This speech accidentally exposed the truth about the US (Uncut) 03-21-2025
This speech accidentally exposed the truth about the US
The idea of globalization was that rich countries would move further up the value chain while the poor countries made the simpler things. You would open an iPhone box and it would say designed in Cupertino, California. Now the implication, of course, is that it would be manufactured in Shenzhen or somewhere else.
But I think we got it wrong. It turns out that the geographies that do the manufacturing get awfully good at the designing of things. Now, we assume that other nations would always trail us in the value chain, but it turns out that as they got better at the low end of the value chain, they also started catching up on the higher end.
We were squeezed from both ends. U.S. Vice President J.D. Vance delivered a speech that was immediately after described by his followers as historic. The vice president was speaking at a summit that was organized by the Silicon Valley venture capital firm Andreessen Horowitz.
This annual meeting in Washington, D.C. is called the American Dynamism Summit, and it brings together corporate executives and U.S. government officials, and one of their main priorities is preparing for war with China. I’m not exaggerating. If you go to the website of this Silicon Valley venture capital firm, Andreessen Horowitz, they have a web page that describes the American Dynamism Project, and it outlines a scenario for a war with China.
And this is what they write. It’s 2027. The People’s Republic of China launches an incursion into Taiwan.
Global supply chain stall. TSMC, the Taiwan semiconductor manufacturing company which produces nearly 90% of the world’s advanced chips, goes dark, crippling industries from banking to defense. Russia aligns with China and cuts off gas exports, sending fuel prices skyrocketing.
Markets plunge. Inflation surges. So this is the scenario that they envision for a war with China in just two years, hypothetically.
And then they fearmonger about China, claiming that the PRC is engaged in the largest peacetime military buildup since World War II, with an industrial advantage in warships, drones, and other weapons of war. They claim that China is supposedly an expansionist power preparing for war, which is nonsense. China has not fought a war since 1979, unlike the U.S., which is at war every single month.
But what this venture capital firm is doing is laying the groundwork for war with China, and it’s acting as the intermediary between the U.S. government and private corporations in the military-industrial complex. And it calls for building, quote, peace through strength built on technology, end quote. And it has an entire tabletop exercise that it developed to work with U.S. government officials and corporate executives to make plans for what war with China will look like and to make solutions for manufacturing disruption and supply chain instability.
This is the Silicon Valley venture capital firm that hosted the conference where the U.S. vice president delivered a speech in which he outlined the U.S. government’s plans to reindustrialize in order to prepare for war. And given that context, I do think this speech was actually quite important because it provides a very good summary of the Trump administration’s economic strategy to try to save U.S. hegemony, to maintain global U.S. dominance by kneecapping all technological rivals, especially China, which the U.S. government sees as the biggest threat to its global dominance. The Communist Party of China is, leads PRC, is the most potent and dangerous near-peer adversary this nation has ever confronted.
They have elements that the Soviet Union never possessed. They are a technological adversary and competitor, an industrial competitor, an economic competitor, geopolitical competitor, a scientific competitor now in every realm. It’s an extraordinary challenge.
It’s one that I believe will define the 21st century. When they write the book about the 21st century, there’s going to be some chapters in there about Putin. There’s going to be some chapters in there about some of these other places.
But the bulk of that book about the 21st century will be not just about China, but about the relationship between China and the United States and what direction it went. And in this speech, J.D. Vance outlined the strategy that the U.S. government wants to pursue in order to reindustrialize the United States, to bring back the manufacturing jobs that were offshored, sent to other countries to exploit low-paid labor in the past 40 years or so of neoliberal globalization, beginning with Ronald Reagan. Deindustrialization poses risks both to our national security and our workforce.
It’s important because it affects both. Pro-Trump media outlets have been celebrating this speech as a harsh condemnation of globalization and quoting J.D. Vance’s promises to carry out America’s great industrial comeback. And that’s what I really want to talk about today, why innovation is key to winning the worldwide manufacturing competition, to giving our workers a fair deal and to reclaiming our heritage via America’s great industrial comeback.
And I believe that’s what we’re on the cusp of, a great American industrial comeback. I’m going to go through this speech and later I’ll include some clips and I’ll analyze Vance’s argument. But in a nutshell, what essentially he’s saying is that the Trump administration wants to unite the populists, as they say, with Silicon Valley, with big tech corporations.
Vance argues that there’s no contradiction between working class people who supported Trump and billionaire oligarchs in Silicon Valley and big tech corporations, which is obviously an absurd argument. But he’s trying to bring these forces together against China, against the global South. And he’s arguing that the U.S. will reindustrialize by imposing very high tariffs and cutting taxes on the rich and cutting taxes on corporations.
And he scapegoats China for all of the problems in the U.S. that were caused by neoliberal globalization. However, Vance and the Trump administration are trying to separate the neoliberal economic policies of people like Ronald Reagan because they support those policies like tax cuts on the rich, privatization, deregulation. They’re continuing with all of those same neoliberal economic policies that benefit the rich at the expense of the working class.
But instead, they’re scapegoating foreign countries and especially China. Now, first, I should explain some context. Who is J.D. Vance? Where does he come from? He is a Republican politician whose entire political career was cultivated by the billionaire Silicon Valley oligarch Peter Thiel, who’s very right wing, very conservative.
And J.D. Vance has tried to market himself as a so-called populist and a national conservative. And he has milked his life story, which is not entirely true, but there are elements of truth that he grew up in a very humble working class family in Ohio and Kentucky. And he wrote a book called Hillbilly Elegy, which was made into a Netflix movie.
But in reality, there were significant parts of that story that were left out. So, yes, he did come from a relatively humble background. But then he went to Yale Law School, the elite Ivy League university.
And then after that, he worked as a corporate lawyer and he worked as a venture capitalist. He is very closely linked to Silicon Valley billionaire oligarchs like his former boss, Peter Thiel. He worked for Thiel.
And then when J.D. Vance ran to be a member of the U.S. Senate, Peter Thiel donated $15 million funding his campaign, which is why Vance won the senatorial race and became a senator of Ohio for one term. And then Trump selected him to be vice president. And I think the main reason that Trump chose Vance is because he is very right wing ideologically, but he’s also very deeply involved in Silicon Valley, in big tech corporations.
And Trump wanted to bring those people into his camp, into his political coalition. And this is why Donald Trump invited the world’s richest billionaire oligarchs from these big tech corporations to his inauguration, including Elon Musk, the CEO of Tesla and SpaceX, including Mark Zuckerberg, the CEO of Meta, which owns Facebook and Instagram, including Jeff Bezos, the founder of Amazon, including Sundar Pichai, the CEO of Google and Alphabet, including Tim Cook, the CEO of Apple, and also Sam Altman, the CEO of OpenAI. Now, I explained in a recent video and report, which I will link to in the description below, how these big tech oligarchs in Silicon Valley have been waging an economic war and a tech war against China and working with the U.S. government to try to block any Chinese competition so they can maintain monopolies.
In fact, J.D. Vance’s former boss, Peter Thiel, published an article back in 2014 in the Wall Street Journal titled Competition is for Losers. And he argued openly, proudly that Silicon Valley corporations, they don’t want competition in free markets. They want monopolies.
They want to entirely dominate their industries because that’s the way that they’re the most profitable. If you actually have a lot of competition, then profit margins are reduced over time. There’s a falling rate of profit.
But if you have no competition, you can charge monopoly rents and become very, very rich, which is how most of these Silicon Valley oligarchs became not just billionaires, but centi-billionaires with hundreds of billions of dollars in wealth. If you’re starting a company, if you’re the founder, entrepreneur starting a company, you always want to aim for monopoly. And you want to always avoid competition.
And so, hence, competition is for losers. Although the U.S. government has always provided support for the Silicon Valley monopolies, regardless of whether or not the president is a Democrat or Republican, under Trump, it has become so blatant, so in-your-face, he even selected Elon Musk, the world’s richest billionaire oligarch, not only to be in his administration, but to be a very powerful figure in the Trump administration who is holding press conferences with Trump regularly at the White House. And the speech that J.D. Vance delivered at the American Dynamism Summit that was organized by the Silicon Valley venture capital firm Andreessen Horowitz is another very good symbol of this.
Now, Andreessen Horowitz is named after one of its co-founders, Mark Andreessen, who is a billionaire venture capitalist. And he also happens to have a head that looks exactly like an egg. It’s really crazy.
But regardless, the point is, is that the Silicon Valley oligarchs are very close to the Trump administration. And the fact that they invited the vice president, Vance, to speak at the summit, and the fact that he agreed to, is a symbol of how close they are. And this is why I’m such huge fans of yours, of Ben’s and Mark’s and of the entire endeavor that we recognize now in our administration is the time to align our work interests with those of all of you.
It’s time to align the interests of our technology firms with the interests of the United States of America writ large. And in this speech, Vance tried to reconcile a deep contradiction that exists within the Trump coalition, which is that it brings together, you know, right-wing so-called populists who falsely claim to represent working class people. I mean, they actually end up abandoning and betraying the working class always, but that’s part of their rhetoric, right? And on the other side of their coalition are these Silicon Valley billionaire oligarchs, who are the ones who actually always benefit.
There are at least 13 billionaires in the Trump administration. These are some of the most powerful people on earth. The idea that they have the same interests as humble working class people in the Rust Belt, in de-industrialized areas of the US, it’s laughable.
They have completely contradictory interests, but the Trump administration is trying to keep both of them together in its coalition, which is obviously very difficult to do. In his speech, Vance tried to reassure the populists that he is bridging together what he calls the techno optimists and the right-wing populists. And he says, don’t worry, these big tech corporations, they’re not against you.
They’re not just going to take away your job and put you in poverty and you’ll have nothing to do. He’s saying that we will unite and artificial intelligence, AI, can be used to increase the productivity of the US economy, trying to bring these two camps together. I received some pushback from people who are worried about the disruptive effects of AI.
One journalist suggested the speech highlighted the tension between the, quote, techno optimists and the populist right of President Trump’s coalition. And today I’d like to speak to these tensions as a proud member of both tribes. And let me put it simply, while this is a well intentioned concern, I think it’s based on a faulty premise.
This idea that tech forward people and the populists are somehow inevitably going to come to a loggerheads is wrong. I was very moved by Mark’s manifesto from a few years ago about America. We are a nation of builders.
We make things. We create things. Now, when J.D. Vance uses the term techno optimist, it’s a reference to the billionaire venture capitalist Mark Andreessen who wrote the techno optimist manifesto.
And in this manifesto, the Silicon Valley oligarch argues that technology is the solution to all problems ever and that we must raise the technology flag. It’s time to be a techno optimist, that we can use technology to solve all of our problems. And of course, the fact that he benefits as a billionaire venture capitalist investing in these tech companies.
Well, you know, for him, that’s just a minor side detail. What this is, is an attempt by Silicon Valley oligarchs to convince not only the people of the United States, but the people of the world that what’s best for these corporations is what’s best for the United States. You know, there used to be this popular slogan about General Motors, GM, and they said, what’s good for GM is good for America.
And now, essentially, what they’re saying is that what’s good for Silicon Valley big tech monopolies is what’s good for the United States and that it is great for all humanity and will liberate all of humanity and claim, you know, they have this very benevolent rhetoric. And again, they downplay the fact that they’re the ones making huge profits and extracting enormous monopoly rents from all of Now, this whole argument is obviously absurd because these are the same billionaires who profited from offshoring jobs in deindustrializing the U.S. And now they’re the ones claiming that they’re going to reindustrialize the U.S. But the way that all of these figures are trying to reconcile this irreconcilable contradiction is by scapegoating China. At the end of their argument, it’s always China, China, China, China.
And this is what the Trump camp is trying to do to keep together the so-called right wing populists and the techno billionaire oligarchs is they say, OK, we can unite together with a new Cold War against China. They scapegoat China for the loss of manufacturing jobs and deindustrialization, not blaming the U.S. capitalists who benefited from sending those jobs abroad and exploiting cheap labor. And recent Horowitz, this venture capital firm, when they held their American dynamism summit in 2024, the same summit where a year later J.D. Vance spoke, they had a panel titled The China Threat, Silicon Valley and the Great Uncoupling.
So China is the way that they try to bring together these obviously contradictory camps who have irreconcilable class interests. The interests of the working class are go against the interests of the billionaire capitalists who simply want to maximize all of their profits, no matter what. So how do you solve that? Scapegoat China.
What it should have taught us, Laura, is we can’t rely on communist China to make all the critical stuff. Now, thanks to these these policies that Biden and other out of touch politicians in Washington gave us, our country was flooded with cheap Chinese goods, with cheap foreign labor, and in the decades to come, deadly Chinese fentanyl. And this is exactly what J.D. Vance does.
Again, this is a guy who claims to be a populist who cares about the working class, but he was a corporate lawyer and he worked for venture capital firms, including for Peter Thiel. And in an interview in 2024, after Trump picked J.D. Vance to be his running mate, Vance said that Trump would end the war in Ukraine and negotiate with Russia in order to try to isolate China. This was his exact quote.
He said they wanted to, quote, bring this thing to a rapid close so America can focus on the real issue, which is China. That’s the biggest threat to our country, and we are completely distracted from it, end quote. So everything that they’re doing is all political distraction.
They claim that they want peace, which is absurd because they’re actually brutally bombing Yemen, the poorest country in West Asia, and they’re restarting the horrific war, the U.S.-Israeli war on Gaza, while falsely claiming to be peace candidates. And they are bringing a conclusion to the war in Ukraine in order to focus on war on China. That’s what all of this is about.
And J.D. Vance said it openly in this interview in which he said that China is the biggest threat and the real issue. We’re going to build factories again, put people to work making real products for American families made with the hands of American workers. We will protect the wages of American workers and stop the Chinese Communist Party from building their middle class on the backs of American citizens.
So now I want to go back to this speech that J.D. Vance delivered at this Venture Capital conference and how in his speech the U.S. Vice President actually inadvertently revealed some very important truths about the economic war that the U.S. has been waging against China and how imperialism functions. So listen to this clip here in which J.D. Vance explains what the goal of neoliberal globalization was to trap poor countries at the low end of the value chain, whereas the rich Western countries, especially the U.S., would maintain an intellectual property monopoly and make all of the profits and exploit low paid workers. He complains that that didn’t work out because China and a few other countries, but especially China, was able to move up the value chain and challenge, provide competition to U.S. corporate monopolies.
Listen here. There were two conceits that our leadership class had when it came to globalization. The first is assuming that we can separate the making of things from the design of things.
The idea of globalization was that rich countries would move further up the value chain while the poor countries made the simpler things. You would open an iPhone box and it would say, designed in Cupertino, California. Now the implication, of course, is that it would be manufactured in Shenzhen or somewhere else.
And yeah, some people might lose their jobs in manufacturing, but they could learn to design or to use a very popular phrase, learn to code. But I think we got it wrong. It turns out that the geographies that do the manufacturing get awfully good at the designing of things.
There are network effects, as you all well understand. The firms that design products work with firms that manufacture. They share intellectual property.
They share best practices. And they even sometimes share critical employees. Now we assume that other nations would always trail us in the value chain.
But it turns out that as they got better at the low end of the value chain, they also started catching up on the higher end. We were squeezed from both ends. The goal of globalization, I would add neoliberal globalization, because globalization has existed for hundreds of years.
What we’ve seen in the past 40 years with the rise of free market fundamentalism and neoliberalism is that new technologies made it much easier for capital to move around the world. And previously, in the Keynesian golden era, if you will, in the 40s, 50s, and 60s into the early 70s, most advanced economies had strict capital controls. Capital was not able to simply move around the world freely.
But in the neoliberal era with financial deregulation, starting with Ronald Reagan in the US and Margaret Thatcher in the UK, what happened is that capital could move freely all around the world. And in this era of neoliberal globalization, J.D. Vance admits that the goal was not just to profit from exploiting low paid workers, but it was to maintain a rigid international division of labor in which workers in poor, formerly colonized countries in the global South, in the periphery of the world system, are trapped at the bottom of the global value chain, producing low value added goods and raw materials, primary commodities, you know, exporting agricultural goods and crude oil and unprocessed minerals, ores. And this is exactly what was argued by the dependency theorists back in the 1950s and 60s.
These were political economists like Raoul Breivich and Hans Singer. And then later there were more radical revolutionary thinkers like Samir Amin and Paul Baran and Andre Gunder Frank. And they were arguing that the global capitalist system was designed in a way in which there was a world system in which these countries in the periphery were trapped in unfair relations in which there is so much competition at the low end of the value chain.
So there are very few profits. The profit margins are tiny because there are so many different countries that can produce different ores or oil or agricultural goods or low value added goods, like for instance, textiles, t-shirts and shoes. So they’re all competing with each other and their terms of trade over time fall, whereas the rich countries in the core of the world system, the imperialist countries that colonized most of the world, can maintain their economic privileges by charging monopoly rents because they have monopolistic control over high value added technologies with very little or even no competition.
And the dependency theorists argued that the countries of the periphery should use state-led economic interventionist policies in order to industrialize to move up the global value chain. And of course the most successful example of that was China, which through a socialist state-led model was able to go from being one of the poorest countries on earth to now having the world’s largest economy when you measure its GDP at purchasing power parity. And today China represents about one-third of global manufacturing production.
It is the world’s manufacturing superpower. And now Chinese companies are competing with U.S. corporate monopolies. Like for instance, the Chinese AI company DeepSeek created AI models that are just as good, if not better, than the AI models developed by U.S. corporations like OpenAI, which is 49% owned by Microsoft.
And even better, DeepSeek made its models open source, freely available for anyone in the world to run locally on their own computer. So what was the response of the U.S. government? It’s threatening to ban DeepSeek and impose more and more restrictions on China, trying to prevent China from getting access to advanced chips to prevent it from developing AI. I talked about that in another video, which I will link to in the description below.
Another good example of this is TikTok. TikTok became one of the most popular apps in the world. So what was the response of the U.S. government to ban TikTok? Another great example is electric vehicles or EVs.
The Chinese EV maker BYD has overtaken Tesla as the largest seller of EVs on earth. And this terrified Elon Musk, who called for trade barriers to restrict Chinese companies so they cannot compete with Tesla. And And that was under the Biden administration.
Of course, Trump is continuing that even further. And in fact, JD Vance talked about this in his speech. He fear mongered about China’s AI, and he said that we have to advance in artificial intelligence to stop China.
So while we remain the leader in technology and innovation, I think there are troubling signs on the horizon. And I raise all this to ask, does this sound like a regime, I’m speaking of China, that will pass up on the opportunity to use AI or any other technology to advance their own interests and further undermine the interests of their rivals? I think the answer is obvious. And that’s why America, we’ve got to be tech forward.
So what all of this shows is that the U.S. government is working with big capitalists, big corporations to try to maintain monopolistic control over high tech sectors to prevent any competition so they can maximize their profits and their rent extraction. Because again, if there actually is competition, profit margins fall and capitalists don’t get richer and richer. They want to maximize their profits.
In order to do that, they want monopolies. Again, this was openly admitted by Peter Thiel, the billionaire Silicon Valley oligarch who previously employed JD Vance and who has been a big funder of the Republican Party and especially pro-Trump MAGA Republicans. If you’re starting a company, if you’re the founder, entrepreneur starting a company, you always want to aim for monopoly and you want to always avoid competition.
And so hence competition is for losers. So in this speech that JD Vance delivered at this Venture Capital Summit, he explains that this is why the Trump administration is returning to these protectionist policies and putting heavy tariffs on China because the U.S. wants to reindustrialize and it doesn’t want competition from Chinese companies. And by the way, I should point out there’s been a lot of confusion about Trump’s tariffs because he’ll frequently announce tariffs on Canada and Mexico, the largest trading partners of the U.S., and then a few days later he’ll say, oh, they’re paused, they’re suspended.
But while Trump has paused tariffs on Canada and Mexico, he’s continued raising tariffs on China. They have not been paused. And as of March, CNBC reported that the average effective U.S. tariff rate on Chinese goods is 33 percent and increasing basically every month under Trump.
But the problem with the strategy by the Trump administration is that it’s not a real industrial policy. I think what’s very interesting about this speech is it’s essentially the Trump administration’s version of a speech that was given in 2023 by the Biden administration’s national security advisor, Jake Sullivan. In his speech, Sullivan pointed out that the so-called Washington consensus, you know, the free market fundamentalist neoliberal policies had failed.
They led to the deindustrialization of the U.S. economy, the loss of good manufacturing jobs, the rise of unemployment in certain areas like the Rust Belt, which caused also high rates of inequality, which led to political instability and the rise of people like Donald Trump. America’s industrial base had been hollowed out. The vision of public investment that had energized the American project in the post-war years, and indeed for much of our history, had faded.
It had given way to a set of ideas that championed tax cutting and deregulation, privatization over public action, and trade liberalization as an end in itself. There was one assumption at the heart of all of this policy, that markets always allocate capital productively and efficiently, no matter what our competitors did, no matter how big our shared challenges grew, and no matter how many guardrails we took down. Now, no one, certainly not me, is discounting the power of markets.
But in the name of oversimplified market efficiency, entire supply chains of strategic goods, along with the industries and jobs that made them, moved overseas. And the postulate that deep trade liberalization would help America export goods, not jobs and capacity, was a promise made but not kept. Another embedded assumption was that the type of growth didn’t matter.
All growth was good growth. So various reforms combined came together to privilege some sectors of the economy, like finance, while other essential sectors, like semiconductors and infrastructure, atrophied. Our industrial capacity, which is crucial to any country’s ability to continue to innovate, took a real hit.
The prevailing assumption was that trade-enabled growth would be inclusive growth, that the gains of trade would end up getting broadly shared within nations. But the fact is that those gains failed to reach a lot of working people. The American middle class lost ground while the wealthy did better than ever, and American manufacturing communities were hollowed out while cutting-edge industries moved to metropolitan areas.
Now, the drivers of economic inequality, as many of you know even better than I, are complex, and they include structural realities like the digital revolution. But key among these drivers are decades of trickle-down economic policies, policies like regressive tax cuts, deep cuts to public investment, unchecked corporate concentration, and active measures to undermine the labor movement that initially built the American middle class. What the Biden administration was doing was essentially trying to make a centrist critique of neoliberalism and responding with an attempt at having an industrial policy.
Now, what does that mean? Industrial policy refers to when the government intervenes in the economy, and instead of relying simply on the free market, the government provides incentives and engages in policies, including planning, to actually develop industrial production in the economy through strategic investments, through incentives and tax breaks and infrastructure development, and investment in education and worker training. The biggest pieces of legislation passed by the Biden administration, like the poorly named Inflation Reduction Act and the CHIPS Act, were aimed at targeting strategic industrial sectors and trying to create a kind of half-baked industrial policy in which the government would provide incentives to encourage industrial production in strategic sectors, especially green industries like electric vehicles and solar panels and also semiconductors. And this was also aimed at China.
This was part of an economic war. So in his first term, Trump started a trade war on China, and he imposed tariffs on China and sanctions on Chinese tech companies like Huawei. And then Biden came in and he continued many of those policies, and he specifically targeted China’s high-tech sector and renewable energy sector.
The Biden White House put tariffs on Chinese electric vehicles and solar panels and batteries, and the Biden administration put export restrictions on China to try to prevent China from getting access to the most advanced chips, semiconductors needed to develop advanced technologies. That was the Democrats’ approach. The Trump administration’s approach is even more of a half-baked, it’s a quarter-baked industrial policy.
And basically what the Trump administration is saying is that we’re going to use tariffs and tax breaks on the rich and corporations in order to incentivize the development of these industries. But it’s not going to work. So as an example, listen to this part of the speech in which Vance talks about U.S. shipbuilding capacities, or the lack thereof, and he compares the inability of the U.S. to make ships today compared to World War II and compared to China.
Look, for example, at shipbuilding. Now, if you go back to World War II, America constructed thousands of so-called liberty ships to carry troops, cargo, and other things, building them at a pace of three ships every two days. Now we build about five commercial ships across an entire year in the United States of America.
And as a result, the United States today accounts for 0.1 percent, one-tenth of one percent of global shipbuilding. China, on the other hand, now makes more commercial ships than the rest of the world combined. In fact, one of Beijing’s state-owned firms built more commercial ships just last year than all of America has produced since the end of World War II.
Now, what J.D. Vance is talking about is absolutely real. The U.S. shipbuilding industry has been devastated through decades of neoliberal free market policies. And you know who dominates shipbuilding in the world is, as he pointed out, China, but not just China, East Asia, China, South Korea and Japan, economies that historically had very strong industrial policy with very strong government intervention, not simply relying on the free market, but the government used state-led policies to plan, to target specific industries and saying, we’re going to develop these industries.
And that’s why it’s very revealing that in that clip, J.D. Vance pointed out that it was a Chinese state-owned company that built more ships in 2024 than the U.S. has built since World War II. It is not a Chinese private for-profit company that is building these ships. It is a Chinese state-owned enterprise that can operate because it’s government owned.
It doesn’t have to rely on the market, on the profit motive. And that’s why it’s not a surprise that as the Financial Times reported, the decline of U.S. shipbuilding accelerated under the Reagan administration with the rise of free market fundamentalism and neoliberalism and the idea that the government doesn’t need to get involved in encouraging production. Instead, everything should be done by a private for-profit corporation because many of these industries are not that profitable.
Making ships is not that profitable. It’s very risky. It’s very capital intensive.
And it requires a lot of upfront investment. And you’re not sure. Capitalists investing are not sure they’re going to get a good return on investment.
So instead, they prefer investing in industries where they’re sure they’re going to get higher return on investment, which tends to be speculative industries. Well, it tends to be Wall Street. They’re not even investing in productive activities.
They’re simply doing financial speculation. But when they do invest in companies, it tends to be tech startups in Silicon Valley, not actual manufacturing, because manufacturing is very difficult, very complicated, and tends to have much lower return on investment. It’s simply not as profitable.
And this is why I think the Trump administration’s superficial quarterbaked attempt at having an industrial policy is going to fail because it’s not a real industrial policy. They simply think that imposing tariffs and cutting taxes on the rich and corporations will magically reindustrialize the U.S., that the government doesn’t need to actually get involved in planning and in developing strategic industries. And, you know, what’s funny is that in that speech, J.D. Vance pointed out that during World War II, the U.S. government did have very advanced manufacturing capabilities.
And as he pointed out, the U.S. was able to build three ships every two days. But why was that? Because the U.S. government, not private companies, the U.S. government was driving that industrial production. This was spelled out by the very mainstream economist Robert J. Gordon in his influential book, The Rise and Fall of American Growth.
He pointed out that after the 1929 stock market crash and the Great Depression in the 1930s, there was very little private capital investment by private corporations. It stagnated. So instead, where did the investment come from? It came from the government.
And he pointed out that new plant facilities were paid for by the government. The government had government-owned plants in the United States. I mean, if that happened today, it would be called socialism, that the Trump administration would demonize that as evil socialism.
But this is how the U.S. government was able to maintain such high levels of industrial output in the 1930s and 40s. And of course, this was also in the 1940s. It was during World War II.
As Gordon points out in this book, the number of machine tools in the U.S. doubled from 1940 to 1945. And almost all of these new machine tools were paid for by the government rather than private firms. In a footnote at the end of this very long book, Gordon pointed out some incredible facts that are not taught in schools usually.
It’s certainly in mainstream economics programs, which are thoroughly neoliberal. I’m reading here from his book, quote, fully 10 percent of 1945 U.S. capacity to produce steel had been financed by the government between 1940 and 1945. The government financed 88 percent of World War II expansion of aircraft plants.
Even after the war in 1947, fully half of the nation’s aluminum was produced in government-owned plants. In 1951, I’ll add this is six years after the end of World War II. In 1951, half the rubber supply was synthetic.
And all of that was produced by private firms in government-owned plants, end quote. If the U.S. government were to do this today, it would be demonized as socialism by Trump and the billionaires, the 13 billionaires in his administration. J.D. Vance would demonize this as evil socialism.
But this was the peak of U.S. manufacturing output. What is the point I’m trying to get at here is that if the Trump administration truly wants to reindustrialize, it would have to be through state-led policies that would be demonized as socialism. But they’re not doing that.
They’re trying to rely on private for-profit companies simply relying only on tariffs as if that will magically solve everything. It won’t. You know how China transformed itself from one of the poorest countries on earth to the world’s manufacturing superpower? It was through a state-led industrial development campaign, through Chinese socialism.
Now, it wasn’t a total planned economy like the former Soviet Union. They also used market forces and what China refers to as a socialist market economy. They combined the best elements of state planning and government ownership with the best elements of market competition.
And China mastered industrial policy. And a hawkish think tank in Washington, D.C. that is very anti-China published a very interesting report all about China’s industrial policy. And they estimated in a conservative estimate that China spent in 2019 1.73 percent of GDP on industrial policy, whereas the U.S. spent 0.39 percent on industrial policy.
South Korea, their industrial policy represented 0.67 percent, which is significantly higher than the U.S., but it’s still much lower than that of China. China spent trillions of dollars investing in the best infrastructure in the world, infrastructure that is better than infrastructure in the U.S. China spent trillions of dollars investing in free public education and jobs training programs to develop the workers needed to actually manufacture goods and to train scientists and engineers to innovate, to develop new technologies, whereas the Trump administration is slashing government spending on research and education and relying only on the private sector, on for-profit corporations, even though I’ve already established that manufacturing is not the most profitable form of production. And if you only rely on private capitalists, they’re simply going to invest in the most speculative areas of the economy that have the highest return on investment, which is not manufacturing.
It’s high tech and it’s finance. The exact sectors that have dominated the U.S. economy in the neoliberal era as the economy has been deindustrialized. In his speech, U.S. Vice President J.D. Vance did not announce any of this actual industrial policy.
He did not say that the Trump administration is going to invest billions or trillions in creating new infrastructure, in training workers, in education for scientists and engineers. None of that. Instead, he said, we’re going to put tariffs and we’re going to cut taxes on the rich, extend the tax cuts on the rich and cut taxes on the corporations and provide tax incentives to corporations.
We overregulated our industries instead of supporting them. We overtaxed our innovators instead of making it easier for them to build their great companies. The Trump administration’s great plan for staging the great American manufacturing comeback is simple.
You’re making interesting new things here in America. Great. Then we’re going to cut your taxes.
We’re going to slash regulations, making the 2017 tax cuts permanent. Cutting taxes and cutting regulation is not an industrial policy. This is simply Reaganism 2.0. The Trump administration is continuing the exact same policies pursued by Ronald Reagan in the 1980s and expecting that that will magically reindustrialize the economy when that’s what caused the U.S. economy to deindustrialize in the first place.
You have to be completely historically illiterate, not know anything about U.S. history to believe that taxes today are too high compared to when the U.S. was actually a significant industrial power. So in World War II, which J.D. Vance quoted, for instance, noting that in World War II, the U.S. could build three ships in two days. You know what the highest marginal income tax rate was in 1944? Ninety four percent.
And that continued until the 1960s. In 1963, the highest marginal income tax rate in the U.S. was ninety one percent. And here the Trump administration is complaining that supposedly the rich have taxes that are too high.
You have to be on drugs to believe that you have to live on another planet to actually believe that thanks to the Trump administration, which in the first term of the Trump administration, they further cut taxes on the rich. The top marginal rate is thirty seven percent. Thirty seven compared that to ninety four percent during World War II or ninety one percent in the 1950s and 60s.
And even thirty seven percent is only the actual number on paper, hypothetically, because we know that big corporate executives like Jeff Bezos, they pay very little in taxes because there are so many loopholes that exist in this system that allow billionaire oligarchs and big corporations to get off with paying very low taxes. And by the way, here we’re just talking about taxes on income, which is a tiny fraction of the problem because rich people are not rich because of high incomes. They’re rich because they own assets.
They’re rich because of capital gains on the assets they own, like stocks and bonds and real estate. So in reality, we should be talking about high wealth taxes on these billionaire oligarchs who have hundreds of billions of dollars in wealth because if you’re only focusing on income tax, that’s precisely what allows these billionaires and millionaires to get around paying taxes, because instead of reporting incomes, they report capital gains, which are taxed at a much lower rate. And the biggest irony of all of this is that the Trump administration has pledged to bring down the U.S. government deficit to reduce U.S. debt.
And they have the Department of Government Efficiency doge led by Elon Musk, the world’s richest man. But meanwhile, they’re cutting taxes on the rich and in corporations, which are actually going to increase the U.S. government deficit and significantly increase U.S. government debt. The elite Penn Wharton Business School at the University of Pennsylvania published an analysis that estimated that because of Trump’s tax cuts on the rich and in corporations, the Trump administration will increase the U.S. government deficit by 5.8 trillion dollars over the next 10 years.
So this is why everything the Trump administration is doing is completely contradictory, half-baked, quarter-baked. It’s a fake attempt at doing industrial policy that is simply combining Reaganism with fake industrial policy that at the end of the day simply benefits billionaire oligarchs and big corporations because the government will cut taxes on them in the name of supposedly trying to reindustrialize. But it’s not going to work because it’s only relying on private corporations to follow the profit motive and ignoring the entire history of successful industrial policy that relied the government to actually direct investment through state-led planning, which they would call socialism.
And the last thing that I’m going to look at today as part of this analysis is a quote from J.D. Vance’s speech that really summarizes all of the points that I’m trying to make and it shows how hypocritical and superficial the Trump administration’s fake industrial policy and bogus attempt to reindustrialize the U.S. is. Listen to this part of the speech that J.D. Vance gave at a summit that was held by the Silicon Valley venture capital firm Andreessen Horowitz, where he praises the Silicon Valley billionaires who are attending, the big tech billionaires, and he says, you’re building something real, you’re building factories, you’re turning profits back into R&D. Each of you came to the summit not because you developed some flash-in-the-pan application, but because you’re building something very real.
You’re raising new factories, you’re turning profits back into R&D, and you’re creating new good-paying jobs for your fellow Americans. And this is why I’m such huge fans of yours. Now that quote is so funny because if you know anything about Andreessen Horowitz, you understand that this is Silicon Valley we’re talking about.
This is the opposite of companies that invest in factories and manufacturing. They are the epitome of the big tech oligarchs who have deindustrialized the U.S. They’re the ones who have profited from deindustrialization. If you don’t believe me, go to Andreessen Horowitz’s website and look at their portfolio.
These are the companies that they have invested in. Airbnb, Coinbase, Facebook, GitHub, Instacart, Instagram, Lyft, Pinterest, Roblox, Skype, Slack. These are not manufacturing companies that are investing in factories.
I mean this is a complete joke if you know anything about how U.S. corporations work, especially in Silicon Valley. Back in 2014, Bloomberg analyzed the data in the S&P 500, which is the main stock market index of the 500 largest publicly traded companies in the U.S., which when people talk about the market, they typically mean the S&P 500. It’s the majority of the market.
And Bloomberg found that in 2014, S&P 500 companies were spending 95% of their earnings on share buybacks and dividends. Almost nothing on investment. I mean it’s a complete joke to expect that if the government cuts taxes on the rich and on big corporations, that they’re going to magically invest in research and development and building factories.
This is exactly what Ronald Reagan claimed in the Reaganite era, the beginning of neoliberalism. Their whole argument was that if you cut taxes on the rich and corporations, they will supposedly invest in factories and create jobs. The exact opposite happened.
This has actually led to the golden era of private equity. Instead of investing in new companies, they bought up all of the existing companies. They cannibalized the economy.
They de-industrialized the U.S. economy. This is the reason for the de-industrialization of the economy. It’s because of Wall Street.
It’s because of Silicon Valley. It’s because that’s what was profitable for these capitalists. And now the Trump administration is saying, oh, we’re going to re-industrialize.
And then you have J.D. Vance, who pretends to be a right-wing populist intellectual, and he name dropped the American system in his speech that he gave at this Silicon Valley Venture Capital Summit, bringing back Henry Clay and the Whig Party’s idea of the American system and industrial policy. But all they’re doing is name dropping something that they read about on Wikipedia. They don’t actually understand what it would take to re-industrialize the U.S., which would be a state-led re-industrialization campaign that would look like socialism, which they’re completely against because they’re in this completely contradictory coalition between billionaire oligarchs in Silicon Valley and the working class, which at the end of the day is never going to work out.
One side is going to win. And can you guess which side is going to win? It’s going to be Silicon Valley, and it’s going to be Wall Street. It’s going to be these big corporations and capitalists.
It’s not going to be the working class. I think I’ve made my point enough, and this analysis has already been long enough. In future analyses, future episodes, I’ll talk more about how the Trump administration’s policies are not helping the working class.
They’re actually taking wealth away from the working class. Tariffs are a tax on imports. That is to say, they’re essentially a tax on consumption because many imports are consumer goods and they’re bought by low-income workers in the U.S. So essentially what the Trump administration is doing is increasing taxes on low-income working class Americans who spend much more of their paycheck on consumer goods.
And meanwhile, the Trump administration is cutting taxes on the rich. So it’s a wealth transfer from the working class to the rich. But I’ve already talked enough today.
I’m going to conclude here. I am Ben Norton, the Editor-in-Chief of Geopolitical Economy Report. I want to thank everyone for joining me today.
Please like and subscribe. Please share this. I will see you all next time.
