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Comment by exabrial | Hacker News Reader

Awesome, I can't wait for me the taxpayer to breathe life into the smoldering shell of a company where the executives and unlimited layers of useless middle management used financial engineering to fool investors about the internal situation while extracting as much money as possible and then bailing out on golden parachutes and landing in soft thick piles of bonuses.

Remember when we did this in 2008 under the Obama administration? We gave them $10bil and they paid out "contractually obligated bonuses" with more than half of the money? https://www.theguardian.com/business/2009/jul/31/wall-street...

Just let it fail. If you're really paranoid, pass a law preventing and foreign buyers from snapping up the ip or fabs and we'll just fine, but that's probably not even needed.

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Literally my same conclusion since 2008.

Hundreds of thousands of people without jobs? Let it fail.

No more domestic semiconductor company? Let it fail.

No more domestic aerospace company? LET IT FAIL.

We keep avoiding making the hard policy decisions by funneling taxpayer money into the hands of the already-wealthy who promise that this time it’ll be different, this time they won’t give it to shareholders and payout bonuses.

Let it fail. Once hundreds of thousands of Americans are jobless due to executive mismanagement and shareholder greed, will actually meaningful and impactful policy be made.

At least in Intel's case, I can see why the US government wouldn't want to get rid of them. For one, Intel is a defense asset and there will generally be apprehension of letting them slip under without the feds gutting what they want out of it. For two, I kinda think Intel did everything right from a US nationalism perspective even if their customers ditched them for it. Intel was never going to keep their Apple contract unless they outsourced to TSMC, abandoned any form of profitable margins and gave up on domestic chipmaking. From the perspective of US lawmakers, Intel is kinda damned-if-you-do, damned-if-you-don't.

I still support letting Intel fail, but I have absolutely no confidence anyone will let it happen.

> Intel is a defense asset

So nationalize them and remove the waste

Nationalize and waste removal is an oxymoron.

I think the opposite is true! What bigger waste is there than profit? Schumpeter agrees with me.

It would be different, of course, if intel were the bleeding edge of innovation.... but that hasn't been true for about twenty years. Maybe longer.

The IRS is one of the most effective government agencies out there, despite continued lack of funding and political mismanagement. NASA still leads space exploration, despite Congress intervening in its agendas.

The mismanagement and waste come from a Congress more obsessed with its re-election and petty politics than it is actually running a gargantuan empire in a sustainable manner, not the agencies themselves, with one notable exception: the Department of Defense. That is a profoundly mismanaged and exploited department that drains valuable taxpayer money into fantasy boondoggles meant to get people promoted and swindle ever-more income from taxpayers in the process.

At the very least, the government should be the baseline option, with Capitalism competing against it on either efficiency or outcome, ideally both. Instead, what we have are Capitalist companies who game the system to extract more wealth for themselves and from each other, and demand the government cover their own mismanagement under the guise of “National Security.”

They cannot have it both ways. If they’re critical to the security of the country, they cannot exist as private enterprise. If they want maximum profit, then they cannot be of import to the government.

Have you tried calling the irs ?

If you gave google the authority to jail customers who didn’t buy their services with 25% of income, even google might provide some customer service, but would surely provide better api’s.

> The IRS is one of the most effective government agencies out there

It is one of the most cost effective agencies because their entire reason d'être is finding missing money and collecting it.

It doesn't really say anything about them being one of the most effective in the sense of good management and having minimal waste. I had to deal with them as an immigrant and it was a nightmare of wait times.

To be fair, and having been through that hell myself, anything involving both American Bureaucracy AND immigration is just a gigantic suck salad.

I think americans call this "the economy" as if they read its liver for good luck

Nationalizing it would only increase the waste.

How do you figure? The profit motive isn't a factor when nationalized. Where would the waste come from?

From the fact that you can get profit by removing waste. Without profit there is no reason to remove waste. Waste isn't a thing you add intentionally if you have a reason. Waste is entropy it happens unless you continually clean it out. If you don't HAVE to clean out the waste it doesn't get cleaned out.

You also apparently need to wipe out the profit occasionally or else the company gets sucked dry of functional capability out of greed.

Perhaps we need a cycle of allowing capitalists to remove waste, nationalization to remove profit, and then capitalists to be allowed to begin again removing waste.

Your definition of waste is likely different to other peoples.

Seems like a good one to me. I suppose there are more blatant forms of waste and raw corruption, but the entropy kind seems like one of the most important for a society to tackle.

> Intel was never going to keep their Apple contract unless they outsourced to TSMC, abandoned any form of profitable margins and gave up on domestic chipmaking.

Intel switching to TSMC probably would have sidestepped their 10nm fab failures, and the resulting design pipeline bubble that meant a lot of stagnation after Kaby Lake instead of the tick/tock(/tock) cycle of sort of annual improvements.

But, even if Intel was still doing its thing right, Apple prefers to vertically integrate, and Apple has a niche where their cpu requirements are different enough, that a custom solution is better. AFAIK, Intel hasn't been willing to make really custom CPUs. The Apple cpus target a lower clockspeed, and that enables a smaller chip, and makes wider execution more feasible, and generates less heat. Intel probably wasn't willing to make a high performance but clock limited design. And Apple might not have wanted to have people compare their laptops with an Intel CPU that only runs at say 3GHz when everyone else is using chips that turbo to 4.5Ghz.

> Intel switching to TSMC probably would have sidestepped their 10nm fab failures

It would, but it would also drain a lot of investor confidence. Intel pulling the TSMC card in 2024 is acceptable, or even desirable, from a shareholder perspective. Doing it in 2017 would have been jaw-dropping, even if it came with the advantages of TSMC 7nm that AMD's mobile chipsets boasted. It might have been the right call, but it would be a kick in the pants to their fab business and a terrible omen of things to come.

> But, even if Intel was still doing its thing right, Apple prefers to vertically integrate

100% agree, and I feel like it's more to my point. Intel was a holdover from an era where Apple had to ditch their reliance on PowerPC. Buying pre-designed chips was an opportunistic success story on a high-margin product like the Mac, and it worked both ways until Apple started designing their own cores. Once Apple could ship an SOC that outperformed Intel, it didn't matter how much it cost to make because there was no middleman to pay. By any means necessary, undercutting Intel was a business imperative for Apple.

I guess the ultimate irony of this is how I hear people begging OEMs to license ARM tech for PCs now. Intel failed as a rent-seeking middleman for high-performance core designs, so now they will be supplanted by Arm, a rent-seeking middleman for low-performance core designs. All Arm Holdings has to do now is buy a fab and they'll be a dead ringer.

As long as there is support for the start-ups which need to rise out of the ashes to replace the dead husk. It's not like the demand has gone away for advanced fighter jets, or cutting edge microprocessors. They need to foster a healthier supply chain to ensure that capacity is met.

SMIC will be more than happy to satisfy the demand for advanced fighter jets and cutting-edge microprocessors if Samsung and TSMC don't have enough capacity to make up for Intel's hypothetically closed fabs. If not buying from SMIC means that US AI, supercomputers, fighter jets, drones, etc., are too expensive to be competitive in countries like India, Saudi Arabia, Germany, Brazil, Nigeria, Indonesia, and the UK, until the ashes finish rising, well, probably that will suit some people just fine. Not US legislators, though.

You don't want this (likely) scenario:

-Intel Fails

-Production stops worldwide. (Not just development)

-US scrambling to sort out the supply chains

-China invades Taiwan

-US Fails

Intel must be replaced domestically. At least wait until there is another fab within the US mainland.

If that happens, it’s because our Government failed to intervene sooner, and is a damning indictment of Western Capitalism in general.

All the more reason to let Intel (or Boeing, or whoever) fail hardcore while we have time to adapt. Intel falling isn’t going to result in a Chinese invasion of Taiwan, but it would smack the hell out of politicians and consumers both that globalism, while a nice idea in times of peace, is not compatible with interests like National Security and the growth of the Middle Class.

So let me get this straight; Intel fails and the American government drops the ball, therefore Western Capitalism itself is indicted and China should be free to start a war and send Taiwanese people to reeducation camps? It sounds like that's what you're saying.

Here's a tip; part of that "Western Capitalism" thing is governments sensibly not binding themselves to extreme libertarianism and being willing to protect strategic industries when necessary. Maybe you think that's not true capitalism or something, that it's not fair, but so what? The stakes are too high to fuck around with letting strategic industries fail out of some insane commitment to ideological purity.

I was going to take this response seriously and write a thought-out retort, but…

> Here’s a tip;

You’re not looking for discourse so much as to have someone agree with your anxiety about a perceived potential conflict and its stakes, and I am not going to be that person to you, sorry.

I made my statements and I stand by them. If you’re extrapolating to the extremes to justify your point of view, then I hate to break it to you but you’re treading ground my OCD has already mapped down to the millimeter. The “National Security” defense is not a valid one absent plans to prevent the exploit of that reasoning by bad actors.

Extrapolating to the extreme? You're the one who spoke of an indictment of "western capitalism" in respect to a defense matter concerning Taiwan. This isn't an abstract scenario, these are real human lives you would be throwing away.

My point is that "western capitalism" isn't an ideological suicide pact. Letting important things fail because you want the system bound to some rigid of rules isn't an acceptable option. Rules exist to serve people, not the other way around.

And that's assuming that the government protecting a strategic industry from their own blunders is even breaking the rules. It isn't. It's one of the characteristic behaviors of "western capitalism". We're not talking about "Ayn Rand's capitalism", nor "Capitalism as Stego thinks it should work".

The important strategic part of Intel is the foundry business. You can spin it off. It will keep making CPUs designed by multiple other competent US companies. You can let the rest fail.

It might in a few years, but fabs aren't really interchangeable widgets.

Their contract-fab business has been a sporadic joke up to now. Until there's an established toolchain and pipeline, and a history of reliable delivery, will there be anyone designing parts to use the Intel fab capacity?

It is probably a lot more practical to protect Taiwan than hoping somebody may rebuild Intel for the next 5-10 years. Having TSMC production in US is also more approachable for the mid term.

> Once hundreds of thousands of Americans are jobless due to executive mismanagement and shareholder greed, will actually meaningful and impactful policy be made.

What policy would that be? Policy to stop large companies from mismanagement golden parachutes, and people losing their jobs due to shareholder greed? I'm all for it, but those are features, not bugs, of the rent-seeking capitalism on which the US is built.

Is there non-rent-seeking capitalism?

That's probably an oxymoron, but who knows, one day some variant might emerge.

In other industries that might be ok (though not for the hundreds of thousands of people without jobs), but not this one. It would be like the US military being reliant on other countries, and potentially its main adversary (China), for its most advanced weapons.

Then why not nationalize it?

Exactly. Industries that are too big to fail shouldn’t be allowed to exist in general (anti trust regulation should see to that), but if that must happen for some reason, then it must be nationalized, or at least very tightly regulated, like utilities are.

It's not like the nationalized companies do that great. The USPS is in perpetual crisis and eventually the Federal Government is going to be on the hook for 10s of billions in pensions.

> ON the hook

Weird to see this framing for something that was promised as a condition of employment.

The USPS gets me my mail regularly. Not sure what else it should be doing. And yes, paying people pensions you promised them is a good thing to do and has nothing to do with mismanagement. Taking the money you had already promised for pensions to instead pay shareholders or executives seems to be mismanagement to me.

The USPS is only in perpetual crisis because people who are deeply against public goods passed a law requiring them to pre-fund retirement benefits 75 years in advance [0] which is utterly ridiculous.

[0]: https://apwu.org/usps-fairness-act

Nationalized industries are nationalized because they shouldn't have to care about profits and losses beyond a basic duty to use resources efficiently. The existence of the nationalized service is deemed to be so important that it must be run by the state to prevent any possible instability or interruptions.

With that being said, the situation of the USPS is not simple - it's been suffering political interference from elected officials for literally centuries. A very good example of why giving too much oversight power to elected officials and having too many political appointees is very dangerous.

Do you have any other examples? The USPS isn’t a nationalized company, it was always a branch of the government. It seems like the USPS is only in crisis because it has long been a political target with especially conservatives trying to sabotage it in order to demonstrate the downsides of public services. But the requirement to pre-fund retiree benefits was eliminated in 2022, is that what you’re referring to with the 10s of billions in pensions? https://en.wikipedia.org/wiki/Postal_Service_Reform_Act_of_2...

If something is critical to National Security or Human Survival, it should be Nationalized. So if Intel, or Boeing, or electric companies, or ISPs, or banks are really that necessary to the American Government that letting them fail would jeopardize our national security, then those entities shouldn’t be publicly-traded or privately-owned enterprises, full-stop.

Unfortunately, that policy is wholly incompatible with the current wealth-extraction and funneling model of the present-day economy, and that’s why it won’t happen until it’s so irreparably broken that the entire global status quo shifts to adjust.

Look at the military industrial complex. Nationalizing intel will turn it into the semiconductor industrial complex.

The US military industrial complex isn't nationalized.

It is.

But if you want to be pedantic it’s both nationalized and private. It depends on whether you’re referring to the military or industry.

When you create these hybrids of business and government, corruption is inevitable.

If I was referring to the military I wouldn't have answered.

Sure. I'm just saying your answer is incorrect. Doesn't matter whether you would or wouldn't of answered. You're completely wrong and you wrote a statement that is utterly false.

Then we already have a semiconductor industrial complex.

No we have a military industrial complex where semiconductors are one small part of industry.

The military-industrial complex is a consequence of privatization. Since the defense industry is 100% private, capitalistic corps with 1 customer, they have no reason to innovate or compete on prices. They can, and do, extort the government for as much money as humanly possible.

That wouldn't be possible if those entities were simply nationalized. But since the gov is a customer, and them a producer, and the gov NEEDS the thing, and only the private sector can give the thing, it's a money bath.

Of course it's really full circle, because while the industry is private it's actually funded entirely by taxpayers. Because the customer is the government. So the corps have a strong incentive to be as inefficient and greedy as possible, and you actually pay for that.

I don't know about full-on nationalization, but we have plenty of evidence to show the incentives for publicly-owned for-profit companies whose primary customer is the Government are strongly misaligned with the non-economic interests of the public.

I don't have a pat solution to this, but for example, Boeing, Lockheed Martin, Northrop Grumman, and Raytheon have little reason to improve when they have a captive customer. Raytheon recently agreed to pay ~$1B in penalties for illegal exploitation of their position and the market doesn't care: https://www.justice.gov/opa/pr/raytheon-company-pay-over-950...

Pure capitalism for these kinds of uniquely critical products and services doesn't seem like the right answer.

Excellent comment. As someone who spent time in the MIC, I’m always glad to see others make the same sort of callouts about exploitation of the Government by entities unaligned with and detached from the goals of the people.

Extremes rarely work; rational compromise is what moves the needle forward, bit by bit.

> Let it fail. Once hundreds of thousands of Americans are jobless due to executive mismanagement and shareholder greed, will actually meaningful and impactful policy be made.

There’s more at stake than money when it comes to companies like GM, Boeing, and Intel.

Wipe out existing shareholders and management and start over like GM in 2008, letting Intel die would be a gift to our adversaries.

If that’s true, which it may well be, this is an extremely strong argument for why it should be nationalized.

Then nationalize it. If it is genuinely so important to the country then we can't let it die then it should be nationalized if it needs to be bailed out.

Great idea. Let’s let the same people who built and managed healthcare.gov build bombs and airplanes.

I am more in favor of that then continuing to give money and bailouts to failed executives.

> healthcare.gov

Are people really still citing this website as a government failure? It had some scaling issues at launch that were fixed within 2-3 months and has been serving tens of millions of Americans without any major incidents since then.

As opposed to having companies do it while asking for exorbitant contracts and not necessarily delivering on par? (cough Boeing cough)

It's not really better on the other side, and we need change somewhere.

The option is not a binary between "let it fail" and "no strings attached bailout."

If things get bad enough for Intel, the precedent that makes the most sense is to follow the model that was used with GM: the company enters bankruptcy, existing investors and creditors are wiped out, and a new corporate entity backed by the fed.gov steps in and assumes the assets and operations of the company. Once things have sufficiently stabilized, the government can then divest its ownership in the company.

Intel is economically and strategically important enough that just letting it collapse without a plan to pick up the pieces is a serious footgun. We have a framework for handling this kind of situation that has been shown to work without rewarding those who caused the problem. It'd be silly not to use it.

It's not just the investors and creditors that need to be wiped out. Above all else the managers need to be fired, with no bonuses or golden parachutes.

Which manager receives golden parachute? wtf?

For some hires, they wont sign on without penalties for early dismissal

Who?

Executive mis management is why companies fail. The majority of the bad decisions are made at the executive level.

I'm asking which managers are receiving golden parachute.

Managers and executives are different groups of people.

The 'the only reason a company exists is to make money for the stockholders' is why we're in this mess right now. Because that's the regime management is operating under. And they are delivering what's demanded. Yeah management is looting companies to the detriment of their long term health. But that's allowed because it aligns their incentives with predatory capitalists.

Stockholders are secondary to c suite. The executives are looting from everyone stockholders included

Making the investors live with market consequences is the only way to hold managers accountable for performance.

Everyone wants better management, but it wont magically solve itself. Those with the power to drive that change need to have an incentive to do so.

Umm, is there a line drawn so that a middle class investor doesnt lose his money? Same for a lower level manager who isnt independently wealthy.

Sigh, I'm sure there is zero consideration for a antitrust-style breakup. All I saw on a quick scan was "hey does any other company want to acquire parts of them" which is just another way to say "does anyone want to reduce competition even more".

I get that there is probably only one top-end fab in Intel and that would be hard to split across two entities.

But if you split Intel into three entities, they might (gasp) hire a bunch of the engineers that have steadily fled intel or be chopped off in shortsighted layoff rounds. You might get (gasp) innovation.

If you give all three the access rights to Intel's IP, things would probably be FINE in the long run. Give three separate companies a couple fabs and the IP, and see what happens. Intel has FIFTEEN fabs. So hand five to each of them.

Intel is a shell because existing management is financial "wizards" and war-on-labor MBAs that are trying to manipulate the stock price to hit options targets.

If you split the companies, they have to compete on engineering, or they die. You can probably also wipe away a lot of the management because the companies will have to do "real work" in the medium run and their "skillsets" won't really apply.

The MBA types will all say that's impossible. IMO that's why we should do it, because all the people that failed the industry and company are opposed to it.

The dichotomy is useful when people want to manipulate the public.

It’s either bailout or not.

The GM bailout was an unmitigated disaster. Their cars are uncompetitive garbage to this day.

When they accidentally make something their customers like (the Bolt, CarPlay), upper management intervenes and discontinues it.

The US would be much better off if the engineers and factories they are squandering were allocated to other companies.

A new Bolt is coming next year.

I don't understand why they discontinued the bolt before the new one comes out. Who does that? You have a cash cow, the assembly lines are already running, just... do nothing.

That's what "let it fail" means. That's classical bankruptcy.

Are using GM as a SUCCESS story?

Haven't seen that before.

Admittedly my language was deliberately more inflammatory than it had to be, because I wanted to challenge folks to basically post what you just did. Rather than an endless reform-a-palooza, seizing upon current apathy to champion “let it fail” forces folks to reckon with the reality that nothing is permanent, and if the status quo is unworkable, how do we destroy and rebuild in a constructive way?

Excellent response, gave you the upvote so others will hopefully read it.

Conrail might be a better alternative model. It really did succeed well enough to re-float and become a competitive endeavour.

The state probably did a better job than a private takeover could have because: - They had effectively infinite backstop-- they could afford to spend years and front load a lot of costs to fix the mess - They had a mandate to restructure the sector beyond a single company. I'd expect a nationalized Intel would have an easier time pivoting to new models, while private investors might be too afraid of killing their current golden geese for, say, a full fab spin-off or becoming a more aggressive x86 licensor.

> Let it fail. Once hundreds of thousands of Americans are jobless due to executive mismanagement and shareholder greed, will actually meaningful and impactful policy be made.

Exactly.

Then we should have let all the startups that had their funds in SVB bank fail, instead of another pseudo-bailout that occurred in March 2023, given that FDIC insurance did not apply to them given the majority of their capital is over the limit.

Those startup's only mistake was choosing the wrong bank, one that was the de-facto standard in the sector and pushed by the likes of YC.

I don't know if I agree with the gov making them whole, but it isn't really comparable to the Intel situation imho. It's not like the gov bailed out SVB and its investors itself.

If it dies, hundreds of companies will rise from it's ashes. One of the big problems America has is the tech giants hoovering up all competition. The 70s,80s and 90s weren't boom times because of the fact these tech giants got their break at that time. It's because the market still had 5-7 major semiconductor companies. Fairchild, Motorola, TI, Intel, Zilog, and that's without really thinking about it.

My following question isn’t meant to be snarky or anything besides inquisitive.

Question: what about if the thing they’re worried about isn’t about letting it fail, but rather geopolitical and military risk? Could the lead time to get the new companies up and running to fill In the gap be too long for them to not consider it too big of a risk of letting them fail?

    geopolitical and military risk

Yeah, I think that's what's largely missing from this discussion and why the auto industry bailouts of 2008 are a poor comparison point.

There is a non-zero chance that China decides to simply seize Taiwan in the next decade or two.

Militarily there's absolutely nothing to prevent that unless we're willing to go nuclear or launch a land invasion of China (lol) or something; the idea of our carrier groups being an effective deterrent under a constant rain of missiles a couple hundred km from China's mainland is beyond delusional.

China's nuclear deterrence also isn't to be messed with. They've built a super-redundant delivery triad. And given the speed with which China scales up technology, I will bet my entire net worth that they have thousands of warheads ready-to-go.

Since China & USA can't invade each other (LMAO) and a nuclear exchange would be suicide, any conflict in the South-China sea would have to be standoff - lobbing cruise missiles at the other non-stop. And the US doesn't even have that front locked down.

Despite spending $800b/y, the US military has a stockpile of just 4k Tomahwaks (as of 2020). If we translate China's production-spamming to the Taiwan situation, then we can safely assume they have a stockpile of missiles that dwarfs that several times. And since they're projecting power in their backyard, it'll be a logistical walkover, especially with how the CCP tends to get things done quickly and at scale.

Sorry if this feels off the point, but your comment just got me thinking about the SCS/Taiwan situation.

Yeah, 100% agree on all points.

The idea of winning a conventional war in China's backyard after 10-20 years of them building toward it is absurd. And nuclear war is uh, nuclear war. Not really a "winner" there.

The only thing stopping China is obviously the huge financial incentive of losing their biggest trading partner(s). That will obviously be an enormous loss for them. At some point though they may calculate that the long term gains are worth it, I don't know the calculus there.

Yes, if they can diversify and expand their positions in gateway economies like Mexico (gateway to North America), Hungary (gateway to Europe), CCP-controlled companies can sell into Western economies without being sanctioned to hell. And Western economies have gotten addicted to cheap Chinese goods: it's the one thing keeping the poor & middle-class from revolting in many first-world nations where people may have been priced out of home ownership. So, even the economic angle isn't a slam dunk for the US and her allies.

Just decades of sleeping at the wheels finally catching up.

Well you have to remember that it takes 8 hours to transport troops from China to Taiwan, and I believe the strait is only safely navigable for two windows in April and October. You're gonna need alot of boats and men to transport and occupy 23 million in an island. So if they are going to invade, we'll know for months beforehand. Which opens the question of the pre-emptive strike.

So China dosen't have time on it's side. A hot war in one of the most busy regions would likely immediately cause a global recession as supply chains collapse, and the US can blockade oil and resources from the Middle East. This isn't like sanctions, if it goes on long enough. And remember that America can continously target and destroy their infrastructure and naval dockyards, China cannot. They've got great industrial capacity, but this war likely won't last long enough for them to actually finish building new ships, if the facilities even exist by then.

Well, some Chinese nationalists argue that strikes on the mainland will cause the CCP to start firing nukes at West Coast in retaliation as some sort of "city-trading" game, and that the Chinese will be more willing to sacrifice millions than the Americans at that, but we'll see if we get to that.

Yeah, I mean, is America willing to trade LA and Long Beach (where a significant % of goods enter the country) and Silicon Valley for Taiwan?

It would also be a world war at that point, so, I don't know that their plans would be restricted to US targets.

China knows that the cost would be devastating for them and the larger world economy as well, for the reasons you said. It would be at least a decade or two until the world economy recovered.

But China seems able and willing to play the long game in ways that the US (with our shorter election cycles) fundamentally cannot and if they are thinking strategically they know that this is one of their key advantages for this sort of conflict. I am not entirely sure that they wouldn't be willing to trade, say, 10-20 years of darkness (Cultural Revolution-style?) for 100 years of Chinese world supremacy atop a new world order.

Yeah, I mean, is America willing to trade LA and Long Beach (where a significant % of goods enter the country) and Silicon Valley for Taiwan?

It would also be a world war at that point, so, I don't know that their plans would be restricted to US targets.

China knows that the cost would be devastating for them and the larger world economy as well, for the reasons you said. It would be at least a decade or two until the world economy recovered.

But they are also not dumb, and won't fight a war they can't win.

>China seems able and willing to play the long game in ways that the US fundamentally cannot

I'm old enough to remember people's endlessly repeating this about Japan in the 1980s.

The difference between this and the auto industry bailouts in 2008 is that in many peoples' views, the semiconductor situation is a national security concern.

Things are building toward war with China over Taiwan, with TSMC being a major factor.

Militarily there is nothing short of a full-scale open war with China that can prevent this and perhaps not even that.

Is this the reasoning that is borne out the best interests for USA (and the world) or just an emotional backlash to "stick it to the man"?

We're not living in a playground with rounded corners, sometimes there are bad choices and there are even worse choices. You might feel moral indignation at the bankers who "got away" with the GFC, but is the feeling of moral satisfaction worth realizing a second Great Depression and potentially WW3 to come out of it?

The GFC happened due to the improper conduct by ratings agencies that gave subprime loans much higher credit status than should have gotten, overloading banks with toxic CDO assets that lead to a major systemic risk once the housing bubble popped. 10 years later, perhaps the executives got away with "golden parachutes", but we're not dealing with exotic derivatives much anymore, the biggest bubbles are just in pure hype stocks or index funds, whose risks are very much anticipated and do not pose a unknown systemic risk poised for incorrection. So I would argue that lessons were learnt.

On the topic of "let it fail, they are benefiting too hard" -> "moral hazard". happened in 2008, as a counterexample, bank-wise... ... and they did indeed let it fail. see bear stearns or lehman another word to throw around here is monopoly as in these companies have monopoly (or duopoly) on the american market i.e. boeings domestic planes, intels domestic fabs. So what are we doing here. We have 5 or more huge banks (not a monopoly), we let them fail, when things are more monopoly seeming, "oh no we need to keep it". Really? A monopoly? The thing the gobmint is sposed to be destroying and it's breathing life into it?

While I understand your argument, which is based on perverse incentives for management of failing firms ("Uncle Sam will bail us out!"), there is a nontrivial global dimension to the problem.

The US cannot afford to lose some capabilities, like spaceflight. Or production of certain hardware.

You can theoretically outsource them to allies, but some of those allies may be in strategically precarious situation. Like Taiwan and South Korea, the two giants of advanced semiconductor production. Or Finland, the only nation which is capable of producing advanced icebreakers for reasonable price and on reasonable schedule.

Also, an adversary like China may be able to kill a healthy US corporation by massive dumping. Then what?

> Just let it fail.

How about we do something about the financial hackers who are just laughing their way to the bank either way?

Billionaires should not exist.

They give back through their charities and foundations. How would you cope with your life without their charities?

It's a tax dodge.

How does this tax dodge work?

https://www.axios.com/2022/09/17/the-ultimate-billionaire-ta...

https://markets.businessinsider.com/news/stocks/warren-buffe...

OK, so rather than giving $50m to the government they give $100m to charity?

On the surface this seems reasonable. Give $50k gift to your local wildlife sancturary for example, and get invited to the annual fundraising meal.

Looks like the big loopholes involve things like 501(c)(4)s

Without spending too long trying to workout the loopholes, it seems the larger problem is with the definition of a charity in the first place?

>OK, so rather than giving $50m to the government they give $100m to charity?

Any income the government doesn't collect is made up for by the middle and lower class and/or more debt which increases inflation, which is mainly a middle and lower class burden.

For a guy who claims everyone should pay their fair share, he sure takes advantage of a lot of loopholes which he probably helped pay to have written.

He's an OG corporate raider and should be thought of as such, rather than a benevolent capitalist.

Billionaire philanthropy is just another tax-free way oligarchs manipulate our society.

How dare they "manipulate our society by"... reducing malaria and fighting climate change. We'd be far better off if we relied on our ineffectual and corrupt (in case of malaria) governments to do it instead.

If all charities were net-good I would tend to agree with you, but they’re not.

How do you define "net-good"? One man's YIMBY charity to make housing more affordable is another's astroturf operation to destroy neighborhoods so real estate developers can make a quick buck.

No, they absolutely should exist. Capitalism raises everyone.

> Capitalism raises everyone

hopefully this is sarcasm

Every major communist country has been left in the dust by capitalist ones. Poverty is at a historical low.

We have gone from people dying from starvation to complaining that not everyone can buy a house. Nearly everyone has a universally connected borderline supercomputer in their pocket.

This is a ridiculous mix of statements! I don't care how many people have 'supercomputer' in their pockets. On other hand homelessness is rampant in USA/Canada and that's a major fail of the capitalism.

>On other hand homelessness is rampant in USA/Canada and that's a major fail of the capitalism.

Meanwhile in capitalist China[1], they're so great at building homes that there are entire cities with barely anyone living in them, "ghost cities". Insofar as a tight housing market contributes to homelessness, it's clear that it's caused by US/Canada specific factors (eg. NIMBYism, building codes, and environmental regulations) than capitalism.

[1] Even though ostensibly it's "socialist with chinese characteristics", for all intents and purposes the real estate sector is capitalist.

there isn't a problem with homelessness in China

but you are right that the capitalist market does restrict the supply of housing because people buy them as investments

also, the ghost cities is way overblown -- they just took time to fill up

Homelessness due to mental illness and drug addiction

Fentanyl and meth imported from China and other countries

EDIT: For naive downvoters. It is an observable fact. Drugs are destroying people and causing homelessness. I have witnessed it first hand.

https://www.youtube.com/watch?v=p5AeGKSDVdE

https://www.youtube.com/watch?v=SwlIAjcYypA

Look up "Philadelphia zombies"

> complaining that not everyone can buy a house

In my ex-Soviet country you were guaranteed to get a free apartment provided by the government. Everyone I know who lived in a city got one, right up to 1991. All you needed to do was to register in a queue and wait for a few years (2-5 depending on several factors like family status — single moms were prioritized, for example). Now we're complaining that "not everyone" can buy an apartment (forget a house), just like you. Not just "not everyone", it's out of reach for most people, and things keep getting worse. At least we have jeans and burgers instead, I guess.

Housing is the cause of 90% of the problems in the west, and that's driven by democratic policies to restrict the supply, not by capitalism.

Yeah. Capitalism would have built a ton the types of apartments the GP is talking about if they were allowed. But, people who already have a place don't want that type of development near them.

Communism is so terrible as a system of government that the U.S. has seen fit to forcefully intervene every time it’s been attempted.

Everyone is free to their own opinions, of course – and I’m not wholesale defending communism as it has been attempted – but I find it odd that something which is supposedly so awful can’t just be left alone to wither on the vine, and prove their point.

> Communism is so terrible as a system of government that the U.S. has seen fit to forcefully intervene every time it’s been attempted.

not exactly

the US and communist Russia were allies in WW2; the US did intervene in Korea and Vietnam but that was about maintaining a global edge over Russia -- Americans didn't give a fuck about whether it was good or bad for the people of Vietnam

Neither Iraq nor Afghanistan were communist.

Chile and Nicaragua are examples of when the US intervened to overthrough a democratically elected communist government.

You forgot Cuba.

Right, Cuba. The tiny island the US is obsessed about.

Cuba actually outperforms its non-communist former slave colony neighbors (Jamaica, DR, Haiti), which is especially impressive considering the never-ending sanctions from the US.

Poverty has indeed been decreasing most places, but your framing is very misleading. Half of the people on earth still live on less than $7/day in 2017 PPP dollars, and they are not universally connected or supercomputing. Over 8% of the global population is still below the $2.15/day PPP threshold that defines “extreme poverty”, which means it’s not enough money to purchase enough food to survive, literally still dying from starvation. Note that’s around twice the population of the US. https://blogs.worldbank.org/en/opendata/march-2023-global-po...

I'm not disagreeing with you that people are definitely struggling, but it's hard to see numbers like what you present w/o also numbers on what it cost to live per day. Is it an extreme case of CA vs WV or is it like someone making $7/day living in CA?

This isn’t primarily the US, this is global extreme poverty, and right now for example, it’s bad in Southern Asia, and sub-Saharan Africa, among one or two other places the UN & World Bank talk about.

> w/o also numbers on what it cost to live per day.

This is what “PPP” is all about, that’s referring to a normalized purchasing power parity that is specifically designed to help you understand what $7/day actually means: it means what you think it does, and it is supposed to compare directly to the amount of money it costs you to feed yourself every day.

https://en.wikipedia.org/wiki/Purchasing_power_parity

rejecting capitalism doesn't equal embracing communism -- esp not communism as implemented in Russia and China

the main reason why the US became the uncontested power of the 20th century was WW1 and WW2

the socialist policies implemented by FDR saved the capitalism by making it less capitalist

> Billionaires should not exist.

I'm ok with them, but they should not use their money against the rest of us.

Because when we pay for their wealth, then there is an accounting step missing somewhere.

That seems to be the root cause. Increased regulatory oversight is unfortunately a double edged sword: you'll make the companies far less efficient.

Which is why letting it fail and letting the investors feel the pain is a good lesson: don't invest in schemes you don't understand and don't have transparency into.

> don't invest in schemes you don't understand and don't have transparency into.

If you want to be pedantic, heeding this lesson is what got Intel into this mess in the first place. If Intel bought EULV fabs from ASML a decade ago, they theoretically could be competitive with TSMC. Intel didn't invest, citing how poorly-understood and opaque EULV was and assuming they could beat it with another process. That miracle process never materialized, and now Intel has learned that without risk you get no reward.

Intel's decision wasn't even irrational, either. EULV is poorly-understood, and competing with it would have avoided the TSMC/ASML integrated monopoly that effectively manifests today.

Intel was right on their EUV assessment though and did invest early. Early EUV had terrible throughput and wasn't at all viable for mass production.

TSMC's 7nm where they jumped ahead of Intel used quad-patterning DUV which is also what Intel was trying. TSMC only started to introduce EUV at 6nm and 5nm which is when ASML had made great breakthroughs and vastly increased WPH. And even then EUV was only used sparingly at the most critical layers. Because other problems were still being solved like uptime and compatible pellicles.

If you want to blame Intel's decisions then look at their use of cobalt contacts or COAG use. They tried to do too much at 10nm when shrinks were getting harder.

> On December 19, 2014, the U.S. Treasury sold its remaining holdings of Ally Financial, essentially ending the program. Through the Treasury, the US Government actually booked $15.3 billion in profit, as it earned $441.7 billion on the $426.4 billion invested.

There was a second Treasury program where they forced all the banks to participate so that there wouldn’t be a negative stigma attached to the banks that actually needed the assistance.

You’re conflating two separate issues: poor corporate governance and the government’s responsibility to protect critical industries. Expecting the government to somehow “un-Americanize” corporate culture—erasing the greed or mismanagement that's unfortunately standard in many large companies—just isn’t realistic. Government action to support vital industries isn’t about endorsing the practices of corporate executives; it’s about safeguarding resources essential to national security and economic stability.

This is right in the Musk wheelhouse. As SpaceX is to Boeing, and Tesla is to GM/Ford, ______ is to Intel. I'm surprised he hasn't made a move in this space.

Afaik the main differences seem to be that the price of finished chips is much more volatile and that the R&D costs of continually creating faster processes and chips are way higher than either electric cars or rockets.

That is, while of course Tesla and SpaceX had to do R&D to have an advantage in the market, rockets were already invented and so were electric motors/batteries. It feels like the hardcore engineering that goes into a new process node or whatever new tech we need to get to the next iteration of Moore's law is even less predictable and more expensive than either cars or rockets.

Afaik Intel's mismanagement is only one piece of the puzzle. Correctly deploying capital to get to the next process node profitably isn't easy. Besides mismanagement there must be other reasons why global chip production is an industry that keeps seeing consolidation at the top?

(edit: formatting)

Letting it fail may bring a windfall boost to others.

If anyone is worried about supply of pure intel silicon, the IP can be sold off or placed in the public domain to keep the ossified 8086 nectar flowing.

And fabs can still make chips under new ownership.

Maybe someone will succeed in a GPU plan to challenge you know whom.

> Just let it fail

I guess that's what they will end up doing but let's pause for a moment and contemplate the fact that they are exploring the options. Intel's strategic importance is recognized and so it's obviously a good idea to explore the potential for making the situation less bad.

For me, this situation highlights the tension between laissez-faire capitalism and systems of economic planning where government interventions can be used to stimulate economies strategically.

I think that in the USA, gov intervention tends to be viewed in ideological terms. Whereas in Europe it's mostly seen as an important economic policy tool. This is a broad generalization of course.

I would like to see more insightful, strategic, long term economic planning. I'm keen on the ideas of Community Economic Development (CED) [1].

If CED is done properly then everyone benefits. The problem is that government bureaucracies have historically been terrible administrators and partners.

The Intel saga points to the need for enlightened change in all these areas: economic policy, civil service effectiveness, community economic development, etc.

[1] https://en.m.wikipedia.org/wiki/Community_economic_developme...

Why can't foreign investors buy the ips, fabs and whatever's left?

I really don't like those protectionist arguments they do nothing good for any of the parties involved, merely raise the prices to consumers and deprive them of choices.

Because at some point, you need domestically-owned manufacturing as a matter of national security.

Exactly, the US already have a functional domestic semiconductor production, covering pretty much everything you'd need. It's much cheaper to protect and maintain that, compared to trying to revive or create a production line, like the EU is.

I don't buy it, it's not like the military needs the latest bleeding edge semiconductors out there.

If they do, they shouldn't rely on publicly traded companies and put them on support line on taxpayer's money.

I mean really IDC. The only justification I have is I also don't want oppressive foreign authoritarian governments (Russia, China) to become even more powerful and oppressive. Slowly doing the tide of tech into them seems to help. In Russia we've seen how this has played out prematurely at a great cost of human life.

because you wind up with your military and government being heavily dependent on a foreign power who may be hostile towards you

The government can both let Intel fail and bail it out. It probably will.

Any bailout should happen post-bankruptcy. Shareholders and executives primarily receiving stock based compensation get wiped out, employees and the fabs get saved.

Then how are we supposed to pickup the stock when it's down 90% with a sure upswing? Institutions have been stocking up on cash for a while. Even the long-term Buffet-esque investors are timing the market right now. All the smart money is saving for the mean regression so they can pickup sweet deals.

>Remember when we did this in 2008 under the Obama administration? We gave them $10bil and they paid out "contractually obligated bonuses" with more than half of the money? https://www.theguardian.com/business/2009/jul/31/wall-street...

AFAIK in finance, "bonuses" are a significant part of compensation, similar to RSUs in tech. So while it might sound great to hose all the greedy bankers, all that would encourage is for people to jump ship, making the prospect of a recovery (which is why you bailed it out in the first place) even harder.

>Awesome, I can't wait for me the taxpayer to breathe life into the smoldering shell of a company where the executives and unlimited layers of useless middle management used financial engineering to fool investors about the internal situation while extracting as much money as possible and then bailing out on golden parachutes and landing in soft thick piles of bonuses.

What are you even talking about?

>Just let it fail. If you're really paranoid, pass a law preventing and foreign buyers from snapping up the ip or fabs and we'll just fine, but that's probably not even needed.

Yea, competitors like China will definitely respect your IP laws

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