Source: Danhu Fisherman

1. Musk will resign

On March 31, Elon Musk announced that he would resign from the U.S. Department of Efficiency (DOGE) at the end of May. As a special employee, he serves at the White House for no more than 130 days.

I have always believed that there are two people who are truly worthy of attention in this American generation.

The first is Vice President Vance, an extreme right-wing politician who is determined to turn right in the foreign aspect and is encouraging Europe to turn right, trying to curb East Asia with all his might. He is relatively young and deserves great attention.

The second is Musk, because he has been on the right path.

After Musk leaves, the United States may lose its last chance to revive its manufacturing industry, and it can even be said that the United States will lose its last chance to revive.

Why do you say so?

2. Whether the manufacturing industry can return to the United States depends on the marginal return rate of capital. As we all know, when Obama ran for the 2008 election, he began to call for the return of manufacturing. Since then, both Obama, Biden and Trump have been taking measures to promote the return of manufacturing and trying to achieve "reindustrialization" in the United States.

However, whether manufacturing is willing to return to the United States depends on the difference between the marginal return of physical capital investment in the United States and the marginal return of foreign investment Rf.

(Rus-Rf)

When the marginal return on investment in the United States is high, manufacturing companies will invest in the United States; when the marginal return on investment in the United States is low, companies will invest abroad. This is a very simple truth.

The following figure shows that since the 1970s, Rus has declined, lower than emerging markets, which is the root cause of hollowing out of the US manufacturing industry. Of course, the smaller Japan is even lower.

Figure 1: Marginal return rate of physical capital investment in China, the United States, Japan and South Korea

Source: See my book for details, published within the year

So, what is the decision of this Rus? Simply put, it includes: total factor productivity (TFP) growth rate, administrative system, administrative efficiency, capital stock, population aging, social inequality, human capital, etc.

We know that since Obama came to power in 2009, American white lefties have been making all kinds of troubles and doing all kinds of extreme correctness, intending to cover up their perverts, corruption, and illegal and criminal activities. The consequences are:

[1] American society is becoming increasingly divided and social contradictions are intensifying.

[2] The widening gap between the rich and the poor is the largest among the major economies in the world. The degree of inequality has intensified and the class has been severely solidified.

[3] The administrative system is inefficient, and corruption is a trend.

Every time the US economy goes bad, the Federal Reserve will engage in QE and zero interest rates, and will not make profound adjustments to the economy (this is not the Fed's responsibility), resulting in many problems and inefficiency.

This all caused Rus to continue to decline. It has dropped to 0.7% in 2024.

Figure 2: Marginal rate of return from two sources

Source: See my book for details, published within the year

3. Musk is on the right path

On November 12, 2024, Trump announced the establishment of the Ministry of Efficiency. On November 20, 2024, Elon Musk and Vivek Ramaswamy published the "Reform Plan", announcing that they will work to promote three major categories of reforms: abolishing excessive supervision, reducing administrative expenses, and saving costs.

Newly taken office on January 20, 2025, Elon Musk began to implement reforms with great fanfare, liquidate the United States Agency for International Development (USAID), investigate corruption, crack down on the powerful and powerful, and even prepare for assassination. He has the spirit of "If you benefit, life and death, you will not avoid it because of misfortune or good fortune."

Although he was a little too hasty and tried to manage employees in the way of managing the company, and was not in-depth enough (for example, there was no hard bone such as the distribution system), it must be said that thorough reform of the US administrative system and eliminating corruption are the only way to improve efficiency. If their plan goes smoothly, it will undoubtedly improve Rus to a certain extent.

So Musk's approach is the fundamental solution to the problem. If he really reforms according to his ideas, the US manufacturing industry may really improve a little.

But since ancient times, "reform" has not been that easy. Musk also attracted criticism from all sides, especially from the left. In addition, his Tesla sales plummeted in Europe, and many stores selling Tesla were burned to pieces and their stock prices plummeted. I guess he gradually became discouraged.

4. The man is about to die, and the old forces are back

March 31 Musk emphasized: Inefficient, a lot of waste and fraud, he is confident that he will reduce spending by 15% without affecting critical services.

However, what's the use? After he leaves, the people will die immediately, and the United States will immediately return to its previous situation. His efforts were in vain. It’s like a strong wind bringing up a pile of garbage, and then the wind stops, the garbage falls down, but it’s still garbage. Nothing changed.

So I said, Musk's path is right. Unfortunately, he couldn't continue to do it. All sectors of the United States will not allow him to continue. If he keeps doing it,Actually, it's a negative. He left the job and let the American politicians continue to rot, which is good.

He continues to do it, and the United States still has a glimmer of hope to achieve a return to manufacturing. After he left, the US manufacturing industry had no hope of a return, and the US would lose its last chance of revival. Rely on raising tariffs? The effect of tariffs is as follows:

Without manufacturing, the US GDP is just an empty shelf. Is it possible to curb the GDP supported by lawn mowing for 1 hour, ambulances for 10 kilometers, and 36 eggs for $30?

Without manufacturing, Vance may have become more right-wing, more extreme, and even gradually become Nazi in order to vote and reputation, but it is not terrible.

Musk is gone, the inefficient America is here, very good, very good, both of which are worthy of our welcome.