufacture, and ship physical objects.
That's the state of affairs that we need to recreate in the US. The specific applications will become obvious when needed.
In a naval war, the US would be unable to replace destroyed ships (or even repair badly damaged ones) because it lacks the shipyard capacity, and the skilled labour. It can't even replace the ships it has in the current navy, which is why so many ships are decrepit, and the logistics arm of the navy has almost completely disappeared.
The same is not true of China.
Also, a significant chunk of the US parts for the US military come from China. Which would make a sustained war with China very interesting.
I work in silicon valley and an industrial tech startup. The majority of our employees are from Anduril, SpaceX, Tesla. A lot of silicon valley's narrative is "we must reshore ... american dynamism", but Chris' point on industrial policy is well-taken.
I appreciated 2 ideas you brought up
- Apple despite outsourcing a majority of its manufacturing to China is still a multi-trillion dollar company
- The idea that manufacturing is important for geopolitical influence, but is it worth the cost? There are real tradeoffs if we decide to invest resources into building back our industrial base.
Here's a thought experiment ... what if today we had China's industrial ecosystem and might (what if we had DJI, BYD, all their robotics companies), but we had to tradeoff our internet giants. I.e. We no longer have Google, Apple, Facebook. In other words, are we willing to swap places? It's naive to imagine that the US could dominate everything forever.
I'm not sure everyone would be happy with this position.
So you're right in asking the question : "what is the correct tradeoff?" Investing in industrial policy will probably make us poorer in the near-term, but 0 investment is probably the wrong answer. 100% investment is also the wrong answer. What is the right level of investment and what are our concrete goals?
Thank you for bringing these ideas to life ; i've been digging into industrial policy and reading China talk / Chris Miller's writing I feel like all of you are asking the right questions.
Anduril is a Potemkin defense company, so I'm not sure why anyone should care what they think on the subject. That they're taken seriously says a lot about where the US is right now.
The US cannot build its planes, or missiles, without Chinese chips and sensors. The US cannot replace its current (rapidly aging) naval fleet, due to a lack of shipyards and skilled labour. Those submarines you want in order to defend Taiwan. Can't be built. Those missiles - the US can't build enough to sustain Ukraine's fight against Russia (which has seriously depleted US stocks). Turns out that the US can no longer build shells for a sustained war, and nobody is quite sure how to restart that (given that the skills and factories required no longer exist in the US).
Maybe there's a larger point to be made about the necessity of manufacturing (though I think you overestimate how much the US has benefitted from controlling the global finance/trading system after world war 2), though the market value of US IT companies has more to do with an extremely frothy stock market in the US, which long ago shed any lingering relationship it had with the real economy.
Just a note to anyone else, this version is cut off compared to the full article on Chris’s substack. Apologies if that was stated somewhere, but I didn’t notice it at first.
ugh my bad!! fixed now