Hi friends 👋,
Happy Sunday! I don’t normally send on the weekend, but this conversation is timely enough that it’s worth throwing in your ears today to prepare for the week ahead.
Last week, I was delighted to see that Conrad Bastable dropped a new essay:
Forsaking Industrialism: The Most Expensive Thing You Didn’t Buy (Why You Need More Than Tariffs To Win Zero-Sum Games On The Global Stage)
Conrad doesn’t write often. At the end of this one, he writes:
My end of the writer-reader bargain is that I promise not to publish unless I have something interesting & meaningful to say. If I’m upholding it, you may not agree with all of my perspectives, but ideally you come away from each essay with a newer or richer framework to think about what it means to build great things.
I’ve found that to be true. I discovered his writing when I read his last essay, Monetization and Monopolies: How the Internet You Love Died (Or Why Tech Monopolies Are Actually Good for Society). It’s a contrarian take that, through insane levels of research and clear argument, he makes almost obvious.
So when he published Forsaking Industrialism, I was thrilled to see both that he was back at the keyboard, and that he’d written about a topic that I, and millions of other people if my twitter feed is any indication, needed to think more deeply about.
The timing was coincidental, Conrad told me. He’d been planning to write this essay on tariffs and reindustrialization for six months, since Trump started hinting (yelling to deaf ears?) that he was serious about tariffs, and since Conrad himself tried to buy a dirt bike and saw first hand what the West and the East had to offer.
There are no simple answers here — in the essay or in the conversation. I had to force Conrad, at the end of our conversation, to just pretend that he was President with a magic wand who could reindustrialize America with whichever policies he chose. Even that premise - that a dictator could enact a clean set of policies and carry them out over decades - goes against what America is and does, and even with the magic wand, the set of prescriptions is long, complex, and interconnected. Tariffs, he said, are a piece, but tariffs, he writes, are not enough.
Instead, what Conrad does in the essay is to lay out, at both the 30,000 foot theoretical level and in the weeds of the specific incentives of specific people at specific companies, how we got where we are today. China has spent decades building an Industrial Platform that gives them the ability to build all sorts of electric products almost at will. America, because the investments required to build an Electric Platform have had a much lower expected IRR than investing in software companies, has not.
I came away from the essay and the conversation with a healthy sense of: this is really f’ing complex. EU regulations, meant to help, push demand to China. Environmentalism, meant to save the planet, push demand to China. There is no boogeyman responsible for the West’s relative decline in industrial capability; there are millions of well-meaning, rational people and decisions operating inside of a capitalist democracy that have, slowly but surely, added up to where we are today.
Two of the most interesting sets of relationships Conrad and I discuss are those between Labor and Capital, and between Principles and Prosperity.
On Labor and Capital
Main Street versus Wall Street is the wrong framing. Successful industrial policy, he says, is about threading the needle between labor and capital.
If domestic labor is too unhappy, they're going to do really bad things for productivity, but if capital's unhappy too, it just leaves.
On Principles and Prosperity
One response to China is to become more like China. Conrad writes that this is the worst of all worlds:
What I think would be most tragic of all, and this is where the European and British cases are instructive, would be to ultimately forsake the philosophies and values of the West without actually improving the underlying productivity and Wealth of the our people.
If we forsake some of what makes our culture special, but do so in service of things that don’t simultaneously increase domestic productivity and involve a greater share of the domestic population in those new gains…the inevitable ruin that follows will be well deserved.
…I hope to convince at least a few readers that abandoning Principle AND Prosperity is the worst trade of all.
There’s a matrix. Japan focuses on principles over prosperity, and this may be Europe’s best quadrant if it continues to choose not to pursue prosperity. China, on the other hand, is in the Keep Prosperity/Abandon Principles quadrant: discarded communist ideology in favor of pragmatic economic growth while maintaining an authoritarian system. This is a viable strategy too!
The ideal for America, as hard as it may be to achieve, is to Keep Principles and Keep Prosperity. It’s both challenging, and the only path likely to succeed. The messy beauty of free market capitalism and democracy helped get us into this mess, and it might be the only way out.
Really, though, this conversation isn’t about answers. It’s about providing information, asking questions, and helping you ask some questions of your own.
With so much dumb, flip-floppy chatter about what it’s going to take to reindustrialize America, I hope listening to this conversation gives you an appreciation for how hard, and how important, the challenge is, and what it might take to get a good outcome.
At the very least, if you read and listen to Conrad, you’ll sound smarter arguing with people on the internet this week.
As always, you can find the full conversation wherever you like by subscribing to Not Boring Radio:
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You can also find links to all of the essays and conversations at readwise.io/hyperlegible. Thanks to our friends and sponsors at Readwise, you can head there for a free trial and get all Hyperlegible articles automatically added to your account.
While you’re there, you can check out our other Hyperlegible episodes, like the one we published on Monday with Parakeet on Skittle Factory Dementia Monkey Titty Monetization:
Big thanks to Conrad for joining me, and to Jim Portela for editing!
Thanks for listening,
Packy
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