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Okay, I'll go.
The big news this weekend was that Trump had a rally and said that, should he not be elected, the U.S. auto industry would be overrun with cheap Chinese imports. He used the word "bloodbath".
The mainstream media, which we're assured rarely tells outright lies, decided to find the exact dividing line between an outright lie and "still technically the truth". You can be the judge of whether they succeeded. For just one of many examples, Joe Scarborough ran a segment where the words "Trump warns of a bloodbath for America if he loses" were emblazoned on the bottom of the screen.
Of course, if any of this surprises you in the slightest, you haven't been paying attention. It's slightly boring at this point and would be funny except so many boomers still watch that dross.
What I want to focus on is the actual substance of Trump's claim. I think that, this time, Trump is on to something. The Detroit auto industry is about to have a head-on collision with China and get absolutely wrecked.
Already, Detroit is not in good shape. The Big 3's share of U.S. auto sales has fallen from 90% in 1965 to just 44% by 2018. (I'm sure it's much lower now). It gets worse. The only reason that Detroit has done this well is a 25% tariff on foreign light trucks that was passed by LBJ in retaliation for European tariffs against U.S. chicken.
In terms of small cars, Japanese automakers have been beating Detroit for decades. For luxury vehicles, Germany has worldwide dominance. That leaves only light trucks and SUV's, where Detroit still performs well only due to tarriffs. We've sort of forgotten about Detroit since 2008. The perception is that things were bad for awhile, but then the automakers got bailed out and they're okay now, especially #girlboss CEO Mary Barra.
This isn't true. The stock prices of the Big 3 have limped along. GM, once the 2nd most valuable U.S. company, now has a market cap only 2% the size of NVIDIA. And, if the Big 3 haven't gone bankrupt again, it's only by jettisoning high-paid union labor. Michigan, once a well-off state, now ranks 39 out of 50 in household income, falling well behind former hick states like Texas and North Carolina.
Enter China.
China is already, by far, the world's largest producer of automobiles, producing about 3x as many as the U.S. Also, China can sell an EV for $10,000. While I'm sure there would need to be changes for the U.S. market, it would not be too expensive at scale. Get ready for hordes of these "shitty but good enough" cars to enter the market.
"No one will ever buy a Chinese car" you laugh, nearly dropping your monocle into your glass of cognac. I don't think this opinion can withstand serious scrutiny. Japanese cars once had a similar reputation. Nowadays, choosing to buy an American car over a Japanese one is seen as either extremely patriotic or moronic. Even if quality never improves, people still buy plenty of Kias and Hyundais. How many more would they buy if the price was reduced by 30-50%?
So let's say all of this is true. A wave of Chinese imports are coming which will cripple the U.S. auto industry. How will voting for Trump help? My gut feeling is that Trump can't save Detroit but that, unlike Biden, he'll at least try.
For most of the period of the 1980s-present, the world has been a huge beneficiary of free trade. The rich in the U.S. have grown much richer, obscenely so. But the biggest gains have been won by the working class in developing nations, especially China. Despite all that there have been losers. The biggest losers are the working class in rich nations, especially in areas that compete with China.
The traditional government solution to manufacturing being outsourced has been to offer job retraining and lots of government benefits to the affected class. But this just doesn't work. The places that have been affected by blue collar job loss are now hollowed-out shells of their former selves.
Trump will probably at least try to ban or tax Chinese cars. Is this the right thing to do? Maybe, maybe not. It will cost American consumers a lot of money, and it will depress wages in China. In aggregate, the tariffs will probably make the world a worse place. But they will help the group that has lost so much and which has been ignored and scorned for decades. The group Biden pretends to care about but which Trump actually does.
Edit: Just saw this retweeted by Crémieux:
America's most affluent metro areas in 1949: https://twitter.com/DKThomp/status/1769891112095740274/photo/1
You'll never guess who's #1.
I vaguely remember a period in the 80s and 90s when cars were a culture war. "Assholes drive imports" was a slogan for a certain sort, who were patriotic enough to buy American cars even when the foreign imports were clearly superior. It was mostly working classs rightwing types doing that.
If we get a big wave of cheap, good-enough, electric cars made in China... how do the culture war lines break down? The right is more pro-American, but these days the left is more foreign-interventionist and might care more about opposing China. The left likes electric cars, but the right has more broke people who just want to save money. And Elon Musk doesn't fit clearly on either side.
On the other hand, does this even matter? Once upon a time the auto industry was a huge deal, both to create jobs and for the military-industrial complex. Nowadays, like you said, the big car companies are tiny compared to... gaming graphics card manufacturer. And as I understand it, there's almost nothing in common between a car factory and a modern weapons manufacturer. So maybe it's OK to just let China take over the car industry, just like we let them take over every other kind of manufacturing.
Trucks are really important for logistics. Soldiers need offroader vehicles - a humvee or something like it.
Furthermore, the broader learning in how to make factories, production chains, engines, working steel all helps military industry. If you've got a big car industry, you'll have a big robotics and machine tools industry too. You'll have lots of experienced engineers who can help make weapons. If you have a big electric car industry, you'll have a big battery industry and batteries have all kinds of military applications in lasers, drones and so on. Everything connects to everything else.
Converting factories to war production, that will be much harder these days. But the pools of knowledge, capital goods and experienced workers are still quite important.
I'm not an expert so I don't want to argue this too much. But what I heard was that, basically, modern military stuff is more like a custom bespoke piece, where each individual tank/ship/airplane/whatever requires tons of individual workers to pore over it and custom assemble it. They all need security clearance and experience with this very specific military technology that has no other application. Factories are more about scale, building up as big and cheap as possible, so they use totally different tools and ways of thinking.
I'm sure that\ you could take automative factory workers and engineers and re-train them as military workers, but you also do that with, say, software engineers.
Aerospace engineers are easier to retrain as a different kind of aerospace engineer than software engineers are as aerospace engineers. I think that’s just a truism.
I also think a lot of that is just the inefficiency of the modern west- in an emergency you could just use f-150’s instead of humvees.
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"Bespoke crafting" sounds true, that is how the hardware has been ordered for past few decades, but at the same time, it looks like such mode of production is not working very well when put into a test of a large-scale war (Ukraine). What seems to count is the ability to mass-produce hundred to thousands of missiles, thousands of cheap drones, and millions of artillery shells. Nobody seems to able to produce hundreds or thousands of tanks and airplanes, but if either side possessed such ability, it might decide the war.
That isn’t because America is fundamentally incapable of making more weapons. It’s because US strategy for decades has been that the only conflicts America will fight will either be against vastly inferior conventional forces in places like the Middle East or in a great power conflict against Russia or China which would either go nuclear or be over Taiwan and therefore resolved pretty quickly (the Chinese landing would fail or succeed in likely fewer than 72 hours).
The Ukraine situation is an extreme anomaly.
In great power politics, the wars are sufficiently rare that anomalies also count. (The French revolutionary and Napoleonic wars were anomalous in their scale. WW1 was, again, anomalous.)
Predicting the outcomes of wars is unpredictable business. Before the 1st Gulf War, very few people knew for certain it was going to be a quick, decisive victory against inferior conventional force. If American strategy calls for small wars in the Middle East or quick decisive naval wars in Asia, what Washington is going to do when faced with an adversary who is perfectly aware of the American strategy and thus presents something that is neither?
And anyway, the current nuclear stockpiles are a fraction of what it was in the 1980s. During the Cold War, the end-of-the-world thought stopping does-not-compute aspect was heavily colored by fiction and propaganda. After the nuclear exchange, a world will end, but the world will not.
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Despite being 2% the market cap of NVDA, GM has 5 times as many employees.
Let's say that we always spam "let China have the crappy businesses" without limit. Solve for equilibrium as X (time) approaches infinity. Eventually, China will have every business except one. A single American person will have a net worth of $100 trillion making memecoins or something. His tax dollars will support what's left of the American economy. All other Americans will work crappy retail jobs. China will control the rest of the value chain. Mercantilism is not great for the victims.
I think this book is relevant: https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma
So, do we go back to 19th century mercantilism? Use the government to subsidize our own, inferior industries, while the navy tries to forcibly stop them from shipping cars to us?
The alternative is to specialize in what we're best at: Pizza Delivery and MicroCode
Mercantilism never left and is in fact in use today in many sectors, with distorting effects on the market. The various more upmarket civilizational stacks existed on top of it, not displacing it entirely.
I'm not a hardcore libertarian or staunch believer in the free market, but it's trivial to understand that countries will naturally protect their own market when they believe they are noncompetitive.
But... why are we uncompetitive? Usually when you see mercantilism, it's to protect a new industry in a developing country, which is how Japan and Korea developed their automotive industries. And maybe China did/does too, so we could do a little to even the score. But if it's just "we cannot allow the auto industry to fail, ever" then it's a recipe for absolute stagnation, like India's domestic auto industry did for the entire cold war.
It's weird that the US auto industry, the oldest, most-developed auto industry on earth, just can't compete with these young upstarts unless the government gives it bailouts.
The reason why is irrelevant. There could be any number of reasons, from cheaper labor to less regulations to quality differences to productivity reasons. But governments are made up of people, and people who are incentivized not to let things fail are obviously going to work in service of those claims.
The Chinese factory example is apt. If you are a western nation, can you compete with that workforce, notoriously selective regulation and an ability to simply make as much as the market can absorb? Well, sure, you could. What's stopping you, aside from, well - the people in your country? (Cf. American Factory)
The other side of the Bretton Woods financial coin making money fungible across national boundaries: if you don't have some sort of protectionism in place, your economy will see significant cash outflows to foreign countries. This is hugely beneficial to countries that are primarily export based, as the US was post-WW2... and not so much in the other direction.
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Why not? All "specialization" seems to have brought is cheap consumer gadgets to fudge inflation statistics with, and cost disease everywhere that's important to people.
You mean cost disease in housing, education, and healthcare? The domestic industries for those are extremely healthy and have not been hurt one iota by imports. In fact, where we can import, we are better off.
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Plus cheaper food, cheaper clothes, cheaper flights, cheaper cars and longer lives.
Housing is getting more expensive due to regulation & immigration rather than cost disease, and healthcare spending is going up because the developed world has a larger proportion of older people who are living longer (partly due to better healthcare). In countries with good housing regulation and immigration control, house prices go down over time.
Free trade and specialisation are the forces pushing prices down. If you abandon them for mercantilism, you get expensive essentials and expensive consumer goods.
Nope, and nope. This is a "do you believe me or your lying eyes" situation. Clothes used to be much better quality than they are now, and food used to be better quality and cheaper (if seasonally unavailable). I can concede the rest, but of the things you listed cars might be the only things worth the squeeze, and even then I'm not sure.
Then we have a whole bunch of second order effects on employment, but I'll also grant they're hard to disentangle, and you might think they have different causes.
I'm not an autarchist, there's obviously a balance to be struck, but I also see no reason to believe why maximum free trade would make any more sense than maximum immigration.
If you buy quality clothes today for the inflation-adjusted amount they cost in 1950 you can certainly still get high quality, possibly even made-in-America clothes. They’re just a niche market since 98% of the population prefers the cheap stuff made in Bangladesh.
The same goes for food. In 1950, Americans spent 24% of their disposable income on food, in 2010 they spent 9.5% of it on food. If they increased their spending on food by 250%, even the average American could afford the premium organic local farmers market stuff that still has a lot of flavor.
Testing the hypothesis would be somewhat hard and require a lot of time. I'm not even talking about the 1950's, my opinion is based on the 80's. Our family in America would send us packages with clothes and whatever else might be useful that they could grab on a sale. These clothes would then make the following rounds: my oldest cousin -> my older brother -> my younger cousin -> me -> my youngest cousin -> my mother, for some of the clothes that looked ok on her -> rag for cleaning floors, where they would serve faithfully for many years, and survive in a state that, if push came to shove, you could still throw into a washing machine and wear them.
If something approaching this quality is still available, please send me a link.
For food, I'm not talking about America, I'm talking about eastern Europe. "Premium organic" food does not approach the quality of what was available back when I was a kid, and the fact that I'd have to go and find a goddamn farmer's market to get what was right there in the local grocery store is itself a drop in quality of life. Again - hard to disentangle - maybe it's all the BS European regulations that are slowly killing farmers throughout the continent, and not free trade, but don't tell me there was nothing lost.
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Well, perhaps aside from armored vehicles and firearms. WWII suggests that industrial capacity is fungible in some specific contexts.
Indeed. If you can make a computer, you can make a gun.
If you can make a sewing machine, you can make a gun.
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yeah. Naive calculation: Suppose Alice has a factory that produces tens of hi-tech bespoke post-Cold war optimized tanks during one year, say 50 units in year. Suppose Bob has several dozens of factories that can produce 500,000 of civilian vehicles each year. Bob needs only engineers to redesign the civilian car production line into something useful in military use -- perhaps, integrate anti-tank guided missile launcher and drone platform and minimal armor against small arms fire -- and then Bob can produce 10,000 modern anti-tank vehicles for each Alice's hi-tech bespoke tank. After the first couple of months, if both realize their current designs are not performing adequately in the field, assuming it takes equal time to come up with a redesign, after the resign and couple of months of production Bob has produced 80,000 upgraded vehicles against 8 Alice's upgraded bespoke units. But frankly, I presume if you have factories producing hundreds of thousands units for civilian consumption, your engineers are much better at setting up production lines, adapting and rolling out new redesigns than if your experience is producing hundreds of bespoke units to a contract.
I think the difference is that modern car factories can’t be retooled to build modern weapons the way WW2 factories could. So retooling the GM or Tesla factory to make modern missiles probably isn’t much easier than just taking over an Amazon warehouse and doing the same there.
To echo the other replies to this comment, a modern military will need drones, but will also still need 4x4 vehicles (whether Humvees, JLTVs, or even just modified pickup trucks), transport trucks (so you still need GMC and International Harvester and the like), and men with rifles (which will be some flavor of AR-15, traditionally-milled or possibly even 3D-printed).
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But at WWII levels of mobilization, we’d probably be looking at revamped civilian vehicles in heavy military use. The GM line can easily produce technicals.
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Not the bespoke weapons, no. But evidently a modern civilian drone factory can make drones that are effective for military use. I believe a protracted total war, the side with more "Gigafactories" and difficult-to-predict quality of innovativeness and engineering that comes from running the factory will be better equipped to churn out useful equipment. In a massive war, you need massive amount of weapons, and wih current production numbers, it looks possible the West would run out of the bespoke weapons.
If the decisionmakers Alice and Bob realize it, it will affect their calculations of outcomes of protracted total war, such calculations will affect their diplomatic strategies. If either side don't realize it, they will walk into it blindly into the next protracted total war, and it will affect the outcome.
But that’s kind of the thing, there can be no protracted direct total war between great powers because of nuclear weapons. There can only be proxy conflicts or MAD. The unique thing about Ukraine is that it’s a moderate to large sized country with a zealous and relatively high IQ population backed by Western countries fighting a former superpower (with a poorly trained but large military and high manufacturing capacity) in conventional warfare.
The US doesn’t need huge volumes of conventional weaponry outside of this niche scenario of supporting Ukraine. No enemy will ever military invade the American homeland, only nuke it if it comes to it. The main scenarios for a hot conflict with China over Taiwan would either spiral very quickly into nuclear exchange or resolve themselves rapidly otherwise (eg very successful Chinese blitzkrieg and amphibious landing in 48h before US can decide on strategic response). The main scenario for a hot conflict with Russia involves some kind of Russian invasion of the baltics, and even there NATO forces in Europe outnumber the Russians, have better equipment and could easily repel the post-Ukraine remnants of the more skilled professional soldiers left, likely pressing into Russia and again leading to a question of nuclear exchange.
The only reason Ukraine is even happening is because it doesn’t have nukes and it’s considered taboo post-1945 to use nuclear weapons offensively against a country that doesn’t have them, even for Russians, especially against your supposed co-ethnic brothers.
"Need" is a strong word. There are plenty of people willing argue that the US really didn't need to intervene in WW1 or WW2 or Korea or Vietnam or station Elvis and other assorted troops in Germany or doesn't need to defend NATO either. Generally, superpowerdom has been considered a prize worth the costs. Perhaps stakeholders in Washington decided it is longer worth it. But that is secondary to my argument.
I think it is mistake to infer that Ukraine is a niche scenario. It used to be a niche scenario (for couple of decades) partly because the US was the uncontested superpower. Starting a large-scale war that the US might notice was considered a bad idea. Ukraine is what a contested hegemony looks like. Putin made a calculated move presuming that the West overplayed their hand supporting the west-aligned Ukrainians and would not / can't supply Ukraine. And perhaps the Washington stakeholders decide, they won't. Same goes for Taiwan, and any other piece of territory previously under their hegemonic protection. It would imply the US will fight only unaligned small countries, not other great powers. The implication for any Middle Eastern or other small country is to quickly align themselves with any of other ascendant great powers so that they are not unaligned small country no longer. Probably the US would be fine. Isolation worked okay for China for a quite long time. But it is an admission of making an exit from the great power politics.
Second, it seems unwise to think only terms how Taiwanese or any other military situation would develop today or in 5 years' time while making decisions about having manufacturing base (development timescales counted in decades). Concerning Taiwan: Who knows what the future of naval combat looks like? Everyone thinks so when they enter a conflict. Afterwards, someone has always been surprised. (Nobody plans to start a long protracted shooting war. Usually everyone plans for a decisive victory.) No matter the specifics, or if the US sits out, it is not a good look for the US power projection capability if it so happens that during the first months of mid-to-large-sized regional war in Asia everyone, including China, both shoots up and shoots down more equipment than the US produces in one year. Perhaps again, the US will be fine after the first such war. But when there has been a couple of such wars, and China has learnt how to improvise and develop and learn?
Third, to make nuclear red lines believable you need to draw conventional lines much earlier. To draw a conventional lines, you need conventional forces and the support organization for them. If you have fewer conventional forces, then the lines you draw need to be proportional to forces you have. Suppose given points one and two, Washington decides to forgo both the superpower hegemony and large conventional forces to keep it. Do you still wish to keep Monroe doctrine? Perhaps, Mexico and Canada?
When Argentina tried to take Falklands, everyone knew the UK wouldn't waste nukes to keep the islands, and they didn't. Suppose they never responded conventionally, either ("Royal Navy was too costly, PM Hacker kept only the Trident"). Couple of decades later, someone is prone to have a bright idea to take yet another inconsequential far-off nominally British island territory ("let's conquer Bermuda for tax reasons, they won't nuke us for that like they didn't nuke Argentina"). The other islands would seek another overlord if they can help it. Perhaps the UK probably would still defend the Isle of Man or the Hebrides, because it is closer to home, but who will be sure? And if their general readiness to fight appears to be nil, and nobody thinks they would start shooting back, how much their threat of nuclear Armageddon is? Nuclear strike doctrines were developed during are when the Cold war belligerents had a large standing armies ready to shoot, and nuclear strike was yet another escalation beyond that. But if you won't fight conventionally? Psychological threat of nuclear annihilation looks more credible after you occasionally demonstrate willingness and capability to go to war in the first place.
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Russia didn't even try to destroy an electric plant (as opposed to transformers) or kill Zelensky. Why nuke?
As far as I'm aware they certainly have tried to kill Zelensky on a number of occasions. But typically decapitation is a poor military strategy anyway, because it opens up the possibility of vengeance (including by the US) and because the people standing behind Zelensky seem to be more hardcore anti-Russian partisans than he is, so no change in policy would be likely. As for destroying power plants, their goal (unlike, say, the US' in WW2 or Iraq) is a permanent annexation of much of Ukraine so radicalizing the population against them is undesirable.
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