The industrial revival of North America/0 Comments/in Long Articles/by Rudolf Huber
Last week we have seen that COVID-19 might have been the wake-up call the world needed. It is most certainly not the cause of our current economic woes. Those have their roots decades back in the past.
The remedy is a re-industrialization of the old industrialized world. And here North America takes a special place. It has been at the deep end of any wave of industrialization for the last 100 years. It always stood for endless resources, endless lands, endless opportunities. The lands of milk and honey.
Anyone looking at it today might definitely not agree with that statement anymore. Let the truth be told – North America has lost a lot of its sparkle.
But it’s not the riots and thugs taking over some city center for a while that made the USA unattractive. It was overboard regulations and a stifling PC culture. Businesses have to spend a lot of money on matters that should not concern them.
And business was allured by the Asian option. Asia was giving it cheap labor and very lax environmental regulations. It was attractive for a long time. That being said, during the last couple of years many corporations have had second thoughts. Their love affair with China was not a love affair anymore. China has evolved. It once was a comparatively easy-going low-cost producer and investment destination. Today it’s more of a tough cookie and the chief manipulator of world markets.
With the sparkle gone and with global uncertainty sky-high, anchors of stability are in demand again. While Asia is not as sexy anymore as it has once been, Europe does not seem to be eager to get out of its own way. It’s plagued by increasing regulation plus a Climate deal thats sure to crush any remnant of the European industry. This makes the old world an unappealing place for a new industrialization wave.
America has what many Asian countries don’t have:
- legal safety and certainty (try to fight a court case in China against a Chinese corporation and you know what I am talking about)
- decent infrastructure everywhere not only in the cities (China builds high-speed trains and entire cities everywhere but those are not built according to the countries needs but according to the needs of construction companies and are often white elephants)
- a massive self-sustaining and stable market on the doorstep (the US is an import market – cut it off the rest of the world and it will feel the sting but it won’t collapse as it will start by making stuff itself – China needs exports or the internal market just evaporates into thin air)
- a deep-rooted grassroots, redneck entrepreneurial culture of toughened individuals (nothing happens in China without the CCP)
And America has what Europe does not have:
- easy, clean and cheap energy (that does not seem like a priority right now but trust me, prices will go up again)
- a dynamic culture that will change when change is needed (at least as compared to fossilized Europe that likes to skirt around all the hot potato issues)
The political system of the United States often looks chaotic. Especially since Donald Trump has taken the top job. But look again. This very system has grown over the centuries and passed many tests and solved problems many other countries don’t have a recipe for yet.
It has evolved and gone through many challenges which gives it a certain resilience. Those who don’t believe that are invited to read up on American history.
It’s important to understand that societies don’t develop nicely and in a linear, peaceful manner. Sometimes problems (real and imagined ones) need a way to dissolve the tension thats in the society. Political Correctness has swept many problems under the rug. It has done that for decades now. But they have not gone away – they just festered there. Now they blow out into the open.
The American system allows that to happen. This is also a guarantee that any blowout will be limited when it happens. Asian and European countries usually tend to prevent any easing of tensions. They are suppressing any problem they stumble upon and they often do so quite brutally. This ensures that problems grow to unmanageable proportions. When there is a blowout, it’s life-threatening.
Sure, the current riots don’t really look like America looks like a top investment destination.
But how long will those riots last? How many cities are affected? How long until the vast majority of the population grows annoyed by the constant drama, the strife, the insecurity, and all the BS they are constantly presented with?
Give people what they claim to want and see how they do with it.
It’s no different for Renewable Energy. The best remedy for it is giving 100% unbalanced wind and solar power to those that clamor for it. And the blackouts that come with it. And the high prices. The same holds true for the riots. Many Americans who might have had some sympathies with the rioters will have second thoughts now.
A painful experience is a useful antidote for future strife.
The federal nature of the US also provides an antidote that prevents the whole country to sink into turmoil. Everything in the US competes with each other. States, cities, entire regions of the country provide diversity. And that diversity ensures that no matter how bad it gets in one of a couple of parts of the country, America flips back onto its feet rather quickly.
When businesses leave, they don’t leave the country. They move from a place they cannot deal with any more to a place thats more welcoming. And with it move many taxpayers to the greener pastures – all within the country.
Thats more stability that one could hope to find with way more autocratic states. Or with recent democracies that seem to never deal with their problems in an open fashion.
Trump’s deregulation reduces the cost gap with Asia. Automation does the rest.
If it’s employed wisely, the COVID-19 stimulus package could result in a dearth of new industrial development. There will be waste and fraud on a massive scale. In the end, thats whats happens when politicians throw massive amounts of money onto problems. It’s too late to avoid that now.
So, as we are already saddling the economy with tons of fresh debt, maybe there is at least some good things coming from that.
Europe will blow all of its stimulus on fantasy projects that will leave nothing but a bad taste in the mouth. America has a chance to do better.
The developed world must rebuild its manufacturing sector. Thats going to hurt more than anything we have seen in our lifetimes. But it’s like with a pregnant woman on her way to the delivery room. It’s going to happen. Our choices have been whittled down and thats a good thing as it gives us focus.
The economies of the developed world have been zombies for too long. Has COVID-19 broken the spell and killed the zombie master?
Winston Churchill once famously observed that Americans will always do the right thing after they have tried everything else.
Are we done with trying everything else now?
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