The factory floor is the foundation of national power

National Review reports that Germany is absorbing a severe "China shock" — its storied industrial base, built over generations, battered by Chinese competition in autos, machinery, and manufactured goods. I did not live to see the automobile or the assembly line, but I understood this principle completely: a nation that surrenders its manufactures to a foreign rival has surrendered something far more precious than a trade imbalance. It has surrendered the sinew of its independence.

In my Report on the Subject of Manufactures, I argued — against considerable fashionable opinion — that industry is not a parasite on a free people but its partner. Agriculture alone cannot make a nation commercially sovereign. Manufactures diversify labor, employ capital productively, deepen skill, and generate the surpluses that fund public credit. Germany built that case in steel and engineering for a century and a half. Now it is watching competitors — subsidized, directed, and deployed as instruments of state — dismantle it.

This is precisely the danger of what I would call unreciprocated openness. Free commerce is a magnificent engine when the parties to it play by comparable rules. When one party deploys state resources — subsidies, directed credit, protected home markets — to capture foreign industries, that is not free trade. That is commercial warfare conducted by other means. Germany, committed to open markets as a matter of ideology, found itself outgunned by a rival that never accepted the ideology.

The lesson for America is direct. Our semiconductor industry, our steel capacity, our advanced manufactures — these are not mere economic sectors. They are the material basis of military readiness, of supply-chain resilience, and of the public credit itself. A nation that cannot produce cannot defend. A nation that cannot defend cannot borrow on favorable terms when the hour of need arrives. I would mark as inference, not recollection, the precise figures of German industrial contraction — the National Review lead does not supply them — but the structural argument requires no footnote. History supplies it in full.

I am not an enemy of foreign commerce. I never was. I sought American exports as eagerly as any merchant. But I insisted, against those who would leave American manufacturers to the mercy of better-established rivals, that a deliberate national policy — tariffs, bounties, encouragement of skill and capital — was necessary in the early stages of industrial development. Germany's shock suggests that the early stage never fully ends when the rival is a state, not merely a market.

My recommendation is plain. America should treat its industrial base — semiconductors, advanced materials, clean-energy manufacturing, defense supply chains — as a matter of national credit, not merely private profit. Support it deliberately. Negotiate reciprocity seriously. And study Germany's predicament not with sympathy alone, but with the cold resolve to ensure it is not our own epitaph.