Herb

Billions of dollars. Millions of followers. Thousands of attendees. Half a dozen governments. And one idea whose time has come.

There's dark talent around the world, from the Midwest to the Middle East. Backing this talent is the right thing to do morally and the smart thing to do economically.

Ironically, one symptom of deindustrialization is that many commenters have never actually managed a physical business. So. Suppose your US company imports $1M of high quality parts, and adds in its own components to produce finished goods sold for $1.2M per batch. Your gross profit is $200k per batch. But wait! Suddenly a new 30% tariff is imposed on that $1M of parts. You now have to fork over $300k to customs before you sell anything. That’s cash you probably don’t have. Oh, and even if you do sell everything, you’re now losing $100k per batch. With a sinking feeling, you realize your profitable business which you somehow managed to keep in America all these years has suddenly become unprofitable. You post online about how bad this is but get shouted down by an angry mob, convinced that capitalists like you should die. You can’t tell nowadays if they’re on left or right. Moreover, you don’t have the time, money, skills, or tools in house to build that $1M of parts yourself. You are being asked to do the equivalent of growing a maple tree when all you needed was a little maple syrup. So now you are faced with several tough choices. (1) First, you may need to go into debt or fire people to quickly come up with the $300k in cash to pay for these surprise tariffs at customs. Even if the tariff might go away, it might not, so you have to get the cash somehow or risk having your shipment impounded. (2) Next, you might need to reduce quality to stop losing $100k on each batch. You could order the lower quality $750k parts, grimace and pay 30% tariff at customs, and hope you can build and sell for the same price of $1.2M per batch despite the lower quality. (3) Alternatively, you could keep the quality parts at $1M and instead raise prices to $1.5M per batch to get back your original margins of $200k per batch, which you need to pay employees after all. But that’s a big hike that your customer will probably not welcome, given that he’s likely dealing with his own tariff shock. So: these tariffs don’t really give an incentive to build in the US. Because it’s far more expensive to build a screw factory than to pay even high tariffs on a foreign screw. Instead what they likely mean is debt, layoffs, lower quality, and higher prices for any US company that buys parts abroad. Just to understand how common that is:

Here’s a reframe. AI doesn’t take your job. AI allows you to do any job. So a coder can now make films. And a filmmaker can now write code. It allows a non-specialist to get started. But a specialist will be needed for polish.

Privacy wins. Tornado Cash is legal. Now Roman Storm (@rstormsf) and Alexey Pertsev (@alex_pertsev) should be immediately freed, pardoned, and reimbursed by the state for their invalid prosecution.

TEN POINTS ON TARIFFS Tariffs are not a good idea for the US. Deregulation should be pursued instead. Here's why. (1) Tariffs only protect the home market. First, at best, tariffs protect the US home market. But China only sends ~16% of its goods to the US! So even Trump's 10% tariff doesn't phase them, because they are selling 84% to other countries: (2) Tariffs hurt allies. Next, as the US imposes tariffs on allies, they become less likely to abide by US-requested trade restrictions on China. For example, the Netherland is no longer classifying ASML machines as dual-use, opening them up for China. (3) Tariffs are small incentives at high costs. Third, tariffs are at best a small incentive on the margins to manufacture in the US. A producer might make more money over the long run if a tariff is sure to persist. But these huge tariffs keep blinking in and out, which is the worst of all worlds. The uncertainty means you can't plan on tariffs being there tomorrow, and the high cost means you can't ignore them when they are imposed today. Breaking supply chains in this way just wrecks anyone exporting or importing into the US. (4) Tariffs don't help exports. Once retaliatory tariffs are imposed, US companies become even less competitive abroad in the 100+ countries where American and Chinese products compete. In fact, US tariffs open the door for China to move into Western Europe, Canada, and Mexico — the only places it hasn't yet become the dominant trade partner: (5) Tariffs aren't specific. Remember, the US has a money printer! So it can just directly invest in specific industries it thinks are strategic, rather than adopting the extremely imprecise instrument of tariffs. Subsidizing alcohol to Canada is not strategic. (6) Tariffs aren't realistically autarkic. There are only 77M MAGA but almost 1B+ in the EU, Japan, South Korea, Canada, Australia, and New Zealand combined. There is just no way that 77M MAGA can produce as much as that "Golden Billion" economic union set up at great expense over 80 years. If you push the world to make everything autarkically within a single country, then China wins — because it has 1B+ scale. (7) Tariffs are irrational nationalism. Relatedly, tariffs do not correctly implement the who/whom or friend/enemy distinction. MAGA should understand that many allies like @PierrePoilievre are non-American, while many declared enemies are Blue Americans. If you're alienating Canadian conservatives while subsidizing the American far left, you're doing it wrong: (8) Tariffs are a diplomatic loser. While the US is alienating economic allies, China is signing free trade agreements (FTAs) with dozens of countries. The PRC has ~25 signed and 18 more on the way. (9) Tariffs are an unnecessary fight. Given that Republicans already inherited a Hot War with Russia, a Cold War with China, and a Cold Civil War with Democrats...why open up completely new conflicts with Canada (!?) (10) Tariffs aren't deregulation. Finally, easing domestic regulation is far better for improving production than adding new regulations in the form of tariffs. Because deregulation doesn’t cause retaliation, and it also unlocks new production. There is political will to deregulate, so why not do that? TLDR: don't increase regulation via tariffs. Deregulate instead.