Re-industrialization is a National Imperative

It is amazing that our nation – one so reliant on ocean trade and whose energy security is so reliant on the arctic – should have such a quote about it as below.

This came out in February…but came up in my digging around on a related topic.

The nation’s first sea-going heavy icebreaker in more than 45 years will be named Sentinel — a nod to its predecessors as well as future missions in the polar regions, Coast Guard Commandant Adm. Karl Schultz said Thursday.

We have been at peace at sea for so long, unchallenged for so long, I think we have forgotten what is needed to fight a sustained war at sea.

Ships cannot be built overnight. Industrial capacity can take years to build and once lost may take decades to have capacity at scale. The intellectual capital from welders to designers takes generations to build and must be maintained or you will re-baseline yourself to almost zero.

As we’ve covered before, it isn’t just new construction, it is maintenance as well. For decades we have let the accountants bleed our industry pale to bare subsistence.

The service is in the midst of its largest ship recapitalization effort in decades, replacing its medium endurance cutters with 25 360-foot Offshore Patrol Cutters and planning to build three medium icebreakers, known as Arctic Security Cutters.

In the past decade, it has commissioned nine of 11 planned National Security Cutters and built dozens of Fast Response Cutters.

It also plans to build a variety of ships known as Waterways Commerce Cutters.

Schultz said that despite the delay in delivery of the Sentinel, the service will have no gaps in its ability to provide support in the polar regions and plans to keep the Polar Star running for several years after delivery of the first Polar Security Cutter.

Polar Star, he said, may be “tired and old,” but “we’ll keep it a couple of years” until delivery of the second heavy icebreaker because “quite frankly, we need the capacity.”

We need to establish a slightly less efficient – but infinitely more effective and geographically diverse – maritime industrial infrastructure.

Remember, nothing is more expensive than losing a war or surrendering your lines of communication to domination by a hostile power.

But reindutrialization will be difficult in the long run and impossible in the short.  Contemplations on the Tree of Woe spells out the bad news:

Measuring Might: Mobilization

The greatest mobilization in human history occurred during world War II. In 1940, the US spent 4% of its GDP on national defense; by 1945, it spent almost 40%. Similarly, in 1940, the USSR spent 10% of its GDP on national defense, but increased it to 65% by 1944.

Today, Russia spends 4.1% of its GDP on its military; America spends 3.5%; and China spends 2.1%. (Saudi Arabia, at 10.4%, and Israel at 5.2% are the two biggest spenders by ratio.) They are essentially on pre-war footing, demobilized.

To what extent could today’s superpowers match the mobilization of the WWII-era US and USSR?

According to the Center for Economic Policy Research (CEPR), about one-third of military spending is on personnel. The remainder is on equipment and operations, both of which are highly demanding on the economy’s manufacturing and energy sectors. At the outbreak of World War II, manufacturing and energy accounted for approximately 30% of the American GDP. From that basis, America spent 40% of its GDP on war. As a first approximation, therefore, the maximum extent to which an economy can be mobilized for defense spending might be 133% of its manufacturing and energy GDP.

At present, manufacturing and energy make up 41% of China’s GDP, 30% of Russia’s GDP, and 20% of America’s GDP. Therefore, the maximum mobilization we would expect their economy to achieve would be 54% for China, 40% for Russia, and 27% for America.

Wait, you ask — Why can’t we just “build more factories?” Because it’s very difficult to rapidly grow manufacturing. The fastest large-scale improvement I have found in looking at data is a 3% increase in the share of manufacturing per year for a major economy. Achieving this during wartime, when manpower is diverted into uniform and infrastructure is under attack seems unlikely. A nation can rapidly convert its peacetime manufacturing to wartime manufacturing, but it cannot rapidly build manufacturing capability where none existed. I assume that maximum mobilization might increase by at most 1% per year from their present level.

Even when taking advantage of pre-existing industrial infrastructure, mobilization is never instantaneous. In its best year, the US was able to mobilize from 10% to 35% (1941 to 1942), and the USSR was able to mobilize from 20% to 55% (1942 to 1943). That suggests the absolute best possible mobilization is a 3.5 increase annually. It’s not clear to me that any of today’s great powers could match those, due to the vastly increased complexity and fragility of our supply chains. Therefore I assume that actual mobilization can at most double yearly, until the maximum mobilization is reached.

Read the whole tale of woe over there.  Meanwhile, the Deep State is desperate to win the war in Ukraine before their military machine falls apart.  They are disarming our own warriors to send weapons to Ukraine.

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