Speaker 1: Hello there, Odd Lots listeners, You are about to hear
Speaker 1: a live episode recording of the Authoughts podcast.
Speaker 2: YEP.
Speaker 3: This episode was recorded in front of a live audience
Speaker 3: at the Decades Bowling Allie in Lancaster, Pennsylvania. We hope
Speaker 3: you enjoyed the show.
Speaker 1: Hello, and welcome to another episode of the All Thoughts podcast.
Speaker 1: I'm Tracy Alloway.
Speaker 4: Joe So, Joe.
Speaker 1: Uh, we can't seem to get away from semiconductors.
Speaker 4: No, we can't.
Speaker 3: And you know, we recently talked to two of the
Speaker 3: pupil basically running the Chips Act in a recent episode.
Speaker 3: But I think if we're going to ask the question
Speaker 3: like how the Chips Act is going, we can't just
Speaker 3: talk to the pupil running.
Speaker 1: No biased you think, Uh no, we need some outside perspective.
Speaker 1: And I'm very happy to say that in this very
Speaker 1: special episode of Odd Lots, which we are recording live
Speaker 1: at the Decades Bowling Allie, we are going to be
Speaker 1: speaking to two of the perfect guests. We are going
Speaker 1: to be speaking to Dan Wong, visiting scholar at Yale
Speaker 1: Law School's Side China Center, and tech analyst over at
Speaker 1: Gavical Dragonomics. Perhaps the only man who's ever read a
Speaker 1: full copy of the Chinese Communist Party's Internal Policy Journal
Speaker 1: from cover to cover.
Speaker 4: Q Speaking Truth, Seeking Truth.
Speaker 1: And special guest. A last minute addition, just to keep
Speaker 1: our producers and our tech audio people on their toes,
Speaker 1: we're also going to have Adam Ozamak. He is, of
Speaker 1: course chief economist at Economic Innovation Group and also our
Speaker 1: host for this wonderful event. So thank you both so
Speaker 1: much for coming on odd lots without further Ado, Dan,
Speaker 1: you recently moved back to the US and now you're
Speaker 1: in Lancaster at a bowling alley. Isn't it great that
Speaker 1: we're all here?
Speaker 5: No one is more surprised than me, Tracy, that we've
Speaker 5: all gotten over here.
Speaker 4: If I could heighten.
Speaker 5: This realness of the moment just a little bit, I
Speaker 5: want to point out that my parents are also here
Speaker 5: in the back slow over from their home in suburban Philadelphia.
Speaker 4: They are shy. I hope we can involve them in
Speaker 4: the bullying.
Speaker 3: Adam, are you surprised to be an economist who owns
Speaker 3: a bowling la and to issue your own tokens?
Speaker 6: I'm a little used to it at this point, but
Speaker 6: I enjoy being an economists who issues.
Speaker 4: Okay, that's fair enough.
Speaker 1: So maybe just to set the scene. I mean, Joe
Speaker 1: and I started talking about semiconductors years ago now because
Speaker 1: of supply chain shortages, which we've since gone on to
Speaker 1: explore in various ways. But in the years that have
Speaker 1: passed since, semiconductors have become like a huge policy point.
Speaker 1: Why is this of interest in particular to someone like Adam?
Speaker 1: Why does this interest you?
Speaker 6: Well, it's part of a broader discussion around industrial policy,
Speaker 6: and I think that, you know, if we're going to
Speaker 6: be trying to pick specific industries that we want to grow,
Speaker 6: I sort of put myself in the camp of I
Speaker 6: think this is possible, but we have to do it
Speaker 6: very smartly. It's not easy, and so my interest in
Speaker 6: the discussion is trying to make sure we're doing this
Speaker 6: the right way to maximize the odds of success. A
Speaker 6: lot of times, you know, you sort of find two camps.
Speaker 6: There's the critics of industrial policy who just say it
Speaker 6: can't work, it's impossible, there's public choice problems, it's doomed,
Speaker 6: and then you sort of have another side that's just like,
Speaker 6: as long as we're spending the money, we're already mission accomplished.
Speaker 6: They might not say that, but that's kind of an
Speaker 6: act sometimes. Sorry guys, but I think we need to
Speaker 6: be critics who think it can succeed and trying to
Speaker 6: make it succeed by being critical and ensuring that it's
Speaker 6: done smartly.
Speaker 3: So, you know, one of the things that the first
Speaker 3: time we ever did a COVID related episode, it was
Speaker 3: actually with Dan and I think it was before we
Speaker 3: knew like quite how much it was going to change
Speaker 3: the world, and it was like very specific, like, well,
Speaker 3: what's COVID gonna do to like, essentially electronics manufacturing in.
Speaker 2: China?
Speaker 3: And that was like the extent to which we're thinking.
Speaker 3: I think it was like February twenty twenty. Obviously, then
Speaker 3: we you know, the world change. We don't need to
Speaker 3: go over all of those things, but let's just start
Speaker 3: with this simple point when it comes to from your perspective,
Speaker 3: can it succeed? Not like the specifics of the Chips
Speaker 3: Act yet or whatever, but do you accept the premise
Speaker 3: that the attempt to turn around domestic manufacturing of high
Speaker 3: end semiconductors in the US is conceivably possible.
Speaker 4: I think it is possible.
Speaker 5: I think it is conceivably possible, and I think that
Speaker 5: we are off to a good start with an emphasis
Speaker 5: on start. Now, the Financial Times are recently tabulated that
Speaker 5: there's something like two hundred billion dollars of new investment
Speaker 5: in clean tech as well as in semiconductors after the
Speaker 5: passage of the IRA as well as the chip SAC.
Speaker 5: At two hundred billion dollars is quite a lot. We're
Speaker 5: seeing these flurries of investments in semiconductors from the likes
Speaker 5: of Samsung and TSMC as well as Intel.
Speaker 4: And we're seeing also a lot of battery makers.
Speaker 5: We're seeing a lot of solar photootaeic makers announcing these
Speaker 5: very large facilities in the US.
Speaker 4: So we are off to see a start.
Speaker 5: And I think what I really really wonder about is,
Speaker 5: you know what exactly are the criteria for success? Is
Speaker 5: spending money really just efficient or as you've had the
Speaker 5: Chips Act administrators come on tell you know, there has
Speaker 5: to be a little bit more.
Speaker 4: And the test that I would propose for you know,
Speaker 4: everyone to.
Speaker 5: Think about are I would say, you know, probably to
Speaker 5: focus on these two things. The first is you know
Speaker 5: what exactly is the economic criterion for success? If we
Speaker 5: are going to have, you know, a thriving chip industry.
Speaker 5: If we're going to have a thriving clean tech industry,
Speaker 5: then you know, the economics have to work out in
Speaker 5: some big way.
Speaker 4: And I think the.
Speaker 5: Challenge for a lot of this is that, you know,
Speaker 5: when I spend a lot of time looking at the
Speaker 5: clean tech supply chain in China, it is going to
Speaker 5: be pretty difficult, I think, for the United States to
Speaker 5: become a lower cost producer in China and a lot
Speaker 5: of these important manufactured products. But is there some criterion
Speaker 5: here that could be met in a bit of a
Speaker 5: lower way. Are we going to see some self sustaining
Speaker 5: dynamics that is not being primarily.
Speaker 4: Driven by foreign investment.
Speaker 5: Are we going to be able to see you know,
Speaker 5: the cost curve, perhaps with some help from tariffs, you know,
Speaker 5: be able to get us to some competitive products.
Speaker 4: And then the second test.
Speaker 5: I would propose that you know, we really think about
Speaker 5: is some threshold of a national security test. Now, you know,
Speaker 5: this is really up for the national security folks in
Speaker 5: DC to debate.
Speaker 4: What this shouldn't really mean.
Speaker 5: But what I would look at is the structure of
Speaker 5: these investments because a lot of what we see right
Speaker 5: now in terms of, you know, the actual investments in chips,
Speaker 5: the actual investments in clean tech that's overwhelmingly going to
Speaker 5: the downstream industries.
Speaker 4: In both of.
Speaker 5: These sectors, we're seeing a lot of investments in the
Speaker 5: battery sells. We're seeing a lot of the investment in
Speaker 5: solar modules, but really these are only the assemblies of
Speaker 5: all of the components that you need. There hasn't been
Speaker 5: quite so much investment in the critical minerals for batteries
Speaker 5: in the US. There hasn't been quite so much investment
Speaker 5: in the solar cells, the solar poly silicon.
Speaker 4: This is much more difficult stuff.
Speaker 5: So if the US is spending a lot of this money,
Speaker 5: you know, two hundred billion dollars, you know, potentially far
Speaker 5: more than that, mostly to import products mostly made in Asia,
Speaker 5: in China, and then assembling a lot of these things here, well,
Speaker 5: it doesn't look to me like they are really going
Speaker 5: to have be a you know, pushing past that threshold. So,
Speaker 5: you know, for ultimate measures of success, I would look
Speaker 5: at the economics, and I would look at the structure
Speaker 5: of these investments.
Speaker 1: Adam, I kind of want to ask you the same question,
Speaker 1: which is, how are we judging the success of this
Speaker 1: program because it does seem, as Dan just laid out,
Speaker 1: there are all these different targets. So on the one hand,
Speaker 1: the Chips Act is sort of the poster child for revived,
Speaker 1: more activist industrial policy. I know that's a negative term
Speaker 1: in some economic circles. I've heard people call it industrial strategy. Instead,
Speaker 1: maybe I'll use that people trying to fix supply chain shortages,
Speaker 1: create new jobs, geostrategic interests. As Dan just mentioned, like
Speaker 1: the list of potential goals here is quite long. So
Speaker 1: how should we be judging the success of this type
Speaker 1: of program.
Speaker 2: Well, I think we need to focus.
Speaker 6: I think that's really important, and we need to focus
Speaker 6: on the goals that actually make sense versus the goals
Speaker 6: that not only do they not make sense, but they're going.
Speaker 2: To be a distraction for achieving our primary goals.
Speaker 6: So, if you think about national security interest, I think
Speaker 6: we have a genuine economic interest in making sure that
Speaker 6: specific mature node chips that we rely on for our
Speaker 6: military we have a safe and steady supply with them.
Speaker 2: Doesn't necessarily mean they need to be here.
Speaker 6: It means they need to be some of them here
Speaker 6: and some of them on allies that we can trust.
Speaker 6: That to me seems like a completely reasonable national security
Speaker 6: concern that I don't see why even you know, you know,
Speaker 6: libertarian neoclassical style economists wouldbject to. I think having the
Speaker 6: most advanced production here, there's an argument for that too,
Speaker 6: at least having some of it for the purpose of,
Speaker 6: you know, making it more less geographically concentrated. You know,
Speaker 6: a lot of the production, ninety percent of advanced chips
Speaker 6: is made in Taiwan. That's a hugely risky situation. So
Speaker 6: I think we think of that as like insurance. So
Speaker 6: we don't want them all the advanced production concentrated one place.
Speaker 2: We want it to be insured.
Speaker 6: Again, this is an area where we should be relying
Speaker 6: on allies, and we shouldn't see it just as a
Speaker 6: goal of producing it here, but a goal of making
Speaker 6: the supply of that more resilient, less risky. I see
Speaker 6: those as reasonable policy goals. I see the idea that
Speaker 6: this is going to be something that creates good jobs,
Speaker 6: skilled or low skill as being a distraction. I think
Speaker 6: that the idea that we're going to you know, have
Speaker 6: more resiliency in a huge variety of chips is not
Speaker 6: really realistic. I mean, there's so many chips made so
Speaker 6: many countries, and you just you're not going to know
Speaker 6: which ones we need to ensure against. If you look
Speaker 6: at like the auto industry, the reason they had a
Speaker 6: chip shortage wasn't because we couldn't make enough chips for them.
Speaker 6: It's because they canceled all their chip orders early in
Speaker 6: the pandemic. And then by the time they realized they
Speaker 6: had made a mistake and they went to the chip
Speaker 6: makers that actually, we do want those.
Speaker 1: Chips classic bull whip effect, right.
Speaker 6: And so like, how were we going to solve that?
Speaker 6: And I don't really hear any clear answers about that,
Speaker 6: and even when I do hear an answer, it's sort
Speaker 6: of not fully thought out in my mind. So we're
Speaker 6: going to create mature node production here. What's going to
Speaker 6: happen next time something like this happens, right? Are the
Speaker 6: automakers going to cancel their orders again? If not, then
Speaker 6: we don't have a problem. And if so, then what
Speaker 6: are we going to do? Use the Defense Production Act
Speaker 6: to seize it? Because it's here. It just it seems
Speaker 6: like a solution that's a little disconnected from the problem.
Speaker 3: Well, this actually gets to another thing, like Dan, I
Speaker 3: mean let's say we all everyone were just sort of
Speaker 3: accept the national security case for domestic advanced semiconductor manufacturing.
Speaker 3: Is there another problem that we need that actually needs
Speaker 3: to be solved beyond that? I mean, like, can we
Speaker 3: just sort of like, yeah, I have maybe more diversified
Speaker 3: globally or something like that, Like it seems like, okay, yes,
Speaker 3: it's pretty crucial the military part. Can what about just
Speaker 3: going back to the status quo outside of that?
Speaker 4: Would that be fine?
Speaker 2: Well?
Speaker 5: The wonderful thing Joe about national security in the US
Speaker 5: is that no one can ever define it. You know
Speaker 5: it is, you know it is. You know, the president
Speaker 5: is very reluctant to define it. The federal judges are
Speaker 5: always very differential about you know, how the US president
Speaker 5: defines what national security is. Maybe you should just come
Speaker 5: up with our own definition.
Speaker 2: You know.
Speaker 5: I think that I take an expansive view of you know,
Speaker 5: US national security. I think there should be quite a
Speaker 5: lot more manufacturing jobs. You know, we're speaking in Pennsylvania.
Speaker 5: This is, you know, a site of quite a lot
Speaker 5: of manufacturing. I value manufacturing for.
Speaker 4: Its own sake.
Speaker 5: I think that I love heavy industry. You know, the
Speaker 5: heavier the better, and so you know, it is you know,
Speaker 5: really great that we should be thinking about these sort
Speaker 5: of things. So, you know, if I were able to,
Speaker 5: you know, think about, you know, what is a good
Speaker 5: vision of all of these things, I would ideally like
Speaker 5: to see. You know that even if automakers make some
Speaker 5: big mistakes in the beginning of the pandemic cancel other orders,
Speaker 5: that was no doubt a mistake that somehow the you know,
Speaker 5: US manufacturing system is able to be somewhat robust, to
Speaker 5: be able to be self correcting enough to rescue you know,
Speaker 5: a lot of these manufacturers from their mistakes.
Speaker 4: Because what I was quite surprised by in.
Speaker 5: The early days of the pandemic was that, you know,
Speaker 5: in the earlier days of March twenty twenty, when the
Speaker 5: US had a pretty big deficiency then of masks and swabs,
Speaker 5: which we were simple products by any measure, there were
Speaker 5: a lot of manufacturers that were not able to quickly
Speaker 5: retool and make these pretty simple products. That manufacturing employment
Speaker 5: even up until I think something like the last three months,
Speaker 5: did not you know, surpass the peak in March twenty twenty.
Speaker 5: That it is pretty surprising that both the manufacturers and
Speaker 5: the workforce were not really able to respond in a
Speaker 5: pretty robust way, be supple enough to make.
Speaker 4: A lot of these types of products.
Speaker 5: And so I would start there by thinking about, you know,
Speaker 5: from a workplace issue, less from an optimization, less from
Speaker 5: an efficiency issue, are we able to build some sort
Speaker 5: of workforce economic system that response robust.
Speaker 4: Link to emergencies.
Speaker 1: So just on the national security point, and you know,
Speaker 1: I take Dan's point that this is sort of like
Speaker 1: a moving and very flexible goal, but I did see
Speaker 1: a headline flow by this week basically saying that Germany
Speaker 1: is in talks to limit the export of certain chemicals
Speaker 1: that are important to chip production. I guess my question is, like,
Speaker 1: what is the ultimate goal here? Is it just to
Speaker 1: cut off chip production within China? Or is it to
Speaker 1: limit chip production in other countries that might be interested
Speaker 1: in developing it is the future goal that we just have,
Speaker 1: you know, a strategic industry of semiconductors that is concentrated
Speaker 1: in a few select Western countries. I'm being very careful
Speaker 1: not to use the word Western bloc, but that kind
Speaker 1: of feels like we're heading.
Speaker 5: Yeah, it's it's a pretty important question, Tracy. And so
Speaker 5: you know what I wonder about with something like the
Speaker 5: IRA with something like the Clean Tech Bill, is what
Speaker 5: exactly is the ultimate objective of the United States government.
Speaker 5: Is it to decarbonize as quickly as possible or is
Speaker 5: it to build out a clean tech supply chain in
Speaker 5: the US as quickly as possible, Because to some extent,
Speaker 5: these two are somewhat intention You know, China does have
Speaker 5: all the solar as well as.
Speaker 4: Quite a lot of the battery technologies.
Speaker 5: It would be much simpler to decarbonize if you just
Speaker 5: imported all of that. But that is, you know, totally
Speaker 5: not acceptable. You know in the present day now with
Speaker 5: respective chips, you know that is a little bit of
Speaker 5: a different story. But again, the targets here are not
Speaker 5: terribly clear. You have the National Security Advisor, Jake Sullivan
Speaker 5: say that, you know that it can't be enough for
Speaker 5: the United States to be just two generations ahead of
Speaker 5: China on semiconductors. You know, they really should be seeking
Speaker 5: some sort of an absolute advantage. This is someone else
Speaker 5: in the National Security Council, Tarun Chabra said, you know,
Speaker 5: we no longer want a comparative advantage against China's technology capabilities.
Speaker 5: The US really needs to have an absolute advantage now
Speaker 5: if you're removing comparative, you know, if you're in the
Speaker 5: realm of the absolute, then becomes quite a lot more
Speaker 5: difficult to figure out exactly the degree to which the
Speaker 5: US really needs to be a hid But you know,
Speaker 5: I think in general, what it seems like here is
Speaker 5: that the US really wants, you know, quite a lot
Speaker 5: of the most advanced stuff, a lot of the everything
Speaker 5: else as well, and it would be ideal if China did
Speaker 5: not get that much further out of here.
Speaker 3: So I want to go back to something where since
Speaker 3: there is some disagreement, get some debate going, and that
Speaker 3: is essentially about employment as a good thing per se.
Speaker 3: And I could see sort of your argument is like, look,
Speaker 3: if the goal is we want to have advanced chips here,
Speaker 3: then the goal should be we want to have advanced
Speaker 3: chips here, and the fact that it creates jobs jobs
Speaker 3: are good, but that is a secondary goal and we
Speaker 3: wouldn't want the job creation aspect to be a distraction
Speaker 3: from the advanced chip.
Speaker 4: To your point, however.
Speaker 3: There is this sort of like seems like slightly different take,
Speaker 3: which is that, no, we want to have an economy
Speaker 3: in which a lot of people are capable of working
Speaker 3: in complex heavy industry, and you don't get there if
Speaker 3: you don't start with employing more people in complex heavy
Speaker 3: industry and the training. I'm thinking about a recent conversation
Speaker 3: we had with Henry Williams and David Ox, like economic
Speaker 3: complexity is a really good thing and is part of
Speaker 3: what drives well. But maybe we could like explore this
Speaker 3: a little bit. Maybe start like, what are your concerns
Speaker 3: about the degree to which some of these secondary goals
Speaker 3: may undermine the main goal, and maybe like sort to
Speaker 3: hear both of your perspective on whether jobs per se
Speaker 3: is a good.
Speaker 2: Part of the ambition.
Speaker 6: Yeah, I mean, I think Dan acknowledges that we already
Speaker 6: are seeing the trade off between domestic employment and the
Speaker 6: main goal when it comes to clean energy, right, I mean,
Speaker 6: we could be importing more clean energy, we'd could be
Speaker 6: getting you know, cleaner, greener, faster, and we're not to
Speaker 6: preserve jobs. And the reality is the wage premium that
Speaker 6: a low skilled person earns and manufactured has declined massively
Speaker 6: over time. It's just not there anymore. These aren't great
Speaker 6: jobs anymore. It's just not the case. We don't have
Speaker 6: an economic interest in taking someone from services to manufacturing anymore.
Speaker 6: I think a lot of what we're seeing is a
Speaker 6: relic of ten to twenty years of a bad economy.
Speaker 6: Like I think, we had a long, long, great recession,
Speaker 6: and before that we had the China Shock. So it's
Speaker 6: been a long time since we've seen a legitimately good
Speaker 6: labor market, and I think people lost faith in that.
Speaker 6: They lost faith in basic macroeconomic policy's ability to generate
Speaker 6: decent wage growth for people with less than a college degree,
Speaker 6: and I think that's just misplaced. I think the fundamental
Speaker 6: mistake there is macro policy. I don't think it's industrial policy.
Speaker 6: I don't think the solution to a ten year recession
Speaker 6: is getting more people in manufacturing.
Speaker 2: And I think if we do that, we don't need
Speaker 2: to do that.
Speaker 3: Dan, you want to defend the idea of Jeff creation
Speaker 3: as part of industrial policy.
Speaker 5: Sure, well, you know, I think it's impossible to disagree
Speaker 5: with Adam that, you know, the wage premium here is
Speaker 5: not good in terms of a lot of manufacturing, and
Speaker 5: I think it is going to be pretty difficult to
Speaker 5: entice these workers who are working in semi inductors to
Speaker 5: you know, get out of you know, Silicon Valley, Bean bags,
Speaker 5: and then you know, go into these fab rooms where
Speaker 5: you know, if you ever go into one of them,
Speaker 5: they have a very strange light. It is yellowish purplish light.
Speaker 5: You're sitting there, you know, looking at you know, these
Speaker 5: transistors for eight hours a day. It is pretty strange work,
Speaker 5: you know, to try to do something like this where, yes,
Speaker 5: if you can you know, get into those bean bags,
Speaker 5: or you know, if you are able to just work
Speaker 5: as a let's say, in as a home healthcare worker,
Speaker 5: where your wages can be you know, just as high
Speaker 5: as working in these grueling factory jobs. You know, I
Speaker 5: think that is pretty difficult to entice a lot of
Speaker 5: people to take a look at the situation and say, well,
Speaker 5: let's do a lot more manufacturing. You know, I'm sitting
Speaker 5: at a law school now, I'm hardly turning wrenches all day,
Speaker 5: and so I want to be the first put up
Speaker 5: my hands and say, you know, this is you know,
Speaker 5: quite quite challenging for me to envision, you know, myself
Speaker 5: as doing something like that as well. But I think,
Speaker 5: you know, in general, what I would love to do
Speaker 5: is to you know, imbue manufacturing with a special sense
Speaker 5: of dignity. Let's imbue complexity with a special sense of
Speaker 5: economic dignity, and that you know that we should say
Speaker 5: that culturally in general, that we should you know, exalt manufacturing,
Speaker 5: that we should exalt economic complexity, that we should consult
Speaker 5: the types of technology that involve a lot more of
Speaker 5: this creation, because I think that is good for both
Speaker 5: the economy as well as for national security.
Speaker 1: So we managed to mention bullwhip effect and bean bag,
Speaker 1: so we just need to mention mint the coin and
Speaker 1: then we'll hit like all the traditional.
Speaker 3: Talking about you are to talk about his token.
Speaker 1: Yeah that's true. Yeah, okay, So just on this point, Dan,
Speaker 1: maybe you can explain. So one thing I've always wondered is,
Speaker 1: you know, we talk about US China rivalry when it
Speaker 1: comes to semiconductors, but China is far behind a lot
Speaker 1: of other countries when it comes to semiconductor technology, but
Speaker 1: it's doing pretty well, as you already mentioned with clean tech.
Speaker 1: What are the differences between those two industries as they
Speaker 1: relate to China's economy and social fabric Because I think
Speaker 1: that'll also give us some insight into whether or not
Speaker 1: this type of traditional quote unquote industrial policy will actually
Speaker 1: work in the US.
Speaker 5: Sure, So you know, maybe you know, we can think
Speaker 5: a little bit about where China is on most technology,
Speaker 5: and so if I can give a very quick snapshot
Speaker 5: of where China is on most of its technology endeavors,
Speaker 5: roping up clean tech as well as semiconductors, what I
Speaker 5: would say is that at this point, I think China
Speaker 5: is pretty competitive with the US in manufactured products outside
Speaker 5: of two big areas. The first is semiconductors, where China
Speaker 5: is has built pretty much the basics of competition in
Speaker 5: all of the you know, semiconductor production, but it is
Speaker 5: leading in absolutely nothing that it is at best ten
Speaker 5: years behind the market leaders here. China is also really
Speaker 5: weak in something like aviation, so you know, in terms
Speaker 5: of China's answer to airbuts and bowing, it is really
Speaker 5: really far behind. But outside of these two big areas,
Speaker 5: again in manufactured technologies only, I would say that China
Speaker 5: has broadly caught up to you know, the West red
Speaker 5: large on most manufactured products. It is leading the US
Speaker 5: and Europe in most of clean tech, by which I
Speaker 5: mean solar wind batteries as well as hydrogen electrializers, and
Speaker 5: it is you know, leading and all sorts of these
Speaker 5: boring industrial products you know, things like hydraulic pumps, which
Speaker 5: would never grace the headlines of you know, fine papers
Speaker 5: like Bloomberg.
Speaker 1: But the Hydraulic Pumps Act isn't coming anytime.
Speaker 5: Soon, No, but we definitely need something like that. But
Speaker 5: China is you know, leading in all of these broad
Speaker 5: manufactured products. Where I think, you know, it is a
Speaker 5: weak relative to the US is that I think that
Speaker 5: any scientific area, any technology sector that involves the complex
Speaker 5: integration of different you know, scientific disciplines, China tends to
Speaker 5: be pretty weak. So in semiconductors that involves the integration
Speaker 5: of chemistry, electrical engineering, computer science, aviation involves the integration
Speaker 5: of material science, aerodynamics, many other things. This is something
Speaker 5: where the US is still really really strong at you know,
Speaker 5: building these vance manufacturing products. Where the US tends to
Speaker 5: be weak is where the science is pretty mature. But
Speaker 5: all of the execution risk lies with manufacturing. So you know,
Speaker 5: in anything that the manufacturing operation is pretty complex. If
Speaker 5: I'm thinking about something like putting together a battery cell,
Speaker 5: involves about a dozen different steps, everything from cell filling
Speaker 5: into final ceiling. All of these demand you know, perfect
Speaker 5: handoff between each one of these steps. And this is
Speaker 5: where the Chinese are really really strong that they learn
Speaker 5: from building iPhones, building complex electronics. They're just really good
Speaker 5: at building products high intricacy at high volume. And so
Speaker 5: this is where I would love to see the US
Speaker 5: become a little bit better at this more volume production.
Speaker 4: And I want to go back.
Speaker 3: To something you said, which I think is like really key,
Speaker 3: which is that you know, perhaps some of the US,
Speaker 3: the diagnoses of the US, we forget that we had
Speaker 3: really many years of slack labor markets, poor demand, maybe
Speaker 3: ten plus years, and weak economic growth going back to
Speaker 3: like glob before the economic crisis, the two thousand and
Speaker 3: eight two thousand and nine crisis. One thing that strains
Speaker 3: me now that I've been trying to think about is, Okay,
Speaker 3: we're in this like tightening cycle with the FED, et cetera,
Speaker 3: but there's still a lot of money coming, you know,
Speaker 3: by multiplier money. It seems like building all these factories,
Speaker 3: batteries chipped, et cetera. Do you see are you, like
Speaker 3: to what extent looking from a macro lens, do you
Speaker 3: see some of this investment allowing the US to maintain
Speaker 3: robust job growth, strong economic activity, and strong wages, et cetera.
Speaker 3: Even as a you know, it's sort of like helping
Speaker 3: us avoid going right back into the gold slump.
Speaker 6: Yeah, I mean, I think ongoing capital investments great. It's
Speaker 6: nice to see that the interest rates haven't fully shut
Speaker 6: that down. And I think that that's you know, sort
Speaker 6: of the risks that we're playing with right now.
Speaker 2: I think all eyes should be on growing GDP.
Speaker 6: How do we increase GDP, how do we do more
Speaker 6: because the reality is we have had we've had tight
Speaker 6: labor markets over the last two years, but a substantial
Speaker 6: part of that has been reduced labor supply and so
Speaker 6: and also just the speed at which things moved, right.
Speaker 6: So I think that looking forward the next five to
Speaker 6: ten years, I think when we think about how many
Speaker 6: people are working, we can do better.
Speaker 2: The labor market can do better.
Speaker 6: And so we shouldn't look at the amount of people
Speaker 6: working down and say, oh, we hit the.
Speaker 2: Lab that's the capacity, it's over.
Speaker 6: It's really a lot of things happening that you know,
Speaker 6: short term neighbor was a lot realer than it ever
Speaker 6: has been, and so I think we should think about
Speaker 6: capital investment growth and higher employment. All is you know,
Speaker 6: that's the next five to ten years that's what we
Speaker 6: should be aiming for.
Speaker 1: So just on this note, though, is there a risk
Speaker 1: that we're front loading capex or pulling forward too much
Speaker 1: investment at a time when the economy is arguably running
Speaker 1: hot and at the risk of not having Oh god,
Speaker 1: I'm about to veer into MMT territory. But at the
Speaker 1: risk of.
Speaker 3: The water's warm, water is warm.
Speaker 1: When the economy is slowing, maybe we won't have that
Speaker 1: fiscal policy or investment lever to pull.
Speaker 6: I think the economy is confusing right now and the
Speaker 6: rezillions of spending, the resilience of durable goods spending, and
Speaker 6: I wouldn't be surprised that there are a lot of
Speaker 6: factory owners and a lot of you know, manufacturers across
Speaker 6: the country who don't know.
Speaker 2: Yet what the permanent trajectory looks like.
Speaker 6: And so given that there's uncertainty, there's I think, you know,
Speaker 6: it would be surprising if there weren't people building factories
Speaker 6: that it's going to.
Speaker 2: Turn out that they don't need.
Speaker 6: You just hope that the economy has enough strength to
Speaker 6: sort of reabsorb that stuff as companies do realize some
Speaker 6: of that malinvestment.
Speaker 2: To put my Austrian at on.
Speaker 3: DAN going back to actually some of the national security
Speaker 3: questions like is there a level which the US can
Speaker 3: feel comfortable?
Speaker 4: And so it's in terms of like, okay, we have
Speaker 4: hit enough.
Speaker 3: Is there any may even like knowing or like being
Speaker 3: able to quantify excuse me, level like okay, the factories
Speaker 3: are up and running. Yes, probably the majority of manufacturing
Speaker 3: is going to be in Taiwan or China or elsewhere
Speaker 3: in Asia. But it's like we're good here, like we
Speaker 3: actually did. Is like do you do you have any
Speaker 3: sort of analytical way of like figuring out what that
Speaker 3: number is?
Speaker 5: I think that is pretty difficult to say if I
Speaker 5: had to come up with my own tests. It is
Speaker 5: that you know that the United States regularly runs into
Speaker 5: problems of oversupply of a lot of these things rather
Speaker 5: than under supply and having you know, basically these spiraling
Speaker 5: cost curves chasing after fewer and fewer goods that you
Speaker 5: know at least you know. Again, it is hard to
Speaker 5: say what the US national government declares to be national security.
Speaker 5: But you know what I would say is you know
Speaker 5: that you know if from I think hopefully that the
Speaker 5: folks that econ Twitter can agree on is you know
Speaker 5: something like, you know, to bring down.
Speaker 4: The cost curve for infrastructure that you know it is.
Speaker 5: It's still kind of mind blowing that these subway extension
Speaker 5: lines in New York City costs about ten times more
Speaker 5: than in you know, European countries. That it becomes you know,
Speaker 5: super difficult to build these upsolar farms, to build these
Speaker 5: sorts of transmission grids. I never knew what an obscene
Speaker 5: four letter word NEPA was until the folks at IFP
Speaker 5: told me so that Neepa, CEQA, it's close cousin just
Speaker 5: really block all sorts of development in the US, and
Speaker 5: that you know, if we don't have, you know, some
Speaker 5: sort of a robust system to save automakers from their mistakes.
Speaker 5: Although these automakers make you know, probably too many mistakes
Speaker 5: to to really try to save them from. But you know,
Speaker 5: unless you know, you are able to, you know, have
Speaker 5: this sort of you know, robustness bring down these cost curves.
Speaker 5: Have regular problems of oversupply rather than persistent undersupply where
Speaker 5: you know, prices just keep rising to chase after these
Speaker 5: goods where it's not at all clear where one hundred
Speaker 5: million dollars in the New York public school system goes,
Speaker 5: It's not very clear where you know, tens of billions,
Speaker 5: hundreds of billions of dollars of infrastructure investment goes. Then
Speaker 5: I think we can be a little bit more at
Speaker 5: ease and thinking about having a robust economic.
Speaker 1: System just on this point. I mean, there is a
Speaker 1: perception out there that when it comes to China, it's
Speaker 1: a command economy, and you know, Shei Shimpin can wake
Speaker 1: up up one day and say we're going to make
Speaker 1: semiconductors a strategically important industry. But actually the way that
Speaker 1: happens it usually isn't a bunch of money thrown at
Speaker 1: that problem. It's sort of a wink and a nod
Speaker 1: to the banks and the credit providers, like, hey, you
Speaker 1: should lend these guys some more money at cheap rates.
Speaker 4: I guess my.
Speaker 1: Question is what kind of policy response would we expect
Speaker 1: to see from China on this front, and would they
Speaker 1: start to tweak their own way, their own version of
Speaker 1: industrial policy in response to what the West is doing.
Speaker 5: Yeah, I tend to think that, you know, China is
Speaker 5: mostly pretty focused on building all of these capacity without
Speaker 5: thinking too much about these other competitive forces. You know,
Speaker 5: that creates a lot of these problems. You know, it
Speaker 5: creates these usual issues of oversupply. But I think the
Speaker 5: Chinese is you know, mostly thinking about its own pernal
Speaker 5: system rather than you know, trying to figure out how
Speaker 5: to you know, make the rest of the world more happy.
Speaker 5: So when the Chinese decide that you know, semiconductors are
Speaker 5: a critical technology, where that solar is a critical technology,
Speaker 5: as you say, the central government would do something like
Speaker 5: name solar a strategic emerging industry, as the State Council
Speaker 5: did in twenty ten, it would trigger you know, a
Speaker 5: vast cascade of subsidies which lead to business creation.
Speaker 4: It encourages the local governments to.
Speaker 5: Give free land to favorite industries, have the banks lend
Speaker 5: at very cheap rates, sometimes these you know, direct grants.
Speaker 5: But you know, in general, what the Chinese tend to
Speaker 5: do is to you know, have oversupply. They don't they
Speaker 5: have no ability to stop themselves from building. And I think,
Speaker 5: you know, if I had to choose, I would you know,
Speaker 5: rather choose that set of economic problems that that was
Speaker 5: the trigger that has made it so that China builds
Speaker 5: basically as much renewable structure every year as the rest
Speaker 5: of the world combined that these Chinese local governments cannot
Speaker 5: stop themselves from building more you know favorite industries in
Speaker 5: something like solar or wind farms, that what they really
Speaker 5: try to do.
Speaker 4: Is to you know, they can't stop themselvesselves from building.
Speaker 5: They build, and they build even when there is no interconnection,
Speaker 5: when these farms aren't really connected to the grid. They build,
Speaker 5: you know, hydroelectric dams that displace millions of people. They
Speaker 5: build even when the central government tells them to stop building,
Speaker 5: because you know, it just wants this sort of capacity
Speaker 5: and employment out there, and that is just you know,
Speaker 5: that's what the US is kind of up against. And
Speaker 5: I wonder, you know, how these two systems can be
Speaker 5: more adaptive.
Speaker 2: Well this I want that feeds into.
Speaker 3: So it really does feel like we have the opposite
Speaker 3: problem where people are always writing substack posts about how
Speaker 3: terrible we are at building things, and then you have
Speaker 3: Dan Turk about no, they literally can't stop the building
Speaker 3: even when they say.
Speaker 2: Stop the building.
Speaker 3: Is it really as simple as like, oh, there's some
Speaker 3: laws from the Carter era that we have to get
Speaker 3: rid of it. Then suddenly we could like build some
Speaker 3: way and rail as fast as they do in.
Speaker 4: Europe and Asia, Like what do you like.
Speaker 1: Just sitting asunde?
Speaker 4: Like I said, like, how do we get to do to.
Speaker 3: Get the US building again? How do you like rank
Speaker 3: the priorities.
Speaker 4: Or get good at that?
Speaker 2: Uh?
Speaker 6: Yeah, I mean I think there are important laws to change,
Speaker 6: But I think what we have to understand is that
Speaker 6: a lot.
Speaker 2: Of the blockers, Like why are those laws there? Right?
Speaker 6: Like we can't just like erase them and say they
Speaker 6: should be going to be gone. A lot of the
Speaker 6: blockers to lower cost are there because someone wants them
Speaker 6: to be there. Sure, and because we don't have enough
Speaker 6: you know, bipartisan't cross ideological.
Speaker 2: Agreement that these things should go.
Speaker 6: You know what I mean, all we have to do
Speaker 6: is get enough people to agree that buy America is
Speaker 6: a problem, and then we can get rid of by
Speaker 6: American provisions. But like this is the law of the problem, Yes,
Speaker 6: to an extent. But the problem is, for whatever reason,
Speaker 6: we can't overcome the force that push for now.
Speaker 3: But there's also like I mean, buy America I presume
Speaker 3: is not why forever with the Second Avenue subway which
Speaker 3: I don't know, I think it exists or maybe it
Speaker 3: has a few stops, And why there are like large
Speaker 3: swaths of the country where they can't put a electrical
Speaker 3: wires and stuff like that. There seem to be like
Speaker 3: that seems like.
Speaker 6: There's more sure, there's a lot of there's a lot
Speaker 6: of problems, and behind most of those problems there's some
Speaker 6: party pushing for them. And I would argue that what
Speaker 6: we need is more ideological alignment among the people who
Speaker 6: wish to push back against those things.
Speaker 2: You know, like NEPA is a huge issue.
Speaker 6: Right, but like it exists for reason, it's defended for
Speaker 6: a reason. There are people who sue using NEPA because
Speaker 6: you know, that's that they want those outcomes, and so
Speaker 6: we need.
Speaker 2: To have more agreement.
Speaker 6: Here are the set of problems and sort of work
Speaker 6: in a bipartisan way to push behind them. And you
Speaker 6: have to be realistic about people are on the other
Speaker 6: side of the table of the everything bagel problem.
Speaker 2: And they that's who we're up against if we're going
Speaker 2: to get rid of it.
Speaker 1: Just going back to the beginning of this conversation when
Speaker 1: we were talking about the goals of the Chips Act
Speaker 1: and the IRA as well, it does feel like there
Speaker 1: is a tension between a recognition that these are strategically
Speaker 1: important things for the US, whether they're semiconductors or clean
Speaker 1: energy tech, and then the ability to actually scale these
Speaker 1: and sell them in a way that is appealing to
Speaker 1: American people and corporations. Is that tension insurmountable. I'd like
Speaker 1: to hear from both of you on this point.
Speaker 5: I think it is probably going to be a pretty
Speaker 5: serious tension, and I think that the US government has
Speaker 5: to work through, you know, all these sorts of tensions.
Speaker 5: Some of these things will be resolved through the executive process.
Speaker 5: So if I think about something like, you know, the
Speaker 5: Treasury Department will give guidance on which electric vehicles are
Speaker 5: actually subject to the full seventy five hundred dollars in
Speaker 5: subsidies from the IRA and so it has to threat
Speaker 5: these needles. If it is, you know, a little bit
Speaker 5: too tight, then you know, the electric vehicle industry uptake
Speaker 5: will be pretty slow because most of these batteries are
Speaker 5: used with minerals process in China. On the other hand,
Speaker 5: if it is you know, if it is too strict,
Speaker 5: then no one will buy electric vehicles. If it is
Speaker 5: not strict enough, then none of these automakers feel that
Speaker 5: they have to, you know, get rid of their China
Speaker 5: dependence on all of these batteries. And so these are
Speaker 5: basically a lot of these tensions that I think are
Speaker 5: going to be pretty difficult to try to solve.
Speaker 6: Adam, I think there's a couple of facts that didn't
Speaker 6: matter here. One is that we have a huge cost gap,
Speaker 6: especially when it comes to advanced semiconductor production. You TSMC
Speaker 6: says it's forty to fifty percent, so it's too expensive
Speaker 6: to start. We used to make it here and we
Speaker 6: don't anymore, and that's for a reason. And the reason
Speaker 6: is because of costs, and you know, it made more
Speaker 6: sense to make it in other countries. So you have
Speaker 6: to be laser focused on those costs. Because of the
Speaker 6: third reason, which is this is a globally competitive industry.
Speaker 6: It's ruthless, and you have to be focused on costs
Speaker 6: and you have to be focused on prices, and policy
Speaker 6: should reflect that. And if policy doesn't reflect that, I
Speaker 6: think that's a problem.
Speaker 5: If I can amplify that point a little bit, that
Speaker 5: you know, I think that you know, what is really
Speaker 5: strange when it comes to something like clean tech in
Speaker 5: the United States is that I think the US is
Speaker 5: in a very strange position where it is trying to
Speaker 5: engage in technological catch up with a lower wage competitor,
Speaker 5: which is China. That China makes you know, solar photovotaic
Speaker 5: panels that are both cheaper as well as more efficient.
Speaker 4: Than the US.
Speaker 5: And uh, you know, often the same goes for batteries,
Speaker 5: and so you know, usually one of these things is
Speaker 5: not true that you know, you are either technologically ahead
Speaker 5: or you are cheaper. But the US really has a
Speaker 5: hard time here, which is why I want to echo
Speaker 5: Adam's point that you really have to focus on bringing
Speaker 5: down this cost card. The other, you know, slightly novel
Speaker 5: thing is that you know, China developed technologically by embracing
Speaker 5: a lot of foreign investment into China. These involved you know,
Speaker 5: Apple through Fox Con building enormous electronics factories in China.
Speaker 5: Tesla has a wholly owned factory in Shanghai that you know, Intel, Dell, whatever.
Speaker 5: All of these American technology giants invested a lot in China,
Speaker 5: and then Beijing was extremely welcoming into in their investment
Speaker 5: and has not you know, retaliated against them throughout the
Speaker 5: many years of President Trump's trade war. By contrast, the
Speaker 5: US has been pretty hostile towards attracting investment from you know,
Speaker 5: what is the technology leader in a lot of these spaces,
Speaker 5: China when it comes to solar and batteries especially, and
Speaker 5: so it is pretty hostile towards Chinese battery makers from
Speaker 5: setting up in Virginia sometimes, you.
Speaker 4: Know, including in Michigan.
Speaker 5: And so I think, you know, the US is making
Speaker 5: this beat that it is going to be able to
Speaker 5: be okay in something like batteries by you know, mostly
Speaker 5: working with allies.
Speaker 4: In Japan as well as South Korea.
Speaker 5: And perhaps that is all very fine, but I would
Speaker 5: also encourage it not to be you know, boxing with
Speaker 5: one hand TIEDUS behind. It's back to be a little
Speaker 5: bit more like China and then trying to get as
Speaker 5: much investment as possible solve mitigate these national security problems
Speaker 5: where they exist, but don't really you know, reject for
Speaker 5: an investment from the technology leader.
Speaker 3: So going back to Chips specifically mentioned at the top,
Speaker 3: Tracy and I recently interview two of the top people
Speaker 3: at running the Chips actor, you guys, and it's totally
Speaker 3: sloop timing because like a week before that, colleagues on
Speaker 3: the Bloomberg opinion side, who are like you know, separate wallas,
Speaker 3: like they totally savaged the state of the Chips Act,
Speaker 3: and like, you know a lot of these amputations like
Speaker 3: oh this should becoming like this like progressive Christmas tree
Speaker 3: of like environmental concerns and child child care, et cetera.
Speaker 3: Like outside of like what you see, you know is
Speaker 3: there's sort of like the tensions goals of like create
Speaker 3: jobs versus creat events, sermon conductors. How concerned are you
Speaker 3: about some of these other elements or like how overblown
Speaker 3: or where do you stand on some of the other
Speaker 3: priorities that some are saying or seeping into.
Speaker 2: The Chips Act.
Speaker 6: Yeah, I mean I think one hundred percent that there
Speaker 6: are other priorities that are just direct.
Speaker 2: They're just going to raise costs, like that's what they do.
Speaker 6: Like there's no world in which forcing project labor agreements
Speaker 6: on in the construction of these fabs does the raise costs.
Speaker 6: And you have to acknowledge that that's the problem. You
Speaker 6: got to be realistic about that. So I think that
Speaker 6: they are absolutely intention I want to be too handed
Speaker 6: economists here, and that there's a lot of stuff that
Speaker 6: they that they are doing and saying that I think
Speaker 6: is good there's a there's a recognition, you know, from
Speaker 6: the administration that we are going to need to nest
Speaker 6: semiconductive production within globalization. And there's a realism there and
Speaker 6: a desire to work with allies on this that I
Speaker 6: think is missing from a lot of the other discussion
Speaker 6: around this. So we're not going to make it all
Speaker 6: and globalization is not the enemy here. Globalization is a
Speaker 6: key factor in why Moore's Law has continued over time.
Speaker 6: If we didn't have globalization, More's Law would have been
Speaker 6: dead a long time ago. And so you cannot run
Speaker 6: away from globalization when it comes to semiconductive production. So
Speaker 6: I do want to say that I do think the
Speaker 6: administration has been good on that. It's the other things.
Speaker 6: It's the Christmas tree stuff that I think is a problem.
Speaker 6: On the other hand, everything bagels are delicious.
Speaker 5: I don't order playing bagels myself, and Christmas trees are beautiful.
Speaker 5: I agree without him that, you know, it is really
Speaker 5: difficult to try to make everything here at home. But
Speaker 5: you know, I wonder at what extent that these childcare provisions,
Speaker 5: that these other labor provisions are really you know, going
Speaker 5: to be mostly inconveniences that these companies are going to
Speaker 5: be able to write off that, you know, or whether
Speaker 5: they actually are critical, you know, if they actually are
Speaker 5: crippling may be a little bit too early to tell.
Speaker 5: But I agree with that, and certainly it is pretty difficult,
Speaker 5: which is why I go back to the test I
Speaker 5: laid out at the beginning. We are seeing as already
Speaker 5: huge amounts of investments in the US, but you know,
Speaker 5: is it going to be invested in most of the
Speaker 5: right things? And you know, is there going to be
Speaker 5: some way to you know, have the Is the US
Speaker 5: going to be able to say that these economics are
Speaker 5: going to be pretty self sustaining over the longer run.
Speaker 1: So I just have one last question, sort of a
Speaker 1: classic interview question, which is in ten years time or
Speaker 1: I don't even know if ten years is long enough
Speaker 1: because we're talking about technologies with very very long lead times.
Speaker 1: But okay, so I guess I have two questions. One,
Speaker 1: what time frame do you think is reasonable to judge
Speaker 1: the success?
Speaker 2: Ser verdict?
Speaker 5: Yeah?
Speaker 1: And then two, what are you looking out for? Is
Speaker 1: there something specific where you would wake up in twenty
Speaker 1: or thirty or fifty years time hopefully we're all still
Speaker 1: around and say this has either been a massive success
Speaker 1: or a desperate failure.
Speaker 5: I look forward to getting back into this bowling alley
Speaker 5: in ten years, one decade from now, and decades perfect yes,
Speaker 5: or perhaps many decades. And you know, thinking about where
Speaker 5: we are that you know, ten years is not very
Speaker 5: long of a time, as you say, Tracy, technologically, politically
Speaker 5: that also tends to be not too long of a time.
Speaker 4: For the Chinese.
Speaker 5: That is only two turns of the five year plan,
Speaker 5: and so I think they judge things on a slightly
Speaker 5: longer timescale.
Speaker 4: Let's give it at least three five year plan cycles.
Speaker 5: What I slightly worry about is that, you know, there
Speaker 5: is quite a lot of investment in things like solar
Speaker 5: and batteries and also in semiconductors in the US today.
Speaker 5: What I worry about is that, you know, somehow the
Speaker 5: TSMC facility in Arizona turns a little bit more like
Speaker 5: a showcase factory that doesn't end up, you know, producing
Speaker 5: too much. Then I think the example here is something
Speaker 5: like Apple's mac pro factory in Texas, which doesn't have
Speaker 5: a very high volume. And you know, if after all
Speaker 5: this investment, a lot of firms will fail. I think
Speaker 5: that is certainly going to be the case even two
Speaker 5: three years from now. You know, we take a look back,
Speaker 5: you know, if you know one of the parties points
Speaker 5: out a lot of these failures and says, you know,
Speaker 5: this is why industrial policy cannot work.
Speaker 4: We're getting a lot more celendras.
Speaker 5: They're still talking about these, the cylindro failure of about
Speaker 5: you know, fifteen years ago. Now that you know politically,
Speaker 5: the appetite disappears, continue investing in these sort of things.
Speaker 5: That is something I am a little bit worried about,
Speaker 5: and so therefore I would say that, you know, we
Speaker 5: have to think about these things on the longer time frame.
Speaker 6: Adam, I would say, it depends what we're talking about specifically.
Speaker 6: So if we're talking about advanced semiconductive production, it'd be
Speaker 6: nice to have a little bit more, you know, less
Speaker 6: geographic concentration there, both on shore and you know and friendshort.
Speaker 6: When it comes to you know, mature none chips, I'd
Speaker 6: love to see more direct accounting for here's why we
Speaker 6: need it, and here is how we've improved resiliency. When
Speaker 6: it comes to solar what I'd love to see is
Speaker 6: the cost curve come down. I think that's everything that's everything.
Speaker 6: I don't care about making it here. I don't care
Speaker 6: where we make and I care that the price comes down,
Speaker 6: and I care that people install it. And I think
Speaker 6: that we should think about the technological frontier as being
Speaker 6: something really important here. And Chips, to be fair, is
Speaker 6: spending billions of dollars on R and D too, So
Speaker 6: I'd love to see that some of that money helped
Speaker 6: move the technological frontier forward.
Speaker 3: I think Alan Staffer is here somewhere. He's always posting
Speaker 3: the solar chart and it always looks very chourage that
Speaker 3: line is going down, so that does seem to be happening.
Speaker 3: One last thing and then I want to like open up,
Speaker 3: and then I think we can go to Q and A.
Speaker 3: But Dan, you know, like, I'm really struck by the
Speaker 3: point that you make about it's kind of rare to
Speaker 3: be trying to catch up to a country that both
Speaker 3: is cheaper and more technologically advanced. Like usually maybe there's
Speaker 3: one the other and you exploit the other. Like should
Speaker 3: we be doing things like you know, export discipline and
Speaker 3: subsidizing the companies that can produce here and sell well
Speaker 3: in the global market. Should we be thinking about that
Speaker 3: type of thing for the US or should we be
Speaker 3: thinking about, you know more buyer of last resort things.
Speaker 3: It seems to be a part of the sort of
Speaker 3: when we have had successful like sort of like military
Speaker 3: driven semiconductor policies like back in the Cold War and
Speaker 3: stuff like that.
Speaker 5: Yeah, well, I would love for US firms to have
Speaker 5: export discipline, which is, you know, a lot of the
Speaker 5: strategy for firms in Asia to you know, sell to
Speaker 5: the rich America can market and then you know, get
Speaker 5: the quality of their products, you know, to to to
Speaker 5: raise the quality of their products. The challenge for the
Speaker 5: US is that there is no bigger and more sophisticated market,
Speaker 5: so it's hard to you know, figure out you know,
Speaker 5: who is able to discipline the American firm. And I
Speaker 5: think to add to the point of you know how
Speaker 5: you know, the US is in a bit of a
Speaker 5: tougher position again, I would think, you know, slightly politically.
Speaker 5: The challenges here to go back to the example of Chips.
Speaker 5: You know, whether the Chips.
Speaker 4: Act is working.
Speaker 5: I think about something like TSMC in Taiwan and so
Speaker 5: TSMC is you know by miles and Miles, Taiwan's everyone's
Speaker 5: favorite employer in Taiwan that people engineers in Taiwan would say,
Speaker 5: I would sell my liver to go work for TSMC.
Speaker 5: You know, it's much more difficult to think that people
Speaker 5: would say that of any chip firm over here. You know,
Speaker 5: Taiwan is periodically in a drought. It is a you know,
Speaker 5: an island where they give the fresh water to TSMC
Speaker 5: and make the citizens drink the treated water in a trout.
Speaker 5: They park a lot of these fire trucks outside of
Speaker 5: the facilities of TSMC in order to make sure that
Speaker 5: TSMC has you know, freshwater to produce the chips powering
Speaker 5: our iPhones, and so you know, this is you know,
Speaker 5: that is just a different sort of thing where politically
Speaker 5: also can I is it really easy to imagine that
Speaker 5: TSMC's facilities in Arizona, a fairly try state, is able
Speaker 5: to park a lot of fire trucks outside of TSMC's
Speaker 5: facilities in a trout.
Speaker 4: I wonder we're.
Speaker 3: Going to be doing an episode soon with the Arizona
Speaker 3: lfelfa farmer, so you will be.
Speaker 4: Making the case that we should not.
Speaker 3: You know, they got to get there, they got.
Speaker 1: To get their Yeah, but thank you Dan for leaving
Speaker 1: with us with that wonderful vision of late stage capitalism.
Speaker 3: And thank you to Adam Ozomak for joining us for
Speaker 3: this conversation. We welcomed questions from the audience, and if
Speaker 3: you'd like to hear those, we invite you to be
Speaker 3: on the lookout for live recordings where you can be
Speaker 3: part of our audience in the future.
Speaker 1: Joe, I found that conversation fascinating.
Speaker 6: It was so great.
Speaker 3: I'm so glad. I appreciate both perspectives. I do find
Speaker 3: like I don't know, I really I appreciate both perspectives.
Speaker 3: I like Dam's case for we should do big heavy
Speaker 3: stuff here, right, I guess for.
Speaker 4: But now that was I really enjoyed it.
Speaker 1: One thing that I think is pretty special about the
Speaker 1: discussion is it has to be a first for a
Speaker 1: semiconductor policy discussion in a bowling alley.
Speaker 3: No, and the listeners who are not here, like we're
Speaker 3: on this stage, we're looking out at bowling alley. Well
Speaker 3: gamed the beautiful light fixture in this old building.
Speaker 2: I had the exact same thought. No one is having this.
Speaker 3: Conversation about like the world, so nothing.
Speaker 4: Else an accomplishment.
Speaker 1: No, it's bowling pin America.
Speaker 4: Actually, you know, it's like this is what we were
Speaker 4: We can.
Speaker 1: Draw the line between bowling pins and pin diodes. How
Speaker 1: about all right? Well, this has been another episode of
Speaker 1: the all Bots podcast. I'm Tracy Alloway.
Speaker 3: I'm Joe Wassenthal and big thanks to our guests Dan
Speaker 3: Wong and Adam Osemaga and of course Adam for this
Speaker 3: incredible location where we recorded.
Speaker 1: A massive thank you to the Economic Innovation Group and
Speaker 1: the Institute for Progress for allowing us to be here
Speaker 1: and do this world first of talking semiconductors in bowling
Speaker 1: Ali Terry Toy. You can follow me on Twitter at
Speaker 1: Tracy Alloway and I'm.
Speaker 3: Joe Wisenthal, and you can follow me on Twitter at
Speaker 3: the Stalwart. Follow our guests on Twitter, Adam Ozimek He's
Speaker 3: at Modeled Behavior, and Dan Wong He's at Dan w Wong.
Speaker 3: Follow our producers Carmen Rodriguez at Carmen Arman and dashall
Speaker 3: Bennet at dashbot. And check out all of the Bloomberg
Speaker 3: podcasts under the handle at podcasts, and for more odd
Speaker 3: Lots content, go to Bloomberg dot com slash odd Lots,
Speaker 3: where Tracy and I have a blog, we post transcripts
Speaker 3: and we have a newsletter that comes out every Friday,
Speaker 3: and for more Odd Lots content, check out our discord.
Speaker 3: It's really fun people chatting in there twenty four to
Speaker 3: seven about all of the things we talk about on
Speaker 3: the show. Check it out at discord dot, gg slash
Speaker 3: odd Lots.
Speaker 2: Thanks for listening.