This is the bit everyone misses. It’s not about protecting a backwards US or EU etc automotive OEM. It’s about stopping a government backed business models from Chinese companies wiping out the rest of the world’s auto makers in a way those companies simply can’t compete with … and then jacking up pricing in a couple of decades.
What people miss even more is that the insane defense budget is largely about maintaining the industrial base in the US.
Anyone who deals with manufacturing knows that China is dirt cheap and (nowadays) often better quality than domestic. Without the government propping up manufacturing, China could rug pull the US without even firing a shot.
I am not from US or China, and just trying to understand. Searching for car subsidies US gives out this, https://www.reuters.com/business/autos-transportation/us-off... . Wouldn't those grants and loans make the beneficiaries also in government backed business models?
This grants tends to come with strong rules on what you can and can’t do with the money, it’s hard for them to be used to prop up a company substantially, they are used to nudge an industry in a direction the market may not yet reward.
China’s support is an order of magnitude more and essentially allows their companies to be unprofitable and not worry about.
Similar to how American VCs enabled Uber to unprofitably wipe out many countries taxi industries in a way that those taxi companies couldn’t compete with.
> China’s support is an order of magnitude more and essentially allows their companies to be unprofitable and not worry about.
This is not at all the case in China's EV sector. The EV sector is China is extremely cut-throat. BYD is not living off of government subsidies. It's an extremely competitive company that has invested heavily in R&D and which has reduced costs through vertical integration.
Even with these restrictions, wouldn't it possible for a US company to move own funds/or loans from subsidied operations towards being more innovative? With this in mind, isn't this still a government backed business opportunity. Isn't using this opportunity or not on the company leadership?
Also doesn't this kind of thinking leads to an argument that says US govt does not want it's own companies to compete with Chinese ones with these grants by use of limitations?
And another question would be as USA is more of a private enterprise type of a country why wouldn't these VC's and car companies cooperate for this competition?
Their business model is still doomed if they cannot technologically compete. American automakers have repeatedly demonstrated their inability to keep up with anyone on technology and innovation.
I think this is half true. The innovation is there: GM's old Voltec hybrid drivetrain and the new Ultium EV platform are really quite good.
The issue is in getting the technology into the marketplace: between advertising, product positioning, dealerships, and consumer demand, that's where things fall apart.
If gov’t backed companies out compete “free market” companies, why are we saddling ourselves with an inefficient economic model? Capitalism is nice for capitalists and all, but it’s not without its problems. Setting aside its tendency to generate dangerous levels of inequality (which is a real problem we are basically ignoring), capitalism is kind of dumb or a least limited in its ability to integrate and act on information in a timely manner (see boom-bust cycles). It seems to me that given the massive advances in information sensing, storage, and processing capabilities of the last six decades, we would be better off with more central planning. This of course still requires political work to ensure just and equitable distribution of goods and services as well as protection of livelihoods, but we should be doing more of these anyway.
>If gov’t backed companies out compete “free market” companies, why are we saddling ourselves with an inefficient economic model?
I think that is actually a fair question, but it all comes down to what you optimize for. I think that the most efficient economic model could be some form of slave command economy.
That said, I think the bigger argument against central economic planning is that it further centralizes social and political power as well. This is prone to more drastic and oppressive failure modes.
Last, you talk about the speed of information, but that cuts both ways. Distributed systems can take advantage of this as well. Capitalist economies have booms and busts, but I would take them any day over great famines.
No. It was a proxy war against the Soviet Union. China didn’t have good relations with the Soviet Union at that time, and they’ve had centuries of bad relations with Vietnam. Shortly after the US pulled out, China invaded Vietnam. They just didn’t make our mistake of engaging in a futile protracted war.
