The common practice of offshoring manufacturing, exemplified by Apple, creates a critical flaw by severing the feedback loop between designers and producers. This leads to suboptimal product design and simultaneously transfers advanced manufacturing skills and capabilities to other nations, like China.
The US military's 30-year strategy, born from the Gulf War, of relying on small numbers of technologically superior weapons is flawed. The war in Ukraine demonstrates that protracted, industrial-scale conflicts are won by mass and production volume, not just technological sophistication.
Simulations of a conflict with China consistently show the US depleting its high-end munitions in about seven days. The industrial base then requires two to three years to replenish these stockpiles, revealing a massive gap between military strategy and production capacity that undermines deterrence.
To rebuild its industrial base at speed, the US government must abandon its typical strategy of funding many small players. Instead, it should identify and place huge bets on a handful of trusted, patriotic entrepreneurs, giving them the scale, offtake agreements, and backing necessary to compete globally.
Instead of ineffective grants to incumbents, the US should leverage its world-leading capital markets. By providing lightweight government backstops for private bank loans—absorbing partial default risk—it can de-risk private investment and unlock the massive capital needed for new factories without distorting market incentives.
The belief that China's manufacturing advantage is cheap labor is dangerously outdated. Its true dominance lies in a 20-year head start on manufacturing autonomy, with production for complex products like the PlayStation 5 being 90% automated. The US outsourced innovation instead of automating domestically.
The romantic notion that the US can rapidly pivot its industrial base for war is a misleading myth. Today's weapons are vastly more complex and reliant on fragile global supply chains for components that are controlled by adversaries, making a WWII-style industrial mobilization impossible without years of preparation.
While headlines focus on advanced chips, China’s real leverage comes from its strategic control over less glamorous but essential upstream inputs like rare earths and magnets. It has even banned the export of magnet-making technology, creating critical, hard-to-solve bottlenecks for Western manufacturing.