This is all just red herring. The decline of shipbuilding in the US is just the result of the general, nation-wide deindustrialization. And analogously, you can't revive the shipbuilding without reviving bigger industrial base.
It's a decent report for someone that has the merest of an idea what the Navy does/uses/needs. It shows how thoughts about various aspects of a ship's needs have changed over the years including walking back from implemented changes as they've responded to opponents' reactions to those changes. It's also in an interesting format seeing the difference from a report vs a presentation style slide deck that must be so tempting to use. Glad to see that actual reports are alive and well outside of the tech bubble.
In World War II we hijacked most of the industrial base for the war machine. After the war, there was incentive to be certain that the US was capable of outfitting the Armed Forces regardless of whether manufacturing slowly shifted overseas.
South Korea, Japan, and Taiwan are too geographically close to a number of likely antagonists in the next global conflict. In the latter case, the distance might be negative.
They may be occupied or their industry bombed to dust as the opening moves in a protracted conflict.
There is something to be said for the DoD to effectively be paying rent (or a retainer, if you prefer that analogy) to Western Hemisphere manufacturing, with a large fraction in the continental US.
edit: downvote if you want but it's rather rude to do so with out providing an answer to my question. It comes off more like you're offended that your assumption in thought is being questioned.
The English speaking world has been on a decades-long campaign to reign in industry. Energy availability has been reduced. Environmental protection has been given supremacy. Manufacturing outsourced to Asia. An impenetrable net of regulations put in place to force businesses to conform to the average. There is the pattern of bailing out incompetent managers so that the financial system doesn't have to reform. In that environment, number of people is a weak metric.
The US has people, educated people and otherwise great people. I don't think at any point anyone has accused this of being a people problem. The issue is that capable people are being prevented from improving the situation.
What situation, specifically, needs to be improved? The US Navy does not, at present, have any need whatsoever to drastically increase the size of its fleet. Every ship that gets built is a ship that needs to be manned and maintained, which siphons money from elsewhere. We can bemoan the inefficiency of the existing shipbuilders, but that's just how the US sells welfare programs to conservative voters.
If you think that a hot war with China is in the cards, forget investing in shipbuilding infrastructure and instead put that money towards onshoring the rest of the national critical supply chain, much of which is in far more dire straits (ahem) than the shipyards.
> The US Navy does not, at present, have any need whatsoever to drastically increase the size of its fleet.
How much of US military spending should be classed as welfare? Between Ukraine and Israel the US appears to be in a 1.5 front war and the European front hasn't covered itself in glory. This might be a good time to think about re-purposing the military from welfare projects to defence, if there is a hot war with China it'll be US vs. the world's preeminent industrial superpower. It'd be wise to prepare before it becomes necessary, they learn how to build things faster than the US does.
I don't think it is likely, but we've seen this last year how close the US is to a 3-front war. There are uncomfortable odds they'd lose; their ability to sustain overseas operations is in question. We're already looking at a debt crisis with what they pulled off in the last 20 years and that was mainly a fight with guerrillas and goat herders.
We have massive stockpiles of equipment and ammunition that we specifically earmark to give away and that's what we've been giving Ukraine. We do not and will not dip into what's allocated for national defense.
All of the "$X billions of aid" headlines are misleading, because most of it is material, not cash.
Israel has plenty of its own weaponry and can do what it pleases.
Yes, there are some commitments in the Eastern Med, but as Ford heads home, the Bataan ARG of literally three ships and zero full-sized aircraft carriers is judged sufficient to hold that down, because remember that their role in Israel is to, uh, do exactly nothing.
Now, putting aside Israel-as-such, there is Ike's group in the Red Sea. The Red Sea presence isn't directly about Israel, but about Houthi threats to global shipping. If the US was in a hot war, global shipping could go around Africa (which Maersk and another line had already decided to do, I've seen some pundit modelling on the costs and consequences, it's pretty miserable from the standards of peacetime, with consequences on the consumer supply chain, but in terms of "oh no the US might lose a hot war with China", going around Africa will just have to work itself out).
And yes, they're moving amazing amounts of arms to Ukraine, but not as much as it looks like. There's a lot of already-destined-for-scrap vehicles, and a lot of ammunition that was approaching the end of its shelf life, and so on. What fraction of Abrams went to Ukraine? (under 1%) How many F16s are going to Ukraine? (I believe that all nations collectively have committed around 60 F16s, which if supplied entirely by the US would be about 2% of US fighter aircraft.) Don't get it twisted, the US is not going full-bore in Ukraine. The stockpiles and production capacity of 155mm is a concern for sure, and air defense missiles too. But it's not even close to being a "front", even in terms of the logistics demands (and obviously in terms of combat personnel it is 0% of a front). And because of that conflict, Russia is nearly incapable of doing anything more aggressive than it already is, which frees up military resources relative to the situation 2 years ago. Except 155mm, of course.
None of this means that the US does or does not need to increase the size of its fleet to meet goals involving its pacing threat, which is the context of this thread, and I'm agnostic about that higher-level claim. And I'm not saying that everything is peachy, neither with respect to the health of the US fleet in general, or in particular with respect to industrial competitiveness vis a vis China. But the US is not currently in a 1.5-front war, that's just absurd.
How would we know that? We haven't seen the US go to war against a top-ten global power in something like 70 years. They might be quite close to the cap of what they can do for all we know. Obviously they have nukes so they aren't going to be invaded, but their ability to control conflicts the like of which we see in Europe, sorta-present in the Middle East and potentially in Asia is very much open to doubt.
The linked article is suggesting that the US shipbuilding industry is operating at 1/20th of what a competitive shipbuilding industry in Japan is, that has interesting implications on the fact that the US is spending 10x as much in their military budget as Russia and 4x China.
I'm not up to speed on the state of stockpiles and democracies tend to be violent military behemoths. So I'd still bet on the US being comfortably ahead of everyone else. But it's performance in the Ukraine has not been as impressive as the gap in budgets suggests it should be. We might observe that it is exhausting the US's ability to provide military support. The US also happens to be broke if anyone cares to check in on their finances. It isn't at all absurd to question the US's military strength here; these wars are not easy for them. Particularly if the response to "this seems inefficient" is going to be "well it is really a welfare program; we don't expect effective production to be happening here".
[0]Read: unacceptable for it to be otherwise for a superpower that would like to stay one. Actually cranking out ships is another thing but the capacity needs to be there (and tested/validated accordingly).
So in GDP you can see clearly Finance sector growing while Manufacturing shrinks. Parasitic relationship. No one seems to be able to comes up with tools to invert that dynamic. I thought Big Tech would be the natural source of such tools but they have been over run by financial engineers too.
The other potential counter balancing force is govt getting into manufacturing big time, but Wall St has too much influence there too. They are great experts in getting govt to hand out subsidies and tariffs which they then siphon off.
There's no doubt that the US shipbuilding is stagnating, but it's not _that_ much stagnating.
Every congressional district gets a piece of the pie, so the process is incredibly inefficient by design.
For all the hooh-rah, the US military is probably the greatest make work program since the pyramids. Many industries, especially tech, exist due to the largesse of the military.
When you hear pandering politicians quack about efficiency, they are a fool or a liar.
Do VCs invest in industries that are so mature that they are almost as old and civilisation itself?
That would be like saying that VC's don't invest in communication companies because communication is as old as civilization, and who wants to invest in semaphores and stone tablets anyways?
Long story short, yes, VCs have entered the defense industry (writ large) and although I have my doubts about whether said VC money will achieve FB-like returns, they are trying.
And to answer the GP poster.... The industry is not "ripe for disruption" because it's dominated more by the "invisible hand of the lobbyist" much more than the "invisible hand of the market".
Fwiw, from my ~20 years in the defense industry.
There is nothing within the Jones Act itself that currently prevents an innovative and enterprising American entrepreneur from building ships at a lower cost.
There is. Without the Jones Act an innovative and enterprising American entrepreneur could build ships partially or wholly outside the US.
She could sell them to a re-invigorated domestic shipping industry. The re-invigoration coming from (1) lowered costs by being allowed to hire foreigners, (2) lower cost of capital, because foreign ownership is allowed, and (3) from the foreign competition spurring on productivity improvements.
A repeal of the Jones act would lower the costs of our American ship building entrepreneur directly, and increase demand for her products, by lowering the costs of her customers.
At a hypothetical example, consider if Thailand passed the equivalent of the Jones act but for computers. At the moment, Thailand produces a lot of hard disks. There are used all over the world, but also in Thai computers. With protectionism in place, Thailand would produce some complete computers for domestic use. But they would be just as abysmal and expensive as American ships. The overall size of the industry would likely be smaller than just the hard disk branch alone was.
(This example worked better before SSD were widespread.)
In the real world right now, a Thai entrepreneur can start building computers easily, because she's allowed to source parts from anywhere around the world. And Thai computer users are allowed to let foreigners service their computers, too.
Of course, as SC Justice Thomas showed, there’s no real moat. And the people in power are just your friends. They’re not placed there by you. And the gifts you give them are just gifts. If you think you can make a better ship, convince my friend in power.
I've made a very conscious decision to not work on weapons, but if I dedicated my life to making weapons then I would hopefully have a core drive to cultivate. Give meaning to the work. The security of your family and way of life are at stake.
If that isn't gaining traction after about six months then try to shake things up with the stick. Put middle managers on alert that failures without improvement won't be tolerated.
"A" position of power is insufficient here. "The" position of power is necessary. It's a big ocean and one person needs to have control of their section to be able to affect change.
For the rest of us on the outside, the US often serves as an interesting experimental platform to test the most extreme ideas and see how things work out
What is that supposed to mean?
Btw, value added in manufacturing in the US has not shrunken during that time, as far as I am aware.
The complaint is thus that we should have more for what we paid...
The complaint seems to be that foreigners are willing to give you those ingredients for the comfortable life cheaper than you could produce then yourself. I don't really see what's wrong with that generosity.
I bring up the industrial revolution, because manufacturing before the industrial revolution existed, but with such low productivity that I am sure you wouldn't want to go back to that state.
I'm not sure the notion that interest was considered a sin by some people at some point in time carries much weight. First, have a look at all the other things considered great sins. Second, banks in the European middle ages did functionally earn interest income, they just used techniques that should be familiar to any modern tax optimiser or even sanction buster to officially call is something else.
One technique was to charge late fees. Technically as a debtor, you could pay your loan back on time at 0%, but if you ever wanted another loan, you better be fashionable late and pay your interest disguised as a late fee.
Another technique was to give you the loan in one currency and have you pay back in another. Then you can disguise the interest payments in the exchange rate.
There's also plenty of examples involving shenanigans with derivatives.
Have a look at modern Muslim finance for more examples.
So that golden age of no interest never really existed to begin with.
Unlike the inventions of agriculture which happened multiple times independently, The Industrial Revolution happened only once and then spread.
It's still debated amongst historians and economists what factors caused The Industrial Revolution to happen in Britain when it did, and not earlier or later or elsewhere.
We know a bit more about what factors help or hinder copy-cat industrialisers. Just because we have more examples to study. You bring up a few yourself.
Btw, I never made the argument that you absolutely need a reasonable financial system to have any kind of industrialisation. I would argue that such a system helps with prosperity, but is not absolutely required.
(One good example that you didn't mention is actually the US. They got quite prosperous despite absolutely hobbling their financial system throughout all of their short history. See eg their bans on branch banking, and obsession with unit banks.)
But all else being equal, I'd rather live in a more prosperous society than the Soviet Union, which barely managed to industrialize at great cost and largely thanks to oil money.
> Maybe the fact that you need the physical, manufactured goods to live a comfortable life unlike 'financial services', that won't cloth you, won't transport you and definitively won't feed you.
Thanks to the division of labour, the tailor doesn't have to drive a car, nor does the bus driver have to make her own clothes. Similarly, people can work in a bank and trade to acquire clothing and transportation.
If they are particularly good at providing banking services, they will be able to acquire a bigger bundle of those manufactured resources than if they worked the factories themselves.
Just like the tailor can get more bus rides with less hassle by selling clothing, then by getting behind the wheel herself.
Btw, what do you have against fractional reserve banking? It seems to universally spring up in anything remotely resembling a free market. Systems with 100% reserves only ever exist when governments interfere, and even then only briefly, because they are brittle. See eg https://www.cato.org/blog/friday-flashback-state-100-percent...
Singapore does fine as a 'second Switzerland'. So I'm not sure where you get the notion that there can be only one Switzerland-like country? (Hong Kong was in a similar boat for quite a while, but it has decreased in importance lately. Not because the global economy didn't want finance any more, but mostly because of PRC mismanagement.)
If NYC or London were independent countries, they would be in similar situations. They even have similar population numbers as the financial centres mentioned above.
When has a financial centre ever imploded overnight? Especially where that was not due to internal mismanagement, but due to shifts in the outside economy? (Though even with plenty of mismanagement, Hong Kong is still around as an important financial centre. Just not as important as before, and the decline has been slow.)
Amsterdam was once a more important financial centre, but its relatively decline has also been slow.
> The idea is sound and good, it works nice and makes everyone more wealthy as long as the money creation is kept in line with the growth of the economy.
I agree that government should be kept out of the money creation business. Private note issuing banks tend to do better. See George Selgin's work for more.
> Countries start pumping in 'empty' money into the system to paper over structural problems, but then these issues come back with double force to bite in the ass.
I am not sure what you are talking about here. You mention countries, so I assume you are talking about a system with a central bank?
Well as long as the central bank makes sure inflation (or nominal GDP) stay on target, the problem you describe just doesn't exist.
> Regarding the financial services, I acknowledge that they are useful, my problem with them is that they disconnected from the real economy and instead of being a tool subservient to the needs of that economy they started to live on their own and even enslave big swaths of the actual economy.
I'm not sure how this enslaving is supposed to happen.
> And anyway, since most of the capital flowing through these small countries is foreign, it's subject to the restrictions of the countries of the origin. So it's not really Switzerland or Singapore's capital. The enslaving happens by 'financialization' of industries.
There are basically two ways to use other people's money: via debt or via equity. Those other people would either be your creditors or your shareholders.
When people use 'slavery' metaphors in the context of finance, they usually mean to say that debtors are the slaves of the creditors. You seem to imply that the notion is the other way round? That's somewhat peculiar.
For 'financialisation', I am going by https://en.wikipedia.org/wiki/Financialization and it doesn't seem particularly scary. Though different people seem to mean very different things by that word. Eg the introduction talks about increasing debt-to-equity ratios.
If you are worried about those ratios, ie about leverage, one targeted change you could make is to remove the tax advantage that debt enjoys over equity: companies typically get to pay interest with pre-tax dollars and have to pay dividends with post-tax dollars.
If you want companies to use relatively more equity and less debt, you should remove that subsidy of debt.
> But in a nutshell it means destroying industrial base for short-term gains and siphoning off of _existing_ wealth from the industry into finance.
How do you 'destroy' an 'industrial base for short-term gains'? Usually a short term focus in the economy means that interest rates are high. But I'm not quite sure how that fits here.