The Fractured Flame, Tariffs, Trust, and the New Fire Economy: The GTESI Lens

In classical economics, tariffs are treated as distortions: taxes imposed on trade to protect local industry, shift cost structures, or incentivize domestic production. They are friction in an otherwise smooth optimization machine. Popular with those aiming to stimulate domestic economies, unpopular with those who see that a rising tide of free trade lifts all boats.

Who’s right? Are tariffs a good path toward a worthy goal of stimulating domestic business? One complexity that arises immediately — do tariffs apply to finished products croissing borders, components, raw materials, or services. It’s not an idle question.

A car manufactured by a US automaker might cross the border 10 times or more in the process of being assembled, components traverse borders all the time, and services move freely for good reasons. How can we easily measure, impose and enforce a tax on, say, an accountant in Munich analyzing sales taxes due for purchase of raw materials from the Philippnes, used in Canada, which ultimately make their way into a vehicle assembled in Canada by German automaker and sold into the US market?

Let’s start by looking at what flows to what in a classical economy, because these questions are made complex not by tariffs or imposts, but by supply-chains. And the general rule since the Neolithic is that the directional flow of raw materials has less to do with prices and borders and more to do with trust, stability, and the absence of chaos.

Back to the Beginning

Consider the world’s first major market — the market in metals. Since the Neolithic, raw materials have moved from the point of extraction, the mine, to the point of smelting, when there’s regional peace and stability. Why? Because it was cheaper to move dense ores than bulky wood (the wood used to fuel the smelting fires). That’s classical economics, and in the Pax Americana since 1945 we’ve seen a lot of it. Raw materials flow towards the most expensive thing to build, operate or move.

So, to use a modern energy trade example, oil flows from well to pipelines and tankers, thence to refineries. Not the other way around. The distance that oil travels will vary — sometimes a few miles, sometimes thousands, but oil travels, the refineries don’t move around every time a new well is spudded. That’s economics at work, but also the Pax Americana, the long peace.

Back in the Neolithic and since, the supply-chain could and did flip directions. At many times, bulky wood flowed to the mine, the point of extraction. It made little sense in classical economics, but it made tremendous sense in an age of piracy. When supply is uncertain, you never move a material because it costs less to ship, you move the material that’s worth less — the risk of loss is the key factor. In the age of Piracy, no one moved raw silver ore from the Americas to Europe, only refined silver. Too many ships would have been required to move the ore, too many risks of shipwreck or seizure. The refinign was done as close to the mine as was practically possible.

Today in the Long Peace

We still see this today, even in the long peace. For real estate closings that are conducted in cash, the cash is rarely transported to the cheapest place to complete the transaction, or at some mega-site where all closings take place to achieve economies of scale. Closings take place in a dilute, distrbuted set of small offices, usually across the street from banks or points of transfer, and concealment or armed protection of the cash is an everyday consideration. Similarly, money changers typically do not make house calls unless they are operating at balck market rates where a shopfront would invite law enforcement. People form corporations in Delaware instead of their home states because the law of corporations is more settled there, historically.

These are unusual and minor outliers, because of a long peace. Yet, if bandits were prevalent, people wouldn’t shop at Costso, the risks would be greater than the economies of scale can justify.

So, we see right away that there’s a need to export disorder in order for classical economics to work. Capture the bandits, enforce the laws, classical economics are more likely to rule.

Which brings us out of the world of classical economics and into the world of the Genral Therory of Evolutionary Systems and Information, where classical economics are a special case that usally make great sense. Just like Newtonian mechanics are usually good enough as a rule fo thumb, but are a special case within Genral Relativity.

In a GTESI analysis, tariffs aren’t just friction—they are flare signals in a larger system of trust, entropy, and thermodynamic decision-making. And today, those signals are everywhere.

GTESI Rule: Using a metals metaphor, if raw materialsd (ore) moves to the flame (smelter) , the system believes in itself. If smelters move to the ore, the system is afraid. When trust collapses, fire moves to the edge.

In this light, we can see tariffs today as something more than cost distortions. In some way, we know they are. That’s why the explanations for them always sound so puzzling, and why the rational struggles to explain the complexities. Tariffs are proxies for deeper fractures in symbolic coherence: fear of IP theft, cyberattack, piracy, climate disruption, war. When a system no longer trusts that its arteries are safe, it ceases to concentrate firepower. We are not as content to ship raw materials to a foreign land for processing. Instead, it redistributes it in flickering edge nodes, often at higher cost, redundancy, and inefficiency. So, we find a way to advantage local production.

Sectoral Snapshots

Semiconductors
- U.S.-China tensions have re-routed capital and IP away from traditional hubs like Taiwan. New fabs in Arizona and Germany represent fire pulled back into trusted domestic cores.
EVs and Batteries
- Gigafactories now rise wherever demand and critical minerals intersect—not because it’s cheapest, but because it’s survivable.
Medical Supply Chains
- Post-COVID, governments began rebuilding localized capacity. Redundant manufacturing pops up not out of efficiency, but out of a new respect for entropy.
Food Systems
- Climate shocks and trade uncertainty are reintroducing national grain reserves, controlled inputs, and even vertical farming: persistent fire over scalable fire.

The Calculus Has Changed

So, as we’ve observed — in a fully optimized system, ore travels to fire. In a system under strain, fuel travels to ore. But today, neither trust nor fuel flows freely. Instead, we are seeing a global shift toward fractured firebeds: clusters of localized production, governed more by resilience and redundancy than by cost or comparative advantage. Tariffs are being applied to manufactured goods, not to services. Not to everyone, everywhere, the same. Exceptions abound — it’s a chaotic landscape and lobbyists are at full froth. The Swamp has not been drained; in fact, it is filling faster than ever — just different apex predators.

What do we call such a fractured landscape, where rules seem to apply unevenly, locally, subject to the whims of powerful warlords. In the Noelithic, we would have described this as a camp network, not a kingdom grid.

GTESI Insight: The modern supply chain no longer behaves like a pipeline. It behaves like a nervous system—sensitive, distributed, partially decentralized.

The Thermodynamics of Trade

Tariffs used to be levers. Now they are diagnostics. They tell us where symbolic coherence has eroded, and where entropy is being exported through redundancy rather than scale. The rise of small-scale, localized manufacturing—even when uneconomic—is a signal that the system no longer trusts itself to protect the flame.

What we are witnessing is not deglobalization. It is recompression: fire breaking into fragments and finding new hearths. The supply chain is no longer a story of price. It is a story of belief. And where value moves—or does not—tells us where the system still dares to burn.

Will Tariffs Persist? Bringing it Back to You

In the end, tariffs are the result of our discontent — buying locally feels more coherent, more able to channel domestic disorder, more part of a ancient ritual of trust and value creation. We feel the symbolism of the craftsman, a compact uniting the yeoman laborer and the worthy capitalist, even if it involves higher cost. For the massively-scaled US market, the source of that higher cost is labor. Work, here in the US market, simply tilts towards higher-value services, They feel fragile — they collapse much faster under pressure.

Why services feel more fragile when things get confused: a GTESI diagnostic

If you are thinking that fee-based servcies, licensing arrangements, the gig economy, feels more uncertain in times like these, you’re not wrong. There are lots of reasons why people embrace “capital-light” pathways to success, yet the owner-operator model which can feel downright rough in the capital formation period or in a prolonged downturn, can feel pretty re-assuring in a moment of confusion. Why is that?

In GTESI terms, we’re assessing thermodynamic persistence across sectors as systems face declining available energy — monetary, emotional, institutional. A recession is a stress test, an entropy wave sweeping through the economy. Some structures crack, some flex, some absorb and redirect.

Services vs. Durable Goods

At core:

Services often depend on discretionary time and attention — ephemeral, symbolic, trust-mediated.
Durable goods often persist through material utility and replacement logic — tangible, usable, physically anchored.

GTESI translation:

Feature	Services	Durable Goods
Information density	High (intangible value)	Medium (functional design)
Entropy exposure	High (dependent on attention, scheduling, mood)	Low (used regardless of mood)
Trust burden	High (must remain desirable, credible)	Medium (trust in brand + function)
Persistence vector	Symbolic + social	Structural + functional
Entropy outlet	Signal decay (canceling, shifting habits)	Deferred use (stockpiling, reuse)

So, services are symbolic, responsive, social, and thus more fragile in downturns unless anchored in necessity, ritual, or regulatory lock-in.

The Pyramid of Persistence (Rainy Day edition)

Let’s build a GTESI Persistence Pyramid, ranked from lowest to highest entropy resilience during recession:

[6] Essential Embedded Systems

[5] Repair & Maintenance Markets

[4] Durable Consumer Goods

[3] Institutional Services (health, legal, ed.)

[2] Discretionary Symbolic Services

[1] Attention-Based Digital Offerings

Layer 1: Attention-Based Digital Offerings

Podcasts, newsletters, influencer services, entertainment subscriptions
GTESI: High symbolic entropy, fast decay unless ritualized (e.g. NYT Spelling Bee)

Layer 2: Discretionary Symbolic Services