The Decline of the U.S. Machine-Tool Industry and Prospects for Recovery (1994)

Its definitely de-globalizing USA's trade but I don't think it will de-globalize the rest of the world's trade. One method for countries to combat US's tariffs is to reduce trade barriers between themselves thus reducing the barriers to sell their goods to other countries instead of US. EU and China just had an initial conversation regarding just this.

This is a fair take, but also consider that Germany attempted to use purchasing fossil gas from Russia to prevent aggression, and it did not.

To quote the philosopher Tankian:

"Why don't presidents fight the war? Why do they always send the poor?"

Those in power right now have no personal disincentive to real kinetic war. It doesn't affect them personally, or so they think up until the moment it does.

> pretty nice for humanity in the last ~50 years.

Case in point, the EU with its internal markets.

I think it won't change much because frankly the peace trade theory has not worked out very well. I think it was first formulated around WW1 and didn't stop it or WW2.

Most modern wars don't make financial sense when accounting for everything but they are still fought. Often over stupid reasons.

For example Russia invaded Ukraine despite trade partnership with Ukraine and EU.

https://en.wikipedia.org/wiki/Democratic_peace_theory has a better run

This is a pretty old idea that goes back to debates over David Ricardo's theory of comparative advantage in the early 1800s.

> “Free trade is God’s diplomacy. There is no other certain way of uniting people in the bonds of peace than by the bonds of interest.” - Richard Cobden

It did not prevent WW1.

People thought that international trade would prevent war before WW1[1]. The concept doesn't really account for how political leaders often care about things other than money, business, or the material welfare of their plebs.

[1] https://bigthink.com/the-past/world-war-one-illusion/

You are thinking about it as an individual instead of as a state. If you put yourself in the position of Louis XVI as the King of France, it makes more sense.

I think that's a misunderstanding. If you could build the house using only resources that you already have than you would have 100k dollars AND a house. That's the idea of mercantilism. Of course sometimes you just don't have needed resources and than you have to buy something but you should limit it to things you can't obtain in any other way. Mercantilism is one of the reasons of colonialism. If you can take resources from some part of the world that you don't really care about, then you are adding wealth to your own country for basically free.

> > historically very popular

> When? Not for a long time. Slavery and witchcraft were historically very popular ...

The wikipedia article places it as 16th to 19th century which is a longer time period than Globalism was popular.

If the end of my post wasn't clear, I'm not a fan of Mercantilism but one does need to understand the other side. Although a big critique I have of Globalism is that the gains from trade are not evenly dispersed automatically so countries like the US really need to raise the top tax rate and increase (or at least not lower) redistribution otherwise you get high income equality.

Also, slavery and witchcraft are still practiced to this day although maybe not globally popular.

> > when you buy stuff you're losing wealth

> That's a incredible failure of understanding. I can't believe that's the basis of mercantilism. Why would anyone buy something?

Economic theories like Mercantilism are on the country level so individuals would still buy stuff because they're not practicing Mercantilism.

On the country level, yeah you don't buy stuff. If your citizens love coffee and your climate doesn't support growing coffee beans then you get a South America colony so now your climate does support growing coffee beans.

Somebody's answer to the house example is pretty good to read as well - https://news.ycombinator.com/item?id=43630218

> Many transactions are better with people who happen to be outside the borders of your country - why wouldn't they be?

At the macro-level sure. However, if the USA had continued to practices mercantilism post-WW2 then we wouldn't have complaints about the lack of manufacturing.

The industrial plants in China would've never been built by US investment because that's literally handing money away to another country. If China doesn't have a factory its irrelevant if their labor is cheaper; the only labor with access to a factory is the USA.

If you build a house from scratch, you created 100K of stuff. If you buy a house for 100K then sit on your ass for a year, you are no richer than before.

"The economy works because people make these value-increasing transactions. I take $10 of inputs, manufacture $20 worth of output, and sell it to you for $15."

You pretty much nailed the arguments in favor of trade protectionism right there. Import cheap unprocessed raw materials, export expensive finished goods, capture the majority of value created in the process.

Gold isn't really wealth any more than paper money is. Consider Spain, which looted S America of gold and silver. How did that work out for Spain? Spain had lots of inflation as a result, and didn't get any wealthier.

The same thing happened with both the California and Yukon gold rushes.

The same thing happens when the government prints lots of money.

What creates wealth? People creating goods and services that people want to buy. Things like making planes, trains, and automobiles. Making hamburgers. Making search engines. And so.

P.S. I always laugh at Jackson's Smaug who has a hoard of gold amped up to 11^11. It was so large it was beyond absurd. If even a portion of it was dumped into the Middle Earth economy, it would promptly become worthless.

>Most of us sell server-time wrapped in software that performs a service…

Most of us value goods more than services. We need food, we need shelter, we need a vehicle.

Ironically, Adam Smith would be called a socialist in modern USA with his views on preventing monopolistic behaviours, the need for government oversight and controls, and the need for strong public goods where the private market fails.

So many people would benefit from reading his works.

> military protection and a stable currency are some of the most complex exports

And how come that always seems seem to come wrapped in ways that inexorably seems to concentrate wealth, so that the benefits of those exports seem to be less evenly distributed?

It's funny because the US right wing (and a huge part of it's so-called left, too) keeps trying to portray US global military power as the opposite. As charity for us ungrateful Canadians and Europeans

It's completely backwards from how people usually perceive empires. And from what it is. Which is a projection of power to ensure the supremacy of American capital interests.

Which is why US GDP per capita etc is incredibly high compared to the rest of the G7. It's not because they're smarter or better than the rest of us. It's because they've built the world order around themselves. By, as you say, exporting that military protection.

The US exports military dominance, and it gets paid in having its currency, regulatory needs / environment, etc. dominate almost everywhere.

(Whether this actually benefits the regular American worker vs its own wealthy business class is a whole other discussion, and may explain why this has become such a fertile ground for rage and frustration among Americans)

> much of the world exporting to one perennial importer

There are lots of importers all over the world, some very large.

> the equivalent of ~20M people's output if we naively scale

Or about 12% of the US labor force. Meanwhile the 12th percentile US income is ~$22,000, i.e. less than the $32k median in China, and half of the jobs there are above that median.

Obviously these numbers are all useless napkin math and none of it really works like that, but the premise isn't inherently absurd. If China is subsidizing manufacturing in order to capture manufacturing jobs and those jobs pay more than what many in the lowest quartile of the US are currently making, there are people who could be made better off by having those jobs back, and they'd still only be paid about what we're currently paying to China.

And this before considering the general arguments about advantages to proximity of manufacturing, e.g. being able to talk to the people in the factory in your timezone in your language assists in product development so the location of the factory has an easier time developing new products. Which allows not just the manufacturing jobs but the whole rest of the company to be there, instead of those jobs starting to get eroded going forward.

It should be easy to reduce our consumption, the average American is consuming an enormous amount of useless junk.

That's something different than specialization.

Suppose you have enough mining production to meet half of domestic demand. Then you still have mining production, and know how to do it, and if it was necessary you could scale it up or reduce domestic consumption somewhat from the uses that aren't as important. Whereas if you outsource all of it or nearly so, i.e. actual specialization, it's a vulnerability whether to enemy action or just a single point of failure that subjects the whole world to unexpected localized turmoil in the only place that makes that.

That applies when your model of a country is on the scale of something like Switzerland or Ireland, which is to say something on the scale of Pennsylvania or Colorado.

The US is more on the scale of a continent than a country.

Economics isn't science, and while Ricardo has some brilliant insights, it isn't a science; he barely models anything. It isn't even a hypothesis since you can never really test it. The core of his idea is this:

the rate of profits can never be increased but by a fall in wages [...] If, therefore, by the extension of foreign trade, or by improvements in machinery, the food and necessaries of the labourer can be brought to market at a reduced price, profits will rise.

I.e., use trade to get to lower wages

It’s interesting you brought up scabs because other than a local service economy, the entire concept of a union can’t exist in a globalized economy. Companies will simply pay labor overseas in countries where organized labor is illegal.

Exactly.

> It's a revolutionary economic argument that specialization doesn't apply to countries

It isn't. The point of specialization is that people can become experts in things, so that not everyone has to be able to do everything. But the goal explicitly isn't for there to be only one person or only one company that knows how to do something -- that's a monopoly, and it's very bad. And if there are going to be a dozen companies that know how to do something (rather than needing every individual at every company to know how to do it), at least one of those companies can be in the US.

> Ore may be much cheaper to mine in another country

Ore isn't really specialization at all, it's resource availability. You simply cannot mine something in a country that doesn't have any. But the US is big enough to have almost everything and even to the extent that it doesn't, it can a) sell mining equipment to those countries that have it and b) ensure that it's more than one country acting as a supplier of those things, instead of allowing a dependency to form on a single one.

> Why haven't other Silicon Valleys and Apple Computers been developed, despite so many efforts?

Apple is an abnormal edge case because in the middle of their existence there was a monopolist (Microsoft) excluding all other competitors while keeping Apple around in an attempt to fend off antitrust scrutiny for their unlawful practices. That allowed Apple to a) invest in designing high quality products while Microsoft was stamping out any other competitors and b) build a strong brand (because the alternative was Microsoft).

To replicate that in other circumstances you have a chicken and egg problem, because you need the scale to have the resources to design high quality products and build a strong brand, but you don't have those resources or that brand with which to achieve that scale. The only ones who do are the other large behemoths, but large incumbent bureaucracies tend to become mismanaged and there aren't actually that many of them.

You also don't want others to replicate Apple, because Apple is a vertically integrated conglomerate. Everyone keeps trying to because they see Apple making a lot of money, but what they should be doing is playing "your margin is my opportunity" and establishing a competitive market where devices are made of fungible components using open standards, because that's how you defeat Apple instead of becoming Apple. It's no coincidence that PCs still have more desktop market share than Android has mobile market share, because the PC platform is still more open than mobile and to the extent that Microsoft has been losing market share it's because they're increasingly trying to lock down the platform and abuse their customers. If you have two closed platforms, the one with more resources is going to win, because then it's Apple vs. just you and Apple is bigger. But if you have an open platform, then it's Apple vs. everyone and everyone is bigger.

> What is the sense of wasting resources on things the country doesn't do well, so some nationalists can ... do what?

Not be dependent on a single supplier for 80-100% of the global production of some important product.

> The U.S. already manufactures warships, though, and we’re already by far the best at it.

We very slowly build a small number of incredibly expensive ships. For any other value of "manufacturers warships", Korea or Italy are better and more reliable.

Also, it's not clear if aircraft carriers are survivable in a vaguely peer context. Missiles and drones have come a long way.

> Australia just cancelled a deal with France in order to buy subs built in the U.S. We build the best in the world

We won't be sending them because we can't build them because our defense shipbuilding industry is moribund, and there is no civilian shipbuilding industry to do double duty.

Practically speaking, I agree.

But theoretically speaking, the time when a strong manufacturing industry is needed is if you get into a lengthy WW2 style conflict, where both sides burn through their stockpiles of tanks/shells/missiles/whatever.

Then whoever can deliver tanks to the battlefield fastest has the numerical advantage. In 1942 the allies had retooled their car/locomotive/tractor manufacturing plants to make tanks and they were literally producing 9x as many tanks as the axis powers. Which is obviously a very good thing, militarily.

So there is historical precedent for the idea that a strong domestic car/locomotive/tractor industry being very helpful in wartime.

Of course, the question you've got to ask is: Will we ever see another WW2 style conflict? Because in a nuclear conflict there's no time to retool and manufacturing plants, and in lower-intensity conflicts like Vietnam/Iraq/Afghanistan there was no desire to.

> we already protect our economy…aircraft carriers…subs…weapons

Except when the threat to your economy and security isn’t something against which those weapons will ever be effective. Even the USS John F. Kennedy, as wonderful as I’m sure it is, won’t fix the giant foot gun that is presently threatening your economy and security.

If the carpenter owns weapons, a lot of my farmland, a lot of shares in my farming business, and my debt… I will learn to build my own crossbow

In 2020 during the largest public health crisis in a century, non-woven respiratory masks were found to be an effective intervention. The country that manufactured 90% of the world's respiratory masks took care of itself first and foremost at the expense of all other countries. You can't blame them for doing so, but you can avoid this scenario repeating itself in the future.

> The counter to this thinking is that if you intertwine your economic wellbeing with your "enemy" to the point that neither side wants to sever the relationship

You mean like how Europe has made themselves completely dependent on Russia for energy? How's that working out?

But China is and has been producing warships at a rapid pace for some time.

> We’re not breaking society to create a nation of workshops.

That's what Mao tried in the Great Leap Forward: They tried to shift steel production to a cottage industry in back yards. You can imagine the results.

And also relevant: Everyone learned to say whatever Mao wanted to hear, so they all reported high and increasing production. It turns out that disinformation isn't economically productive, even if it feels that way - you can't make cars out of it.

Yes, and the American N95+ mask manufacturers didn't want to risk another boom-bust cycle so when the government wouldn't guarantee them a long term purchase deal, they couldn't ramp up. They had gone through this same scenario during the first SARS scare and almost went bankrupt when everyone went back to buying cheaper imported masks.

https://www.washingtonpost.com/investigations/in-the-early-d...

Yes https://en.wikipedia.org/wiki/Shortages_related_to_the_COVID...

Yes, it was a severe and acute issue.

I think so, isn't that why they brought in all the KN95 masks? The K meaning "Korean."

> thanks to its technology and finance industry

There's been a great sucking sound from all the electrical and mechanical engineers switching to writing CRUD apps because the pay is double.

Only if you can enforce it when there is a default. The odds against which was assumed to be zero is becoming nonzero.

Guaranteeing that families won't go bankrupt due to market forces beyond their control would make so many things so much easier. For example, in my state of Pennsylvania, fracking is a political issue. It's a fossil fuel industry, so ideally we'd be weaning off it. But we actually encourage it by having no severance tax on any extracted energy sources. The state is leaving money on the table, and voters seem to like it that way. But, in truth, they don't care about taxes for fracking companies. They care about not ruining towns economically dependant on fracking. They're terrified of those companies leaving, because a chunk of the town's workforce would fall into poverty and take the town with it. Very few people care about where their electricity and heat come from, as long as they can afford it. There's no good reason to oppose moving to renewables except household economics, which is a very good reason for individual voters. If we made sure they weren't going to freeze and starve if the one big employer left town, that employer wouldn't have such an outsized influence on state politics.

In a healthy free market, companies go bust. It just happens: better competitors show up, services or goods aren't needed, plans don't pan out. But we've created a system that keeps companies afloat ala Weekend at Bernie's, instead of what people actually want: keep families afloat.

And we didn't pay for re-skilling, re-training, re-education.

This was the old "learn to code" moment. You are going to take a 50 year old auto worker with a high school degree and train them to do what? We have tried it, we have invested in it, is just doesn't work well.

Trade Adjustment Assistance (TAA) Workforce Investment Act (WIA) Workforce Innovation and Opportunity Act (WIOA) American Recovery and Reinvestment Act (ARRA)

You are better off using trade policy to at least slow down offshoring to give people a chance to move, retrain, retire if they are close.

Even if one were to be very generous and assume that this plan will lead to all jobs that were outsourced coming back, that's really only half the problem - technological progress is always going to displace some jobs. Without everything you mentioned, those whose jobs simply do not exist anymore are out of luck... and also now everything is more expensive because of tariffs

The tariffs will kill our industry. That’s my prediction. They will raise the cost of our inputs significantly, reducing demand, and giving China breathing room to catch up.

That’s a self fulfilling prophecy…say that is the case. The one thing that won’t change is the jobless and skill less Americans; I understand that the road to hell is paved with good intentions but at this point we can’t help but not ignore the homeless, jobless and skill less problem. Though we can solve it by just creating a UBI, right (sarcasm)?

Counterpoint: as far as I know, 30 years ago, a small US company could invent a consumer good and credibly manufacture it here in small to moderate quantities. Today, not so much. If you want an economical contract manufacturer to help you manufacture your product using modern tooling and access to the engineers who know how to set up those tools, as far as I know, you mostly need to look outside the US.

So tariffs shouldn’t be a problem since we “manufacture more than we did ever before”! we’ll be able to buy USA made and avoid high cost of imports; great!

Correct.

The question isn't whether maximum global free trade maximizes efficiency. The question is whether maximizing global economic efficiency creates optimal outcomes for a nation, for groups within a nation, or for individuals in the nation. It is clearly a mixed bag, so there is pushback.

Ask these questions. Besides maximizing monetary efficiency:

Does free trade maximize a nation's resiliency?

Does free trade maximize a nation's employment?

Does free trade maximize a nation's security?

Does free trade promote equitable distribution of a nation's wealth?

Unless the question is yes to every answer, it is fair to have a policy debate about how much you are going to limit free trade. Every nation does it to some degree, no matter how much free trade rhetoric they promote.

Artificial here meaning some men were able to afford it. Because only natural state is them wanting it, but being unable to get it.

I agree you need a variety of skills and jobs, but "learning how to build machines" is just as white collar as learning to code. Particularly since the functionality of any modern machine involves just as much code as it does mechanical engineering. Don't get me wrong, mechanical and software engineering are completely different fields and we need both of them. But they're both unarguably college educated white collar jobs.

I'm curious if you have any links you can share on this topic. Thanks.

[flagged]

I don't understand why everyone on HN is so enamored with beautiful looking Apple hardware but doesn't understand that this stuff is made by people and machines that are also made by people.

At the end of the day if you want quality products and innovation you need to pay for it.

Outsourcing this ability to other countries saves you money up front but it costs you the institutional knowledge to do it at home and all the costs that losing this entails.

Fred Flintstone wasn’t just looking to work behind a desk though. He was looking for a promotion to management. In those days a desk job meant that you had some authority. You had worked your way through the ranks and put in your time. It was a sign that the company values you and you would be taken care of. Gold wristwatches and all that.

Plenty of people still work in the data entry mines, even though that’s a desk job. In a lot of ways being an Uber driver about as cushy as a desk job in terms of physical demand on the body, but it certainly isn’t a status position.

There are an enormous number of people who would love to make $50k working a lathe in the US. Enormous amounts of them. But they can't. They're working at Walmart making minimum wage.

https://sfstandard.com/2025/02/25/ycombinator-startups-surve...

I would argue they know..

And techies face the prospect of becoming obsolete, with ageism rife.

I don't know that the prior situation was sustainable and would have lasted much longer anyway. Using China for manufacturing is like using Amazon for sales. You are required to give them everything they need to take your business away.

Currency rates are also a factor.

https://financialpost.com/news/stephen-miran-economist-trump...

> Miran.. points to Trump’s application of tariffs on China in 2018-2019, which he argues “passed with little discernible macroeconomic consequence.” He adds that during that time the U.S. dollar rose to offset the macroeconomic impact of the tariffs and resulted in significant revenue for the U.S. Treasury.. “The effective tariff rate on Chinese imports increased by 17.9 percentage points from the start of the trade war in 2018 to the maximum tariff rate in 2019,” the report said. “As the financial markets digested the news, the Chinese renminbi depreciated against the dollar over this period by 13.7 per cent, so that the after-tariff USD import price rose by 4.1 per cent.”

https://archive.is/uvL5w

> The deepening trade war is raising speculation in financial markets that China may resort to aggressively devaluing the yuan against the dollar in a break of their policy of pursuing a stable currency.. A weaker yuan would make Chinese goods cheaper abroad, offsetting some of Trump’s tariff impact, and make it costlier for local consumers to buy US goods.. One big consideration for Beijing is the risk of foreign investors pulling their money out of China if the currency sinks.

> The economic picture of what will happen is instead of being an American engineer designing widgets made in China, some fraction of you are now decimated to be an American widget maker of items engineered in China. Tarriff is essentially just a handicap to comparitive advantage in trade, trading out jobs where you had the advantage.

That's just a myopic regurgitation of free trade dogma that misses much. For instance: 1) the previous sock of American widget makers didn't become engineers, they got laid off with poor prospects; 2) it assumes a friendly free trade regime, which is unrealistic oversimplification; and perhaps 3) that "comparative advantage" is something real and not just lower living standards and laxer environmental and labor regulations.

> It is one of the most baffling thing I have seen our government do in our lifetime.

The part you're baffled about is only baffling if you're ignorant of everything except free trade dogma.

The real baffling thing is why little to no distinction was made between allies and adversaries, low wage countries and high wage countries.

This is the eternal evolution of individual labor.

But then the question is - do you think going backwards to an earlier time is a solution?

Go far enough back to individual homesteads doing some light farming, hunting, fishing. You'll be self sufficient, but you won't be able to afford a phone or television!

It's going to be a difficult problem (always) solving for the future of individual contributions to society as labor gets replaced by automation, and even knowledge work gets replaced by machine learning.

But I still think great minds (and also the minds that get put in charge) should look forward and try to build a good future, rather than cling to a dying past.

Firstly, the number of people who cannot be a software engineer is not actually very large. There are a lot of really shitty software engineers out there. Unlike being a doctor or a lawyer, you don't have to pass a test that requires actually knowing material, you simply have to be able to convince someone to give you a job banging on a keyboard, which does not necessarily require one to have technical skills.

Not everyone can be a good software engineer, sure.

Among people who cannot be a lawyer, or a doctor, or a good software engineer, there are also very few people who can be a good machinist.

Competent machinists require an extremely similar set of problem-solving skills as competent software engineers.

Bolting a bumper to a Ford is different from manufacturing the metal shape of the bumper itself, and a competent machinist is the person who both figures out how to turn a piece of raw metal into a piece of bumper-shaped metal, and also the person who figures out how to do so in an easily replicable way.

okay then tax and redistribute, don’t try to pick winners and do stupid industrial policy that makes everyone poorer.

Until they lose a finger and can't do it anymore.

> Not everyone can be a SW engineer. Same how not everyone can be a doctor. [...] For a lot of people, bolting bumpers to Fords is as good as it gets in terms of job prospects.

You're taking a swipe at factory workers, and elevating Software Engineers to the intellectual strata of doctors?

Most working-age adults can be a contemporary Software Engineer (even without LLM cheating).

For that matter, I could teach bright 12 year-olds to apply the technical skills that your average Software Engineer does (though that would be mean, and stunt their development).

You'd better pray that your doctor is much more capable and professional than your typical Software Engineer.

> don’t even get me started with how much heavy machine operators make!

$40 an hour in Austin Tx, a city with construction going on in every corner.

And I know many laborers that work for wages that most "software monkeys" wouldn't do just to shit in a pot. If you are in software development you are far more likely to live in a more expensive area of the nation where trades have a much higher than average value. In places that aren't employing many software developers trades don't pay nearly as well.

If only the US had allies. But I guess it's hard to count on them when you're actively threading invasion!

A war with China won't be won with manufacturing. It'll be won by having allies.

If it actually comes to pass, you'll probably declined fighting the hot war, and opt for a cold one. But without allies it'll get real cold.

Hard to imagine rebuilding a manufacturing economy while your scientists are fleeing the country.

Sucks that Trump is considering trying to repeal the CHIPS act then huh

Not really. Mostly they are built by machines. Extremely skilled machinists work in research or niche development, where they can solve new problems. Very skilled operators can tram a machine better, or eke out more repeatable clamping, and make slightly more accuracy out of an established process.

Their time is much better spent creating new processes or making low-run jigs and things.

I can tell when a dirt bike is running rough, but that doesn't mean I can design the helmholtz resonator in the exhaust. That difference is engineering.

The average software engineer is working on A to B plumbing code to confer more privacy violating javascript onto webpages, not novel implementations of algorithms at scale.

Likewise the average machinist is not "skilled" in the way that most here are implying.

This feels like cope; ignoring that there are multiple kinds of “lazy.”

There’s the kind that focuses on simplicity and avoiding unnecessary work to achieve the same goal (the good kind); and there’s the kind that just ignores necessary work and drags out the process delaying the goal (the bad kind).

There are plenty of programmers, and machinists, in both camps. Many programmers actually are lazy knuckleheads in the worst sense of the word - and, according to recent researchers, 10% of programmers self-admit to doing nothing at their jobs.