While I agree with the main point here that the Trump Admin actions are too limited with too much reliance on tarrifs, there is a missing acknowledgment of the US leading in the space part of aerospace. However, no big capital investment in innovation will help while China steals US IP and ignores patent rights. As Palmer Lucky points out, we need to cut off China from patent information access, and prevent all the industrial espionage.
Perhaps all of the money/capital that is going into Elon Musk’s venture for colonizing space would better be directed to developing improved commercial aircraft. I don’t know how to achieve that, although a tariff on Chinese aircraft would help.
In any case, I don’t regard either space exploration or faster commercial aircraft travel as allocations of resources that have much benefit for the vast majority of people. (I do, however, support the U.S. and its allies devoting resources to space based defense.)
Mr. Lynn does not talk about the flip side of ramping up capital investment in key industries. The funds will likely have to come from reducing consumption. And with increased automation the investments will produce fewer new jobs than in the past. We will not have to worry about these trade-offs during the current administration. It will just pile on the debt until the USA loses its reserve currency status. The current administration will also not invest in key technology that our President does not like (e.g. wind, solar and electric vehicles).
Spend a few minutes on YouTube and you'll realize this guy is full of it. There is the fully private effort, which recently got investment from Boeing, to build a new lifting body(blended wing like the stealth bomber) passenger and cargo planes.
Nasa just did a test flight of a super sonic prototype that doesn't create a loud sonic boom when it passes overhead. There is a private company working on a corporate jet version. Here's the realty, we normal people are never going to make a habit flying super sonic, it's just too expensive compared to the time saved.
Boeing and other have toyed with building a trans-sonic passenger jet. This would go about 100 miles faster then current passenger jets. I doubt they will ever bring it to market. It would lop about 40 minutes off a New York to London flight. Again, not enough time savings to really make the investment worth it.
On the hyper-sonic front, there are various projects from both government and private sources. There's one companies that has had some serious success with building a chimera engine that can transition from turbo jet to ram jet. It will probably see use in military application. Other big steps have been made in rotating pulse jet technology. Rotating pulse jets could theoretically make it into the civilian market at some point, but you would have to figure out how to reduce the sound.
All that before you get into SpaceX, and Blue Horizon as well as few other commercial space flight outfits. So we are still well ahead of the competition and the aerospace industry gets plenty of government funding. Usually through the military. The lifting body aircraft come straight from developing the F15, F35, B2 and more recent B21 that is being put into production.
Unfortunately, Boeing is a monopoly just as all the other main industries in the USA have become over the last 50 years since Nadar, Friedman and cohorts got their ways. From food to defense, all our industries have become monopolies with moats as ole "aw shucks" Buffet likes to say. These are what Buffet invested in, monopiles, moats. His strategy.
So, this monopoly power has been with us and if we are to break these moats or monopiles up will take a lot of political leverage and courage which is not even close to being there now. The politicians especially Democrats are hard into these monopiles and doubtful they will be tamed and knocked down as Roosevelt and Co, did during the depression. The monopiles they blamed for a majority of the reasons for the depression. Ole grass roots democrats back then busted the monopiles and Brandies at the Supreme Court had their back.
But all that changed in the 70's and especially as we hit the 80's.
So, until this situation is fixed, we will keep doing what we have been doing? Nothing. And Trump likes big. He has a lot of really good ideas and instincts, but he is a rich guy that loves gaudy expensive and flashy and big. He will unfortunately not be the one to do this. It is not him.
Good article! IMO what you're alluding to is an element of the basic problem that arises from the fundamental macro identity: investment equals savings, plus the net current account balance.
In 2024, America's gross domestic savings were 17% of GDP. By contrast, China's was 43%.
China is willing to do a lot to restrict domestic consumption. And as a basic cultural reality, the Chinese are also a much lower time preference culture right now and don't take their prosperity as a given.
If America wants to generate investment, it needs to find a way to either convince the American public to repress consumption or force them to do so. That seems like a very difficult project outside of wartime.
The key quote: So what should America actually do to protect its own industry? Tariff revenues, assuming they survive legal challenges, represent a significant pool of capital. The question is whether Washington has the strategic vision to deploy them effectively, or whether they will simply vanish without a trace in the vast federal budget.
The Trump administration is not relying only on tariffs as a method of rebuilding industrial capacity , and today so is a canard. Clearly there is emphasis on tax policy, particularly immediate depreciation, deregulation, with heavy rule revisions, and direct investment in key sectors.
Great point Richard. Europe became our rival by outsourcing their national defense to us, a peculiar act for an "enemy"... It's fascinating to watch MAGA embrace Russia as their new and perhaps only ally while pitching Western Europe overboard. One is too "woke" and offends MAGA's ever delicate and brittle sensitivities. The other literally targets our soldiers by assisting the enemy (Iran) MAGA chose war with, invades sovereign nations, brutally attacks civilian populations, kidnaps children to ship back to the motherland, attacks western infrastructure, conducts disinformation campaigns to influence western elections including ours, and toys with our president like a cheap marionette.
You may prefer a vacation in "Stalingrad" and cheap Russian vodka, I'd rather prefer a sip of good wine and Christmas in Paris:)
Great post! Please keep elevating the question of WHERE that tariff revenue has gone to. I think if it were already being very publicly deployed to address urgent public needs (including revitalizing necessary industries), the Supreme Court reversals would have gone differently and Congress would be getting onboard. We've blown a vital opportunity - as you so incisively said, building a wall around an empty lot.
While I agree with the main point here that the Trump Admin actions are too limited with too much reliance on tarrifs, there is a missing acknowledgment of the US leading in the space part of aerospace. However, no big capital investment in innovation will help while China steals US IP and ignores patent rights. As Palmer Lucky points out, we need to cut off China from patent information access, and prevent all the industrial espionage.
Perhaps all of the money/capital that is going into Elon Musk’s venture for colonizing space would better be directed to developing improved commercial aircraft. I don’t know how to achieve that, although a tariff on Chinese aircraft would help.
In any case, I don’t regard either space exploration or faster commercial aircraft travel as allocations of resources that have much benefit for the vast majority of people. (I do, however, support the U.S. and its allies devoting resources to space based defense.)
Mr. Lynn does not talk about the flip side of ramping up capital investment in key industries. The funds will likely have to come from reducing consumption. And with increased automation the investments will produce fewer new jobs than in the past. We will not have to worry about these trade-offs during the current administration. It will just pile on the debt until the USA loses its reserve currency status. The current administration will also not invest in key technology that our President does not like (e.g. wind, solar and electric vehicles).
Spend a few minutes on YouTube and you'll realize this guy is full of it. There is the fully private effort, which recently got investment from Boeing, to build a new lifting body(blended wing like the stealth bomber) passenger and cargo planes.
Nasa just did a test flight of a super sonic prototype that doesn't create a loud sonic boom when it passes overhead. There is a private company working on a corporate jet version. Here's the realty, we normal people are never going to make a habit flying super sonic, it's just too expensive compared to the time saved.
Boeing and other have toyed with building a trans-sonic passenger jet. This would go about 100 miles faster then current passenger jets. I doubt they will ever bring it to market. It would lop about 40 minutes off a New York to London flight. Again, not enough time savings to really make the investment worth it.
On the hyper-sonic front, there are various projects from both government and private sources. There's one companies that has had some serious success with building a chimera engine that can transition from turbo jet to ram jet. It will probably see use in military application. Other big steps have been made in rotating pulse jet technology. Rotating pulse jets could theoretically make it into the civilian market at some point, but you would have to figure out how to reduce the sound.
All that before you get into SpaceX, and Blue Horizon as well as few other commercial space flight outfits. So we are still well ahead of the competition and the aerospace industry gets plenty of government funding. Usually through the military. The lifting body aircraft come straight from developing the F15, F35, B2 and more recent B21 that is being put into production.
Unfortunately, Boeing is a monopoly just as all the other main industries in the USA have become over the last 50 years since Nadar, Friedman and cohorts got their ways. From food to defense, all our industries have become monopolies with moats as ole "aw shucks" Buffet likes to say. These are what Buffet invested in, monopiles, moats. His strategy.
So, this monopoly power has been with us and if we are to break these moats or monopiles up will take a lot of political leverage and courage which is not even close to being there now. The politicians especially Democrats are hard into these monopiles and doubtful they will be tamed and knocked down as Roosevelt and Co, did during the depression. The monopiles they blamed for a majority of the reasons for the depression. Ole grass roots democrats back then busted the monopiles and Brandies at the Supreme Court had their back.
But all that changed in the 70's and especially as we hit the 80's.
So, until this situation is fixed, we will keep doing what we have been doing? Nothing. And Trump likes big. He has a lot of really good ideas and instincts, but he is a rich guy that loves gaudy expensive and flashy and big. He will unfortunately not be the one to do this. It is not him.
Good article! IMO what you're alluding to is an element of the basic problem that arises from the fundamental macro identity: investment equals savings, plus the net current account balance.
In 2024, America's gross domestic savings were 17% of GDP. By contrast, China's was 43%.
China is willing to do a lot to restrict domestic consumption. And as a basic cultural reality, the Chinese are also a much lower time preference culture right now and don't take their prosperity as a given.
If America wants to generate investment, it needs to find a way to either convince the American public to repress consumption or force them to do so. That seems like a very difficult project outside of wartime.
The key quote: So what should America actually do to protect its own industry? Tariff revenues, assuming they survive legal challenges, represent a significant pool of capital. The question is whether Washington has the strategic vision to deploy them effectively, or whether they will simply vanish without a trace in the vast federal budget.
The Trump administration is not relying only on tariffs as a method of rebuilding industrial capacity , and today so is a canard. Clearly there is emphasis on tax policy, particularly immediate depreciation, deregulation, with heavy rule revisions, and direct investment in key sectors.
Europe WAS an ally. Now they are a rival if not something worse. The future is with the non-Chinese Asian powers.
Great point Richard. Europe became our rival by outsourcing their national defense to us, a peculiar act for an "enemy"... It's fascinating to watch MAGA embrace Russia as their new and perhaps only ally while pitching Western Europe overboard. One is too "woke" and offends MAGA's ever delicate and brittle sensitivities. The other literally targets our soldiers by assisting the enemy (Iran) MAGA chose war with, invades sovereign nations, brutally attacks civilian populations, kidnaps children to ship back to the motherland, attacks western infrastructure, conducts disinformation campaigns to influence western elections including ours, and toys with our president like a cheap marionette.
You may prefer a vacation in "Stalingrad" and cheap Russian vodka, I'd rather prefer a sip of good wine and Christmas in Paris:)
Great post! Please keep elevating the question of WHERE that tariff revenue has gone to. I think if it were already being very publicly deployed to address urgent public needs (including revitalizing necessary industries), the Supreme Court reversals would have gone differently and Congress would be getting onboard. We've blown a vital opportunity - as you so incisively said, building a wall around an empty lot.
but… muh socialism…