Comment by epistasis
7 hours ago
I think the challenges for heavy industry aren't as much the cost of energy, as it is the capital cost, and a workforce that has lots of options for higher paying jobs.
Heavy industries are usually pretty low on the value chain in economies. They do not provide much return on capital, compared to the high tech options and service options that are available in the US, but not available anywhere else in the world.
The rest of the (non-European) world dreams of the economic opportunities that are possible in the US, from Silicon Valley tech, to biotech, to the financial opportunities. China has been trying to climb up the value chain ladder for decades, and is slowly getting there.
It's mystifying to me why people are fantasizing about climbing down the value chain in the US, to being poorer, and allocating capital to things with lower return on investment. I just don't get it! What's the appeal?
Well, manufacturing capacity was the basis of US military dominance, which was the underpinning of the post WW2 US-led world order. That's pretty clearly eroded, and we're not sure we could win in a war against China, especially not a full-on war of attrition, and they're not sure about that either, and so they're steadily getting more willing to throw their weight around geopolitically, trying to get a setup that's more favorable to them. The difference in shipbuilding capacity is staggering, for example. Even if each of our ships had a 10-1 kill ratio, we'd still run out of ships first.
My read on why we want it back, anyway. I'm sure there are other reasons, too.
> we're not sure we could win in a war against China
The USA couldn't even win a war against Afghanistan - which had basically no army and is the second-poorest country in the world. It couldn't win in Iraq, Niger, Yemen, Somalia, Lebanon, Cambodia, Cuba, Korea, Laos, Tibet, and of course Vietnam. It is currently very much not winning in Iran either.
The main power of the US was its ability to bomb anyone they want to, due to a worldwide network of military outposts and a huge fleet of aircraft carriers. Prior to the drone era, this meant it was able to bully most countries into doing whatever the US wants it to do. As is now becoming painfully clear, it is no longer viable to maintain air superiority with a few dozen super-expensive toys, and hosting a US base is rapidly becoming a serious liability.
The USA is absolutely not going to win any kind of direct war. About the best possible outcome these days is maintaining its sphere of influence without either politically or economically ruining itself.
Manufacturing dominance was for WW2, but post WW2 it's really high tech and Silicon Valley that gave us dominance.
Silicon Valley was built on defense contracts for control systems, that's what funded all early semiconductor work, what built the technical empire that led to software's dominance in more recent decades.
And Ukraine is proving that heavy manufacturing competence is not the key discriminator. Now light manufacturing, high tech, and bottom-up organization and logistics are letting a small country defend itself against a far far far larger enemy with 4x the people and an absolutely massive dominance in heavy industry and manufacturing of heavy vehicles.
The biggest weakness of Ukraine is the same weakness of the US at the moment: inability to manufacture large amounts of interceptor missiles for air defense. That's not a heavy industry problem, that's a technology problem, a logistics problem, an operations problem. This requires the skill of Apple, not the skills of GM. And in the time it takes the US to scale up production, Ukraine is going to invent their own far cheaper option from scratch.
And that's because the US has not yet moved beyond the style of military industry built on massive high-capital manufacturing, that's slow moving and design iteration measured in years rather than months. The US is currently repeating the same mistake, but even worse, with its drone initiatives because the rewards are based purely on corrupt personal relationships rather than any sort of competitive process.
Heavy industry and manufacturing are not the model for building a military of the future, or an economy of the future.
If by heavy industry you mean shitloads of steel production, I mostly agree, but if you count things like domestic rare earth minerals processing, semiconductors, solar, batteries, I'm not so sure. I don't know the official ontology of what goes in heavy vs light. If magnets are going to be one of the key strategic resources in warfare, though, we should probably get that supply chain down. And being able to replace ship losses still seems relevant.
And yeah, controls, signal processing, decisionmaking, etc are all going to be big determinants, and we're no slouches in that stuff. It used to take a huge bomber fleet and an absurd number of bombs to score as many hits on target as a single B-52 load can now score, thanks to the ability to strap cheap guidance packages onto dumb bombs, margin of error has gone from on the order of half a mile to single digit yards.
>Manufacturing dominance was for WW2, but post WW2 it's really high tech and Silicon Valley that gave us dominance.
There was a good 40+yr there, more in some industries.
Selling the industrial economy piecemeal to china under the guise of environmentalism, worker protection, etc, etc for pennies on the long term dollar was an intentional policy choice and a resounding failure. The winners from that of course don't want to see it framed that way.
I think it's unlikely the next War will be won by tanks and Liberty ships.
Beyond that there's still the economic viability problem in the US. A steel mill worker in the US makes 65k per year. In China they make 12K. This holds true for the rest of the heavy industry supply chain.
As the parent posts points out, what we are really fighting against here is baumol's cost disease.
Edit: a Chinese steel worker salary is about 80th percentile for Chinese workers - a very attractive gig.
US steel workers are about 40th percentile - worse than average.
For sure, it's not going to be the same, but we need to be able to feed our missile launchers for more than a couple of weeks if we get into a peer conflict. That means building a lot of big physical things, quickly, and transporting a lot of those big physical things, quickly. For that last part, actually, maybe we do still need liberty ships...
> I just don't get it! What's the appeal?
its the k shaped economy. the big opportunities are great if you can get into them, but otherwise all there is is serving coffee to the wealthy. People are already poorer without a ladder or fulfilling work at the bottom
I could see that, if people actually wanted to work in those jobs in large numbers. Yet, poll after poll shows that people don't want to work in the jobs, they just want heavy industry and manufacturing to return to being a big part of the US economy.
People understand that these jobs are worse than what's currently available, yet for some reason want them here.
I want those to be automated. I don't want anyone to have to work in a steel mill - it is hot dirty work that wears out your body. I wouldn't wish that on my worst enemy. However those plants are mostly automated and I know we will need them in some worst case scenarios.
Why do people think steel mills would pay better or be more attractive than serving coffee. Hard jobs already exist and are in high demand.
There is a tremendous amount of money in those high capital costs enterprises. High tech can make you a lot of money, but you can also go bankrupt when everyone buys from your competitor - just like everything else. The world needs the things that heavy industry makes, and despite the large capital costs they are valuable. People are still making a lot of money in those industries - even if it is less than the silicon valley can make.
Also industry is only low value so long as someone friendly to you has it. The world really worried about China climbing that latter because they are making some political moves that could lead to war. Maybe they won't, but China clearly is building a powerful military and they are not friendly to the freedoms that the US and western Europe likes. If it comes down to war we need heavy industry.