"Best I can do is subsidize manufacturing"

The Economist reports, ‘The world is in the grip of a manufacturing delusion’, and is it ever!

First a breakdown of the scale of subsidies:

Nowhere is spending more than America. “Folks, where is it written that [we] can’t once again be the manufacturing capital of the world?” Joe Biden, the country’s president, has asked. In search of an answer, he has committed around $1trn, or almost 5% of American gdp. In response, the eu has tweaked state-aid rules, so that national governments can splash out. These initiatives follow the example of rising Asian powers. China’s “Made in China” strategy aims to turn the country from a big manufacturing player into a dominant one. India’s “Make in India” strategy hopes to boost the industrial share of the economy to 25% of value added by 2025.

This is an incredible amount of money.

For context, much of the developed world faces fertility crises with fertility rates well below replacement. The most ambitious set of government interventions to address any of these crises are Estonia’s which account for just over 3% of their GDP (See this twitter thread summarizing some of the data in ‘Parental Leave and Fertility: Individual-Level Responses in the Tempo and Quantum of Second and Third Births’). Estonia is dedicating the equivalent of 60% of what the United States is dedicating to subsidizing manufacturing in an effort to boosting population, The Ultimate Resource.

While the economic returns to additional humans are unbeatable the returns to manufacturing are diminishing globally. The Economist essay outlines common delusions about manufacturing and its place in the global economy which much of the world’s political class still desperately cling to despite the overwhelming evidence that,

cutting-edge industry looks more like the service sector. According to the imf, manufacturing-associated services have grown as a share of global output in recent decades. The assembly of a gadget is not where the sort of money that leads to high-paying jobs is made.

Excellent essay outlining the scale of the political conundrum presented by, ‘The world is in the grip of a manufacturing delusion’, which against all economic, historical, and technological evidence clings to manufacturing as the key to human flourishing.