Apr 28, 2025

Dani Rodrik on the CHIPS Act

A skeptic might object that Biden’s policies have not fully borne fruit and are not yet captured in official statistics.  But the fact is that hugely capital-intensive semiconductor plants generate few jobs, relative to the physical investment they require.  TSMC’s three fab investments in Arizona are expected to employ a mere 6,000 workers – which works out to more than $10 million per job.  Even if the projected tens of thousands of additional jobs in supplier industries materialize, that is a paltry return for employment.

~ Dani Rodrik, "America's manufacturing renaissance will create few good jobs," Project Syndicate, April 22, 2024

TSMC fab under construction in North Phoenix


Dani Rodrik on manufacturing productivity

Labor productivity in US manufacturing has grown nearly sixfold since 1950, compared to a mere doubling in the rest of the economy. The result has been a striking increase in the manufacturing sector’s ability to produce goods, but also an equally dramatic decline in its capacity to generate jobs. While value added in manufacturing (at constant prices) has broadly kept pace with the rest of the US economy, six million manufacturing jobs have been lost since 1980, while 73 million non-farm jobs have been created elsewhere (mainly in services).

When Donald Trump took office in January 2017, the share of US manufacturing in non-farm employment was 8.6%. When he left office, that figure had fallen to 8.4%, despite his attempt to shore up employment through import tariffs. And despite Biden’s significantly more ambitious efforts, manufacturing employment has dropped further, to 8.2%. The decline in manufacturing employment as a share of total employment (even if not in absolute terms) seems to be an irreversible trend. 

~ Dani Rodrik, "America's manufacturing renaissance will create few good jobs," Project Syndicate, April 22, 2024



Barron's on gold's limited value in a portfolio

Our top tip on how gold behaves is this: It doesn't.  People do the behaving, and they are appallingly unreliable.  Use bonds as a stock market hedge.  If they don't work, fall back to patience.  For inflation protection, think of assets that are a better match than gold for the goods and services that you buy every week.  A diversified commodities fund has precious metals but also industrial ones, along with energy and grains.  Treasury-inflation-protected securities are explicitly linked to the consumer price index, which measures inflation for a theoretical individual whose buying patterns differ from your own, but are close enough.  Own a house.

~ Jack Hough, "Stash Some Gold in Your Portfolio - But Not Too Much," Barron's, April 26, 2025



Apr 27, 2025

Rick Santelli on globalization

I think it is pretty simple: globalization was deflationary.  Reversing it is the opposite.

~ Rick Santelli, CNBC, April 3, 2025



Kenneth Pringle on President McKinley's China agenda

China was also on McKinley’s agenda. 

The Middle Kingdom had been divided into “spheres of influence” by the European powers.  American business feared missing out on this huge untapped market. 

On Sept. 6, 1899, McKinley issued the Open Door Note, demanding the Europeans allow China to become “an open market for the commerce of the world.”  This wasn’t free trade in the modern sense, simply a right for all to share in the pillaging of China’s dying Qing dynasty. 

Today, the Chinese consider this era part of its “Century of Humiliation.”  It drives leader Xi Jinping in his dealings with the West.

~ Kenneth G. Pringle, "McKinley Is a Conservative Darling. Why Trump Admires the 25th President," Barron's, February 2, 2025



Kenneth Pringle on President Biden's mercantilism

In slapping tariffs of 100% on Chinese electric vehicles, and 25% to 50% on products from semiconductors to surgical masks, Biden expands a trade war started by predecessor and self-proclaimed "Tariff Man" Donald Trump.  The U.S. wants Europe to join, and China is threatening retaliation.

Biden is actually following a much older trading strategy, one favored by George Washington, Abraham Lincoln, Herbert Hoover - and Queen Elizabeth.

From the 16th to 19th centuries, trade was a national competition to protect industry, improve world standing, and pursue politics by other means.  A zero-sum game, with winners and losers.

War, colonialism, great wealth, and poverty were the consequences.  Adam Smith dubbed it the mercantile system, or mercantilism.

Now Biden, who once championed China's entry into the World Trade Organization, is using punitive tariffs against China to "make sure American workers and American business and corporations can compete and win in the industries of the future."

Welcome to Mercantilism 2.0.

~ Kenneth G. Pringle, "Biden's Tariffs Are Nothing New for U.S.," Barron's, June 17, 2024






Apr 26, 2025

Shaun Rein: "Hi Scotty Bessent, it's been 12 years since we last met to talk about investing in China"

Hi Scotty Bessent, it's been 12 years since we last met to talk about investing in China when you were still CIO over at Soros (btw, amazing how you moved from Soros' right hand to Trump's side despite MAGA hating Soros).

At the time, it was clear to me you underestimated China's economic rise & support for the CPC among everyday Chinese.  You were uber bearish on China because it adopted a communist political system, and you didn't think the growth rates were sustainable. You took an ideological rather than a data based view at analyzing China.  There was also a whiff of American superiority (let's be real and call it bigotry) in your analysis.

Boy, you were wrong obviously.  You should have listened to me then.  China became the world's largest retail market, powering the profits of American firms from Boeing to Nike, Apple, Estee Lauder, Buick, KFC.  It now rivals us in technology from DeepSeek to Huawei to BYD.

[...]

Now you're US Treasury Secretary. Congrats!  Again, you'll have to tell us how you switched from Soros to MAGA.

But now your underestimation of China is dangerous - it doesn't just hurt your returns for your LPs, now you're hurting the economic well being of me and my fellow Americans for being so arrogant and blind about China.

China has the resolve to push back hard against Trump's tariffs even though you think China doesn't have the cards.  Xi Jinping won't yield.  China views this as a once in a century opportunity to change the world order forever, at our disadvantage.  And the CPC's legitimacy doesn't come from a Democratic vote, it comes from making China strong again after a century of humiliation from American and European imperial powers.  In other words, the CPC has been preparing for a showdown like this since it's very existence.

China has derisked from America since 2017.  They are selling well into ASEAN and Africa.  Your America First strategy has alienated Europe and Canada so they are pivoting back to China.  We are isolated and friendless, just like you, JD Vance and Trump intended.

Xi Jinping, Wang Yi and He Lifeng won't take your call, but I will.  Maybe you'll listen to me to figure out how to extricate America from the economic and geopolitical mess you've gotten us in. 

Shipping volumes are down to covid era levels, farmers are demanding subsidies and Walmart and Apple's CEOs are telling you there will be shortages come the summer.  Our stock markets are like a casino, waiting for word from you or Trump that your tariff stupidity won't go on forever.

America and China both benefit from cooperation and mutual respect.  Let's get back to Bush era respect.  I'll even take the Obama era.

You ignored my advice once 12 years ago, don't ignore it again. 

~ Shaun Rein, Twitter/X post, April 23, 2025