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This points out the fact that ceding your technical manufacturing base to other countries, especially your possible enemies, is good way to lose geopolitical relevance in a hurry. The implicit assumption has always been that nuclear weapons trump everything, but realistically this only is useful if an enemy believes you are willing to invoke Armageddon to resolve a conflict. Is the US going to risk annihilation over Taiwan? If the answer is 'no', then relative conventional combat strength will determine the victor, and when your opponent owns your industrial base, you have already lost.

My understanding is that the deindustrialisation of the USA is largely a natural consequence of the 'exorbitant privilege' of having the world's global reserve currency (since Bretton Woods). This was identified as early as the 1960s by Robert Triffin, and is known as the Triffin Dilemma [1].

[1] https://wikiless.tiekoetter.com/wiki/Triffin_dilemma

That wouldn't explain why you see the same in Australia, NZ, UK, etc etc.

It seems to me that "obvious explanation" of globalization is more parsimonious (although I acknowledge there can be multiple forces at work).

Things are set up so that corporations can "shop" for the lowest wages, taxes, environmental laws and so on. In fact they have to or face being outcompeted. Another headwind is heavy state support for "real" industry in a lot of places (that CAN see the value in having an industrial base).

The result of globalisation is nominally more efficient (in a comparative advantage sense), but hollows the industrial base in richer countries and since that is an externality not measured in dollars, here we are.

Personally I am also partial to the related narrative that this has stifled local innovation in a broad blast radius around the outsourced industries and is a major contributing factor in reduced infrastructure capacity in the west.

Yeah, this is basically the stability/instability paradox.


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