This is why legislation such as the CHIPS Act should not be seen as corporate welfare but rather as leveling the playing field.
it used to be common sense not to hand over your nation's strategic assets to potential foreign adversaries, common Americans all intuitively knew shipping manufacturing to China was bad. Wall Street greed and bribed politicians allowed this to happen. Evil is selling out your nation for profit
Americans are richer than ever. The problem in America, however, is that the distribution of that wealth has become completely lopsided so it’s concentrated in a few hands. That’s a domestic policy issue.
Outsourcing manufacturing is different, however, from shopping away strategic assets and not investing in keeping strategic manufacturing capacity alive, which once again is a failure of US domestic policy.
"Poverty and economic inequality are not identical. When the city is turning off your water because you can't pay the bill, it doesn't make any difference what Larry Page's net worth is compared to yours. He might only be a few times richer than you, and it would still be just as much of a problem that your water was getting turned off."
Except outside of the most abject poverty that is fairly rare in the developed world, utility/disutility is more a function of relative economic status than absolute economic status. So, in the only sense that matters, this is at least oversimplified; you have to improve absolute wealth on the lower end considerably just to offset the disutility of increased equality and break even. It is possible to increase inequality and have everyone better off in utilitarian terms, but improvements in the usual economic measures are not sufficient to show that because those are poor proxies for utility.
Because I see subsidizing exports through the nose as a way of dumping on foreign markets.
Evaluating the tech stack is very important and usually at the very top you find trivial technologies that are not difficult to replicate. This is where you find brand, trademarks, and marketing.
Maybe in other markets, anything related with semiconductors has a HUGE capital barrier to entry. Exhibit A: ASML's EUV machines.
I understand that an EUV machine is much more complex than a chisel but how difficult (in time) would be to clone one? Did anybody already start doing it?
A scenario is: China invades Taiwan, the chip factories blow up so China doesn't get them, it takes years to build them somewhere else for the rest of the world but China won't have those machines from ASML ever (embargoes.) But can they buy one now and clone it in a reasonable time?
China has barely 10 years of experience in chip industry and it's not necessarily the most profound one. China's most successful foundry SMIC was made possible by former top TSMC engineers (many with PhD's from top US universities) and it's generally understood that SMIC's most cutting edge 14nm node is really a clone of TSMC N16FFC. Many also suspect 14nm is their limit and can't advanced any further without access to the chip manufacturing supply-chain in the US/Japan/EU, who collectively own 95% of the market. Shanghai Micro Electronic Equipment, SMEE, recently announced that they developed their own 28nm lithography machines, but that's also with help and components from Japan. The 28nm processing is hardly a cutting edge tech and that's not even under US sanction. Even Taiwan/South Korea depend almost entirely on supply-chain from the US/Japan/EU (except wafer).
Now, the key idea here is "outsider's help." It's not impossible if China is allowed to poach engineers from their suppliers/competitors, steal IP, or import highly sensitive, cutting-edge components and materials from the US/JPN/EU. The problem as I see it is, there is obviously no shortage of American multinational companies, such as Apple, Nike, etc,... willing to sell out America's national security or economic interests to make more doh's in China. And Apple isn't just a very profitable US company with the largest market cap in the world, but also it's very well politically connected -- just look at the shenanigan Apple pulled against Qualcomm with their operatives at FTC. The orange man was somewhat of an anomaly and managed to stop this flow, but I'm not so sure about Biden or whoever comes next. The recent revelation, or $270B deal between Tim Apple and Xi, clearly shows what Apple intends to do and where this is going to go if Apple is left unchecked.
It's like American capitalism wants itself to fail. It's pretty much self sabotage at this point.
What is food stamps for Walmart and Amazon workers if not an unaccounted for government subsidy?
You all have it so ingrained that market forces are the only way things should work that you even end up using absolute categories such as good and evil.
If we're just making handouts to support big companys competing to make their own chips, then yeah, it's boring & "evil". But there's a lot to be gained if America could reopen not just companies but foundries, places that take orders. If a nation can get it's citizens access to domestic chipmaking capabilities at competitive prices, that nation can start spawning all kinds of firms specialized in all manners of chips, can create a massive amount of intellectual & market leadership for itself.
I propose that creating silicon foundries again, as a public good, would be enormously enormously beneficial for the intellectual & economic prosperity of a nation.
If the world were well served by chip-making, then I think your disregard would be due. But we seem to be well well well into a period of mass consolidation, of less & less accessibility to chip-making. America & many other places that have been hotbeds of intellectual knowledge & creativity will surely languish & die unless the environment can be improved, unless access to the means of production can be secured & made available to the people, to the students, to the upstarts. Ignore that "stragedy" at your nation's mortal peril, imo.
I think it's a bit telling that the Google/SkyWater collaboration is still on 130nm. It's great that some patron is out there trying to encourage novel chip making, trying to reboot a general knowledge in a dying decaying sector. And there's some reasons why perhaps like 40nm or so might be un-strategic a choice. But generally I think access to even vaguely-quasi-modern chipmaking is falling away, is collapsing. The strategy of keeping this industry accessible is, to me, a defining battle.
(That said, OLED making is not where I think accessible, competitive silicon foundries are needed. But this thread, this story is a telling indicator to me.)
Is that not true? Does the US constitute only 13% of world chip making because most chips sold are cheap, low powered chips? And if that is the case, does it really matter that we aren't making the cheap stuff?
These chips are not cheap by anyway, US has lost advanced chipmaking ground
Capitalism doesn't exist in a vacuum, nor is it magical in the way you imply. You youngsters
If China is going to do this we either have to do the same or levy corresponding import duties on the product. If we do nothing at all we lose all our industries to China.
Edit: yes the US does this too in other industries like aerospace. That just illustrates the point.
Instead of propping up our own companies, a better response might be to ban imports of these government subsidized products. Apple wouldn't be harmed in the slightest, this move is just a cost savings for them.
2020: $20.9B [0]
2019: $21B [0]
2018: $21.1B [1]
2017: $9.6B [1]
2016: $10.3B [2]
$6B is a low single digit percentage of their profit going back 28 years. BOE has been subsidized on a whole other level and they're still not consistently profitable.
[0] https://www.intc.com/news-events/press-releases/detail/1439/...
[1] https://www.intc.com/news-events/press-releases/detail/1092/...
[2] https://www.intc.com/news-events/press-releases/detail/1102/...
There's nothing wrong with subsidising Intel. They're competing against countries like South Korea whose government recently announced a package of chip manufacturer subsidies worth $450bn after all. They won't be able to compete if they're aren't given a little help.
China probably sees things as leveling the playing field too. To find high tech industry that emerges through pure Ayn Rand search through Mogadishu, various favelas, etc., not developed or rapidly developing places.
Not everyone thinks Apple's profit should come before America's national or economic interest.
Pretty much for each unit they sell, they not only receive payment from customer, they also receive government payment for the same amount. As a result, they were able to keep the price unreasonably low.
CCP is as a matter of fact the largest VC in China.
Interesting trivia: BOE was considered the most successful example of municipal government VC by Hefei and Chengdu. Hefei bet on both plasma display and LCD, only BOE survived.
Several decades ago it was food security - the idea that a nation must produce enough of its own food to feed its populace - that was the concern of import policy. Today the field is much, much broader.
China will dump out their OLEDs, I’ll get cheaper OLEDs, my nation will make other things and exchange them for OLEDs. China may come to dominate the OLED market, but OLEDs will be displaced by micro-LEDs.
China will never completely control any particular technology simply because, wealthy as they are, they don’t have the resources to afford such a thing. They may be able to buy their way to market dominance, but there will always be alternative sources. Not least, because of the fact they’re not the only country pursuing a strategy of national champions.
Food security is also a bit of a joke. Well not a joke, a cudgel used by the farming lobby to shut down reasoned discussions about whether we should reduce some of the largesses currently extended to farmers. Nations don’t need ‘food security’, they need a functioning global supply chain and reasonable leaders that can restrain the dogs of war.
Notions of things like food security only make wars more likely because nations feel like they’d be more likely to win in the event of one occurring. But really, we all know nobody would win in a war where America got to the point where food security was in question.
So yeah basically what Trump did to China during the trade war.
What are your thoughts on affirmative action?
A better comparison if you really insist on comparing treatment of companies to actual people would be to take two identical companies working in the same market. Force one of them to close. After the second has been established for a few hundred years, allow the one you shut down to reopen, but tell them that they can't charge more than 50% of the price of the established firm, and also say that suppliers don't have to provide goods to that firm, and if they do then those suppliers don't have to provide goods at the same level of quality. Those suppliers also charge more, for the lower quality goods. To be safe, you also don't allow the company to build anywhere near existing commercial or industrial zones, so they also have to pay more for shipping and transit, despite being less conveniently placed.
After a while you say "ok, you can sell to everyone and we aren't going to limit what you can charge, etc". Then you turn around and say "see everything is equal now".
Of course by this point entire industries are built around the version of the product sold by the established firm, the established firm has more resources, the subsidiaries of the established firm have more resources, as do their subsidiaries, because all those subsidiaries have been getting the same preferential treatment. Meanwhile the historically penalized firm has been given a bad rap because the quality of a lower quality of goods, because they got worse materials to start with, they couldn't afford the same quality of workers (in fact they were functionally prohibited from employing the best).
Now people say "of course we pay less for goods from that company, they're lower quality".
It may be a true statement, but the reason isn't because the company is fundamentally flawed, just that the established company has had unending advantages, and those advantages continue to apply even after the original penalties were removed.
Of course this is a gross simplification of what actually happened to the victims of the various repressive laws and policies of various countries, because again, companies are not people.
I am a coloured South African(an ethnic group that was previously disadvantaged due to apartheid era racial policies) we in South Africa have Affirmative action policies called Black Economic Empower(BEE) (Its open to all previously advantaged racial groups ie Black, Coloured, Indian they just call it BEE) that has led to mass corruption and cronyism.
>Start with crony capitalism, which in South Africa goes by the euphemism “black economic empowerment”. The idea behind it seemed laudable enough—to right a historical wrong. Under apartheid, the country produced white titans of industry such as the Oppenheimer family (owners of DeBeers), while making it hard for black South Africans to own businesses. The ANC(Ruling political party) felt it only fair that there should be black billionaires, too. To give them a leg-up it insisted that mining companies should hand at least 26% of their shares to the “historically disadvantaged”. Mining companies (as well as banks and insurers) did so willingly, diluting existing shareholdings when they transferred stakes to the likes of Cyril Ramaphosa, now the president, along with Patrice Motsepe, his brother-in-law, and Bridgette Radebe, his sister-in-law.[1]
I and alot of South Africans could stomach a one-off payment or one-off percentage equity stake in firms(in South Africa the government instituted a policy that South African Corporate firms would sell shares preferential)to disadvantaged groups but after these shares were sold, the government wanted to continuously repeat it.
>If these handouts had been a one-off tax, their harm would by now have been forgotten. But once the new black shareholders had sold their holdings, the government drafted regulations to repeat the process. And so capital investment in mines fell by 45% between 2010 and 2018, with output falling by 10% and employment by 50,000—a tenth of direct employment in the industry in 2010.[1]
When the government gives support not based on merit and competence but gender, race, religion or ethnicity you undermine industrial policy(Instead of support based on a person's potential ability or ability to do things)With affirmative action you end up institutionalising incompetence.
>Black Economic Empowerment, a policy that incentivises firms to give equity to black investors or business to black-owned suppliers, has created a new generation of Randlords with more political acumen than entrepreneurial talent. “Cadre deployment”, whereby ANC party(Ruling political party) members get jobs on the basis of factional fealty rather than merit, has degraded the state. These appointees steer contracts towards chosen “tenderpreneurs”, who in turn donate to the party. By 2007 Kgalema Motlanthe, a party grandee, said: “This rot is across the board...Almost every project is conceived because it offers opportunities for certain people to make money.”[2]
Many South African feel that our counrty has become "a cappuccino society, A vast, huge, black majority at the bottom with a layer of white cream and a few chocolate sprinklings at the top of it" referring to the small black elite who have gained great riches from the post-apartheid years - from a failed attempt to rebalance the wealth among the many.
Yes, I acknowledge the present-day inequities that racist, sexist, etc policies can cause, but if a Government was serious about addressing historical inequalities then you need to invest in education and skills development. Affirmative action never works in the long term, instead of making people competent and self-reliant,it makes them dependent on handouts.
Industrial policy can sometimes work in South Korea, Taiwan, Certain Industries in China, or it can fail spectacularly and end up being a waste of time and resources Malaysia and South Africa(instead of giving equity stakes and handouts you could have used those same resources to invest in everyone, not just a particular race, ethnicity, gender or religion.)
Affirmative action policies can actually be self-defeating and harm the industrial policies you have.
Contrast Taiwan and Malaysia's Industrial Policies and Outcomes
Taiwan's has currently a healthy semiconductor industry with many successful and impressive firms ie TSMC, etc.
And Malaysia with its affirmative action laws favouring certain ethnicities that ultimately undermined their industrial policies. The corruption and shenanigans that result from affirmative action policies happened in South Africa also happened in Malaysia and undermined their long term industrial goals.
Appropriating a quote from Deng Xiaoping "It doesn't matter whether a cat is black or white, as long as it catches mice." This is taken to mean that as long as the economy works, it is a good economy.
Affirmative action is equality of outcome. Do people think they have godly powers that can guarantee certain outcomes or results? There is an inherent risk of failure in all ventures and endeavours.
A correct criticism of capitalism is when it does not provide equal opportunity and so we should always strive to provide equal opportunity, but people confuse that with the equal outcome when, equal outcome can only be enforced through violence because different people, free people make different choices and when they make different choices they have different outcomes if you don't let them suffer the consequences of bad choices or reap the rewards from good choices then you have to use force or violence to get a prefered outcome
If people are really serious about freedom and equality then you should want not just the freedom to succeed, but also the freedom to fail.
[1]https://www.economist.com/leaders/2021/07/24/end-of-the-line...
[2]https://www.economist.com/middle-east-and-africa/2021/07/24/...
This is like saying rain is bad because it only fell on one farm out of a hundred.
> if a Government was serious about addressing historical inequalities then you need to invest in education and skills development.
So you agree that affirmative action can work. Your objection is to the way that the political elite pretended to implement affirmative action for the many while really only being interested in enriching themselves.
> Affirmative action is equality of outcome.
Nonsense. It can be whatever you want it to be. If you gave scholarships to impoverished black kids, that isn't a guarantee of a good outcome. Just that those poor black kids have the same opportunity than the rich whites. Now if you said that n% of all board seats of stock exchange listed companies had to be POC, then that would be equality of outcome.
Just because your South African politicians fucked your country over, doesn't make affirmative action bad.