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Comment by laurent92 | Hacker News Reader

Sure, but which technology should USA reproduce. Just chips, and then be late on everything else?

No. There is a gigantic machine in China, its name is Shenzen. Its magic is that you can find any part and people who can rebuild them differently.

This is the entire “valley” that USA should bring back home. USA should bring back the construction of the Macbooks, phones, servers and routers, and the entire ecosystem of tinkering that comes with it. This is the backbone of USA’s national security.

We just have to acknowledge that having local industries means having poverty and dirty waste disposal at home instead of 9000km away. Which is not necessarily a bad thing either, so we can innovate on efforts.

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Why would poverty be a necessary import? We don't need to let US companies pay as poorly as overseas to achieve a competitive price in fact we cannot because

-You cannot get skilled labor to work for less than competing unskilled work

- Welfare and benefits erase the savings.

You just make it prohibitably expensive to deal with your foreign competition, subsidize it, or some combination.

Yes, and making it too expensive to import, and paying high wages results in high prices of finished products, which reduces purchasing power, and so increases poverty on the margin.

Industrial development can be promoted without creating poverty by using the tax code to eliminate any after-tax speculative super profits in real estate and finance and non-industrial sectors so that investors are forced to put their money into the real economy.

Then by using financial regulations to require loans which expand quantity of legal tender in circulation to be issued on security of the replacement cost of tangible industrial capital, structures, plant, and equipment values rather than on security of the present value of future property rents.

Then by replacing regressive sales, consumption, and payroll tax with a distributive ground rent tax on property owners.

Promoting industrial development through regressive taxes and wage suppression is only the aristocratic form of industrialization pursued by right-wing governments when they are unwilling to eliminate after tax ground rents and non-industrial super profits enjoyed by the rich.

Hi, I have a question if you have time at some point:

When you say “ Then by using financial regulations to require loans which expand quantity of legal tender in circulation to be issued on security of the replacement cost of tangible industrial capital, structures, plant, and equipment values rather than on security of the present value of future property rents.”

This is interesting to imagine, but how? (Sorry if it’s a stupid-obvious question, but I am earnest in asking it. Perhaps I am stupid tonight.) I could certainly see regulation to kill the “future rents/superprofits industry” but not quite sure how to require loans for ... call it the future-tangible-industry-industry? Also sorry this question is formulated in such a round about way.

Gleeful aside: Me thinks the status quo elite would not like it. ;)

Finally; I am happy to do research -> how might you suggest I google my way into this viewpoint most directly?

> This is interesting to imagine, but how?

I ask the same question too, because when people speculate on computing:

> security of the present value of future property rents

often

> replacement cost of tangible industrial capital, structures, plant, and equipment values

Are often included included in the models because often this is the collateral that can actually have a liquid market value in the event of liquidation, but this is also subject to market conditions at the time this needs to be liquidated and the cost of actually liquidating.

Not to mention it would lower loan values since other non tangibles are often considered (IP, investor sentiment on corporate managers executing any given strategy, market conditions, etc).

You can’t have industry and no huge salary gap between the bottom and the top. Correlation, if you mandate very uniform wages, you only have tertiary service jobs, like France which has very little income ratio (3.5x, if I remember), but doesn’t have industry anymore.

It was the simple desire of “solving it with taxes” which was the root of a despicable trend that has mechanically “exported” poverty to where it can’t be seen, because we couldn’t sustain the sight, for about 60 years now. It’s a sin and a bane.

Taxes (eg tariffs against countries that produce goods efficiently) only extract private value to put it in public hands, which politicians use to favouritize groups they like (or military projects they like, concerning US). It doesn’t make companies innovate in average - only the side that receives the taxes innovates somewhat, and based on non-market incentives, rather political ones. France is full of those non-performing startups that end up 4th on the market, if that is what you aim for, so France doesn’t have technological sovereignty.

At least if we accepted poverty in the USA in exchange for bringing industry back home, those workers would be poor but work in a safe environment.

You have done nothing to validate this claim and are simply regurgitating acceptable political speak.

Kids can be taught otherwise. And a minority of the rich can be told to stfu by the masses, or enjoy working in the coal shovel jobs.

We pretend there’s a meritocracy lifting these folks up, but it’s been argued well it’s nothing more than network effects and really just seeing no upside to being egalitarian while the masses sit around being apathetic political agents.

And believing you’re going to achieve perfect sovereignty is non-sense. It’s a shared planet. Nation state politics worked fine when technology and access to the world were control by monarchs.

Not enough old people are going to be around to confirm their common sense awareness of these heavily distributed “truths”.

The social narrative will be whatever the political engaged make it.

Avoiding political engagement all but insures this.

> At least if we accepted poverty in the USA in exchange for bringing industry back home, those workers would be poor but work in a safe environment.

Nobody's stopping anyone from opening up a factory that pays people $7/hour in the US.

Since bringing industry back home is so important, are you ready to go work in it for those kinds of wages?

It's easy to demand that other people accept poverty. It's hard to explain why market actors would be willing to work for low wages in a high-COL country.

Shenzen has elements which are probably not reproducible.

But 1) subsidies are what we would call a 'distortion' and those should be dealt with, possibly with anti-dumping tariffs;

2) There is such a thing as 'strategic investment' in key industries where the bar is very high and $10M from a VC won't help. This is where we need coordinated leadership.

3) There are other ways of 'building stuff'. Automation, AI etc. present opportunities for creating substitutes for those value chains.

In particular, I think what the DARPA should push for is a robotic 'pair of hands' - i.e. a very easily programable set of very nimble robotic hands with accompanying vision, that can be made to do specific tasks within parameters i.e. 'pick up that part, add this other part' and handle most of the weird things that can go wrong.

4) In germs of geopolitics ... it may be more ideal to push for more diversity in sourcing and to help develop India, Malaysia, Mexico etc. towards doing at least more of those things. That's hard though.

Personally, if the west can't build stuff it is only a matter of time before we are the customer and the prices start rising and our debt starts to crunch. There will be some part/component that during conflict becomes necessary but no ability to manufacture.

We will have lost our knowledge and it'll take decades to recover, if we can recover at all.

The billionaires will escape unscathed.

I agree with point 4. If we had distributed supply chain then things may work better longer term but I am amazed that businesses still look to offshore everything without looking at the long term prospects of their workers and communities.

Short of an amazing breakthrough in automation, this is basically inevitable. If you think about it in terms of labour values (I know, but stick with it) the West basically gets to do unequal exchange, the average westerner consumes a lot more labour-hours than they actually work.

Now the reason for that is that behind every hour of work of an average westerner there's a lot more capital helping, and more educational capital too. But if developing countries do get closer, then inevitably prices will start rising.

Not all industries can benefit so much from added capital. Those that can, and the service economy, are done in developped countries. Those that can't, are done in developing countries. If the two equalize, then the inequality in labour hours will equalize and westerners will either have to work more or consume less of products that are made in developing countries.

There's no reason to think that there will be some kind of 'equalization'.

There is no natural force driving it.

You could argue the trade imbalance in which money flows a little bit more in one direction, but that can actually go on so long as the 'Richer Nations' are growing the economic base and expanding the money supply in serviceable terms.

But what's hidden in the obvious discussion of which direction money is flowing in trade ... is the direction that surplus is flowing. The economic surplus is pretty much on the side of the more powerful countries. Everyone benefits, but the rich nations benefit more.

Almost all of the corporate value (i.e. net profits) in the iPhone is realized in the US. The consumer surpluses are also vast but they are distributed to whoever actually buys an iPhone.

As long as trade isn't too imbalanced and much of the actual cash can be returned to 'Rich Nations' by sale of services etc., and, those net consumer/industrial surpluses remain big ... the equilibrium of 'poor countries doing labour and rich countries doing services' can go on essentially forever.

The factors that will change are:

1) China is going 'up market' and will provide more advanced things.

2) The Rest of the World will start to provide competitive labour - and more importantly - be vehicles of consumption as well making rich export markets for everyone.

3) AI will probably affect production in fairly significant ways. Robots with a little bit of dexterity and AI might very well be able to do some tricky assembly ... can you imagine that they could actually lay out, fold and cut fabric? And then sew together pieces? I can see that happening.

Finally, I would say it's definitely not good to look at all of this as a 'zero sum' game, and ultimately wealth is only relative anyhow.

If we ignore the geostrategic and social issues about power, and 'liberal democracy' etc. - there's every opportunity for a lot of poor nations to move up the ladder very quickly (already happening) and for rich countries to stay rich. As those nations 'catch up' their rate of acceleration slows down somewhat as it's rather difficult to 'get ahead' let alone 'stay ahead' for long. I don't even think China will ever actually 'get ahead' - they are, per capita, still quite poor on the whole and their growth is slowing.

As cultural values start to shift, the very measures we use for 'Purchasing Power Parity' start to shift as well. For example, how do we put a price on clean air, vacation, basic freedoms? And from a less secular but still hugely relevant perspective - living among one's culture, with one's 'people', the architecture, the view from your office/home, the lovely bike path to work, the gardens, the local bier garden where you see your friends, the local football team etc. etc.. People already to value those things a lot (see: Europe) they just don't directly factor into our equations. Over the next few decades we're going to rely less heavily on GDP and more on other measures.

Well, of course there is a reason. It's very simple. Growth rates are much lower in richer countries than the rest of the world. As an economy matures, the growth rate slows down. Therefore there is a a tendency towards equalization.

It doesn't need to become exactly equal. The gap just needs to shorten. And it does, at exponential speeds.

Already the average GDP in the West is only twice the worldwide average, this only shrinks every year.

Exporting your deficit to the US forever can't work. It doesn't solve the paradox of saving. Eventually you have to realize that the us treasuries you were buying won't be honored and everything you exported was a free gift to the US. In short, the IOUs you spent so many real resources to acquire are an illusion if you take too long to turn them in.

Honestly, anyone who falls for a paradox of competition deserves it.

> Shenzen has elements which are probably not reproducible.

They are reproducible if we have the political will.

There was a time when NYC was kinda like Shenzen. My friends and I loved to go down to Canal Street to prowl through the electronics and industrial equipment stores that looked a lot like the videos I've seen.

I think a key to Shenzen that's not reproducible in US is total disregard for patents and intelectual property. This disregard was a key to fast progress everywhere wherever fast progress happened.

Are patents and IP even a good thing? Preventing idea or bytes from spreading, what kind of silly thing to try to protect. Look at software: OSS is probably the 1st world wonder, and Debian and Postgres will last for millenia. The rest of the software world is moving to the cloud, where the source is not visible to the user anyway. Software never successfully relied on the law to be protected.

Same for the film industry. Piracy is common consumption, law has had no power in this billion dollar industry, and yet this industry is striving. I say, companies should be allowed to protect their films with the DRM they want, but once the film is in the open, the law shouldn’t try to protect it from being copied. So you’d just pay to be among the first to see the movie, in a good quality, and the rest of peer-to-peer would be legal.

IP law and patents is a weird contraption, making very little money compared to what it costs, and a major risk to any innovating company. IP law is a major drag on our industry, that’s not even respected by our real competitors.

> Are patents and IP even a good thing? Preventing idea or bytes from spreading, what kind of silly thing to try to protect.

The theory is: Nobody will invent anything if they don't have a monopoly on the idea. As if without patents, someone would have a great idea and say "I'm not going to invent this thing and become a millionaire, because someone else might copy it cheaply and become a bigger millionaire! Nope, rather just keep stocking shelves!"

But would you ever invest in an idea that could be easily copied?

> Sure, but which technology should USA reproduce. Just chips, and then be late on everything else?

Whichever ones are essential to national security.

The ability to manufacture local, trusted hardware is important for military purposes, just like the ability to manufacture high-performance aircraft parts was and is important in the case that overseas suppliers are hostile or cut off.

The DMEA in Sacramento basically does this.

https://federallabs.org/labs/defense-microelectronics-activi...

There's a lot of talk about the tinkering culture of Shenzen, but is it really related to innovation?

Has Shenzen become a startup hub? What large startups have come out of it?

Tencent, Bytedance, Huawei, DJI, SenseTime, ZTE? At least back in ~2015 when I visited, it was definitely a major startup hub.

don't know any but personally since it's not in the anglosphere you're bound to miss a lot of companies doing incredible stuff. just like it's easy to miss a bunch of small tech companies in the us doing incredible stuff whether for the right reasons or not.

Shenzhen is home to a lot of startups. some of them become unicorns, many of them you'll never hear about unless you're ij that specific market because they're B2B or get rebadged in Western markets. But there's a tooon of startups in every domain there. Basically most of the ebike market for example will use a lot of components from Shenzhen startups, and so do most electronics and a lot of software and e-commerce.

> Sure, but which technology should USA reproduce. Just chips, and then be late on everything else?

For ICs:

Design, Fabs and Packaging should all be looked at from a national security standpoint. IMHO it needs to be viable to compete with foreign fabs. Whether that looks like subsidies, tax breaks/credits, or guaranteed minimum volumes... Those each are different policy decisions that have pros and cons.

We also need to consider the larger electronics manufacturing supply chain:

PCB manufacturing, contract manufacturing, pick and place/automation, etc. are all extremely important and should have similar thought put into it. Today it isn't reasonable for most people to do a significant electronic manufacturing run in the US because we essentially pushed it all overseas in the 80s and 90's. There just simply aren't enough CMs and PCB houses to do large runs in the US and its the same chicken and egg problem that you have with IC fabs: You can't do it in the US because there isn't enough volume to get good pricing and there isn't a decent pricing because the PCB houses are focused on low volume runs.

Ironically, when we pushed all that stuff overseas, the major reasons were because of costs (primarily) and environmental impact. At the time, many electronics had a non-insignificant amount of hand assembly and it was stupid cheap for labor in China. Coupled with the fact that companies in China just did not give a fuck about the environment, there were literally no downsides.

Today, things have changed a ton. First, almost everything is surface mount and is well suited to automated pick and place machines. Second, PCBs have become easier to manufacture/design and there are new technologies that could make this even better. Third, with things like ROHS and all the lead free/environmental requirements, many of the advantages of going to a country that doesn't care about the environment isn't as beneficial, because the requirements are for the end products, not the process.

It really wouldn't take a massive amount of government encouragement to really bring back most of this stuff, I think though there is the big issue that there just aren't that many direct jobs created. Most of the money is going to get sunk into machines that make things and sure, there will be people who mind the machines, but you just don't need that many people for these automated processes. Lets just say that spending $50 million on roads produces a lot more jobs than spending $50m in a PCB house. The flip side is that while the $50m on a road might help transport several billion dollars worth of goods over its lifetime, a PCB house focusing on specific types of PCBs could/will enable companies generate billions of dollars worth of profits on the goods manufactured.

I understand the dirty waste but why poverty?

If your manufacturing process needs labor input, then it will happen where labor is cheap. Laborers working for cheap constitute poverty.

But if they're willing to work for cheap, wouldn't they be worse off without the manufacturing? I mean, those people are already struggling and bringing manufacturing doesn't change that.

Yes. But the question is not whether people in Shenzen are better off with those manufacturing jobs, but whether it people in _the US_ would be better off if the manufacturing came back.

So then either you have to 'force' people to take Shenzen-laborer level wages in the US, or the costs of manufacturing in the US will be higher than in Shenzen.

It is poverty from our own perspective. If we stop paying them we don't have to blame ourselves. We can blame them for their own poverty.

Cleaning yourself of this "moral guilt" is selfish as hell.

Much of the competitive advantage that pushed manufacturing overseas was that people in poorer countries would accept lower wages for similar work compared to doing it in the US. That lowers costs a lot and makes up for other inefficiencies like prototyping time (though that has come down since so much is concentrated and can be developed locally in places like Shenzhen) and transportation.

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