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Panel Urges Government, Industry Action to Improve Battered Space Supply Chain

By Doug Messier
Parabolic Arc
June 3, 2022
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by Douglas Messier
Managing Editor

LONG BEACH, Calif. — The question of how to strengthen the U.S. space industry’s weakened supply chain, which has been battered over the past two years by the global COVID-19 pandemic, was the subject of a panel discussion at the Space Tech Expo last week. The answers boiled down to the Pentagon adopting an agile approach to developing and acquiring technology, and reversing a decades-old trend by industry of outsourcing manufacturing abroad.

Ron Faith, president and chief operating officer of RBC Signals, said there have been significant supply chain disruptions due to the pandemic. The lead times for antennas and components have lengthened from weeks to months. Instead of using cargo ships, RBC Signals has shifted to much faster air freight, he added. The change has resulted in new approaches to breaking down antennas and packaging them for shipment.

Faith recounted how COVID-19 restrictions stretched out an antenna installation in South Korea that would normally take 1.5 weeks to 5 weeks. The team needed to quarantine for two weeks after arriving at its destination, and another week upon returning to the United States.

Lockheed Martin’s Chris Winslett said that while obtaining what are known as Tier 1 and 2 components has not been overly difficult, Tier 3 and 4 have been in shorter supply. The shortages have made for a couple of challenging years at the defense contractor.

Winslett said a key challenge is to reverse a decades-long trend of outsourcing the manufacturing of key technologies such as electronics and computer memory to low-wage countries. The trend has left U.S. companies and the military open to supply chain disruptions from abroad.

Jordan Noone, co-founder and general partner of the venture capital firm Embedded Ventures, noted that a lot of manufacturing has been outsourced to countries like China, which have a vested interest in seeing the United States decline as a world power. The outsourcing has built up not only commercial competitors but also the Chinese military.

Noone cautioned companies about taking investment from overseas because some of the investment firms are controlled by foreign governments. This is an area in which founders of startups need guidance, he added.

Brig. Gen. Steve “Bucky” Butow, director of the space portfolio for the Defense Innovation Unit (DIU), said there are horror stories of U.S. companies that made solar panels that took foreign investment only to have the investors drive the companies into bankruptcy. The investors then moved manufacturing offshore, and relaunched the bankrupt companies as American even though none of the products were made in the United States.

Butow said the Pentagon is trying to improve the supply chain by bringing its acquisition model out of the 1960’s. The military needs to embrace the commercially driven “New Space” industry, with a willingness to take more risks, innovate and iterate new technologies, and to rapidly adopt new systems.

DIU is helping to build up the supply chain by awarding multiple contracts, and funding research and development that raises the technology readiness level (TRL) of new systems, Butow said.

The U.S. military needs unfettered access to space at reduced cost, as well as frequent launches to prove out new technologies, he added. Modular, sustainable spacecraft that can serviced and upgraded is another key to success.

Winslett said the recently created Space Development Agency (SDA) is trying to streamline development and acquisition. He praised the military’s move to incrementally introduce new technologies.

Jeffrey Smith, who is overseeing logistics for NASA’s Gateway program, said the space agency is awarding fixed-priced contracts to multiple vendors as it attempts to create a robust supply chain for deep space exploration. He noted that having U.S. manufacturers provides NASA with greater insight into technology and the risks involved.

Noone said that U.S. companies need to become more agile by embracing digital engineering that allows engineers to modify designs and manufacturing on the fly. Many companies are still relying on archaic software whose origins date back to the 1980’s.

Part of Embedded Ventures investment portfolio is focused in digital engineering. Noone was co-founder of Relativity Space, which has embraced both digital engineering and additive (3D) manufacturing methods to develop a line of launch vehicles.

Noone said the investment climate has been hurt by multiple space companies becoming publicly traded through mergers with special purpose acquisition companies (SPACs). Known as “blank check” companies, SPACs are already traded on the stock market; their sole purpose is to find another company with which to merger. The targeted company then goes public under its own name.

Many of the space companies that have gone public via SPAC mergers in recent years are currently trading much lower than the prices at which they debuted. Noone believes the experience will haunt the investment community for the next decade, and that much work will be required to overcome the reluctance of some investors to put money into the space sector.

46 responses to “Panel Urges Government, Industry Action to Improve Battered Space Supply Chain”

  1. ThomasLMatula says:
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    Most of the problems with the supply chain are because of China, so simply put very high tariffs on goods from outside NA or EU and the problem will resolve itself.

    • Zed_WEASEL says:
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      All that does in the near term is drive up component cost and reduce their availability. Just where are you going to get components between the imposition of the tariffs and domestic sources coming online. Like it or not components are a global commodity.

      Never mind the tariffs will start a trade war. Hope the farmers can weather not shipping foodstuff to the countries getting the tariffs.

      • ThomasLMatula says:
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        The costs are only lower because of the unfair trade practices of foreign nations. So it is sad that you think it is OK for the other countries to place huge tariffs on US goods, for example 25% on our automobiles, to protect their industry while our tariffs are small, less 2.5% for automobiles.

        So you think it is OK to put our future security in hostile hands like China which produces 80% of the medical goods we use in the USA? You do know that Adam Smith, the originator of Free Markets economics, noted there was one reason to justify tariffs and that was national security.

        • SLSFanboy says:
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          We do not make 80% of our own medical goods because American companies CHOOSE to buy cheaper Chinese goods made with cheaper labor because they make more money. It is simple greed, not all that market B.S. you are blathering.

          • ThomasLMatula says:
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            No, China has very high barriers to importing medical goods, both tariffs and because the government favors heavily buying from domestic sources. By contrast barriers to entry to the U.S. market has historically been low. So it made economic sense to manufacture there and ship here. And remember, public corporations are required by law to maximize their returns to shareholders.

            • SLSFanboy says:
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              Yes, it only makes sense. Well that makes you right about everything. Required by law to maximize profit. You do understand that is what is wrecking planet Earth? Destroying any future for billions of human beings? No problem with that?

              • ThomasLMatula says:
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                Higher USA tariffs will be good for the global environment since manufacturing firms will be discouraged from going to nations like China that have lax environmental laws.

              • SLSFanboy says:
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                That will not “discourage” anything. You are dancing around the truth that American companies CHOSE to offshore their business instead of supporting America. Corporations are psychopathic entites with no loyalty and no ethical responsibilities. They only care about serving the seventh prince of hell, Mammon.

                Keep on blathering though.

              • ThomasLMatula says:
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                They are Required by the securities laws to provide the best ROI to the shareholders. And if they don’t the shareholders just buy other stocks, including the folks that manage your retirement funds. Many firms tried to be loyal and stay in America, but American “free trade” policy drove them into bankruptcy.

              • SLSFanboy says:
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                I get it, nobody is at fault. Riiiight.

                Keep on blathering.

              • duheagle says:
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                There are definitely people at fault. Nearly all of them are Democrats, some still living, others now deceased.

              • duheagle says:
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                The “choosing” could have been done at any time but wasn’t because it’s actually a lot of real trouble to set up production in a foreign land. One only does it when the policies of one’s own government make it so difficult and/or expensive to produce domestically that off-shoring finally pays off better than the much less difficult production in one’s own backyard.

                The key element in tipping the balance was world-high U.S. corporate tax rates imposed by Democrats for entirely ideological reasons – mainly the same visceral hatred of businesses and businessmen you are displaying. It’s ironic that both the European aristocrats and the Jacobins who overthrew and replaced them – and from whom the modern Democratic Party is very much directly descended – took equivalently dim views of “tawdry commerce.”

        • Zed_WEASEL says:
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          National Security tariffs are usually protectionist in natural. Still remember the aluminium tariffs that was imposed a few years ago for “National Security” by the US government. Predictably Aluminium got more expensive for end users with reduce supply. Those tariffs wasn’t against China, it was against Canada, Brazil and Europe. That started a trade war with counter tariffs against US goods. The real purpose of the tariffs was to allow US aluminium producers who lobby for it to corner the US market.

          Oh by the way. There is a high US tariff on imported pickup trucks that allow the Detroit big 3 to retain high market share for decades. That is one of the reason why other countries have a high tariff on US autmobiles.

          • ThomasLMatula says:
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            The high tariffs against the U.S auto industry long predate the tariffs added to protect pickups and those tariffs were in response to the high tariffs being placed by other nations on U.S. agriculture goods. And they have worked very well, which is why the Japanese auto makers build pickups in the United States employing American workers.

            Actually the coming shortage of global agriculture goods is the prefect time for the U.S. to raise tariffs on imported goods since other nations will not be willing to raise the food cost to their consumers by raising tariffs on U.S. agriculture. Indeed, many nations, fearing the political unrest are already temporary reducing those tariffs on U.S. agriculture.

      • duheagle says:
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        U.S. farmers need to worry about getting paid by the PRC, but not about getting food orders from it. The Russo-Ukraine War has taken a lot of wheat off the world market just when the PRC needs vast quantities of any kind of feed it can lay hands on to rebuild its disease-decimated hog population. And the human population of the PRC has to eat too. Among the numerous side-effects of the Russo-Ukraine War is also a serious fertilizer shortage. With Ukraine’s food exports off the market and Russian food exports squeezed down to a trickle by the refusal of most ships to enter Russian ports, any nation that can export food will have no trouble at all finding ready buyers. Hell, the U.S. is way more than self-sufficient in food, but prices for it are rising rapidly even here.

        • ThomasLMatula says:
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          Yes, if other nations do put tariffs on U.S. agricultural goods in response it will only benefit American consumers by reducing the cost of food here, reducing the 10-12% increase in food prices over the next year predicted by the USDA in its latest reports.

          • duheagle says:
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            That is true but also irrelevant. Nations that need to import food will find fewer sources and will, if anything, cut or eliminate any extant tariffs on food, not slap on new ones. Relative scarcity will raise prices and the U.S. consumer will not be insulated from that world-wide trend.

            The response of both the U.S. agriculture industry and the U.S. government should be to do everything possible to increase production including abandoning policies to encourage taking land out of production.

            This would also be the best possible time to end ethanol mandates and subsidies anent gasoline and encourage the switching of corn production from varieties optimized for ethanol production to those optimized for human and animal consumption.

            I don’t expect the current regime in DC to do either of these as both are contrary to Green dogma and the latter would also incur the wrath of ethanol producers. Perhaps rising prices for food-grade corn will cause farmers to switch anyway and cause the ethanol industry to die of natural causes. One can hope, anyway.

            • ThomasLMatula says:
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              Agree, both in terms of Ethanol and Biodiesel which produce less energy than the fossil fuels used to produce the “climate friendly” fuels.

    • SLSFanboy says:
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      That is idiotic. The problem is corporations want cheap labor. They will not pay Americans a living wage to work in a factory because it shrinks their profit margins. If shareholders don’t get bigger checks every year they fire their boards and get people who will maximize profits. Simple greed is how we got into this mess. Blame it on China and the government but it is lack of regulation and institutionalized corruption that has destroyed our mixed economy. This has saddled us with oligarchs who have engineered the murder of the middle class. If you want to tell the truth instead of the big lie then blame the Reagan Revolution and the corrosive influence of dark money on politics.

      So… “simply put”, your Sinophobia and populist Trumpist obfuscation is no solution.

      • ThomasLMatula says:
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        Since the end of the Second World War America has allowed other nations access to our markets with low to no tariffs while blocking our access to their markets with very high tariffs. It is time that we recognize that this policy has seriously damaged both the America economy and national security and reverse it.

        • SLSFanboy says:
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          Neoliberals always say what is convenient. If it is about paying workers then they say one thing and if it is about other countries they say another thing. It is all about one thing and that one thing has nothing to do with the truth. It is about maximizing proft. Deregulation and zero taxes go right along with that. You are babbling about tariffs when the biggest corporations want nothing to do with tariffs because it would cut into their profits. They will scream “FREE TRADE” when they want to manipulate the population and something else if that will make them a buck. It is all a scam and your childish talking point is part of it.

          • duheagle says:
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            What is childish is your tedious repetition of irrelevant Marxist boilerplate.

            The so-called destruction of the middle class was an inevitable consequence of the Boomers being the largest generation as a percentage of the U.S. population in history. As they began entering the labor market in the early 60s, their sheer numbers put downward pressure on wages. Two additional factors in this process were the liberalization of U.S. immigration laws in the mid-60s and the entry of far more women than ever before into the wage and salary workforce, partly as a result of the feminist movement, but even more because fewer and fewer families could get by on the earnings of a normative Boomer dad. The labor glut of the time made it far more difficult for a single male breadwinner to support a family and that caused the two-working-parent household to become normative even though the massive advent of the Boomer working mom also made the general problem worse.

            Half of we Boomers have already retired. The Millennials – our children – are also a large generation, but not so out-sized as our own. So the Leave it to Beaver or Father Knows Best sort of stay-at-home mom family may make at least a partial comeback. It certainly seems to be true that a Millennial machinist can make a significantly better living than I could as a Boomer software developer back in the day.

        • duheagle says:
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          The reason that was done was to secure allies against the USSR. The policy has, to a considerable degree, now outlived its usefulness. But PRC government policy – especially the massive and draconian anti-Covid lockdowns – have made such a hash of things there that Western businesses are fleeing back to the U.S. faster than U.S. policy changes could ever induce. And it isn’t just U.S. companies re-shoring. There will be a lot of new manufacturing infrastructure built in the U.S. by Japanese, South Korean, Taiwanese and Singaporean capital too.

          • ThomasLMatula says:
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            Yes, it was part of the Marshall strategy to help the Western European nations to recover from WWII, but since the 1960’s it has hurt the nation.

            • duheagle says:
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              Mainly since the end of the Cold War – which was the reason the policy was initiated in the first place. Government policy is a lot like software. When new, it is often useful and helpful. As it ages, though, it gets further out of sync with newer realities and eventually becomes, in effect, a lot of tumorous growths. The U.S. did revise a lot of its trade policy, post-Cold War, but insufficiently in the U.S.’s own interests.

    • duheagle says:
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      Tariffs won’t matter much if imports from China fall off a cliff for other reasons. A good bit of production formerly done in China is coming back to the U.S. and even the lower-end stuff is going to Mexico and non-PRC countries in Southeast Asia. The PRC has very low labor productivity, but its demographic implosion has reduced its working-age population enough to cause wage rates to sharply rise in recent years. China isn’t really a low-cost producer anymore. The rolling Covid lockdowns of entire PRC cities have raised such merry hob with supply chains that there is now a full-scale stampede of Western investor capital and businesses out of the PRC. The place is a mess and getting worse by the day.

      • ThomasLMatula says:
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        Yes, which makes it a good time to add tariffs on imports, so firms will see the economic advantage on returning production to North America.

        • duheagle says:
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          That message has already been received loud and clear. Even inveterate Sinophile Apple is moving production out of the PRC. Additional tariffs will, at this point, mostly serve to disadvantage firms now moving their production elsewhere and wouldn’t even raise much revenue.

          • ThomasLMatula says:
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            Revenue is incidental and in terms of tariffs, nations that allow U.S. goods to enter with low/zero tariffs would receive the same treatment of low/zero tariff treatment, making “most favored nation” status meaningful again.

            • duheagle says:
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              It’s a bit more complicated than that. We had good reasons to offer friendly nations asymmetric trade deals during the Cold War years. Our mistake was to continue this policy once the Cold War ended and, far worse, to extend this policy to opponents in addition to friends. But that is all water under the bridge, now. We didn’t tariff the PRC when it would have done some good and made the government some serious revenue. And with PRC manufacturing now in the early stages of implosion, it will fall steeply as a worldwide factor. Adding tariffs now may raise a bit of revenue and modestly accelerate the slide into irrelevance of the PRC – both worthy aims. But a program of simplistically pantographic tariffs anent all other trading partners isn’t in the U.S. national interest.

    • redneck says:
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      I disagree that tariffs are the answer. Too often it is a form of isolationism such as destroyed China and damaged Japan centuries ago.

      The supply chain is less robust than it should be in large part due to regulatory issues and barriers to entry here. Also the derogatory attitude towards people that have to work for their money. Labor force issues are not imaginary either. There are very few investors interested in setting up manufacturing here on products with low margins and difficulty in staffing.

      One of the other issues is that the American consumer wants maximum value for their money. That is a major reason for so many high quality Japanese cars on our roads, Chinese products on the shelves, and Hispanic workers in our fields. Trying to force the consumer to pay more is fighting the laws of economics regarding their own self interest.

      Want to fix the supply chain? investigate why the production went offshore in the first place.

      • ThomasLMatula says:
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        Economists have, and it is mostly because of the market distortions resulting from other countries placing tariffs on goods imported while we reduced or eliminated tariffs on goods produced here. This made it profitable for firms to move production to other nations after World War II instead of investing in more modern production technology here.

        What most folks who do not study economic history also fail to realize is that it was high tariffs on imports from the 1820’s to 1920’s that created American industry. The higher costs resulting from buying goods made in America instead of England was offset by the wages the workers were receiving for making those goods.

        Why do people believe it is OK for nations like China, Japan and Germany to protect their industries and workers with high import tariffs and it is wrong for the United States to do so? Why is it OK for those nations to isolate their markets from the United States while allow the world to undermine our workers by keeping our tariffs low? The Theory of Free Trade only works IF there are no market distortions from tariffs or other barriers to entry which is not the case in the real world.

        • duheagle says:
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          U.S. tolerance of asymmetric tariffs was a deliberate policy used to draw allies into the anti-USSR coalition in the decades after WW2. Off-shoring of labor-intensive, low capital industry started almost immediately. Japan was the low-cost producer in those days. What began the damaging departure of capital-intensive industry to foreign parts in a big way was rising U.S. corporate tax rates. Most of this has not been a post-WW2 phenomenon, but a post-Cold War one. Better tax policy here and demographic inversions in much of the developed and developing world will now drive a reversal of this trend. In fairly short order, the current 2:1 manufacturing value-added ratio between the PRC and the U.S. should reverse. The Covid pandemic has been a wake-up call in all sorts of ways.

          • ThomasLMatula says:
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            Yes, American tax policy is another that needs to be reset with a system that makes sense from the perspective of economic science.

            • SLSFanboy says:
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              Economics is the voodoo of academia. They never had any respect and what they appear to have now is just fear of the oligarchs.

              Keynes was the last economist with any credibility. It has become a cesspool since he passed.

          • SLSFanboy says:
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            Only the idiot who wrote that understands any of it.

          • redneck says:
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            Amazing how a 93% tax rate creates incentive to go elsewhere or just quit.

            • duheagle says:
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              Or to figure out ways to dodge around it. Back in the day, pretty much the only people who actually made enough money in regular salary to be in the stratospheric – and confiscatory – top tax bracket were showbiz people. Then, not long post-WW2, Jimmy Stewart figured out that making each movie be a corporation allowed one to take little in salary and realize most of one’s take from a successful film as capital gains. One still made a bit of salary even on loser pictures and the losses could be used as carry-forwards against future taxes on successful pictures by production companies. Thus was born Hollywood Accounting.

        • redneck says:
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          Having read a bit of history and economics myself, I am willing to say that there were many factors that created American industry back when, and that tariffs were a minor factor at best. Freedom tops of the list, with many countries restricting their population to the point that innovation was stifled to some degree.

          Another was the shortage of skilled labor during those years when an ambitious person could go west for free/cheap land and become an owner. Innovators had an advantage in productivity that created profits that could be reinvested to become even more productive.

          There’s reams of evidence in all directions that we don’t have time to hash out, even if it was on topic for this forum.

          • ThomasLMatula says:
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            It is as it is about returning manufacturing to the United States for reasons of national security.

            The manufacturers in England in the 19th Century would have been able to undercut the textile manufacturers in the United States as they did in India, except that the U.S. was able to protect itself with tariffs and India, long a center of textile manufacturing, was a British possession and could not so they lost that industry. Steel, locomotive, coal and ship building were other industries protected by tariffs.

            Yes, the western expansion and the open emigration policy created markets, but those markets could have been served by the UK as they were in Canada keeping the US simply a producer of commodities, not a nation of industry.

            • redneck says:
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              This is a very complex subject of many layers. Some manufacturing needs to be done here for much the same reason SpaceX does so much in house. Control of supply/national security.

              Some manufacturing we need to leave offshore unless an entrepreneur can make it profitable here. Low value labor intensive and non critical stuff. The American consumer benefits from products made by $5.00 an hour foreigners.

              To me, the absolutely critical thing is to eliminate as many obstacles as possible to setting up new businesses. The Boca Circus is most visible at the moment Regulatory capture by established players is a problem. Locally we have to have engineered blueprints to pull a permit even when (the majority of the time) there is no engineering involved, just drafting to well known codes. Adds months and thousands to every project or prevents them in the first place.

              My first thought on protectionism is the automaker’s after WW2. America was producing more cars than the rest of the world combined at one point before the war. Afterwards America had no serious competition for decades as all the potential competitors had been knock down. The industry got complacent and lost major market share as soon as others got back on their feet. Then I think about the AT&T monopoly and what we gained when it went away.

              I’m going to stop here for now.

              • ThomasLMatula says:
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                Yes, one part of the solution is expanding the free trade zone beyond Mexico into Central America, providing both a low cost source of labor and providing jobs there to expand the local economies and reduce their need to immigrant here for jobs.

            • duheagle says:
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              That is broadly correct, but misses some additional important factors. Just as we erected tariff barriers in the 19th century to allow growth of domestic industry, we were willing, after WW2, to allow allied countries to do the same so as to raise their own standards of living and consequent ability to be of assistance in checking the USSR. Major examples would be Germany, Japan and South Korea. That worked. Our allies grew industrialized and rich. Together we checked the USSR. The USSR eventually died.

              But all of those allies now have demographic inversions going on that are only modestly less severe than those of Russia and the PRC. It is not in the U.S. national interest that these nations should crash and burn in the same fashion that now seems the inevitable fate of Russia and the PRC. Their declining and aging populations make them less able to absorb American production anyway. The best thing we can do for them in future is to continue what we’ve done for some time now, namely, let them build production facilities in the U.S. that employ still fairly numerous Americans instead of trying to crank out a comparable value of product from their domestic plants using rapidly declining native-born workforces. Allowing them to continue asymmetric tariffs lets their declining domestic production serve their declining domestic markets while their equity ownership of American-based production gives them better access to the American market than would exports from their home territories. This allows their increasingly aged and retired populations to be supported. All of these nations will effectively dwindle away by the 22nd century. Asymmetric tariffs can be part of what amounts to U.S. hospice care for long-time allied nations.

      • duheagle says:
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        Off-shoring was a consequence of both asymmetric tariffs and high corporate tax rates here in the U.S. The latter was finally corrected during the Trump administration. The ongoing implosion of the PRC, combined with declining working-age populations and very high wage rates in places such as South Korea, Japan and Taiwan will encourage companies in those countries to build out even more of their manufacturing capacity here in the U.S. than they already have in addition to what is built by U.S. companies looking to de-complexify, de-risk and shorten their supply chains.

        Production of low- and mid-complexity goods, though, will not, for the most part, be returning to the U.S. The former will move to non-PRC nations in Southeast Asia – Apple setting up shop in Vietnam, for example – while the latter will mostly come to Mexico whose labor productivity and skill level is much higher than the PRC average and whose labor force is not yet undergoing rapid shrinkage.

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