"Forgetting to look up" implies a desire or intent to do so. The United States - former leader of the collective West - made the choice decades ago to sacrifice everything on the altar of quarterly profits. All that remains are the consequences of that decision.
We can all agree to blame Jack Welch as shorthand though, I think.
There's also risk in investing in very long-term things that may not pan out.
WAI, in other words
The only major example I can think of is Amazon dot com which famously reinvested all its profits into itself for well over a decade.
The fact that investors didn't punish Amazon dot com was seen as befuddling in the press.
> Companies routinely lose money for years in pursuit of long term growth.
No, I don't think this is true at all because you used the word "routinely". I would claim it is very rare.
I mean, I agree that such companies are over-represented in thinking about small businesses if that's what you mean. Normal companies have to be profitable quickly for sure.
It feels like tons of companies get valued based on userbase or revenue or theoretical breakthrough rather than ever having to really think about breaking even, but I know that's just because those folks get all the press.
Some money is lost to push up this valuation or valuation based on some future sales, or market share or anything...
But much of that long term growth now is just the company growing to displace competitors in existing markets, often by subsidizing prices and dodging regulations - see: Uber, Lyft, Air BnB, etc.
We've all seen the playbook a dozen times now: move into a market, keep prices artificially low until the existing competitors are displaced, then the raise prices to return the initial investment and more. That kind of growth-by-displacement is genuinely necessary sometimes but in these cases it's more like a fungus than a plant, just metabolizing an existing system.
It's not the same thing as actually expanding a market or investing in concrete assets (steel mills, power plants, boats, railroads) or R&D that compounds future growth. When the actual investment is just spent artificially lowering prices there's no actual efficiency gains and the consumers ultimately pay the price and more when the company hits the peak of the existing market and shift to enshittification mode to really extract wealth.
100 years ago clothes were expensive items. Which is why they were class signals - less because of fashion and more because if you were poor you needed to buy long lasting fabrics. Clothes for the poor were expensive as well as the rich.
You can buy those same quality items today but nobody will because we expect clothes to be cheap and not have to repair them.
Take flights... For all the complaints about lack of legroom etc the price of a flight 50 years ago was the same as first/business class today. And yet how few people will pay for it. They'll grumble about small seats and bad snacks but hardly anybody will fork out for the upgrade. Not because they can't actually afford it but because they believe it should be cheaper.
When Sears was looted by management, how were consumers supposed to continue purchasing quality stuff from a historic company?
You've got your cause and effect backwards. American companies fired everyone who was paid enough to afford good stuff, and replaced them with workers in other countries, and then those people didn't really have a choice but to buy the junk because it was the only option left on the market and they couldn't afford anything else
What happened was that American business theory abandoned the American worker.
Is it all being demolished, or is 95% of it being moved into?
Because all those ghost cities that China was building that the news kept bitching about... Are now all full.
Meanwhile, in the West, we have a housing shortage. Who looks the fool now...
I would. It's showing the weaknesses and limitations of its ideology.
> You’d have to be blind to ignore the massive overbuilding of property in China, which they are now demolishing. All of that wasted capital.
So what?
> Authoritarian regimes with controlled media always seem successful… Up until the USSR collapsed there were many prominent people in the West saying it was the superior system.
The West is literally de-industrializing and can't seem to built shit except slowly and expensively. Industry after industry gets hollowed out as China takes the lead.
Do not make the mistake of reasoning about US vs China from the experience of US vs USSR. China doesn't have a command economy, outproduces the US, and controls many key industries. The US is resting on its laurels, and its people cope by thinking of the few industries where it's still ahead, but those are dwindling.
> The market test - meaning floating prices and the response to them - is a superior way of allocating capital.
That's not truth, it's a dogmatic assumption.
China has been able to exploit a dogmatic belief in the free market to siphon the real capital out of the West and into itself (industry and know-how) in order to achieve dominance. The US elite is content to have paper. We'll see how that works out.
> We need to see how all of this plays out
If you're rooting for China. If you're rooting for the US, by then it will be too late to course correct.
Isn't the same now happening with the US with the massive overbuilding of AI capacity? Seems like a tightly centralized capitalist system is not that different from a communist one.
Private ownership of means of production: On an atomic, legal level of course. But if point at an NVIDIA based compute rack at a US based random datacenter, can someone tell me actually who owns it? I am interested in the actual natural person who has an ownership share of this capital asset, not the myriads of layers of corporate and financial networks of equity delegations through investment banks, but the actual owner?
Profit oriented: Of course, it is said so. But do really companies, entrepreneurs do things to maximize the profits of the actual owners, shareholders? Are the executives and boards really that keen on putting forward the interest - of the previously referenced unknown - actual owner of the capital assets?
Free market based: This has also multiple sub-characteristics, but most importantly something about competition, or rather the lack of collusion and that economic actors (including consumers, (natural person) investors) are all fully informed. How much is this true in the West?
I think we are very much lost in labels.
The companies building out vast data centers for AI aren’t looking to make profits for several years (if ever), and are catching a lot of flak for it. The shareholders who seem to be focused on short-term profits and punish them every time they get cold feet. Oracle is a prime example of this.
I don’t know if the markets in Asia work differently, or if the investors there are just as fickle.
Like meta with the metaverse thing, I hate it with a passion, but pouring billions yearly with little return just to support your vision is at least a break with tradition...
so this begs the question - why isn't the west's own supply chain options as immense? My unresearched answer is that the gov't policies of the west doesn't induce it, while china's gov't does (which includes targeted subsidies, tax incentives and state driven finances).
The "hidden" cost is that the workers in this supply chain isn't as well paid and isn't as powerful as the workers from the west (there's no unions in china for example).
They used to be. Since roughly the 80's, policymakers have decided it is better for the shareholders to outsource most of that industry overseas to China and India and etc, where the labor is cheaper.
Note that workers and especially union members actually have every incentive to keep that production domestic, but shareholders and CEOs profit when they can cut labor costs and the typical Western consumer values cheap products more than the health of domestic industry.
Western industries have been supported by subsidies, tax incentives, bailouts, low interest rates, and a dozen other things from the gov't but the same policies reward outsourcing and financial engineering more than actual production capacity.
The US explicitly chose to be a service economy. China explicitly chose to be a mercantile economy.
The US can absolutely switch paths, it will just take a long time and will require pushing millions into poverty. But we're on track to do it.
In other words: the US wants its workers assembling hamburgers, China wants its workers assembling drones.
And when there's a conflict, the US will lose because you can't win a war with hamburgers.
Which is how China gets to make drones to begin with. You don't seem to have any understanding of what a service economy is.
US and China are on completely different stages of industrialization: The US had its massive boom of manufacturing almost a century ago, enriching its population massively. Those rich citizens make the same manufacturing uncompetitive today, because no one is going to work in a factory for $20k/year (median wage in urban China), when he can work for other "rich" people for more than twice as much.
Switching paths is not feasible for the US in the same way that it is not gonna be feasible for China to hold on to all its industry as wages rise: You can't compete globally at "poor people wages" while being "rich", as simple as that.
The only thing that the US is on track to is getting a taste of what real corruption feels like, enriching Trump's friends, and hollowing out its middle class.
You can also see this in the German approach to energy trade with Russia.
This toxic idea needs to be put to bed. All it did was feed and enrich foreigners at the expense of locals and create supply chain dependencies that made themselves hostage.
Because each city in China has become specialized. You want to have someone make hairdryers for your company to sell? Then go to Cixi. There are dozens of small suppliers making the parts that go into hair dryers. There are dozens of companies making small appliances (just like hairdryers) They're all "just down the street" from each other. This means that the knowledge and infrastructure and workers are all in one place. You don't have to ship a truckload of heater elements across the country to some factory that some CEO decided should be built in the lowest cost real estate. The same reason that all of the America IC manufacturers got started in Silicon Valley.
This sort of specialization/concentration used to happen in the US. That's why NYC had a "garment district" where you could get clothing made from design to ready-to-sell. Los Angeles used to be one of the major hubs for making aircraft because of the large number of small companies making stuff that the aerospace companies assemble into aircraft. Jacobs wrote about this sort of thing in Cities And The Wealth of Nations about how the Shah of Iran wanted a helicopter factory in Iran. It was a flop because none of the seats are made across town, they're made in America, like the blades or engine or windscreen or avionics. All the Shah got for his dream was an assembly plant. There was no transfer of technology so that the parts could be made in Iran.
Before shipping containers were invented, shipping goods was expensive enough that factories making things tended to be located close to their suppliers. That was why Detroit became a center of car manufacturing. Shipping containers made it cheaper to transport some item across an ocean than it costs to drive it across the city.
The last 200 years has been an aberration and it is currently in the process of being corrected.
Does anyone here have leverage to affect strategy?
I 100% believe the strategy is to enlarge the Trump family's wealth, and it's been a wildly successful strategy (in the past year he's been able to create billions in wealth for his family [0]). At least this vaguely ties Trump's success to the success of the United States in a limited capacity. Completely destroying the US is not ideal for him, but it's clear all policy decisions being made are being done so based on their capacity to improve Trump's situation.
We've been headed this direction long before Trump, from both parties, increasingly American policy is about what's good for American companies and in particular the people who own them. Now that pool has just shrunk a bit.
0. https://www.wsj.com/politics/trump-family-business-visualize...
How can you say? The ultra wealthy are not playing team sports. If the country burned tomorrow they would just sit on their yacht or buy citizenship somewhere else.
Sure the lion share of his investments are currently in the US, but that could easily change.
Yes, they'll all be on yachts when the shit hits the fan, but they're still fighting to figure out who get the biggest yacht, and right now it seems like Trump has more to milk from us before he entirely lets this thing fall apart.
Exactly, just as taking out structural supports when stripping copper and goods from a three story walkup is sub optimal and potentially fatal.
But make no mistake, from way out here (Australia), having watched the US for decades, it really does look like you've a grifter inside the house taking everything that isn't nailed down with zero concern for anyone else in the US.
It's a bad time for those that cannot afford shiny gold baubles.
Nah.
He wants to be a dictator that extracts wealth from it's citizens.
He has a benefit from following the communist path to extract wealth. Make lives miserable, so they are living off the state ( eg. standing in line for bread), so they can't protest.
Putin is not Trump's friend, but Trump idolises him for extracting enormous wealth from Russia, censoring news ( propaganda) and imprisoning political opponents, ...
Just check the "firehose of falsehoods" ( a Russian propaganda method), it will explain a lot about Trump.
People like Trump are perfectly happy to destroy a trillion dollars of GDP as long as they get a billion. Project 2025 and all the techfascist dreams of "Network states" are exactly about destroying the US and ruling over the ashes. Christian fundamentalists for example are perfectly happy to have a shell of a former good country as long as they get to institute sharia law.
> from both parties, increasingly American policy is about what's good for American companies
When democrats lost the election to Reagan by a landslide, it was pretty clear Americans had no idea what good policy was and would not vote for it. That's what the problem was. Bill Clinton did neoliberalism and "It's the economy stupid" and democrats pushed for the Crime Bill because those slogans were what the American voter will respond to, at least until right wing media improved it's propaganda power to turn the entire concept of "democrat" into a slur.
Voters in the 80s decided that hard work and building a better future was for suckers, and they'd rather loot the future and do cocaine now. So here we are. Now the exact same people are pitching a fit and giving everything to Trump because they are angry that the policies they supported the past 40 years did exactly what they should have expected.
People keep voting for republicans because "the debt is bad" despite 25 years of direct and objective evidence showing that to be the worst idea.
People keep voting for republicans for "anti-war" despite Bush Jr. getting re-elected for running multiple criminal wars against the middle east, not even the right fucking countries, "for doing 9/11"
People keep voting for republicans "because of the economy" even though republicans haven't shown any ability to run the damn economy for decades, and Trump specifically pushing for things that harm the economy outright.
The voters are bad at voting.
Did you miss the Infrastructure act that spent $500B on roads, ports, and water projects? The CHIPS act that spent $50B on decoupling and R&D?! The Climate & Energy act ("IRA") that spent $400B on clean energy subsidies??!!
I can understand the perspective of wanting more, but the forward-looking policies of the last administration were in a different galaxy compared to those of the current administration, where the big plan is to chop USAID, boost deportations, and cut capital gains tax.
This is the difference between corn and the cob and corn in the toilet. No, it is not the same.
I bet China’s first priority when building semiconductors isn’t hiring lawyers.
People have all sorts of mythologized reasons for why the USSR failed, because while it often produced immense amounts of goods and services and well educated people in certain areas (sometimes beating "the west" by a good margin for one or two years at a go), it also made long term advancement contingent on the party and not the real world and became incapable of handling major changes.
We're witnessing that now in the US with perhaps one of the most incompetent governments in history that is also burning down the non-political institutions of expertise that for all their faults and mistakes, at least had educated and motivated people that cared about their purpose.
As the comment you responded to said: it's all about the next quarterly profits. The fact that we are getting leapfrogged by China doesn't matter to those CEOs: that's a long-term thing, and it doesn't impact their next bonus.
Good joke. Probably a couple of tech billionaires will eventually say something and then something will happen.
Damned if you. Damned if you don't.