Rebuilding America: First It Will Fail

Rebuilding America

“Blown up, sir!” – Stripes

Raw materials for steel have gone way up in price.  Producers say it’s a horrible ore deal.

When I was in 6th grade, I remember driving to Capital City with Pa Wilder while he had a business trip.  As part of the trip, we went through Industrial Town.  The major feature of Industrial Town was a miles-long hulking rusted out steel plant complete with huge towers, big enough to hold Oprah’s breakfast.

To me, they looked like the discarded remnants of an ancient technological innovation.  In fact, when I was reading a novel about explorers that had gone to some far-off world that had been littered with the technology of an incomprehensible civilization, I visualized that old steel plant.

It was rare to have one-on-one time with just Pa and I.  He often worked long hours, but on longer trips, sometimes we’d talk about, well, whatever.  As I’ve mentioned before Pa was a banker, and I think he was more amused by my early fixation on science than anything.  But when it came to the steel plant, Pa Wilder knew a lot, and that day was the first time I ever heard “Bessemer Process”, and we talked about steel and history during the drive.  He said that once upon a time, you could bring your ore, make steel, and sell it for a fee.  Apparently “He who smelt it, dealt it” didn’t catch on as a business model.

I hate recycling aluminum cans.  It’s just soda pressing.

Bad dad jokes aside, when we drove by, that old steel mill wasn’t doing so well.  The major reason, oddly, was World War II.

During World War II, the United States and Britain, mostly did everything they could to blow up anyth8ing in Germany that could make a ball bearing or paper clip.  At the end of the war, the country was in ru8ins.  The same thing happened in Japan – the country was wrecked, and, unlike Germany, the Japanese didn’t have many of resources needed for steel production, things like iron ore or coal.

In both cases, Germany and Japan didn’t build back with the Bessemer Process, they built back with the newest technology.  Japan, especially, had to focus on being efficient since Japan has fewer natural resources to work with to make steel than Kamala Harris has for use in a battle of wits.

Once Kamala though she might be pregnant.  She asked the doctor, “Is it mine?”

To be clear, it was very hard to rebuild nations shattered by the Last Modern War, but once those countries did finally rebuild, they were the most efficient and highest quality steelmakers in the world.

But this took decades.

The infrastructure had to be completely rebuilt.  Then people had to learn how to make the new technology – basic oxygen steelmaking was pioneered by the Swiss and the Austrians.  Oh, sure, the Austrians and Swiss are so autistic that asking a girl out is a seventeen-step process that has to be memorized prior to execution, but that’s exactly the autism level needed when you’re going to change an entire industry.

In a rare screwup, the Swiss dude who invented the process wasn’t legally able stop the Japanese from using his process for free, and the Japanese licked it up without having to pay royalties.  The Swiss, experts at chocolate, hoarding gold, yodeling, and engineering.  At being attorneys?  Maybe not so much.  80% of Japanese steel was made using the basic oxygen process by 1970, because it was far cheaper.

Oops.

But Baltimore is gr . . . oh.

Since the United States didn’t bother to innovate, US Steel©, once the biggest steel manufacturer in the world, was sold to Nippon Steel™ for the equivalent of what Elon Musk keeps in his couch cushions back in December, 2023.

What’s the lesson here?

To be clear, in many cases our economy is where Japan’s was after World War II.  There are two major differences:

  1. It’s not as obvious because the nigh-infinite ability of the United States to print cash and trade it for things like steel is still in effect, and
  2. We were complicit in the destruction of our own industry via free trade, regulations, and financialization, and didn’t even need to use any bombs.

To rebuild an industry requires time.  It also requires a lot of investment of money, but it also requires the best talent in the country.  Silicon Valley became the information systems capital of the world because it brought together capital and talent over the period of decades.  Taiwan became the semiconductor capital of the world because of the capital and talent it consumed over the course of decades.

Hey, that’s what Xi said.

What did New York do?  Soaked up capital to loan and soaked up talent to figure out how to magic more cash into existence – by and large a waste of decades of some of the best and brightest in the world.

This is the game that we should have been playing, but stopped when the United States was the undisputed manufacturing giant of the world.  Now, the reason we were the undisputed manufacturing giant of the world was because everyone else was blown up.  What did we do with that success?

Rested.  Relaxed.  And began to believe that the economic success was a right, not a consequence of hard work, talent, and investment.

We have to learn to build things, not financial products.  But we also have things to unlearn.  Our liability system is horrific, but that’s because liability lawyers fund the Democratic party, so, they buy more bacon-wrapped shrimp than others.

The other thing to unlearn is zero impact.  As long as humans live on the planet, we’ll impact it – the idea is to conserve and make wise use of our resources.  The GloboLeftElite have taken their mask off when climate ideologs go after the United States, with declining carbon emissions, and ignore China and India with massive and growing carbon emissions, with China producing nearly three times the CO2 of the United States.

How dare you!

But have the GloboLeftElite complain about China or India?

Nah.  They wouldn’t listen anyway.

The path forward requires that we fail.  Great news!  We’ve failed!  We’re in a worse place than the Japanese after World War II due to our cultural inertia and the newfangled “all the Zoomers have a mental disorder” society.

The second part of the path is letting go of the financialization and making PowerPoints® in New York as the goal of society.  If we want to be serious, we have to make stuff, not accounting irregularities.

There’s a reason that China’s buying gold, and that reason is simple:

They’re making steel.

Author: John

Nobel-Prize Winning, MacArthur Genius Grant Near Recipient writing to you regularly about Fitness, Wealth, and Wisdom - How to be happy and how to be healthy. Oh, and rich.

46 thoughts on “Rebuilding America: First It Will Fail”

  1. As recently as the 1990s we were still manufacturing our own printed circuit assemblies at Warlabs, Inc. because American in-house manufacturing and assembly were still strict requirements for DoD procurement. Common-Off-The-Shelf (COTS) changed all that, for the sake of a few dollars saved, and suddenly we were buying literal throwaway sub-assemblies from everywhere around the globe. If a widget failed in the field, or (all too often) during bench testing on the way into inventory, we simply scrapped it and bought another.

    The point is, it was not so very long ago that we did know how to make all our own widgets, to exponentially higher quality standards than COTS allows. Some of us late Reagan era young turks of engineering and manufacturing are still hanging on today, squeezing out that last year or three of max salary before the pension (remember those?) kicks in. There is, as a result, a very small and rapidly-closing window of opportunity for the transfer of tribal knowledge to another generation of producers before it is too late. The complete and utter disappearance of moon mission capability should be a chilling reminder that when it’s gone, it’s gone.

    Bring back chip manufacture. Bring back steelmaking. Bring back pharmaceutical production. Make “Made in China” the measure of inconsistent quality and unreliable sourcing that it is. It will be crazy-expensive to pull off, especially at the beginning. But what price freedom and security?

    1. TBC: Absolutely right. Yesterday, I received a new box of flexible fabric Band-Aids®, “real ones,” from Johnson & Johnson. I checked the side of the box: “Made in China.” This is insane. The last time I purchased a box of this particular J&J Band-Aid, they were made in Brazil. So-called “American companies” have thrown away our nation’s strategic economic advantage and security, for what? A dollar and a bump in stock market share prices. Our US Navy and Air Force (and Army, Marines and Space Force) are spending hundreds of billions of dollars to secure international sea lanes and air space to ship “American” products from China. All for an extra dollar.

    2. To make the transfer, we’d have to have the people who were capable (and interested) in getting the knowledge, and many of those don’t want those jobs anymore because they want to make PowerPoints for bigbux, or go trade on Wall Street or . . .

      We traded our freedom and security for cash.

  2. “But have the GloboLeftElite complain about China or India?”

    Of course not – those countries aren’t “White” countries.

  3. Sir,
    I suspect there is more to the story than just ‘fail to innovate, reap the rewards’…

    Consider that any attempt to recapture the engineering prowess that made the US pre-eminent in the world, even with the best minds available, now must navigate the woke morass that surrounds the proving grounds.
    If everything white is bad, and the Orange Man is Satan, and not only are black and brown people not racist, they’re incapable of being such, well….Houston, we have more than a single problem here.

    I mean, engineering students go to see the F-1 first stage engines from the Saturn 5, and marvel at the sheer engineering genius that produced them without CAD which now can’t be found at any price. This alone indicates the degree to which things have fallen, and they can’t get up.

    The difficulties are now systemic and entrenched. Just the lost capital alone is nightmarish. And all the DEIB hires in the world won’t make up for the fact that merit-based conduct is the only. Way. Forward.

    Otherwise, BB&B investments are still the safest bet.

    MinC

    1. Yup.

      Clearly the rebuilding of manufacturing of any kind in the US will be exclusively within “Galt’s Gulch”, at least until after the culling.

    2. YO! Mike in Canada: this old geezer was a tool & gauge maker in the 1970s at a defense plant making cryogenic pumps for the Saturn rocket engines you speak of. We made ’em to pump liquid oxygen at close to absolute zero. Three shifts of 4,000 proud, skillful, and extremely hard workers. Co-operation was a key from the gear hobber, to the grinder to the superfinisher and lapper (we worked to the millionth of an inch.) We used ZERO COMPUTERS, or CAD/CAM. Just ‘old-timers’ who knew their craft–were given a task and solved it.

      Watch the beauty of this ballet–FIRE and ICE of the Saturn rocket WE MADE!

    3. And all that engineering was done with slide rulers. Unlike calculators, the slide rule requires you to pay attention and think. After working with several of Gen Z, I have come to the conclusion that these are the weak men who will create hard times. In that fire some of them will be forged into the strong men that will rebuild America.

      1. Steve, I agree with your comment completely except that this issue goes back even before Gen Z. I was in engineering school in the 80’s when the first programmable calculators hit the market. The HP 41 was very popular because you could buy analysis packs that would give the calculator the ability to solve everything from stress analysis to fluid mechanics. The students that had them breezed through homework problems, but never learned the fundamentals. Many ended up failing the Engineer in Training (EIT) exam that came at the end of our senior year because they used the calculator as a crutch and never got a real feel for the underlying mechanics. Arrival of the smartphone amplified the problem, but we were already starting on a downward trajectory even before the Millennials hit the workforce.

          2. Wow, another RPN-addict here. 11c/15c/15c “limited edition” (with the bugs)/41cv/28C/25/48SX/48GX/35/45/32s2/35s/50g. Also the DM-15/DM-15L from Swiss Micros. Got my eye on their DM-42.
            And I have a few nice slipsticks, but am a GenXer who’s too lazy to keep track of where the decimal should go. 😀

    4. But merit-based is racism, I have been reliably informed. So, I guess we’ll just have to miss luxuries like electricity and water.

  4. Americans live on their past glory, now we’re racing into WW3 without a clue how to produce anything, and once the dust settles, not a thing will be rebuilt. We don’t have the brains or ability to replace what was built 50-70 yrs ago when I was a child. They said the Baltimore bridge could take several yrs to rebuild, Truman would have said give me 6 months to make it bigger and better, and accomplished it.
    Kids today graduate high school with an AA degree for effort, and still can’t fill out a job app or do their own taxes an a 1040EZ. We’re fooling ourselves to think anything will get better as we circle the drain of collapse.

    1. The average (average!) grade at Harvard is an A-. Well, it was an A- in 2017, so it’s probably an A now.

      Harvard is a participation trophy.

  5. Interesting discussion.  I too have been fascinated by steel production.  Birmingham AL  just south of me was a major steel production town once upon a time, since the area had all four components needed to make steel locally: iron ore, coal, limestone and cheap labor.   By the 1960s one of those resources was gone.  Guess which one.  

    Now Birmingham is the archetypal failed industrial town.  Its previous town mascot was Vulcan; see: https://visitvulcan.com/about/ .  Its current town mascot is 9mm Parabellum; see: https://www.cbs42.com/news/birmingham-among-most-dangerous-cities-in-the-us-study-finds/ . As a result, Sloss Furnaces (see: https://www.slossfurnaces.com/ ) which used to cast a continuous nighttime glow over the city have been abandoned to become a major Halloween attraction.  This is a scary thought on several levels.

    Here’s some interesting insights.  Steel, cement, plastic and fertilizer are the keys to civilization…along with oil.

    https://reason.com/2022/05/25/civilization-runs-on-ammonia-plastic-steel-and-cement-for-now/

    https://time.com/6175734/reliance-on-fossil-fuels/

    So let’s look at some rough numbers.  Planetwide, our civilization has…

    Annual world production of steel of 2 billion tons at an average of $700 per ton = $1,400 billion per year

    Annual world production of cement of 4 billion tons at an average of $ 150 per ton =  $ 600 billion per year

    Annual world production of plastic of 0.4 billion tons at an average of $ 1,100 per ton = $440 billion per year

    Annual world production of fertilizer is 0.2  billion tons at an average of $ 700 per ton = $140 billion per year

    So…steel still rules as the major OUTPUT of our civilization.  But consumer electronics (computers, smartphones and televisions all sucking up our eyeballs and attention) is close behind steel as a $1,100 billion per year industry.  

    As for INPUT, well, civilization uses around 90 million barrels of oil per DAY or around 33 billion barrels of oil per year.  At the current price of around $85 per barrel, civilization consumes $2,800 billion per year of oil.  SO… the oil industry is twice the steel industry.

    The “failure” part of near history is gonna be a long, long fall for civilization. The “rebuild” part is gonna be…interesting.

    1. Yessir, Ricky. Good analysis. What the indolent, stupid, and depraved don’t quite realize (but will fathom soon enough) is that ENERGY is vital to modern living. With all the lazy crackpots running the show(s) these days, it will be interesting to see how they cope with all the “stuff” they thought would be around forever but simply vanished with no energy needed to produce “modernity.” The move fool they.

      Rx: get right with your Creator, prepare, and build a strong bond with like-minded folk around you. Things will get ‘spicy’ soon enough–it’s baked in the ‘recipe’ we’ve all been forced to swallow or entertain.

      Luke 22:36

    2. It is, especially since prices are up, productivity is down, it will take longer and be much more expensive to rebuild than it was to build.

    1. Let’s hollow the place out even further so that when it collapses, it will never be reconstructed, eh?

  9. One can go practically anywhere in the US now, and see the wreckage. Yes, it’s due to greed, and it’s evil twin brother, stupidity. When greed becomes the central motivation, it doesn’t matter what the actual goal is, or was. Quaint considerations, such as life, liberty, and the pursuit of happiness, are just road kill for greed. Long ago, the important considerations in this country, on a large scale, became not God, family, and country, but MONEY. When you decide to pursue a false god, the Real God will let you have free rein of it, and it will soon demonstrate why it is false. We’re being taught a lesson, one that will take decades, and buckets of blood and tears to complete.

  10. My older daughter lives south of BHM in Helena, works in Hoover, and rarely goes into BHM, maybe 1-2X/mo. Other than the 5 Points area’s restaurants, there’s no reason to go anywhere in that sh*thole.

    Pelham, Helena & Alabaster were redneck central 40-50 yrs. ago. Now, they’re solid middle & upper middle class. Just like Madison & Ridgeland, north of Jackson, MS.

    Joke of the Day:

    Q: What do you call Georgia without the ATL Metro?

    A: Mississippi

      1. Son of-

        After my partner’s husband retired 10+ yrs. ago, he became MARTA’s Outside Counsel, resigned after a year. Said it was a zoo. She agreed.

    2. I’ve been there, but only through there, but flight has changed every city during my lifetime.

  11. Two things I hope:
    all the chinese counterfeit grade 8 bolts (which test grade 2) don’t break the same day

    And we order a couple of million pairs of boots before we escalate.

      1. In the mean-time, my sister’s leatherworks (largely boots and custom shoes) should be able to do a booming business. Not sure she’s on-board with the ‘everything falling down’ narrative, but I’ll run it past her when I see her in a couple of weeks…

  12. In addition, I think that the EPA and the unions had a lot to do with the loss of manufacturing in this country. In any case, now would be the time to implement automation and A.I. into a rebuilt manufacturing base.

    1. Nobody wants to address the elephant in the workplace, but the Bolsheviks (and their unions) were thrown out of Germany in the 1870’s by Bismarck and came to the US, (with their unions of brotherly love and comradeship). They took over our mines, schools, heavy industry, trucking, police, etc, etc until today we have been destroyed from within by Bolshevism. And nobody wants to see it, the unions are good for the masses to ensure well paying jobs, until you look at what the last 120+ yrs did to US.
      All of America’s ills can be blamed on this key factor, Bolshevik Unions have destroyed us, as planned, and nobody saw it coming. The German painter knew this, and we laughed our asses off, until we became their next target. You can’t fix stupid.

      1. Bolsheviks, Frankfurt School, Freud, Bernays, Friedan, Abzug, and so forth. All factors contributing to the downfall of the US in particular and the West in general.

        If only we could discern a pattern or common thread among all these. If only. But what could it be? I for one am utterly stumped.

  13. I’m sitting here wearing made-in-USA work boots, socks, and briefs. I pay a local shop to keep my 21-year old Saturn station wagon running (225k+ miles, so far). If we, individually, aren’t willing to spend our money on the things we value, don’t expect American business to cut its own throat trying to compete solely on price.

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