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Ernst Younger's avatar

Very balanced and sane view on finance and populist industrialism. Need to encourage new cohort of patriotic silicon valley hardware startups (ie. palmer et al.), especially wrt to underwriting venture financing from govt, like the chinese has done for solar and EV. Musk can and should be courted to be brought around with supervision of these programs

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wmj's avatar

China does consider industry a jobs program - that’s precisely why they subsidize employment so heavily and are content to accumulate dollars in exchange for goods. In their mind, better to have an extra 5% of the population going to the factory to churn out widgets rather than collecting disability checks. The US, of course, has made the opposite decision.

That China-US mirror is perhaps the single key point your analysis misses: the US trade deficit (and its attendant joblessness) is the result, yes of overregulation, but also quite heavily of an overvalued currency. And it’s overvalued b/c China, the world’s surplus country, has a closed capital account. The US cannot forcibly open their capital account, the only solution is to make imports more expensive.

Countries running ~8% current account deficits as the US is now - at full employment, in peacetime! - are headed for a disastrous collapse, probably sooner rather than later. And because trade balances globally not bilaterally, we cannot simply target China - their surplus would find its way through intermediaries.

Tariffs are a clumsy, but effective stopgap solution.

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