It requires significantly less political capital to create a new tax cut or subsidy than to raise taxes or allocate new spending directly.
Furthermore American tax policy w.r.t foreign profits is a rounding error when it comes to building up semiconductor manufacturing infrastructure.
No American company is happy they have to go to China or Taiwan to tape out a new design. There simply isn't the infrastructure to do it affordably on this side of the Pacific, unless it has critical technologies that cannot be offshored for fear of industrial espionage.
> It requires significantly less political capital to create a new tax cut or subsidy than to raise taxes or allocate new spending directly.
This is an incredibly important point, and one that I wish would come up more often. The reason that the US tax code is such a cluster@%&$ is because we insist (for reasons of politics) on conducting our fiscal policy almost entirely through the tax code, rather than just, you know, spending money directly on the stuff we want to invest in.
But something nobody talks about are the sacrifices the population has to do to churn those things out of factories at the same scale as nations desperate to rebuild and feed their people. China succeeded because they went all in, their factory employees are still told today they have to sacrifice their youth to the nation.
Will american factory workers work the same way ? Will you proudly join a factory and start building stuff, at the cost of your health?
The solution, long term, can only come from China changing their mindset somehow, and then the next few places taking over the gap (I suppose Africa one day will wake up, India is starting a bit)
Also, even if America start pulling out, this doesn't make their products automatically superior. Taiwan especially showed they can outpace in execution, maybe in design and even if the US stop buying there, now Taiwan itself can compete and lead where the US will follow: is it better to be independent on bad design or co dependent on good ones ?
Semiconductor fabrication is almost entirely automated and any new fabs in the US will be on the cutting edge of new automation technologies, so I don't think there will be quite so many workers involved.
Furthermore American tax policy w.r.t foreign profits is a rounding error when it comes to building up semiconductor manufacturing infrastructure.
No American company is happy they have to go to China or Taiwan to tape out a new design. There simply isn't the infrastructure to do it affordably on this side of the Pacific, unless it has critical technologies that cannot be offshored for fear of industrial espionage.