>Like with the first round of funding last year, the administration is invoking the Defense Production Act—a long-standing piece of legislation that grants the president the power to ensure the supply of materials needed for national defense.
Mark my words, this planned economy stuff is going to come back and bite us...
Bite us worse than manufacturers outsourcing and offshoring [1] already and losing supply chain and manufacturing muscle memory? You would think we would've learned with Boeing [2], but nope, people still complaining planning is a concern vs the free market race to the bottom that has brought us current state.
"Protectionism" is a pejorative term used by people who forget the complexity of building at scale, and the cost of losing this capability. Helplessness as a nation state is not a flattering look on the global stage.
> A company representative announced the information to an assembly of workers. He said, “The best way to stay competitive and protect the business for long-term is to move production from our facility in Indianapolis to Monterrey, Mexico.”
Boeing subsists primarily on defense production. Do we want every American industry to end up like them?
Seriously, the faulty airplanes were all built in the US by a company with some of the closest government ties in our economy. It is indeed an example of what fruits use of the defense production act might bear.
Why single out Boeing? What about Lockheed, NG, GD, Leidos, Booz Allen, Hamilton, etc.?
Are all these companies "victims" of "planned economy"? Do you have any evidence that they are experiencing the same multitude and severity of issues as Boeing?
> It is indeed an example of what fruits use of the defense production act might bear.
What fruits are those, exactly? Are these fruits worse or better than an already bloated military-industrial complex? Please, elaborate.
Based on where we're at today, we can only go up. Boeing is an easy fix; nationalize them and fix it. To not do so (and allow incompetent management to remain) is a choice.
Breaking up Boeing is, in a sense, the opposite of nationalizing it. Furthermore nationalizing Boeing would mean buying it from the shareholders, who already have the right to change its management, if they want to. Why don't they want to fire its management?
I'd say it's because Boeing is a creature well-adapted to its environment - an environment created by protectionism and defense production contracts.
It's unconstitutional to nationalize a company without compensating shareholders at market rate. Your own link (Reuters) explains this in depth—you should first read that article which I think you've misunderstood.
What is the value of an enterprise that cannot sell airplanes due to buyer sentiment and regulatory refusal? I argue it is closer to $0 than you might think. Determine a desired outcome, and then engineer it within constraints (hard vs mutable limits, and where interpretation provides latitude).
Edit: Book value is reasonable compensation to nationalize. "Closer to $0", not $0.
> What is the value of an enterprise that cannot sell airplanes due to buyer sentiment and regulatory refusal? I argue it is closer to $0 than you might think.
There is a lot of residual value in the physical plant of the enterprise--the real estate it owns, the machines it owns, the resources it has in inventory. Actually, there's a name for this value: book value.
I agree with you, I also see a political thing here that is entirely a reflection of societies inability to bridge political issues and focus on agreeable national issues at this level. Its entirely of "our" own making.
The inability to establish bipartisanship in Congress to make congressional sessions more productive and not bogged down along party lines as they are today, more often than not (and increasingly so), leaves the administration with little levers to pull.
Given that, we've seen presidents since Reagan use some wonky legal logic to move money around that is very much intended (in the spirit of) something, but used for something else entirely.
Very often the places you have the most flexibility for this is defense, because you have the easiest time making a legal case for it if its ever challenged.
If we didn't have a dysfunctional congress, which is definitely an extension of dysfunctional politics in the US, they could use the correct levers to create subsidies for this via congressional allocation, but as it sits today, you'd never get a bill through congress.
I don't think it's fair for people who live in hot climates to pay for the heat pumps of people in cold climates, or for people who can't afford an upgrade to pay for their neighbor's new equipment. That said, yes, absolutely, lawful subsidies are far less of a petri dish for corruption than individual executive interventions.
Well, since the defense production act was created to allow the government to divert capacity the most obvious negative outcome would be the loss of whatever the capacity was doing to begin with.
Perhaps the more dangerous outcome for as long as the budgets remain small is the government playing favorites. "You better donate to the right party and hire the right retiring regulators, or the government won't start a defense production program for your industry." Now that companies have an incentive to bend the administration's picture of what products will help the climate you can guess what will happen. Once the relationships are built up the effects will extend beyond individual programs.
Also, the defense industry is one of the least efficient and most lobbyist-driven/build-fifty-parts-in-fifty-states/friends-with-the-colonel institutions in our system. We begrudgingly accept it because, what's the alternative? - but if you wish that on the rest of the economy you must want the terrorists to win. ;-)
>the most obvious negative outcome would be the loss of whatever the capacity was doing to begin with.
As long as VC is lighting money on fire on obviously stupid ventures like Juciero and subsidizing Uber/Lyft rides to far below cost for a decade, NFTs, and transparent frauds like FTX, it's hard to get worked up about government deciding to make sure our basic national security needs are covered.
VC has not proven themselves to be paragons of free private market efficiency for the past decade.
There's almost no overlap between VC and anything involving sheet metal. In fact the way manufacturing events never make it out of industry press is a good sign the troubles will need to get very bad indeed before the feedback in the democratic system begins to control them.
Kind of proves the point. Private capital is more willing to invest in stupid shit that they can convince themselves will 10x than in something worthwhile that probably can't be 10x'd easily, like manufacturing.
Venture capital is a small fraction of private capital. If you stretch the definition to its limits, you could say that tech companies are a big fraction of the total stock market cap, but the majority is still accounted for by companies like P&G.
In some ways you are, since we all pay the cost of monetary policy and 0% interest rates didn't happen in a vacuum. They're interconnected and in more ways than monetary policy but its the most obvious example.
Now I'm not debating the merits here, simply stating that the speculation VCs engaged in was in large part due to the "cheapness" of money, which is directly the result of monetary policy since 2008 or so.
This drives things like safe returns vs riskier returns, which can in turn fuel bubbles since safe returns[0] can't pace inflation, the money goes elsewhere, into riskier things over time, creating bubbles and over-investment as people chase better returns. This makes it more expensive over time to do things, like holding safe investments vs riskier ones, because your future value is eroded.
This also translates into other societal issues, and while it may not always be the main cause it will exacerbate existing problems, particularly in markets where financing is prevalent, like housing.
[0]: Such as Certificates Of Deposit, which are all the rage again now that interest rates are higher than have been in ~15 years
I have a hard time being scared that we're not going to be able to make enough weapon systems because we started making heat pumps. Industry isn't zero sum; investment can create jobs. Even if that weren't the case, I still would not be quaking in my boots.
I agree there is a risk of favoritism. Still, I think the consumer benefit is worth the risk. Ideally in my view, the government can set some base standards like they do with EV batteries and tax credits. And over time they can raise the bar on requirements, on efficiency and reliability and install cost requirements.
Third, the money is coming from the Defense Spending Act, but it's not like companies have to be paid up gold star members of the defense industry consortium to play here. Defense Production Act. I think the GAO has a pretty good review of what happened with emergency Defense Production Act spending under COVID, and it doesn't give me fear at all that this is some crazy Military Industrial Congressional Complex boondogle. It makes me feel like mostly this stuff works fine & is well done, and agencies are tuning things responsibly. https://www.gao.gov/assets/gao-22-105380.pdf
This is $63m spending. Being afraid of this level of spending feels absurd to me. I cannot imagine being against some basic government investment in trying to do better in a key sector like this. I have faith we'll find and do great things with some of this money, and set a path that will keep yielding improvements in American's lives. I wish we weren't all so afraid of this shit.
I remember when there were tons of subsidies for LED lighting in order to make them competitive with the extremely low prices of incandescent/halogens and their simple low part designs. Then the incandescent/halogen ban went through the the prices of LED light bulbs went through the roof and never came back down. All while LEDs never achieved anything close to the early claims of 100k hours and ended up only be comparable to incandescent in lifetime due to skimping on parts cost in the driver boards.
I hope we don't see that play out again with heat pumps. That said, I'm glad there is funding for the design of heat pumps in north american markets. Existing heat pump designs don't really work for continental climate severe cold.
>All while LEDs never achieved anything close to the early claims of 100k hours and ended up only be comparable to incandescent in lifetime due to skimping on parts cost in the driver boards.
I don't know what bulbs you're using but I don't find this to be the case.
As an alternative example, the effect of subsidies on the solar panel industry has led to rapid improvements in cost and efficiency.
Phillips, Cree, and all sorts of generics. If you have good electrical power you won't notice, but if your power is dirty, a loose neutral exists, etc, the driver boards do not last long. Whereas the simple no-circuitry halogens do. And this is especially true in enclosures.
It's another situation where the well off remain well off but for the poor the situation gets worse.
Big Clive of YouTube fame has shown many times over that modest changes to the driver board of commercial LED lights will allow them to last indefinitely. You have to wonder if the manufacturers don't know this.
Anecdotally, I've replaced more halogens than any other kind of bulb. I'm assuming it was the fixture that was causing it. They were cheap but they guzzled power.
>prices of LED light bulbs went through the roof and never came back down
Maybe I'm buying cheap bulbs but the latest ones I've bought have been very reasonably priced and most definitely are lasting longer than incandescent / halogen. I recently replaced some that had been operating for at least 8 years and likely longer.
That's the kind of thing western neoliberal economists used to say about China in the 1990s - it was only hurting itself with all this central planning, etc. and if it wanted to really grow it should go fully unplanned, release capital controls, instead of this hybrid central planning/capitalist system that theyve got.
They sort of seamlessly morphed from that to arguing about how its economic rise can be arrested by slapping tariffs, etc. on them.
China's growth appears to have halted at a below western standard of living primarily due to government intervention. I am not so sure the economists were wrong.
The globe cannot sustain the entire chinese population at the western rate of consumption. Modern economists aren't known for their ability to think beyond next quarter's earnings.
China's growth is stalling because the export oriented industrialization process it tapping out and because they've already reaped most of the demographic dividend.
Can you think of another example of a country that did better by following the standard neoliberal washington consensus advice from the 70s/80s/90s?
Chile and Russia are two examples that I can think of that followed western proscriptions at one point (70s/80s and 90s) but it didn't exactly work out well for either of them.
That was supposed to be something that would stop happening when they developed too. The idea was that once they became rich they would liberalize and demand democracy and it would just happen. I think Thomas Friedman was the poster boy for that idea but he was far from the only one pushing it.
It really is wild looking at predictions about what would happen in the 1990s and comparing it to what did actually happen.
It's even wilder seeing people repeat similar predictions and forgetting when theyve been made before.
The whole economy is rigged in so many ways... "keep the rich rich... make the middle class poorer" is the motto... or maybe it's just "make the rich richer and bomb anyone who disagrees"
I am so happy that heat pumps are getting more and more attention. They have the opportunity to reduce the energy used to heat a home by 75%.
They're not "perfect" (e.g. they don't work at <0F temperatures without truly absurdly large heat-exchange components that aren't worth the capital expense). I also know a lot of people would like the option to use natural gas, but I'd like to think that with this type of additional investment and focus, some future heat pumps could use natural gas as their "backup resistive heating" instead of electric.
Heat pumps are pretty incredible and I am always surprised we don’t see more of them. We recently installed a heat pump water heater and it made a noticeable dent in our electric bill. Next up is a heat pump dryer!
Also surprised by the lack of solar water heating in the US. My childhood home had a system but when it broke we could not find anyone that could fix the system and had to remove it.
Combo Heat pump washer+dryers also just made a huge technical advancement as well, not requiring any ventilation to run, meaning you can put them anywhere in your home with a water line - eg in an unventilated hallway closet with far less risk of fire (dryers cause 92% of house fires). And they use less water and energy per load than a typical washer/dryer.
I thought that was a really interesting stat (I believed you, I don't mean I went to fact-check you but that's what ended up happening!) and wanted to read more about it -- it sounds like dryer fires aren't _overall_ that destructive, but in the "washer & dryer" category (~16k fires out of ~350k per year) they are 92% of that category.
Figured you'd want to know, since I found it interesting!
That being said, the dryer fires are certainly preventable and if any technology aids in reducing that, it's well worth it!
There's also the LG one. Reviews are so-so about the LG one, with lots of complaints about reliability and clothes smelling cooked after drying with the heat pump.
> a heat pump water heater and it made a noticeable dent in our electric bill.
I think, in most of the USA, a natural gas water heater would have made a similar dent in your overall utility bill. But I still am very glad we're working harder towards good heat pumps.
I have a heat pump dryer. It's a small LG one. Takes ages to dry but that's the trade off I was willing to make. Super gentle on my clothes, uses hardly any power, no vent to catch on fire.
Compared to resistive heat, sure, but a heat pump powered by fossil fuels isn't much better than a gas furnace. My point is that we need to stop burning fossil fuels for electricity so that heat pumps make sense.
> Compared to resistive heat, sure, but a heat pump powered by fossil fuels isn't much better than a gas furnace. My point is that we need to stop burning fossil fuels for electricity so that heat pumps make sense.
Technically, heat pumps can absolutely achieve greater than 100% efficiency (considering their input electricity as a starting point).
It's also true though that there are also lot of caveats about their effectiveness based on temperature differential, maximum output compared to a furnace, efficiency with which the upstream electricity is generated, etc.
Mark my words, this planned economy stuff is going to come back and bite us...