This is optimistic. They could totally inflate prices in the long term, and not just create inflation, but reduce the standard of living Americans are used to. That in itself is fine as Americans probably consume too much, but living in the USA will become more like living in Europe where many goods are much more expensive.
Worst case is that American Juche turns out to be just like North Korean Juche.
This will all happen. But as I said, this is a trade-off. Devalue the currency, incentivize local production, increase exports, revive the working class – that's the long term goal.
> but reduce the standard of living Americans are used to.
Whose standard of living though? It's well and good if you're in a comfy desk job with health care and a pension. The discontent that led to Trump's rise is real, and it's routinely overlooked when considering how to counter him. Of the everyday people, those who have stable jobs and purpose aren't voting for Trump. (Of the wealthy, it's probably a lot more cynical who voted for Trump)
I'm not in favor of the policy, the manner in which it's being applied, or the people that are doing it, but reversing off-shoring is a consequence of using protectionist policies – be it tariffs, or subsidies.
High-skill work, and pencil-pushing desk jobs don't cover 100% of the population, and has lead to a lot of unproductive busy-work in the cities. The offshoring of blue-collar work bred the discontent that led to Trump. Trump fancies himself the new William McKinley and is using the cudgel of tariffs to re-onshore manufacturing. This is a process he started in his first administration, that was retained by Biden, and now he's doubling down and doing exactly what he promised he would – and somehow his voters are surprised?
Worse still, those service economy jobs keeping the coastal cities alive (both low skill and high skill) are on the verge of being replaced by AI – whether that's one year or 20, I don't know—though I'm wagering the latter. Physical labor is going to become more valuable as robotics is still way behind in technological development. I don't have a crystal ball, but I'd wager that–at least counterfactually—the US will have more jobs by enacting protectionist policy.
> Worst case is that American Juche turns out to be just like North Korean Juche.
Do you really in your heart of hearts think this is going to happen? I'm pretty sure the subjugation of the American people by the government would be feasible, let alone easy.
The fundamental problem is that people want low-value jobs (manufacturing clothes irons, screw drivers, ceramic mugs) with a contemporary American middle class living wages. It just doesn't math though. If you make mugs by hand all day you simply cannot create enough value in a day to keep up with the person who automates production lines all day.
Worse yet, they want those wages while also still being able to go to walmart and buy...clothes irons, screw drivers, and ceramic mugs for <$20 (maybe $50 for the iron).
We already just saw how this went over during the pandemic. Many people got $20/hr jobs for the first time in their life. A wage they have always dreamed of while slogging in $10-$12/hr jobs. Then it happened...but it felt the same as when they were making $12/hr. This is because the intrisic value they create didn't change. Value creation is what determines the structure of an economy, not wages or dollars or any other currency, those are just proxies.
The intrinsic value of making this stuff in the US just isn't there to make it viable to compete with the large number of high intrinsic value job workers in the US.
Personally, I am completely in favor of all these policies. We are basically going to go through a period of austerity.
It is really what makes this system so incredible. Such a dynamic system to go from sending people checks in the mail to a few short years later, austerity. People get much too involved though with the personalities as opposed to what the system is doing as a whole.
At the most macro level, I think there is a tremendous amount of denial that the unipolar moment is over. The arguments against austerity here are just clinging to a time that has come and gone. It is like wishing I could stay in my 30s forever.
AI is also incredibly deflationary long term. The path we were on would have devalued the currency long term. If we get control of the debt and re-shore manufacturing, I can't imagine that not being good for the currency. I think the easiest way to get a non-distorted view is by flipping things around from the perspective of China.
All of this would seem bad from the Chinese perspective.
I feel like we are also doing a type of Yuan gambit to the world long term here.
Sick of the US? Well the Yuan is right there for you to take. We are betting on the gambit being refused.
If we could just turn the temperature down on the political personality bullshit there is so much interesting discussion to be had but it is almost impossible that it currently doesn't turn into a pointless food fight.
> All of this would seem bad from the Chinese perspective.
China is leading with very aggressive investments in AI and automation, along with clean energy and clean energy vehicles. America is...just blustering mostly, some AI investments, but not much beyond that. China is set to reap more of the AI revolution than the US is, so it is very good from the Chinese perspective, especially given the increasing skill gap between Chinese and American talent. The MAGA effort is just making it worse by de-emphasizing education even more. Like Trump, Xi is an autocrat for sure, but unlike Trump he isn't stupid.
