Monopoly Round-Up: Does the Left Have Trouble with Making Things in America?On the weekend of "No Kings," it's worth asking if the Democrats have anything to say about political economy. Also, airlines impose fees for reclining in seats, and California sells its own insulin.Today’s round-up has lots of monopoly news, as usual. California is selling its own insulin to undercut big pharma, Senator Josh Hawley is circulating a bill to prohibit AI from exploiting children, and airlines are starting to charge junk fees for passengers who want to recline in their seats. Not kidding. All of that after the paywall. I want to focus the main round-up essay on why the Democrats have trouble embracing the idea of making things in America. It’s going to sound critical, but it’s meant to offer some analysis of a faction that is having trouble finding a coherent critique. I am observing this dynamic because this weekend, a set of marches took place, the “No Kings” rallies, where participants expressed opposition to deportations, occupation of cities by troops, and offered praise for multiculturalism, et al. It was almost entirely reactive to Trump, with no commentary or interest in anything relating to political economy. As CNN reported, “One protester wearing a unicorn costume and dancing along to the music said he chose the costume because he ‘felt like the unicorn exemplified the diversity and culture of LA.’” I see this kind of cultural politics as perhaps the main theme of liberal thinking. Last week, for instance, I got into a back-and-forth on Twitter with a popular fashion influencer named Derek Guy about whether it’s possible or desirable to make clothing in America. In between pithy observations about menswear, he tends to bash tariffs and the attempt to re-shore production to the U.S. “I don’t think reshoring garment manufacturing is a way forward to building an American middle-class,” he said. “The costs—xenophobia, nationalism, protectionism—are too high.” I tweet a lot, and normally when I get into a dispute with someone, it doesn’t matter. But when arguing with Guy, I got feedback from people in random parts of my life, because he is a sort of internet celebrity. He’s not a policy person, but a talented hobbyist who found a popular niche obsessively talking about luxury clothing. More importantly, Guy operates via the algorithm, he knows what his audience of liberals seek, so his politics reflects something deeper in the liberal/leftist psyche. To that end, it’s worth teasing out his views, which are rooted in a certain political economy vision, and one that is pretty widespread. Guy believes that the U.S. should allow most production to go offshore. In terms of garments, he especially wants to offshore clothes “prone to becoming commodities,” like white t-shirts, where technologically advanced factories in other countries can produce them cheaply. I asked him why we couldn’t do the investment here, and he expressed concern that robots would displace labor, so re-shoring wouldn’t help Americans anyway. Commodification, in his view, pushes down worker wages in a race to the bottom. He set out the example of a $2 Hanes t-shirt, and said we can’t nor should we try to make that in the U.S. To the extent the U.S. should have any garment making, it should be high-end customized luxury work for which consumers will pay a premium. He also argued that garment production in the U.S. has always been done by immigrants, and whatever is left is still done by immigrants, because U.S.-born citizens don’t have the skills or willingness to sew a button. Ultimately, Americans want cheap prices, and that means offshoring, where wages are low. And Guy was explicit he believes this view applies across labor, not just in garment-making. While this influencer is a specialist in menswear, his political economy views are quite common. They are no different than those put forward by powerful Wall Street backed D.C. policy advocates, who share a disdain for domestic production and U.S. born citizens. For instance, in 2022, economist Adam Posen, head of an important think tank called the Peterson Institute, claimed that the Biden attempt to re-shore manufacturing was not only inefficient, but more importantly, was a mere “fetish for keeping white males with low education outside of the cities in the powerful positions they are in.” The video went viral, since it was saying the quiet part out loud. Posen was wrong about the racial implications, but that’s not the point. He was expressing a strong elite undercurrent of anger at the very attempt to make things in America. And yet, it is very possible to make things here. A few weeks ago, the Wall Street Journal did a story on how Newell re-shored production of Sharpie markers, a commodified pen whose production it offshored to China in the early 2000s. Since the company brought back production to Tennessee and reinvested in the factory, quality is higher, productivity has gone up 300-400%, workers were retained in the plant, and wages are up by 50%. Workers were retrained to be in charge of increasingly automated systems. Why does it matter to make things in the U.S.? Well, there’s a question of sovereignty, of whether we can govern ourselves. We saw during Covid the perils of lacking key production infrastructure. But it goes way beyond that. Over the past few weeks, as I noted on Friday, we’ve seen extraordinary assertions of power by the Chinese state to exploit its rare earth magnet monopoly. Going forward, the Chinese government will demand the blueprints for all products made with rare earths, which is to say, everything from cars to fighter jets. And the Chinese government will give permission, one-by-one, for making such products, worldwide. Yes, China is now claiming industrial sovereignty over the entire world. What’s odd about this situation is that making rare earth magnets isn’t some exotic technology. It’s mining, crushing rocks, and subjecting them to chemicals and industrial processes. It’s commodified, like producing white t-shirts. Rare earths is not even a big industry, since rare earth materials are cheap. There are even rare earths outside of mines; “If all U.S. computer hard disk drives were recycled,” wrote the government in 2023, “the contained [rare earth] magnets could satisfy up to 80 percent of electric vehicle magnet demand.” Yet, China has leverage over the entire world because they do rare earth processing at scale, and no one else will be able to do that, for at least a few years. That means that China could, if the CCP chooses, seek to deindustrialize us. Chinese officials have a phrase, “great changes unseen in a century,” describing this shift of hegemonic power; it will impact how we operate as a nation, for the rest of our lives. To put it differently, if the U.S. government announced that Americans were now subject to Chinese law, it would likely be a huge story, or at least, a noticeable one. Yet that de facto just happened, and it has essentially made no ripple in the U.S. political news flow. More broadly, something I’ve noticed about Democratic/liberal/lefty politics is that there’s a disinterest in America’s economic place in the world, aside from cliched commentary about standing by allies and disdain for Trump’s trade war, or focus on particularly famous conflicts, like Israel. After Trump’s first victory, in 2017, Democrats did try to look back on corporate trade agreements, and wondered if support for import-driven neoliberal policy displacing workers made sense anymore. Joe Biden responded to this curiosity; he tried industrial policy, kept Trump tariffs in place, and did some successful re-shoring. But the politics never took; Democrats mostly didn’t know about any of the Biden policy involving industrial production, and to the extent they did, it’s been forgotten. And important parts of the Democratic Party have turned aggressively against the use of tariffs or other tools to re-shore manufacturing. In the context of China’s moves using its rare earth magnet monopoly, this attitude of disinterest in making things here is increasingly weird. And yet, there’s zero framework for understanding what’s happening, just no capacity to see the Chinese state as capable and powerful of acting upon us. China is about to displace the U.S. as the global hegemon. But the Democrats, and the left more broadly, just don’t see it as their business to care. In my back-and-forth with Guy, I think I can kind of understand why. Let’s go back to the Sharpie marker example. What Newell did with Sharpie markers, investing in factories to juice productivity, is how America has always operated. Historically, America had the highest wages in the world from the 1750s to the 1980s. We had higher wages and higher productivity precisely because our policy framework ensured that we invested in machine tooling and productivity-enhancing technologies to keep us competitive with lower wage nations, and then we had labor protections of various forms to allow people to “keep the fruits of their labor.” A high-productivity, high-wage, and high business formation model was how we operated. In the 1950s, the U.S. exported a lot of garments, and somehow, contra the view that it’s all labor arbitrage, did so with the highest wages in the world. Why did that change? It wasn’t some inherent globalization quasi-Marxist story of commodification, it was *policy.* We explicitly traded away U.S. garment jobs to support development in other countries. George Ball, for instance, undersecretary of State on economic affairs for JFK, suggested we should lose garment/textile jobs in the South, because “we Americans could afford to pay some economic price for a strong Europe.” U.S. policy on textiles and footwear were dictated by Cold War interests. Kissinger fought for increased imports and displacement of U.S. workers, for fear of “new gains for the Communists in Italy since shoe (and textile) production is centered in the ‘red belt.’” Judith Stein’s book Pivotal Decade: How the U.S. Traded Factories for Finance goes into this story in depth. But the point is that offshoring production *was* a choice based on policy, which often included things like tariffs, import quotas, and so forth. By and large what we’re dealing with now is not a Cold War story, it’s a 1990s NAFTA/WTO story. We made clothing in the U.S. until the 2000s. U.S. national strategy under Clinton and then Bush was to focus policy on finance, design, and R&D, and to consolidate economic power in the hands of Wall Street banks through financial deregulation, tighter patents, and lax antitrust. We’d pursue a “capital light” model of production, and let people in East Asia do the grubby work of making things while we did the high-end cool stuff we could patent/copyright. That’s the story in everything from textiles to semiconductors to Hollywood. It’s also a choice abroad; every other nation had higher tariffs than the U.S., because they wanted to take our industries. No one has a de minimis of $800 except America, that level of duty-free access is an anomaly based on our own weird delusions about the ability to continually import. One consequence of this post-Cold War strategy was the collapse of industrial ecosystems in the U.S., as well as the growth of bloated monopolies. Another consequence is a dramatic decline in capital investment to improve productivity. What’s happened, in other words, is not that robots are substituting for labor, it’s that monopoly profits are pooling on Wall Street and pushing down both labor share and capital investment. It’s all rent extraction. And it’s not, as economists often imagine, commodification. After all, if that theory of economics is right, and everything gets commodified, then stuff would be cheap in America. But it’s not. We do not live in a consumer’s paradise. In fact, prior to the neoliberal revolution, we did have the lowest prices in the world for a host of goods and services, but that’s flipped. It turns out low wage low productivity also means high prices, not low ones. Take the observation about Hanes t-shirts for $2. I looked on Amazon, and Hanes retail for $45 for a 5-pack, which is $9/apiece. I’m guessing the production cost is $2, or less, but most of the *actual* cost is the marketing and distribution in the U.S. That’s a function of endless layers of private bureaucracy that emerge when you get rid of open and competitive markets and substitute corporate monopolies. That’s why land and production in the U.S. is costly vis-a-vis other countries, it’s not that labor is more expensive when accounting for productivity, it’s that the various tolls you have to pay to Wall Street make everything super costly. And now we get to the nub of the problem. If the labor issue in garments is representative of a broader labor dynamic, and it is, then we have to ask the question of whether it’s possible to make even high-end stuff here under our traditional neoliberal policy framework. And the answer is no. The view that the U.S. should have legions of high-skill garment workers may or may not be a good idea in the abstract, but it’s very obvious that it would not work as long as U.S. policy is biased *against* people who work for a living and against people who want to invest in productivity-enhancing capital goods instead of McKinsified pricing games. A good example of the failure of this theory is Hollywood, where we have the most skilled craftspeople in the world making specialized bespoke goods, and yet L.A.’s entertainment industry is getting absolutely decimated. High end skilled labor isn’t exempt from the trends affecting low wage labor. There is a basic question here, which is how America is able to have a high standard of living without making very much ourselves. We import $1 trillion+ more than we export. That makes no sense, on some level, we’re a giant global welfare queen. How do we do it? Well, the answer is that we are the provider of dollars to the rest of the world, sort of like an oil-exporter, only our export is pieces of paper that facilitate commerce. That’s the national strategy initiated under neoliberalism, and it’s profoundly anti-production, anti-labor, and anti-business. It’s pro-monopoly and pro-Wall Street. That’s what’s driving the offshoring, not high wages or low skills. The justification for this neoliberal order is not that it’s good, it is that it’s inevitable. We operate in a global marketplace, so goes the story, and U.S. labor just isn’t competitive, unless it’s low wage immigrant labor. Americans demand low consumer prices. And any attempt to interfere with the natural workings of the market by having production here will be counterproductive, and is racist, xenophobic, and protectionist. The truth though, of course, is that consumer prices in the U.S. are high, global trading arrangements are set by policy choices across governments, and high overhead is a result of a massively bloated financial sector that demands a piece of every transaction in the U.S. And the anger from people in America displaced by private equity ripping apart their lives and offshoring production isn’t a result of racism or xenophobia, it’s just legitimate economic grievance. What I dislike about the “offshoring is good” approach is not that it won’t work, though it won’t. It’s that under the cover of some sort of cosmopolitan anti-racist rhetoric is the same old story that concentrated capital likes. We can’t have nice things. We can’t make things here. This is all inevitable, the economists say it, the robots won’t help, Americans don’t have the skills, they are parochial, et al. America is doomed. Just get rid of all tariffs, and give Wall Street what it wants, and treat Americans like the lazy consumers they are. The thing is, whether we have a functional society based on honoring work is a *choice.* Some have just decided that it’s inevitable, we can’t fix our society, and so we shouldn’t even try. But in fact, we can build things here if we want, and making a functional culture and society means we have to get back to doing that, by pushing Wall Street financiers out of the way. We can choose differently, if we want. But to believe that we have a choice, we must start by believing there’s a “we.” And that’s where the left/liberals get confused, because it’s hard for them to acknowledge that America exists as a political community primarily to help Americans. A few years ago, I wrote a piece on July 4th called The Long Annoying Tradition of Anti-Patriotism. In it, I laid out what I think is the origin of this problem: a certain vision of America as a place where the people must be ruled by their betters. There’s a fear coursing from John Adams to modern-day Atlantic editors to Wall Street Democrats like Peter Orzag of popular control of a society. They dislike the idea that ordinary Americans would or could or should have political power, and their view of this nation is one that resists such democratic impulses, and where elites rule over a global population of morally equal souls. They use a malleable set of arguments, the most popular recent one being identitarian - it’s why Posen could derisively use the term “white man,” though what he really meant was American-born. Here’s a good headline that makes the anti-democratic point. Layered onto this anti-populism is an inability to conceive of the U.S. actually becoming a poor and desperate place. It’s been eighty years since World War II; there isn’t an American alive who can remember a time when the U.S. wasn’t the preeminent power on earth, or as Bill Clinton called it, the “indispensable nation.” The affluence, the bounty, it just flows, automatically, and the idea is just to divide the pie more equally. In many ways, Bernie Sanders, when he talks about how the U.S. is the wealthiest country in the world and yet we don’t have health care for everyone, is falling into this trap. The left is built to fight over the spoils, not to think about what created the spoils in the first place. It’s a weirdly imperial self-conception; the Republicans do the killing and finance and oil drilling and factories, and the Democrats do education and health care and diplomacy and soft stuff. Of course, there is a different vision of America, one shared by Wright Patman, Louis Brandeis, and Franklin Delano Roosevelt. They saw this nation as the result of a thousand years of struggle, from the Magna Carta on, to free human beings from the yoke of local warlords, absolutist kings, unrepresentative assemblies, and corporate monopolies. Being able to produce in the U.S., honoring the industrial arts, allowing Americans to have the fruits of their labor, was foundational to their vision of egalitarian politics. This vision was itself a myth, but it was rooted in an obvious belief that America exists first and foremost as a compact among Americans to protect our life, liberty, and pursuit of happiness, and only secondarily for non-Americans. These populists feared foreign domination and domestic coercion, but believed that we could construct a popular politics to protect ourselves from it. They had a view of America, and who Americans were as a people. And they saw, clearly, how powerful foreign kings and domestic lords on Wall Street sought to subdue us. They would understand the threat from China, and the mess we’ve made by our own hostility to people who work for a living. They would see that as un-American. Ultimately, Americans see themselves as part of a political community, and prioritize those within that political community above those outside of it. That’s how all nation-states work, and it’s the foundation of human liberty. It’s just that embracing a moral dividing line between Americans and non-Americans is something liberals and libertarians have a hard time with. It’s hard to argue for producing things here if you believe the nation-state isn’t a political project worth preserving. And now, the round-up, with monopoly-related stories of the week. The Pope attacks usury as corrupting the human heart, a new report shows mergers among homebuilders reduces the supply of new homes, California begins selling its own insulin to go after big pharma, and new data demonstrates that U.S. hospitals spend twice as much on administrative costs as patient care. Plus, a new report on the dark side of the McDonald’s Monopoly Game… All after the paywall... Continue reading this post for free in the Substack app |



