WEBVTT - This Is How We'll Know If the CHIPS Act Is Working 0:00:05.440 --> 0:00:08.520 Hello there, Odd Lots listeners, You are about to hear 0:00:08.640 --> 0:00:11.960 a live episode recording of the Authoughts podcast. 0:00:12.160 --> 0:00:12.400 YEP. 0:00:12.520 --> 0:00:15.520 This episode was recorded in front of a live audience 0:00:15.600 --> 0:00:19.599 at the Decades Bowling Allie in Lancaster, Pennsylvania. We hope 0:00:19.600 --> 0:00:20.400 you enjoyed the show. 0:00:21.440 --> 0:00:24.760 Hello, and welcome to another episode of the All Thoughts podcast. 0:00:25.079 --> 0:00:26.119 I'm Tracy Alloway. 0:00:26.640 --> 0:00:28.440 Joe So, Joe. 0:00:28.680 --> 0:00:31.640 Uh, we can't seem to get away from semiconductors. 0:00:31.840 --> 0:00:32.440 No, we can't. 0:00:32.440 --> 0:00:35.400 And you know, we recently talked to two of the 0:00:35.479 --> 0:00:39.440 pupil basically running the Chips Act in a recent episode. 0:00:40.040 --> 0:00:41.440 But I think if we're going to ask the question 0:00:41.520 --> 0:00:43.600 like how the Chips Act is going, we can't just 0:00:43.680 --> 0:00:45.400 talk to the pupil running. 0:00:45.479 --> 0:00:49.800 No biased you think, Uh no, we need some outside perspective. 0:00:49.920 --> 0:00:52.320 And I'm very happy to say that in this very 0:00:52.360 --> 0:00:55.400 special episode of Odd Lots, which we are recording live 0:00:55.760 --> 0:00:58.160 at the Decades Bowling Allie, we are going to be 0:00:58.200 --> 0:01:01.440 speaking to two of the perfect guests. We are going 0:01:01.480 --> 0:01:05.320 to be speaking to Dan Wong, visiting scholar at Yale 0:01:05.400 --> 0:01:08.880 Law School's Side China Center, and tech analyst over at 0:01:08.920 --> 0:01:12.880 Gavical Dragonomics. Perhaps the only man who's ever read a 0:01:13.000 --> 0:01:17.480 full copy of the Chinese Communist Party's Internal Policy Journal 0:01:17.680 --> 0:01:18.759 from cover to cover. 0:01:19.680 --> 0:01:22.120 Q Speaking Truth, Seeking Truth. 0:01:22.880 --> 0:01:26.520 And special guest. A last minute addition, just to keep 0:01:26.520 --> 0:01:30.160 our producers and our tech audio people on their toes, 0:01:30.280 --> 0:01:32.360 we're also going to have Adam Ozamak. He is, of 0:01:32.360 --> 0:01:36.520 course chief economist at Economic Innovation Group and also our 0:01:36.560 --> 0:01:39.720 host for this wonderful event. So thank you both so 0:01:39.800 --> 0:01:42.840 much for coming on odd lots without further Ado, Dan, 0:01:43.400 --> 0:01:45.959 you recently moved back to the US and now you're 0:01:45.959 --> 0:01:48.360 in Lancaster at a bowling alley. Isn't it great that 0:01:48.400 --> 0:01:48.960 we're all here? 0:01:49.680 --> 0:01:52.640 No one is more surprised than me, Tracy, that we've 0:01:52.680 --> 0:01:53.920 all gotten over here. 0:01:54.240 --> 0:01:55.640 If I could heighten. 0:01:55.320 --> 0:01:58.320 This realness of the moment just a little bit, I 0:01:58.360 --> 0:02:00.880 want to point out that my parents are also here 0:02:01.400 --> 0:02:07.720 in the back slow over from their home in suburban Philadelphia. 0:02:08.080 --> 0:02:10.600 They are shy. I hope we can involve them in 0:02:10.639 --> 0:02:11.160 the bullying. 0:02:13.560 --> 0:02:16.360 Adam, are you surprised to be an economist who owns 0:02:16.360 --> 0:02:18.560 a bowling la and to issue your own tokens? 0:02:19.800 --> 0:02:22.160 I'm a little used to it at this point, but 0:02:23.240 --> 0:02:25.080 I enjoy being an economists who issues. 0:02:25.320 --> 0:02:26.239 Okay, that's fair enough. 0:02:26.440 --> 0:02:28.840 So maybe just to set the scene. I mean, Joe 0:02:28.919 --> 0:02:33.040 and I started talking about semiconductors years ago now because 0:02:33.080 --> 0:02:36.040 of supply chain shortages, which we've since gone on to 0:02:36.080 --> 0:02:39.720 explore in various ways. But in the years that have 0:02:39.800 --> 0:02:44.480 passed since, semiconductors have become like a huge policy point. 0:02:45.080 --> 0:02:49.520 Why is this of interest in particular to someone like Adam? 0:02:49.720 --> 0:02:50.720 Why does this interest you? 0:02:51.840 --> 0:02:55.519 Well, it's part of a broader discussion around industrial policy, 0:02:55.840 --> 0:02:58.440 and I think that, you know, if we're going to 0:02:58.520 --> 0:03:03.639 be trying to pick specific industries that we want to grow, 0:03:05.080 --> 0:03:06.720 I sort of put myself in the camp of I 0:03:06.800 --> 0:03:09.680 think this is possible, but we have to do it 0:03:09.760 --> 0:03:13.360 very smartly. It's not easy, and so my interest in 0:03:13.400 --> 0:03:15.960 the discussion is trying to make sure we're doing this 0:03:16.040 --> 0:03:18.480 the right way to maximize the odds of success. A 0:03:18.520 --> 0:03:21.359 lot of times, you know, you sort of find two camps. 0:03:21.400 --> 0:03:24.280 There's the critics of industrial policy who just say it 0:03:24.320 --> 0:03:27.800 can't work, it's impossible, there's public choice problems, it's doomed, 0:03:28.200 --> 0:03:30.800 and then you sort of have another side that's just like, 0:03:31.040 --> 0:03:34.399 as long as we're spending the money, we're already mission accomplished. 0:03:34.560 --> 0:03:36.240 They might not say that, but that's kind of an 0:03:36.320 --> 0:03:40.600 act sometimes. Sorry guys, but I think we need to 0:03:40.640 --> 0:03:44.640 be critics who think it can succeed and trying to 0:03:44.680 --> 0:03:47.640 make it succeed by being critical and ensuring that it's 0:03:47.680 --> 0:03:48.400 done smartly. 0:03:48.840 --> 0:03:50.920 So, you know, one of the things that the first 0:03:50.920 --> 0:03:54.640 time we ever did a COVID related episode, it was 0:03:54.720 --> 0:03:57.560 actually with Dan and I think it was before we 0:03:57.600 --> 0:03:59.280 knew like quite how much it was going to change 0:03:59.320 --> 0:04:01.440 the world, and it was like very specific, like, well, 0:04:01.440 --> 0:04:05.560 what's COVID gonna do to like, essentially electronics manufacturing in. 0:04:07.080 --> 0:04:07.400 China? 0:04:07.480 --> 0:04:09.320 And that was like the extent to which we're thinking. 0:04:09.320 --> 0:04:14.440 I think it was like February twenty twenty. Obviously, then 0:04:14.520 --> 0:04:16.800 we you know, the world change. We don't need to 0:04:17.080 --> 0:04:19.239 go over all of those things, but let's just start 0:04:19.240 --> 0:04:22.960 with this simple point when it comes to from your perspective, 0:04:23.640 --> 0:04:26.360 can it succeed? Not like the specifics of the Chips 0:04:26.360 --> 0:04:28.840 Act yet or whatever, but do you accept the premise 0:04:29.400 --> 0:04:33.680 that the attempt to turn around domestic manufacturing of high 0:04:33.720 --> 0:04:36.920 end semiconductors in the US is conceivably possible. 0:04:37.720 --> 0:04:39.520 I think it is possible. 0:04:39.560 --> 0:04:42.240 I think it is conceivably possible, and I think that 0:04:42.440 --> 0:04:45.800 we are off to a good start with an emphasis 0:04:45.839 --> 0:04:50.440 on start. Now, the Financial Times are recently tabulated that 0:04:50.520 --> 0:04:53.640 there's something like two hundred billion dollars of new investment 0:04:54.040 --> 0:04:56.760 in clean tech as well as in semiconductors after the 0:04:56.800 --> 0:05:00.280 passage of the IRA as well as the chip SAC. 0:05:00.600 --> 0:05:03.160 At two hundred billion dollars is quite a lot. We're 0:05:03.200 --> 0:05:07.240 seeing these flurries of investments in semiconductors from the likes 0:05:07.279 --> 0:05:10.360 of Samsung and TSMC as well as Intel. 0:05:10.920 --> 0:05:13.000 And we're seeing also a lot of battery makers. 0:05:13.040 --> 0:05:16.760 We're seeing a lot of solar photootaeic makers announcing these 0:05:16.880 --> 0:05:19.200 very large facilities in the US. 0:05:19.680 --> 0:05:21.239 So we are off to see a start. 0:05:21.560 --> 0:05:24.479 And I think what I really really wonder about is, 0:05:24.839 --> 0:05:28.080 you know what exactly are the criteria for success? Is 0:05:28.240 --> 0:05:31.520 spending money really just efficient or as you've had the 0:05:31.640 --> 0:05:34.760 Chips Act administrators come on tell you know, there has 0:05:34.800 --> 0:05:35.599 to be a little bit more. 0:05:35.760 --> 0:05:38.159 And the test that I would propose for you know, 0:05:38.200 --> 0:05:38.719 everyone to. 0:05:38.720 --> 0:05:41.159 Think about are I would say, you know, probably to 0:05:41.200 --> 0:05:44.120 focus on these two things. The first is you know 0:05:44.160 --> 0:05:48.120 what exactly is the economic criterion for success? If we 0:05:48.240 --> 0:05:50.719 are going to have, you know, a thriving chip industry. 0:05:50.760 --> 0:05:53.120 If we're going to have a thriving clean tech industry, 0:05:53.480 --> 0:05:55.680 then you know, the economics have to work out in 0:05:55.720 --> 0:05:56.279 some big way. 0:05:56.680 --> 0:05:57.400 And I think the. 0:05:57.400 --> 0:05:59.240 Challenge for a lot of this is that, you know, 0:05:59.240 --> 0:06:00.919 when I spend a lot of time looking at the 0:06:00.960 --> 0:06:03.440 clean tech supply chain in China, it is going to 0:06:03.480 --> 0:06:06.039 be pretty difficult, I think, for the United States to 0:06:06.080 --> 0:06:09.479 become a lower cost producer in China and a lot 0:06:09.480 --> 0:06:13.560 of these important manufactured products. But is there some criterion 0:06:13.640 --> 0:06:15.320 here that could be met in a bit of a 0:06:15.360 --> 0:06:17.960 lower way. Are we going to see some self sustaining 0:06:18.040 --> 0:06:20.760 dynamics that is not being primarily. 0:06:20.320 --> 0:06:21.520 Driven by foreign investment. 0:06:21.800 --> 0:06:23.320 Are we going to be able to see you know, 0:06:23.400 --> 0:06:26.480 the cost curve, perhaps with some help from tariffs, you know, 0:06:26.560 --> 0:06:29.360 be able to get us to some competitive products. 0:06:29.600 --> 0:06:30.760 And then the second test. 0:06:30.560 --> 0:06:32.760 I would propose that you know, we really think about 0:06:32.920 --> 0:06:36.359 is some threshold of a national security test. Now, you know, 0:06:36.440 --> 0:06:38.640 this is really up for the national security folks in 0:06:38.760 --> 0:06:39.919 DC to debate. 0:06:39.720 --> 0:06:40.760 What this shouldn't really mean. 0:06:41.080 --> 0:06:43.440 But what I would look at is the structure of 0:06:43.480 --> 0:06:45.960 these investments because a lot of what we see right 0:06:45.960 --> 0:06:48.760 now in terms of, you know, the actual investments in chips, 0:06:49.000 --> 0:06:52.479 the actual investments in clean tech that's overwhelmingly going to 0:06:52.560 --> 0:06:54.039 the downstream industries. 0:06:54.400 --> 0:06:55.040 In both of. 0:06:55.000 --> 0:06:57.760 These sectors, we're seeing a lot of investments in the 0:06:57.800 --> 0:07:00.240 battery sells. We're seeing a lot of the investment in 0:07:00.279 --> 0:07:03.240 solar modules, but really these are only the assemblies of 0:07:03.320 --> 0:07:06.120 all of the components that you need. There hasn't been 0:07:06.240 --> 0:07:09.600 quite so much investment in the critical minerals for batteries 0:07:09.600 --> 0:07:12.320 in the US. There hasn't been quite so much investment 0:07:12.480 --> 0:07:15.200 in the solar cells, the solar poly silicon. 0:07:15.400 --> 0:07:16.800 This is much more difficult stuff. 0:07:17.040 --> 0:07:20.080 So if the US is spending a lot of this money, 0:07:20.160 --> 0:07:23.200 you know, two hundred billion dollars, you know, potentially far 0:07:23.240 --> 0:07:28.400 more than that, mostly to import products mostly made in Asia, 0:07:28.440 --> 0:07:31.240 in China, and then assembling a lot of these things here, well, 0:07:31.280 --> 0:07:33.120 it doesn't look to me like they are really going 0:07:33.160 --> 0:07:35.480 to have be a you know, pushing past that threshold. So, 0:07:35.800 --> 0:07:38.160 you know, for ultimate measures of success, I would look 0:07:38.160 --> 0:07:40.040 at the economics, and I would look at the structure 0:07:40.120 --> 0:07:41.000 of these investments. 0:07:41.560 --> 0:07:43.600 Adam, I kind of want to ask you the same question, 0:07:43.680 --> 0:07:46.120 which is, how are we judging the success of this 0:07:46.200 --> 0:07:49.080 program because it does seem, as Dan just laid out, 0:07:49.160 --> 0:07:52.360 there are all these different targets. So on the one hand, 0:07:52.880 --> 0:07:56.720 the Chips Act is sort of the poster child for revived, 0:07:56.880 --> 0:08:01.320 more activist industrial policy. I know that's a negative term 0:08:01.440 --> 0:08:05.200 in some economic circles. I've heard people call it industrial strategy. Instead, 0:08:05.320 --> 0:08:09.600 maybe I'll use that people trying to fix supply chain shortages, 0:08:10.520 --> 0:08:15.560 create new jobs, geostrategic interests. As Dan just mentioned, like 0:08:15.600 --> 0:08:19.160 the list of potential goals here is quite long. So 0:08:19.240 --> 0:08:21.800 how should we be judging the success of this type 0:08:21.840 --> 0:08:22.440 of program. 0:08:22.800 --> 0:08:24.000 Well, I think we need to focus. 0:08:24.120 --> 0:08:26.560 I think that's really important, and we need to focus 0:08:26.600 --> 0:08:29.800 on the goals that actually make sense versus the goals 0:08:29.840 --> 0:08:31.920 that not only do they not make sense, but they're going. 0:08:31.840 --> 0:08:34.320 To be a distraction for achieving our primary goals. 0:08:34.880 --> 0:08:39.240 So, if you think about national security interest, I think 0:08:39.280 --> 0:08:43.200 we have a genuine economic interest in making sure that 0:08:43.800 --> 0:08:48.360 specific mature node chips that we rely on for our 0:08:48.360 --> 0:08:51.440 military we have a safe and steady supply with them. 0:08:51.559 --> 0:08:53.480 Doesn't necessarily mean they need to be here. 0:08:53.920 --> 0:08:55.960 It means they need to be some of them here 0:08:56.000 --> 0:08:58.720 and some of them on allies that we can trust. 0:08:59.280 --> 0:09:02.280 That to me seems like a completely reasonable national security 0:09:02.280 --> 0:09:05.960 concern that I don't see why even you know, you know, 0:09:06.000 --> 0:09:12.040 libertarian neoclassical style economists wouldbject to. I think having the 0:09:12.080 --> 0:09:15.240 most advanced production here, there's an argument for that too, 0:09:15.280 --> 0:09:17.480 at least having some of it for the purpose of, 0:09:18.320 --> 0:09:22.480 you know, making it more less geographically concentrated. You know, 0:09:22.800 --> 0:09:25.600 a lot of the production, ninety percent of advanced chips 0:09:25.679 --> 0:09:28.520 is made in Taiwan. That's a hugely risky situation. So 0:09:29.520 --> 0:09:31.560 I think we think of that as like insurance. So 0:09:31.600 --> 0:09:34.560 we don't want them all the advanced production concentrated one place. 0:09:34.760 --> 0:09:35.800 We want it to be insured. 0:09:35.920 --> 0:09:38.240 Again, this is an area where we should be relying 0:09:38.240 --> 0:09:40.480 on allies, and we shouldn't see it just as a 0:09:40.520 --> 0:09:43.040 goal of producing it here, but a goal of making 0:09:43.120 --> 0:09:46.920 the supply of that more resilient, less risky. I see 0:09:46.960 --> 0:09:51.160 those as reasonable policy goals. I see the idea that 0:09:51.200 --> 0:09:54.560 this is going to be something that creates good jobs, 0:09:55.200 --> 0:09:59.760 skilled or low skill as being a distraction. I think 0:09:59.800 --> 0:10:03.840 that the idea that we're going to you know, have 0:10:04.559 --> 0:10:08.760 more resiliency in a huge variety of chips is not 0:10:08.840 --> 0:10:11.680 really realistic. I mean, there's so many chips made so 0:10:11.760 --> 0:10:14.360 many countries, and you just you're not going to know 0:10:14.400 --> 0:10:16.280 which ones we need to ensure against. If you look 0:10:16.320 --> 0:10:19.760 at like the auto industry, the reason they had a 0:10:19.800 --> 0:10:22.600 chip shortage wasn't because we couldn't make enough chips for them. 0:10:22.679 --> 0:10:25.360 It's because they canceled all their chip orders early in 0:10:25.360 --> 0:10:27.920 the pandemic. And then by the time they realized they 0:10:27.920 --> 0:10:30.480 had made a mistake and they went to the chip 0:10:30.480 --> 0:10:31.800 makers that actually, we do want those. 0:10:31.760 --> 0:10:34.080 Chips classic bull whip effect, right. 0:10:33.960 --> 0:10:35.679 And so like, how were we going to solve that? 0:10:35.840 --> 0:10:39.320 And I don't really hear any clear answers about that, 0:10:39.400 --> 0:10:41.480 and even when I do hear an answer, it's sort 0:10:41.480 --> 0:10:44.559 of not fully thought out in my mind. So we're 0:10:44.600 --> 0:10:49.000 going to create mature node production here. What's going to 0:10:49.040 --> 0:10:52.199 happen next time something like this happens, right? Are the 0:10:52.240 --> 0:10:55.480 automakers going to cancel their orders again? If not, then 0:10:55.480 --> 0:10:57.520 we don't have a problem. And if so, then what 0:10:57.559 --> 0:11:00.000 are we going to do? Use the Defense Production Act 0:11:00.080 --> 0:11:02.360 to seize it? Because it's here. It just it seems 0:11:02.400 --> 0:11:04.880 like a solution that's a little disconnected from the problem. 0:11:04.960 --> 0:11:08.560 Well, this actually gets to another thing, like Dan, I 0:11:08.600 --> 0:11:11.840 mean let's say we all everyone were just sort of 0:11:11.880 --> 0:11:18.600 accept the national security case for domestic advanced semiconductor manufacturing. 0:11:18.840 --> 0:11:21.560 Is there another problem that we need that actually needs 0:11:21.559 --> 0:11:25.320 to be solved beyond that? I mean, like, can we 0:11:25.400 --> 0:11:28.080 just sort of like, yeah, I have maybe more diversified 0:11:28.080 --> 0:11:31.000 globally or something like that, Like it seems like, okay, yes, 0:11:31.280 --> 0:11:35.680 it's pretty crucial the military part. Can what about just 0:11:35.720 --> 0:11:37.840 going back to the status quo outside of that? 0:11:37.880 --> 0:11:38.640 Would that be fine? 0:11:39.080 --> 0:11:39.280 Well? 0:11:39.280 --> 0:11:42.600 The wonderful thing Joe about national security in the US 0:11:42.720 --> 0:11:45.480 is that no one can ever define it. You know 0:11:45.600 --> 0:11:48.040 it is, you know it is. You know, the president 0:11:48.280 --> 0:11:51.400 is very reluctant to define it. The federal judges are 0:11:51.440 --> 0:11:55.080 always very differential about you know, how the US president 0:11:55.120 --> 0:11:57.560 defines what national security is. Maybe you should just come 0:11:57.640 --> 0:11:58.679 up with our own definition. 0:11:59.320 --> 0:11:59.520 You know. 0:11:59.600 --> 0:12:02.520 I think that I take an expansive view of you know, 0:12:02.640 --> 0:12:05.640 US national security. I think there should be quite a 0:12:05.679 --> 0:12:09.880 lot more manufacturing jobs. You know, we're speaking in Pennsylvania. 0:12:10.200 --> 0:12:12.400 This is, you know, a site of quite a lot 0:12:12.480 --> 0:12:15.880 of manufacturing. I value manufacturing for. 0:12:15.800 --> 0:12:16.480 Its own sake. 0:12:17.040 --> 0:12:19.360 I think that I love heavy industry. You know, the 0:12:19.640 --> 0:12:22.160 heavier the better, and so you know, it is you know, 0:12:22.200 --> 0:12:24.679 really great that we should be thinking about these sort 0:12:24.720 --> 0:12:27.360 of things. So, you know, if I were able to, 0:12:27.440 --> 0:12:29.360 you know, think about, you know, what is a good 0:12:29.440 --> 0:12:31.920 vision of all of these things, I would ideally like 0:12:32.000 --> 0:12:35.080 to see. You know that even if automakers make some 0:12:35.320 --> 0:12:38.760 big mistakes in the beginning of the pandemic cancel other orders, 0:12:38.800 --> 0:12:42.080 that was no doubt a mistake that somehow the you know, 0:12:42.320 --> 0:12:46.160 US manufacturing system is able to be somewhat robust, to 0:12:46.240 --> 0:12:49.400 be able to be self correcting enough to rescue you know, 0:12:49.480 --> 0:12:51.880 a lot of these manufacturers from their mistakes. 0:12:52.200 --> 0:12:54.199 Because what I was quite surprised by in. 0:12:54.160 --> 0:12:56.240 The early days of the pandemic was that, you know, 0:12:56.280 --> 0:12:59.360 in the earlier days of March twenty twenty, when the 0:12:59.440 --> 0:13:03.160 US had a pretty big deficiency then of masks and swabs, 0:13:03.360 --> 0:13:06.240 which we were simple products by any measure, there were 0:13:06.280 --> 0:13:08.800 a lot of manufacturers that were not able to quickly 0:13:08.840 --> 0:13:13.079 retool and make these pretty simple products. That manufacturing employment 0:13:13.440 --> 0:13:15.880 even up until I think something like the last three months, 0:13:16.040 --> 0:13:21.360 did not you know, surpass the peak in March twenty twenty. 0:13:21.640 --> 0:13:24.560 That it is pretty surprising that both the manufacturers and 0:13:24.640 --> 0:13:27.360 the workforce were not really able to respond in a 0:13:27.400 --> 0:13:30.880 pretty robust way, be supple enough to make. 0:13:30.720 --> 0:13:32.000 A lot of these types of products. 0:13:32.080 --> 0:13:34.040 And so I would start there by thinking about, you know, 0:13:34.080 --> 0:13:37.400 from a workplace issue, less from an optimization, less from 0:13:37.440 --> 0:13:40.360 an efficiency issue, are we able to build some sort 0:13:40.360 --> 0:13:44.400 of workforce economic system that response robust. 0:13:44.120 --> 0:13:45.040 Link to emergencies. 0:14:01.720 --> 0:14:04.560 So just on the national security point, and you know, 0:14:04.600 --> 0:14:06.800 I take Dan's point that this is sort of like 0:14:06.880 --> 0:14:09.800 a moving and very flexible goal, but I did see 0:14:09.840 --> 0:14:12.920 a headline flow by this week basically saying that Germany 0:14:12.960 --> 0:14:16.280 is in talks to limit the export of certain chemicals 0:14:16.280 --> 0:14:19.760 that are important to chip production. I guess my question is, like, 0:14:20.520 --> 0:14:23.520 what is the ultimate goal here? Is it just to 0:14:23.920 --> 0:14:28.560 cut off chip production within China? Or is it to 0:14:28.880 --> 0:14:33.360 limit chip production in other countries that might be interested 0:14:33.800 --> 0:14:36.920 in developing it is the future goal that we just have, 0:14:37.680 --> 0:14:41.120 you know, a strategic industry of semiconductors that is concentrated 0:14:41.240 --> 0:14:45.920 in a few select Western countries. I'm being very careful 0:14:45.920 --> 0:14:48.400 not to use the word Western bloc, but that kind 0:14:48.400 --> 0:14:49.360 of feels like we're heading. 0:14:49.760 --> 0:14:53.400 Yeah, it's it's a pretty important question, Tracy. And so 0:14:53.840 --> 0:14:55.920 you know what I wonder about with something like the 0:14:55.960 --> 0:14:58.880 IRA with something like the Clean Tech Bill, is what 0:14:59.000 --> 0:15:02.400 exactly is the ultimate objective of the United States government. 0:15:02.840 --> 0:15:06.760 Is it to decarbonize as quickly as possible or is 0:15:06.800 --> 0:15:09.760 it to build out a clean tech supply chain in 0:15:10.080 --> 0:15:12.760 the US as quickly as possible, Because to some extent, 0:15:12.840 --> 0:15:16.120 these two are somewhat intention You know, China does have 0:15:16.240 --> 0:15:18.200 all the solar as well as. 0:15:18.160 --> 0:15:19.760 Quite a lot of the battery technologies. 0:15:20.040 --> 0:15:22.840 It would be much simpler to decarbonize if you just 0:15:22.880 --> 0:15:25.520 imported all of that. But that is, you know, totally 0:15:25.520 --> 0:15:28.480 not acceptable. You know in the present day now with 0:15:28.520 --> 0:15:31.360 respective chips, you know that is a little bit of 0:15:31.400 --> 0:15:35.600 a different story. But again, the targets here are not 0:15:35.960 --> 0:15:40.040 terribly clear. You have the National Security Advisor, Jake Sullivan 0:15:40.120 --> 0:15:43.760 say that, you know that it can't be enough for 0:15:43.800 --> 0:15:46.520 the United States to be just two generations ahead of 0:15:46.600 --> 0:15:50.400 China on semiconductors. You know, they really should be seeking 0:15:50.440 --> 0:15:53.160 some sort of an absolute advantage. This is someone else 0:15:53.160 --> 0:15:56.240 in the National Security Council, Tarun Chabra said, you know, 0:15:56.280 --> 0:16:01.160 we no longer want a comparative advantage against China's technology capabilities. 0:16:01.520 --> 0:16:04.360 The US really needs to have an absolute advantage now 0:16:04.400 --> 0:16:06.680 if you're removing comparative, you know, if you're in the 0:16:06.720 --> 0:16:09.440 realm of the absolute, then becomes quite a lot more 0:16:09.440 --> 0:16:11.960 difficult to figure out exactly the degree to which the 0:16:12.080 --> 0:16:14.000 US really needs to be a hid But you know, 0:16:14.040 --> 0:16:16.000 I think in general, what it seems like here is 0:16:16.040 --> 0:16:19.040 that the US really wants, you know, quite a lot 0:16:19.080 --> 0:16:22.120 of the most advanced stuff, a lot of the everything 0:16:22.120 --> 0:16:24.480 else as well, and it would be ideal if China did 0:16:24.520 --> 0:16:26.160 not get that much further out of here. 0:16:26.520 --> 0:16:28.800 So I want to go back to something where since 0:16:28.840 --> 0:16:32.080 there is some disagreement, get some debate going, and that 0:16:32.280 --> 0:16:36.880 is essentially about employment as a good thing per se. 0:16:37.120 --> 0:16:39.880 And I could see sort of your argument is like, look, 0:16:39.920 --> 0:16:43.080 if the goal is we want to have advanced chips here, 0:16:43.440 --> 0:16:45.200 then the goal should be we want to have advanced 0:16:45.240 --> 0:16:48.920 chips here, and the fact that it creates jobs jobs 0:16:48.960 --> 0:16:51.200 are good, but that is a secondary goal and we 0:16:51.240 --> 0:16:54.240 wouldn't want the job creation aspect to be a distraction 0:16:54.320 --> 0:16:55.800 from the advanced chip. 0:16:56.200 --> 0:16:57.840 To your point, however. 0:16:58.080 --> 0:17:00.880 There is this sort of like seems like slightly different take, 0:17:00.920 --> 0:17:03.119 which is that, no, we want to have an economy 0:17:03.200 --> 0:17:05.719 in which a lot of people are capable of working 0:17:05.800 --> 0:17:08.919 in complex heavy industry, and you don't get there if 0:17:08.920 --> 0:17:11.720 you don't start with employing more people in complex heavy 0:17:11.760 --> 0:17:14.520 industry and the training. I'm thinking about a recent conversation 0:17:14.600 --> 0:17:17.679 we had with Henry Williams and David Ox, like economic 0:17:17.760 --> 0:17:20.520 complexity is a really good thing and is part of 0:17:20.560 --> 0:17:22.760 what drives well. But maybe we could like explore this 0:17:22.760 --> 0:17:25.320 a little bit. Maybe start like, what are your concerns 0:17:25.520 --> 0:17:29.359 about the degree to which some of these secondary goals 0:17:29.400 --> 0:17:32.040 may undermine the main goal, and maybe like sort to 0:17:32.080 --> 0:17:34.760 hear both of your perspective on whether jobs per se 0:17:34.920 --> 0:17:35.520 is a good. 0:17:35.320 --> 0:17:36.080 Part of the ambition. 0:17:36.560 --> 0:17:40.280 Yeah, I mean, I think Dan acknowledges that we already 0:17:40.280 --> 0:17:44.159 are seeing the trade off between domestic employment and the 0:17:44.240 --> 0:17:47.439 main goal when it comes to clean energy, right, I mean, 0:17:47.480 --> 0:17:49.760 we could be importing more clean energy, we'd could be 0:17:49.760 --> 0:17:53.440 getting you know, cleaner, greener, faster, and we're not to 0:17:53.560 --> 0:17:58.119 preserve jobs. And the reality is the wage premium that 0:17:58.160 --> 0:18:01.560 a low skilled person earns and manufactured has declined massively 0:18:01.600 --> 0:18:04.080 over time. It's just not there anymore. These aren't great 0:18:04.200 --> 0:18:06.959 jobs anymore. It's just not the case. We don't have 0:18:07.000 --> 0:18:11.200 an economic interest in taking someone from services to manufacturing anymore. 0:18:11.760 --> 0:18:14.240 I think a lot of what we're seeing is a 0:18:14.680 --> 0:18:19.320 relic of ten to twenty years of a bad economy. 0:18:19.720 --> 0:18:22.920 Like I think, we had a long, long, great recession, 0:18:23.200 --> 0:18:25.800 and before that we had the China Shock. So it's 0:18:25.840 --> 0:18:29.200 been a long time since we've seen a legitimately good 0:18:29.280 --> 0:18:31.600 labor market, and I think people lost faith in that. 0:18:31.760 --> 0:18:36.040 They lost faith in basic macroeconomic policy's ability to generate 0:18:36.760 --> 0:18:39.480 decent wage growth for people with less than a college degree, 0:18:39.520 --> 0:18:42.120 and I think that's just misplaced. I think the fundamental 0:18:42.119 --> 0:18:46.480 mistake there is macro policy. I don't think it's industrial policy. 0:18:46.560 --> 0:18:50.520 I don't think the solution to a ten year recession 0:18:50.960 --> 0:18:52.920 is getting more people in manufacturing. 0:18:53.440 --> 0:18:55.040 And I think if we do that, we don't need 0:18:55.080 --> 0:18:55.480 to do that. 0:18:58.040 --> 0:19:00.520 Dan, you want to defend the idea of Jeff creation 0:19:00.800 --> 0:19:03.280 as part of industrial policy. 0:19:03.240 --> 0:19:06.200 Sure, well, you know, I think it's impossible to disagree 0:19:06.600 --> 0:19:09.159 with Adam that, you know, the wage premium here is 0:19:09.200 --> 0:19:11.840 not good in terms of a lot of manufacturing, and 0:19:11.880 --> 0:19:15.439 I think it is going to be pretty difficult to 0:19:15.640 --> 0:19:19.159 entice these workers who are working in semi inductors to 0:19:19.680 --> 0:19:22.800 you know, get out of you know, Silicon Valley, Bean bags, 0:19:23.160 --> 0:19:26.320 and then you know, go into these fab rooms where 0:19:26.520 --> 0:19:27.920 you know, if you ever go into one of them, 0:19:28.040 --> 0:19:31.920 they have a very strange light. It is yellowish purplish light. 0:19:32.080 --> 0:19:35.400 You're sitting there, you know, looking at you know, these 0:19:35.440 --> 0:19:39.920 transistors for eight hours a day. It is pretty strange work, 0:19:40.400 --> 0:19:42.600 you know, to try to do something like this where, yes, 0:19:42.680 --> 0:19:45.040 if you can you know, get into those bean bags, 0:19:45.520 --> 0:19:48.040 or you know, if you are able to just work 0:19:48.160 --> 0:19:51.840 as a let's say, in as a home healthcare worker, 0:19:52.000 --> 0:19:54.680 where your wages can be you know, just as high 0:19:54.720 --> 0:19:57.760 as working in these grueling factory jobs. You know, I 0:19:57.760 --> 0:20:00.040 think that is pretty difficult to entice a lot of 0:20:00.080 --> 0:20:03.400 people to take a look at the situation and say, well, 0:20:03.520 --> 0:20:06.560 let's do a lot more manufacturing. You know, I'm sitting 0:20:06.560 --> 0:20:09.800 at a law school now, I'm hardly turning wrenches all day, 0:20:09.880 --> 0:20:11.840 and so I want to be the first put up 0:20:11.880 --> 0:20:14.159 my hands and say, you know, this is you know, 0:20:14.359 --> 0:20:17.400 quite quite challenging for me to envision, you know, myself 0:20:17.600 --> 0:20:19.880 as doing something like that as well. But I think, 0:20:19.920 --> 0:20:22.040 you know, in general, what I would love to do 0:20:22.400 --> 0:20:26.760 is to you know, imbue manufacturing with a special sense 0:20:26.760 --> 0:20:30.200 of dignity. Let's imbue complexity with a special sense of 0:20:30.240 --> 0:20:33.400 economic dignity, and that you know that we should say 0:20:33.480 --> 0:20:37.480 that culturally in general, that we should you know, exalt manufacturing, 0:20:37.520 --> 0:20:40.520 that we should exalt economic complexity, that we should consult 0:20:40.640 --> 0:20:43.679 the types of technology that involve a lot more of 0:20:43.720 --> 0:20:46.320 this creation, because I think that is good for both 0:20:46.320 --> 0:20:48.280 the economy as well as for national security. 0:20:48.800 --> 0:20:52.000 So we managed to mention bullwhip effect and bean bag, 0:20:52.119 --> 0:20:54.240 so we just need to mention mint the coin and 0:20:54.240 --> 0:20:56.760 then we'll hit like all the traditional. 0:20:57.000 --> 0:20:59.840 Talking about you are to talk about his token. 0:21:00.520 --> 0:21:05.520 Yeah that's true. Yeah, okay, So just on this point, Dan, 0:21:05.600 --> 0:21:08.240 maybe you can explain. So one thing I've always wondered is, 0:21:08.400 --> 0:21:11.520 you know, we talk about US China rivalry when it 0:21:11.520 --> 0:21:15.480 comes to semiconductors, but China is far behind a lot 0:21:15.520 --> 0:21:19.040 of other countries when it comes to semiconductor technology, but 0:21:19.200 --> 0:21:22.440 it's doing pretty well, as you already mentioned with clean tech. 0:21:23.160 --> 0:21:27.720 What are the differences between those two industries as they 0:21:27.760 --> 0:21:32.040 relate to China's economy and social fabric Because I think 0:21:32.080 --> 0:21:34.359 that'll also give us some insight into whether or not 0:21:34.440 --> 0:21:38.320 this type of traditional quote unquote industrial policy will actually 0:21:38.320 --> 0:21:39.119 work in the US. 0:21:39.440 --> 0:21:42.640 Sure, So you know, maybe you know, we can think 0:21:42.640 --> 0:21:46.720 a little bit about where China is on most technology, 0:21:47.000 --> 0:21:49.399 and so if I can give a very quick snapshot 0:21:49.520 --> 0:21:53.040 of where China is on most of its technology endeavors, 0:21:53.720 --> 0:21:56.639 roping up clean tech as well as semiconductors, what I 0:21:56.680 --> 0:21:59.399 would say is that at this point, I think China 0:21:59.560 --> 0:22:05.240 is pretty competitive with the US in manufactured products outside 0:22:05.280 --> 0:22:09.240 of two big areas. The first is semiconductors, where China 0:22:09.400 --> 0:22:12.920 is has built pretty much the basics of competition in 0:22:13.480 --> 0:22:17.280 all of the you know, semiconductor production, but it is 0:22:17.640 --> 0:22:20.760 leading in absolutely nothing that it is at best ten 0:22:20.840 --> 0:22:23.920 years behind the market leaders here. China is also really 0:22:23.960 --> 0:22:27.600 weak in something like aviation, so you know, in terms 0:22:27.600 --> 0:22:30.560 of China's answer to airbuts and bowing, it is really 0:22:30.600 --> 0:22:34.400 really far behind. But outside of these two big areas, 0:22:34.680 --> 0:22:38.960 again in manufactured technologies only, I would say that China 0:22:39.000 --> 0:22:42.040 has broadly caught up to you know, the West red 0:22:42.119 --> 0:22:46.000 large on most manufactured products. It is leading the US 0:22:46.040 --> 0:22:48.240 and Europe in most of clean tech, by which I 0:22:48.320 --> 0:22:52.960 mean solar wind batteries as well as hydrogen electrializers, and 0:22:53.040 --> 0:22:55.120 it is you know, leading and all sorts of these 0:22:55.160 --> 0:22:59.760 boring industrial products you know, things like hydraulic pumps, which 0:22:59.760 --> 0:23:02.919 would never grace the headlines of you know, fine papers 0:23:02.920 --> 0:23:03.520 like Bloomberg. 0:23:04.320 --> 0:23:07.320 But the Hydraulic Pumps Act isn't coming anytime. 0:23:07.040 --> 0:23:10.240 Soon, No, but we definitely need something like that. But 0:23:10.320 --> 0:23:13.040 China is you know, leading in all of these broad 0:23:13.080 --> 0:23:15.760 manufactured products. Where I think, you know, it is a 0:23:15.760 --> 0:23:18.440 weak relative to the US is that I think that 0:23:18.800 --> 0:23:23.440 any scientific area, any technology sector that involves the complex 0:23:23.480 --> 0:23:27.440 integration of different you know, scientific disciplines, China tends to 0:23:27.440 --> 0:23:31.000 be pretty weak. So in semiconductors that involves the integration 0:23:31.160 --> 0:23:37.399 of chemistry, electrical engineering, computer science, aviation involves the integration 0:23:37.560 --> 0:23:43.080 of material science, aerodynamics, many other things. This is something 0:23:43.119 --> 0:23:46.080 where the US is still really really strong at you know, 0:23:46.119 --> 0:23:49.439 building these vance manufacturing products. Where the US tends to 0:23:49.480 --> 0:23:52.280 be weak is where the science is pretty mature. But 0:23:52.400 --> 0:23:56.439 all of the execution risk lies with manufacturing. So you know, 0:23:56.560 --> 0:24:00.600 in anything that the manufacturing operation is pretty complex. If 0:24:00.640 --> 0:24:03.440 I'm thinking about something like putting together a battery cell, 0:24:03.720 --> 0:24:06.960 involves about a dozen different steps, everything from cell filling 0:24:07.000 --> 0:24:09.879 into final ceiling. All of these demand you know, perfect 0:24:09.960 --> 0:24:13.000 handoff between each one of these steps. And this is 0:24:13.000 --> 0:24:15.840 where the Chinese are really really strong that they learn 0:24:15.920 --> 0:24:19.880 from building iPhones, building complex electronics. They're just really good 0:24:19.960 --> 0:24:23.399 at building products high intricacy at high volume. And so 0:24:23.520 --> 0:24:25.600 this is where I would love to see the US 0:24:25.600 --> 0:24:28.199 become a little bit better at this more volume production. 0:24:29.080 --> 0:24:30.080 And I want to go back. 0:24:30.000 --> 0:24:32.360 To something you said, which I think is like really key, 0:24:32.440 --> 0:24:35.360 which is that you know, perhaps some of the US, 0:24:36.000 --> 0:24:39.440 the diagnoses of the US, we forget that we had 0:24:39.520 --> 0:24:43.359 really many years of slack labor markets, poor demand, maybe 0:24:43.480 --> 0:24:46.919 ten plus years, and weak economic growth going back to 0:24:47.000 --> 0:24:50.440 like glob before the economic crisis, the two thousand and 0:24:50.440 --> 0:24:52.679 eight two thousand and nine crisis. One thing that strains 0:24:52.720 --> 0:24:55.120 me now that I've been trying to think about is, Okay, 0:24:55.160 --> 0:24:57.359 we're in this like tightening cycle with the FED, et cetera, 0:24:57.560 --> 0:24:59.760 but there's still a lot of money coming, you know, 0:25:00.000 --> 0:25:02.639 by multiplier money. It seems like building all these factories, 0:25:02.760 --> 0:25:07.000 batteries chipped, et cetera. Do you see are you, like 0:25:07.119 --> 0:25:10.600 to what extent looking from a macro lens, do you 0:25:10.680 --> 0:25:14.080 see some of this investment allowing the US to maintain 0:25:14.560 --> 0:25:18.840 robust job growth, strong economic activity, and strong wages, et cetera. 0:25:19.600 --> 0:25:21.879 Even as a you know, it's sort of like helping 0:25:21.960 --> 0:25:24.320 us avoid going right back into the gold slump. 0:25:24.960 --> 0:25:28.000 Yeah, I mean, I think ongoing capital investments great. It's 0:25:28.400 --> 0:25:31.080 nice to see that the interest rates haven't fully shut 0:25:31.119 --> 0:25:33.560 that down. And I think that that's you know, sort 0:25:33.560 --> 0:25:35.240 of the risks that we're playing with right now. 0:25:35.520 --> 0:25:38.199 I think all eyes should be on growing GDP. 0:25:38.320 --> 0:25:41.080 How do we increase GDP, how do we do more 0:25:41.119 --> 0:25:43.000 because the reality is we have had we've had tight 0:25:43.080 --> 0:25:46.800 labor markets over the last two years, but a substantial 0:25:46.840 --> 0:25:50.199 part of that has been reduced labor supply and so 0:25:50.600 --> 0:25:53.200 and also just the speed at which things moved, right. 0:25:53.240 --> 0:25:56.560 So I think that looking forward the next five to 0:25:56.640 --> 0:25:58.800 ten years, I think when we think about how many 0:25:58.800 --> 0:26:00.439 people are working, we can do better. 0:26:00.760 --> 0:26:02.280 The labor market can do better. 0:26:02.680 --> 0:26:05.280 And so we shouldn't look at the amount of people 0:26:05.359 --> 0:26:07.400 working down and say, oh, we hit the. 0:26:07.400 --> 0:26:09.280 Lab that's the capacity, it's over. 0:26:09.680 --> 0:26:11.919 It's really a lot of things happening that you know, 0:26:12.400 --> 0:26:15.200 short term neighbor was a lot realer than it ever 0:26:15.240 --> 0:26:17.520 has been, and so I think we should think about 0:26:17.920 --> 0:26:21.679 capital investment growth and higher employment. All is you know, 0:26:21.840 --> 0:26:23.520 that's the next five to ten years that's what we 0:26:23.520 --> 0:26:24.320 should be aiming for. 0:26:24.880 --> 0:26:27.240 So just on this note, though, is there a risk 0:26:27.600 --> 0:26:32.720 that we're front loading capex or pulling forward too much 0:26:33.320 --> 0:26:37.240 investment at a time when the economy is arguably running 0:26:37.440 --> 0:26:41.040 hot and at the risk of not having Oh god, 0:26:41.080 --> 0:26:44.119 I'm about to veer into MMT territory. But at the 0:26:44.240 --> 0:26:44.760 risk of. 0:26:44.920 --> 0:26:46.920 The water's warm, water is warm. 0:26:47.640 --> 0:26:50.200 When the economy is slowing, maybe we won't have that 0:26:50.440 --> 0:26:54.200 fiscal policy or investment lever to pull. 0:26:55.520 --> 0:26:59.760 I think the economy is confusing right now and the 0:26:59.800 --> 0:27:04.439 rezillions of spending, the resilience of durable goods spending, and 0:27:04.560 --> 0:27:06.280 I wouldn't be surprised that there are a lot of 0:27:06.560 --> 0:27:09.800 factory owners and a lot of you know, manufacturers across 0:27:09.840 --> 0:27:11.320 the country who don't know. 0:27:11.359 --> 0:27:14.000 Yet what the permanent trajectory looks like. 0:27:14.240 --> 0:27:17.399 And so given that there's uncertainty, there's I think, you know, 0:27:17.440 --> 0:27:20.560 it would be surprising if there weren't people building factories 0:27:20.560 --> 0:27:21.040 that it's going to. 0:27:21.080 --> 0:27:22.120 Turn out that they don't need. 0:27:22.240 --> 0:27:25.119 You just hope that the economy has enough strength to 0:27:25.160 --> 0:27:28.919 sort of reabsorb that stuff as companies do realize some 0:27:29.000 --> 0:27:30.480 of that malinvestment. 0:27:30.520 --> 0:27:32.240 To put my Austrian at on. 0:27:33.000 --> 0:27:35.800 DAN going back to actually some of the national security 0:27:35.880 --> 0:27:38.919 questions like is there a level which the US can 0:27:38.960 --> 0:27:39.680 feel comfortable? 0:27:39.720 --> 0:27:41.800 And so it's in terms of like, okay, we have 0:27:41.920 --> 0:27:42.440 hit enough. 0:27:42.840 --> 0:27:44.720 Is there any may even like knowing or like being 0:27:44.760 --> 0:27:49.080 able to quantify excuse me, level like okay, the factories 0:27:49.080 --> 0:27:53.280 are up and running. Yes, probably the majority of manufacturing 0:27:53.400 --> 0:27:56.520 is going to be in Taiwan or China or elsewhere 0:27:56.560 --> 0:27:59.159 in Asia. But it's like we're good here, like we 0:27:59.240 --> 0:28:01.960 actually did. Is like do you do you have any 0:28:02.000 --> 0:28:04.399 sort of analytical way of like figuring out what that 0:28:04.520 --> 0:28:05.000 number is? 0:28:05.560 --> 0:28:08.399 I think that is pretty difficult to say if I 0:28:08.520 --> 0:28:11.000 had to come up with my own tests. It is 0:28:11.040 --> 0:28:14.840 that you know that the United States regularly runs into 0:28:15.040 --> 0:28:18.720 problems of oversupply of a lot of these things rather 0:28:18.800 --> 0:28:22.760 than under supply and having you know, basically these spiraling 0:28:22.800 --> 0:28:27.119 cost curves chasing after fewer and fewer goods that you 0:28:27.119 --> 0:28:29.000 know at least you know. Again, it is hard to 0:28:29.000 --> 0:28:32.480 say what the US national government declares to be national security. 0:28:33.080 --> 0:28:34.520 But you know what I would say is you know 0:28:34.640 --> 0:28:37.480 that you know if from I think hopefully that the 0:28:37.520 --> 0:28:40.040 folks that econ Twitter can agree on is you know 0:28:40.080 --> 0:28:41.880 something like, you know, to bring down. 0:28:41.720 --> 0:28:45.080 The cost curve for infrastructure that you know it is. 0:28:45.240 --> 0:28:48.360 It's still kind of mind blowing that these subway extension 0:28:48.400 --> 0:28:51.400 lines in New York City costs about ten times more 0:28:51.520 --> 0:28:55.920 than in you know, European countries. That it becomes you know, 0:28:55.960 --> 0:28:59.600 super difficult to build these upsolar farms, to build these 0:28:59.640 --> 0:29:03.680 sorts of transmission grids. I never knew what an obscene 0:29:03.680 --> 0:29:07.480 four letter word NEPA was until the folks at IFP 0:29:08.120 --> 0:29:13.080 told me so that Neepa, CEQA, it's close cousin just 0:29:13.160 --> 0:29:17.239 really block all sorts of development in the US, and 0:29:17.280 --> 0:29:19.360 that you know, if we don't have, you know, some 0:29:19.400 --> 0:29:23.040 sort of a robust system to save automakers from their mistakes. 0:29:23.240 --> 0:29:26.080 Although these automakers make you know, probably too many mistakes 0:29:26.280 --> 0:29:28.600 to to really try to save them from. But you know, 0:29:28.720 --> 0:29:30.520 unless you know, you are able to, you know, have 0:29:30.640 --> 0:29:33.760 this sort of you know, robustness bring down these cost curves. 0:29:33.800 --> 0:29:38.320 Have regular problems of oversupply rather than persistent undersupply where 0:29:38.480 --> 0:29:41.320 you know, prices just keep rising to chase after these 0:29:41.320 --> 0:29:44.320 goods where it's not at all clear where one hundred 0:29:44.360 --> 0:29:47.000 million dollars in the New York public school system goes, 0:29:47.200 --> 0:29:49.280 It's not very clear where you know, tens of billions, 0:29:49.400 --> 0:29:52.560 hundreds of billions of dollars of infrastructure investment goes. Then 0:29:52.720 --> 0:29:54.200 I think we can be a little bit more at 0:29:54.200 --> 0:29:57.000 ease and thinking about having a robust economic. 0:29:56.640 --> 0:29:59.160 System just on this point. I mean, there is a 0:29:59.200 --> 0:30:01.760 perception out there that when it comes to China, it's 0:30:01.800 --> 0:30:04.840 a command economy, and you know, Shei Shimpin can wake 0:30:04.920 --> 0:30:06.640 up up one day and say we're going to make 0:30:06.720 --> 0:30:13.000 semiconductors a strategically important industry. But actually the way that 0:30:13.280 --> 0:30:16.560 happens it usually isn't a bunch of money thrown at 0:30:16.600 --> 0:30:18.880 that problem. It's sort of a wink and a nod 0:30:19.040 --> 0:30:21.840 to the banks and the credit providers, like, hey, you 0:30:21.840 --> 0:30:24.959 should lend these guys some more money at cheap rates. 0:30:25.640 --> 0:30:26.120 I guess my. 0:30:26.160 --> 0:30:29.440 Question is what kind of policy response would we expect 0:30:29.440 --> 0:30:31.360 to see from China on this front, and would they 0:30:31.440 --> 0:30:35.160 start to tweak their own way, their own version of 0:30:35.160 --> 0:30:37.840 industrial policy in response to what the West is doing. 0:30:38.320 --> 0:30:41.880 Yeah, I tend to think that, you know, China is 0:30:42.520 --> 0:30:46.800 mostly pretty focused on building all of these capacity without 0:30:46.880 --> 0:30:50.440 thinking too much about these other competitive forces. You know, 0:30:50.520 --> 0:30:53.240 that creates a lot of these problems. You know, it 0:30:53.440 --> 0:30:56.840 creates these usual issues of oversupply. But I think the 0:30:56.960 --> 0:31:00.280 Chinese is you know, mostly thinking about its own pernal 0:31:00.360 --> 0:31:03.040 system rather than you know, trying to figure out how 0:31:03.040 --> 0:31:05.320 to you know, make the rest of the world more happy. 0:31:05.560 --> 0:31:08.880 So when the Chinese decide that you know, semiconductors are 0:31:09.000 --> 0:31:12.520 a critical technology, where that solar is a critical technology, 0:31:12.600 --> 0:31:15.760 as you say, the central government would do something like 0:31:15.880 --> 0:31:19.640 name solar a strategic emerging industry, as the State Council 0:31:19.840 --> 0:31:22.959 did in twenty ten, it would trigger you know, a 0:31:23.040 --> 0:31:27.160 vast cascade of subsidies which lead to business creation. 0:31:27.600 --> 0:31:30.320 It encourages the local governments to. 0:31:30.680 --> 0:31:34.520 Give free land to favorite industries, have the banks lend 0:31:34.560 --> 0:31:38.720 at very cheap rates, sometimes these you know, direct grants. 0:31:39.200 --> 0:31:41.880 But you know, in general, what the Chinese tend to 0:31:41.920 --> 0:31:45.360 do is to you know, have oversupply. They don't they 0:31:45.400 --> 0:31:48.080 have no ability to stop themselves from building. And I think, 0:31:48.120 --> 0:31:50.040 you know, if I had to choose, I would you know, 0:31:50.120 --> 0:31:54.160 rather choose that set of economic problems that that was 0:31:54.400 --> 0:31:57.400 the trigger that has made it so that China builds 0:31:57.840 --> 0:32:01.680 basically as much renewable structure every year as the rest 0:32:01.680 --> 0:32:04.800 of the world combined that these Chinese local governments cannot 0:32:04.840 --> 0:32:08.680 stop themselves from building more you know favorite industries in 0:32:09.080 --> 0:32:12.440 something like solar or wind farms, that what they really 0:32:12.480 --> 0:32:13.120 try to do. 0:32:13.440 --> 0:32:16.320 Is to you know, they can't stop themselvesselves from building. 0:32:16.800 --> 0:32:19.640 They build, and they build even when there is no interconnection, 0:32:19.720 --> 0:32:23.160 when these farms aren't really connected to the grid. They build, 0:32:23.440 --> 0:32:26.720 you know, hydroelectric dams that displace millions of people. They 0:32:26.720 --> 0:32:29.440 build even when the central government tells them to stop building, 0:32:29.800 --> 0:32:32.800 because you know, it just wants this sort of capacity 0:32:32.920 --> 0:32:35.520 and employment out there, and that is just you know, 0:32:35.560 --> 0:32:37.440 that's what the US is kind of up against. And 0:32:37.480 --> 0:32:39.560 I wonder, you know, how these two systems can be 0:32:39.600 --> 0:32:40.160 more adaptive. 0:32:40.240 --> 0:32:42.240 Well this I want that feeds into. 0:32:42.440 --> 0:32:44.400 So it really does feel like we have the opposite 0:32:44.400 --> 0:32:47.560 problem where people are always writing substack posts about how 0:32:47.640 --> 0:32:49.920 terrible we are at building things, and then you have 0:32:50.000 --> 0:32:52.800 Dan Turk about no, they literally can't stop the building 0:32:52.960 --> 0:32:54.520 even when they say. 0:32:54.320 --> 0:32:55.160 Stop the building. 0:32:55.680 --> 0:32:57.920 Is it really as simple as like, oh, there's some 0:32:58.040 --> 0:32:59.960 laws from the Carter era that we have to get 0:33:00.080 --> 0:33:02.480 rid of it. Then suddenly we could like build some 0:33:02.600 --> 0:33:04.840 way and rail as fast as they do in. 0:33:04.920 --> 0:33:06.840 Europe and Asia, Like what do you like. 0:33:07.240 --> 0:33:08.000 Just sitting asunde? 0:33:08.040 --> 0:33:10.640 Like I said, like, how do we get to do to. 0:33:10.720 --> 0:33:12.880 Get the US building again? How do you like rank 0:33:12.960 --> 0:33:14.440 the priorities. 0:33:13.880 --> 0:33:14.640 Or get good at that? 0:33:15.560 --> 0:33:15.800 Uh? 0:33:15.880 --> 0:33:18.160 Yeah, I mean I think there are important laws to change, 0:33:18.160 --> 0:33:21.000 But I think what we have to understand is that 0:33:21.520 --> 0:33:22.040 a lot. 0:33:21.880 --> 0:33:25.160 Of the blockers, Like why are those laws there? Right? 0:33:25.200 --> 0:33:28.120 Like we can't just like erase them and say they 0:33:28.120 --> 0:33:30.600 should be going to be gone. A lot of the 0:33:30.960 --> 0:33:34.520 blockers to lower cost are there because someone wants them 0:33:34.560 --> 0:33:37.680 to be there. Sure, and because we don't have enough 0:33:38.200 --> 0:33:42.280 you know, bipartisan't cross ideological. 0:33:41.640 --> 0:33:43.480 Agreement that these things should go. 0:33:44.240 --> 0:33:45.440 You know what I mean, all we have to do 0:33:45.560 --> 0:33:48.200 is get enough people to agree that buy America is 0:33:48.240 --> 0:33:50.000 a problem, and then we can get rid of by 0:33:50.040 --> 0:33:54.840 American provisions. But like this is the law of the problem, Yes, 0:33:54.880 --> 0:33:57.920 to an extent. But the problem is, for whatever reason, 0:33:58.240 --> 0:34:00.960 we can't overcome the force that push for now. 0:34:00.960 --> 0:34:03.320 But there's also like I mean, buy America I presume 0:34:03.480 --> 0:34:06.520 is not why forever with the Second Avenue subway which 0:34:06.520 --> 0:34:08.600 I don't know, I think it exists or maybe it 0:34:08.600 --> 0:34:12.360 has a few stops, And why there are like large 0:34:12.360 --> 0:34:15.040 swaths of the country where they can't put a electrical 0:34:15.200 --> 0:34:17.120 wires and stuff like that. There seem to be like 0:34:17.320 --> 0:34:18.120 that seems like. 0:34:18.040 --> 0:34:20.360 There's more sure, there's a lot of there's a lot 0:34:20.400 --> 0:34:22.640 of problems, and behind most of those problems there's some 0:34:22.680 --> 0:34:25.359 party pushing for them. And I would argue that what 0:34:25.400 --> 0:34:29.040 we need is more ideological alignment among the people who 0:34:29.080 --> 0:34:31.040 wish to push back against those things. 0:34:31.239 --> 0:34:33.719 You know, like NEPA is a huge issue. 0:34:33.600 --> 0:34:36.560 Right, but like it exists for reason, it's defended for 0:34:36.600 --> 0:34:40.200 a reason. There are people who sue using NEPA because 0:34:40.280 --> 0:34:43.200 you know, that's that they want those outcomes, and so 0:34:43.719 --> 0:34:44.200 we need. 0:34:44.080 --> 0:34:45.320 To have more agreement. 0:34:45.760 --> 0:34:48.640 Here are the set of problems and sort of work 0:34:48.640 --> 0:34:51.680 in a bipartisan way to push behind them. And you 0:34:51.719 --> 0:34:55.799 have to be realistic about people are on the other 0:34:55.880 --> 0:34:58.880 side of the table of the everything bagel problem. 0:34:58.960 --> 0:35:02.440 And they that's who we're up against if we're going 0:35:02.480 --> 0:35:02.920 to get rid of it. 0:35:19.480 --> 0:35:21.799 Just going back to the beginning of this conversation when 0:35:21.840 --> 0:35:25.200 we were talking about the goals of the Chips Act 0:35:25.360 --> 0:35:28.239 and the IRA as well, it does feel like there 0:35:28.360 --> 0:35:33.399 is a tension between a recognition that these are strategically 0:35:33.440 --> 0:35:36.879 important things for the US, whether they're semiconductors or clean 0:35:37.000 --> 0:35:41.320 energy tech, and then the ability to actually scale these 0:35:41.960 --> 0:35:44.880 and sell them in a way that is appealing to 0:35:45.400 --> 0:35:51.160 American people and corporations. Is that tension insurmountable. I'd like 0:35:51.200 --> 0:35:52.840 to hear from both of you on this point. 0:35:56.040 --> 0:36:01.080 I think it is probably going to be a pretty 0:36:01.120 --> 0:36:04.560 serious tension, and I think that the US government has 0:36:04.600 --> 0:36:08.080 to work through, you know, all these sorts of tensions. 0:36:08.400 --> 0:36:12.120 Some of these things will be resolved through the executive process. 0:36:12.280 --> 0:36:14.480 So if I think about something like, you know, the 0:36:14.600 --> 0:36:18.520 Treasury Department will give guidance on which electric vehicles are 0:36:18.560 --> 0:36:21.320 actually subject to the full seventy five hundred dollars in 0:36:21.360 --> 0:36:24.719 subsidies from the IRA and so it has to threat 0:36:24.760 --> 0:36:27.319 these needles. If it is, you know, a little bit 0:36:27.320 --> 0:36:32.240 too tight, then you know, the electric vehicle industry uptake 0:36:32.239 --> 0:36:34.600 will be pretty slow because most of these batteries are 0:36:34.680 --> 0:36:38.399 used with minerals process in China. On the other hand, 0:36:38.440 --> 0:36:40.160 if it is you know, if it is too strict, 0:36:40.200 --> 0:36:42.680 then no one will buy electric vehicles. If it is 0:36:43.040 --> 0:36:45.759 not strict enough, then none of these automakers feel that 0:36:45.800 --> 0:36:48.320 they have to, you know, get rid of their China 0:36:48.320 --> 0:36:51.359 dependence on all of these batteries. And so these are 0:36:51.400 --> 0:36:54.080 basically a lot of these tensions that I think are 0:36:54.680 --> 0:36:56.920 going to be pretty difficult to try to solve. 0:36:57.600 --> 0:37:01.399 Adam, I think there's a couple of facts that didn't 0:37:01.440 --> 0:37:05.400 matter here. One is that we have a huge cost gap, 0:37:05.760 --> 0:37:09.080 especially when it comes to advanced semiconductor production. You TSMC 0:37:09.200 --> 0:37:12.320 says it's forty to fifty percent, so it's too expensive 0:37:12.320 --> 0:37:14.960 to start. We used to make it here and we 0:37:15.000 --> 0:37:17.960 don't anymore, and that's for a reason. And the reason 0:37:18.040 --> 0:37:20.839 is because of costs, and you know, it made more 0:37:20.880 --> 0:37:22.920 sense to make it in other countries. So you have 0:37:22.960 --> 0:37:24.759 to be laser focused on those costs. Because of the 0:37:24.760 --> 0:37:27.719 third reason, which is this is a globally competitive industry. 0:37:28.160 --> 0:37:32.000 It's ruthless, and you have to be focused on costs 0:37:32.000 --> 0:37:34.920 and you have to be focused on prices, and policy 0:37:34.960 --> 0:37:38.160 should reflect that. And if policy doesn't reflect that, I 0:37:38.160 --> 0:37:39.160 think that's a problem. 0:37:39.320 --> 0:37:41.799 If I can amplify that point a little bit, that 0:37:42.280 --> 0:37:44.000 you know, I think that you know, what is really 0:37:44.000 --> 0:37:47.400 strange when it comes to something like clean tech in 0:37:47.680 --> 0:37:50.759 the United States is that I think the US is 0:37:50.760 --> 0:37:53.600 in a very strange position where it is trying to 0:37:53.640 --> 0:37:57.000 engage in technological catch up with a lower wage competitor, 0:37:57.080 --> 0:38:01.440 which is China. That China makes you know, solar photovotaic 0:38:01.520 --> 0:38:04.720 panels that are both cheaper as well as more efficient. 0:38:04.600 --> 0:38:05.240 Than the US. 0:38:05.800 --> 0:38:08.320 And uh, you know, often the same goes for batteries, 0:38:08.520 --> 0:38:10.239 and so you know, usually one of these things is 0:38:10.280 --> 0:38:13.040 not true that you know, you are either technologically ahead 0:38:13.320 --> 0:38:15.920 or you are cheaper. But the US really has a 0:38:15.960 --> 0:38:17.720 hard time here, which is why I want to echo 0:38:17.960 --> 0:38:20.480 Adam's point that you really have to focus on bringing 0:38:20.480 --> 0:38:23.600 down this cost card. The other, you know, slightly novel 0:38:23.680 --> 0:38:28.560 thing is that you know, China developed technologically by embracing 0:38:28.920 --> 0:38:33.319 a lot of foreign investment into China. These involved you know, 0:38:33.440 --> 0:38:38.240 Apple through Fox Con building enormous electronics factories in China. 0:38:38.640 --> 0:38:44.400 Tesla has a wholly owned factory in Shanghai that you know, Intel, Dell, whatever. 0:38:44.719 --> 0:38:48.360 All of these American technology giants invested a lot in China, 0:38:48.440 --> 0:38:52.240 and then Beijing was extremely welcoming into in their investment 0:38:52.440 --> 0:38:55.560 and has not you know, retaliated against them throughout the 0:38:55.600 --> 0:38:59.279 many years of President Trump's trade war. By contrast, the 0:38:59.400 --> 0:39:03.880 US has been pretty hostile towards attracting investment from you know, 0:39:03.920 --> 0:39:06.400 what is the technology leader in a lot of these spaces, 0:39:06.560 --> 0:39:09.840 China when it comes to solar and batteries especially, and 0:39:09.920 --> 0:39:13.040 so it is pretty hostile towards Chinese battery makers from 0:39:13.080 --> 0:39:15.799 setting up in Virginia sometimes, you. 0:39:15.800 --> 0:39:17.320 Know, including in Michigan. 0:39:17.560 --> 0:39:19.399 And so I think, you know, the US is making 0:39:19.400 --> 0:39:21.960 this beat that it is going to be able to 0:39:22.120 --> 0:39:25.280 be okay in something like batteries by you know, mostly 0:39:25.320 --> 0:39:26.920 working with allies. 0:39:26.520 --> 0:39:28.320 In Japan as well as South Korea. 0:39:28.360 --> 0:39:31.040 And perhaps that is all very fine, but I would 0:39:31.040 --> 0:39:33.399 also encourage it not to be you know, boxing with 0:39:33.680 --> 0:39:36.479 one hand TIEDUS behind. It's back to be a little 0:39:36.480 --> 0:39:38.359 bit more like China and then trying to get as 0:39:38.440 --> 0:39:42.280 much investment as possible solve mitigate these national security problems 0:39:42.280 --> 0:39:44.560 where they exist, but don't really you know, reject for 0:39:44.600 --> 0:39:46.439 an investment from the technology leader. 0:39:46.880 --> 0:39:50.000 So going back to Chips specifically mentioned at the top, 0:39:50.160 --> 0:39:53.240 Tracy and I recently interview two of the top people 0:39:53.520 --> 0:39:57.080 at running the Chips actor, you guys, and it's totally 0:39:57.239 --> 0:40:00.719 sloop timing because like a week before that, colleagues on 0:40:00.760 --> 0:40:05.040 the Bloomberg opinion side, who are like you know, separate wallas, 0:40:05.080 --> 0:40:07.839 like they totally savaged the state of the Chips Act, 0:40:07.840 --> 0:40:09.600 and like, you know a lot of these amputations like 0:40:09.600 --> 0:40:12.560 oh this should becoming like this like progressive Christmas tree 0:40:12.719 --> 0:40:18.520 of like environmental concerns and child child care, et cetera. 0:40:18.680 --> 0:40:22.120 Like outside of like what you see, you know is 0:40:22.120 --> 0:40:25.080 there's sort of like the tensions goals of like create 0:40:25.160 --> 0:40:28.560 jobs versus creat events, sermon conductors. How concerned are you 0:40:28.600 --> 0:40:31.600 about some of these other elements or like how overblown 0:40:31.680 --> 0:40:33.279 or where do you stand on some of the other 0:40:33.360 --> 0:40:36.400 priorities that some are saying or seeping into. 0:40:36.239 --> 0:40:36.960 The Chips Act. 0:40:37.680 --> 0:40:39.600 Yeah, I mean I think one hundred percent that there 0:40:39.640 --> 0:40:41.760 are other priorities that are just direct. 0:40:41.760 --> 0:40:44.040 They're just going to raise costs, like that's what they do. 0:40:44.280 --> 0:40:47.880 Like there's no world in which forcing project labor agreements 0:40:48.080 --> 0:40:50.400 on in the construction of these fabs does the raise costs. 0:40:50.920 --> 0:40:52.840 And you have to acknowledge that that's the problem. You 0:40:52.880 --> 0:40:55.200 got to be realistic about that. So I think that 0:40:55.239 --> 0:40:58.240 they are absolutely intention I want to be too handed 0:40:58.239 --> 0:41:00.279 economists here, and that there's a lot of stuff that 0:41:00.320 --> 0:41:02.879 they that they are doing and saying that I think 0:41:03.000 --> 0:41:07.440 is good there's a there's a recognition, you know, from 0:41:07.480 --> 0:41:11.440 the administration that we are going to need to nest 0:41:11.520 --> 0:41:15.960 semiconductive production within globalization. And there's a realism there and 0:41:16.000 --> 0:41:18.759 a desire to work with allies on this that I 0:41:18.760 --> 0:41:21.000 think is missing from a lot of the other discussion 0:41:21.040 --> 0:41:23.200 around this. So we're not going to make it all 0:41:23.600 --> 0:41:27.400 and globalization is not the enemy here. Globalization is a 0:41:27.480 --> 0:41:31.040 key factor in why Moore's Law has continued over time. 0:41:31.160 --> 0:41:33.680 If we didn't have globalization, More's Law would have been 0:41:33.680 --> 0:41:36.520 dead a long time ago. And so you cannot run 0:41:36.560 --> 0:41:39.320 away from globalization when it comes to semiconductive production. So 0:41:39.360 --> 0:41:40.799 I do want to say that I do think the 0:41:40.800 --> 0:41:43.359 administration has been good on that. It's the other things. 0:41:43.360 --> 0:41:45.600 It's the Christmas tree stuff that I think is a problem. 0:41:46.200 --> 0:41:48.480 On the other hand, everything bagels are delicious. 0:41:49.200 --> 0:41:53.280 I don't order playing bagels myself, and Christmas trees are beautiful. 0:41:53.680 --> 0:41:56.680 I agree without him that, you know, it is really 0:41:56.760 --> 0:42:00.759 difficult to try to make everything here at home. But 0:42:00.960 --> 0:42:04.719 you know, I wonder at what extent that these childcare provisions, 0:42:04.719 --> 0:42:09.200 that these other labor provisions are really you know, going 0:42:09.200 --> 0:42:12.960 to be mostly inconveniences that these companies are going to 0:42:13.000 --> 0:42:15.600 be able to write off that, you know, or whether 0:42:15.600 --> 0:42:18.279 they actually are critical, you know, if they actually are 0:42:18.320 --> 0:42:21.080 crippling may be a little bit too early to tell. 0:42:21.560 --> 0:42:23.960 But I agree with that, and certainly it is pretty difficult, 0:42:24.000 --> 0:42:25.560 which is why I go back to the test I 0:42:25.600 --> 0:42:28.080 laid out at the beginning. We are seeing as already 0:42:28.160 --> 0:42:31.279 huge amounts of investments in the US, but you know, 0:42:31.400 --> 0:42:33.279 is it going to be invested in most of the 0:42:33.360 --> 0:42:35.960 right things? And you know, is there going to be 0:42:36.000 --> 0:42:38.600 some way to you know, have the Is the US 0:42:38.719 --> 0:42:41.520 going to be able to say that these economics are 0:42:41.600 --> 0:42:44.480 going to be pretty self sustaining over the longer run. 0:42:45.160 --> 0:42:48.000 So I just have one last question, sort of a 0:42:48.040 --> 0:42:52.560 classic interview question, which is in ten years time or 0:42:53.280 --> 0:42:54.960 I don't even know if ten years is long enough 0:42:54.960 --> 0:42:58.640 because we're talking about technologies with very very long lead times. 0:42:58.680 --> 0:43:01.520 But okay, so I guess I have two questions. One, 0:43:02.160 --> 0:43:04.920 what time frame do you think is reasonable to judge 0:43:04.920 --> 0:43:05.480 the success? 0:43:05.680 --> 0:43:06.280 Ser verdict? 0:43:06.560 --> 0:43:07.080 Yeah? 0:43:07.120 --> 0:43:09.560 And then two, what are you looking out for? Is 0:43:09.560 --> 0:43:12.800 there something specific where you would wake up in twenty 0:43:12.880 --> 0:43:15.600 or thirty or fifty years time hopefully we're all still 0:43:15.640 --> 0:43:18.920 around and say this has either been a massive success 0:43:19.160 --> 0:43:21.200 or a desperate failure. 0:43:22.239 --> 0:43:25.560 I look forward to getting back into this bowling alley 0:43:25.680 --> 0:43:30.240 in ten years, one decade from now, and decades perfect yes, 0:43:30.640 --> 0:43:34.919 or perhaps many decades. And you know, thinking about where 0:43:34.960 --> 0:43:39.520 we are that you know, ten years is not very 0:43:39.560 --> 0:43:45.000 long of a time, as you say, Tracy, technologically, politically 0:43:45.040 --> 0:43:47.640 that also tends to be not too long of a time. 0:43:48.200 --> 0:43:49.040 For the Chinese. 0:43:49.160 --> 0:43:51.600 That is only two turns of the five year plan, 0:43:51.960 --> 0:43:54.480 and so I think they judge things on a slightly 0:43:54.520 --> 0:43:55.480 longer timescale. 0:43:55.560 --> 0:43:58.279 Let's give it at least three five year plan cycles. 0:43:58.719 --> 0:44:01.160 What I slightly worry about is that, you know, there 0:44:01.320 --> 0:44:04.280 is quite a lot of investment in things like solar 0:44:04.320 --> 0:44:08.200 and batteries and also in semiconductors in the US today. 0:44:08.800 --> 0:44:11.160 What I worry about is that, you know, somehow the 0:44:11.520 --> 0:44:16.400 TSMC facility in Arizona turns a little bit more like 0:44:16.440 --> 0:44:19.760 a showcase factory that doesn't end up, you know, producing 0:44:19.800 --> 0:44:22.400 too much. Then I think the example here is something 0:44:22.480 --> 0:44:26.719 like Apple's mac pro factory in Texas, which doesn't have 0:44:26.920 --> 0:44:30.080 a very high volume. And you know, if after all 0:44:30.120 --> 0:44:32.239 this investment, a lot of firms will fail. I think 0:44:32.239 --> 0:44:34.719 that is certainly going to be the case even two 0:44:34.719 --> 0:44:36.719 three years from now. You know, we take a look back, 0:44:37.120 --> 0:44:39.680 you know, if you know one of the parties points 0:44:39.719 --> 0:44:41.719 out a lot of these failures and says, you know, 0:44:41.760 --> 0:44:44.080 this is why industrial policy cannot work. 0:44:44.239 --> 0:44:45.719 We're getting a lot more celendras. 0:44:45.760 --> 0:44:48.640 They're still talking about these, the cylindro failure of about 0:44:48.920 --> 0:44:52.440 you know, fifteen years ago. Now that you know politically, 0:44:52.480 --> 0:44:55.960 the appetite disappears, continue investing in these sort of things. 0:44:56.440 --> 0:44:59.200 That is something I am a little bit worried about, 0:44:59.280 --> 0:45:01.239 and so therefore I would say that, you know, we 0:45:01.320 --> 0:45:03.480 have to think about these things on the longer time frame. 0:45:04.760 --> 0:45:07.879 Adam, I would say, it depends what we're talking about specifically. 0:45:07.880 --> 0:45:11.080 So if we're talking about advanced semiconductive production, it'd be 0:45:11.160 --> 0:45:13.359 nice to have a little bit more, you know, less 0:45:13.400 --> 0:45:18.200 geographic concentration there, both on shore and you know and friendshort. 0:45:19.080 --> 0:45:22.080 When it comes to you know, mature none chips, I'd 0:45:22.080 --> 0:45:24.920 love to see more direct accounting for here's why we 0:45:25.000 --> 0:45:28.440 need it, and here is how we've improved resiliency. When 0:45:28.480 --> 0:45:30.360 it comes to solar what I'd love to see is 0:45:30.360 --> 0:45:33.720 the cost curve come down. I think that's everything that's everything. 0:45:34.160 --> 0:45:37.239 I don't care about making it here. I don't care 0:45:37.239 --> 0:45:39.200 where we make and I care that the price comes down, 0:45:39.400 --> 0:45:41.520 and I care that people install it. And I think 0:45:41.560 --> 0:45:44.799 that we should think about the technological frontier as being 0:45:44.800 --> 0:45:47.920 something really important here. And Chips, to be fair, is 0:45:48.080 --> 0:45:50.239 spending billions of dollars on R and D too, So 0:45:50.280 --> 0:45:52.479 I'd love to see that some of that money helped 0:45:52.520 --> 0:45:54.320 move the technological frontier forward. 0:45:54.680 --> 0:45:57.800 I think Alan Staffer is here somewhere. He's always posting 0:45:57.800 --> 0:46:00.800 the solar chart and it always looks very chourage that 0:46:01.200 --> 0:46:04.400 line is going down, so that does seem to be happening. 0:46:04.600 --> 0:46:06.480 One last thing and then I want to like open up, 0:46:06.520 --> 0:46:08.279 and then I think we can go to Q and A. 0:46:08.400 --> 0:46:11.880 But Dan, you know, like, I'm really struck by the 0:46:11.920 --> 0:46:14.040 point that you make about it's kind of rare to 0:46:14.080 --> 0:46:16.479 be trying to catch up to a country that both 0:46:16.520 --> 0:46:20.200 is cheaper and more technologically advanced. Like usually maybe there's 0:46:20.239 --> 0:46:22.840 one the other and you exploit the other. Like should 0:46:22.880 --> 0:46:26.799 we be doing things like you know, export discipline and 0:46:26.960 --> 0:46:31.839 subsidizing the companies that can produce here and sell well 0:46:31.840 --> 0:46:34.239 in the global market. Should we be thinking about that 0:46:34.280 --> 0:46:36.040 type of thing for the US or should we be 0:46:36.080 --> 0:46:39.160 thinking about, you know more buyer of last resort things. 0:46:39.239 --> 0:46:41.319 It seems to be a part of the sort of 0:46:41.520 --> 0:46:44.200 when we have had successful like sort of like military 0:46:44.280 --> 0:46:49.120 driven semiconductor policies like back in the Cold War and 0:46:49.120 --> 0:46:49.680 stuff like that. 0:46:49.880 --> 0:46:52.840 Yeah, well, I would love for US firms to have 0:46:52.920 --> 0:46:55.320 export discipline, which is, you know, a lot of the 0:46:55.600 --> 0:46:58.840 strategy for firms in Asia to you know, sell to 0:46:58.880 --> 0:47:01.960 the rich America can market and then you know, get 0:47:02.080 --> 0:47:04.960 the quality of their products, you know, to to to 0:47:05.040 --> 0:47:07.120 raise the quality of their products. The challenge for the 0:47:07.239 --> 0:47:10.360 US is that there is no bigger and more sophisticated market, 0:47:10.480 --> 0:47:12.759 so it's hard to you know, figure out you know, 0:47:12.760 --> 0:47:15.560 who is able to discipline the American firm. And I 0:47:15.600 --> 0:47:17.920 think to add to the point of you know how 0:47:18.000 --> 0:47:19.759 you know, the US is in a bit of a 0:47:19.800 --> 0:47:23.000 tougher position again, I would think, you know, slightly politically. 0:47:23.040 --> 0:47:26.200 The challenges here to go back to the example of Chips. 0:47:26.400 --> 0:47:27.600 You know, whether the Chips. 0:47:27.320 --> 0:47:28.000 Act is working. 0:47:28.320 --> 0:47:32.000 I think about something like TSMC in Taiwan and so 0:47:32.160 --> 0:47:36.680 TSMC is you know by miles and Miles, Taiwan's everyone's 0:47:36.719 --> 0:47:40.880 favorite employer in Taiwan that people engineers in Taiwan would say, 0:47:40.960 --> 0:47:43.160 I would sell my liver to go work for TSMC. 0:47:43.600 --> 0:47:45.680 You know, it's much more difficult to think that people 0:47:45.680 --> 0:47:48.560 would say that of any chip firm over here. You know, 0:47:48.640 --> 0:47:52.640 Taiwan is periodically in a drought. It is a you know, 0:47:52.920 --> 0:47:56.560 an island where they give the fresh water to TSMC 0:47:57.040 --> 0:48:00.720 and make the citizens drink the treated water in a trout. 0:48:00.800 --> 0:48:03.520 They park a lot of these fire trucks outside of 0:48:03.560 --> 0:48:06.600 the facilities of TSMC in order to make sure that 0:48:06.719 --> 0:48:10.840 TSMC has you know, freshwater to produce the chips powering 0:48:11.000 --> 0:48:13.719 our iPhones, and so you know, this is you know, 0:48:13.760 --> 0:48:16.840 that is just a different sort of thing where politically 0:48:16.880 --> 0:48:20.279 also can I is it really easy to imagine that 0:48:20.400 --> 0:48:25.239 TSMC's facilities in Arizona, a fairly try state, is able 0:48:25.280 --> 0:48:28.440 to park a lot of fire trucks outside of TSMC's 0:48:28.480 --> 0:48:29.920 facilities in a trout. 0:48:30.200 --> 0:48:31.560 I wonder we're. 0:48:31.360 --> 0:48:34.520 Going to be doing an episode soon with the Arizona 0:48:34.600 --> 0:48:36.799 lfelfa farmer, so you will be. 0:48:36.760 --> 0:48:37.960 Making the case that we should not. 0:48:38.200 --> 0:48:40.200 You know, they got to get there, they got. 0:48:40.080 --> 0:48:42.360 To get their Yeah, but thank you Dan for leaving 0:48:42.400 --> 0:48:45.759 with us with that wonderful vision of late stage capitalism. 0:48:45.560 --> 0:48:47.920 And thank you to Adam Ozomak for joining us for 0:48:48.000 --> 0:48:51.480 this conversation. We welcomed questions from the audience, and if 0:48:51.480 --> 0:48:53.600 you'd like to hear those, we invite you to be 0:48:53.680 --> 0:48:55.880 on the lookout for live recordings where you can be 0:48:55.920 --> 0:48:57.520 part of our audience in the future. 0:49:19.000 --> 0:49:20.960 Joe, I found that conversation fascinating. 0:49:21.360 --> 0:49:21.960 It was so great. 0:49:22.040 --> 0:49:26.360 I'm so glad. I appreciate both perspectives. I do find 0:49:26.440 --> 0:49:30.840 like I don't know, I really I appreciate both perspectives. 0:49:30.840 --> 0:49:33.680 I like Dam's case for we should do big heavy 0:49:33.680 --> 0:49:36.000 stuff here, right, I guess for. 0:49:36.160 --> 0:49:37.960 But now that was I really enjoyed it. 0:49:38.040 --> 0:49:39.840 One thing that I think is pretty special about the 0:49:39.840 --> 0:49:42.239 discussion is it has to be a first for a 0:49:42.239 --> 0:49:45.720 semiconductor policy discussion in a bowling alley. 0:49:45.920 --> 0:49:48.759 No, and the listeners who are not here, like we're 0:49:48.760 --> 0:49:51.200 on this stage, we're looking out at bowling alley. Well 0:49:51.280 --> 0:49:54.560 gamed the beautiful light fixture in this old building. 0:49:55.120 --> 0:49:57.719 I had the exact same thought. No one is having this. 0:49:57.880 --> 0:50:03.520 Conversation about like the world, so nothing. 0:50:03.239 --> 0:50:04.640 Else an accomplishment. 0:50:04.800 --> 0:50:07.120 No, it's bowling pin America. 0:50:07.160 --> 0:50:09.160 Actually, you know, it's like this is what we were 0:50:09.680 --> 0:50:10.040 We can. 0:50:10.000 --> 0:50:12.759 Draw the line between bowling pins and pin diodes. How 0:50:12.800 --> 0:50:16.520 about all right? Well, this has been another episode of 0:50:16.600 --> 0:50:19.560 the all Bots podcast. I'm Tracy Alloway. 0:50:19.200 --> 0:50:22.000 I'm Joe Wassenthal and big thanks to our guests Dan 0:50:22.200 --> 0:50:25.400 Wong and Adam Osemaga and of course Adam for this 0:50:25.560 --> 0:50:27.760 incredible location where we recorded. 0:50:28.719 --> 0:50:31.759 A massive thank you to the Economic Innovation Group and 0:50:31.840 --> 0:50:35.040 the Institute for Progress for allowing us to be here 0:50:35.120 --> 0:50:38.440 and do this world first of talking semiconductors in bowling 0:50:38.440 --> 0:50:43.000 Ali Terry Toy. You can follow me on Twitter at 0:50:43.040 --> 0:50:44.480 Tracy Alloway and I'm. 0:50:44.360 --> 0:50:47.439 Joe Wisenthal, and you can follow me on Twitter at 0:50:47.440 --> 0:50:51.000 the Stalwart. Follow our guests on Twitter, Adam Ozimek He's 0:50:51.080 --> 0:50:55.120 at Modeled Behavior, and Dan Wong He's at Dan w Wong. 0:50:55.640 --> 0:50:59.680 Follow our producers Carmen Rodriguez at Carmen Arman and dashall 0:50:59.680 --> 0:51:02.600 Bennet at dashbot. And check out all of the Bloomberg 0:51:02.640 --> 0:51:06.799 podcasts under the handle at podcasts, and for more odd 0:51:06.840 --> 0:51:10.120 Lots content, go to Bloomberg dot com slash odd Lots, 0:51:10.160 --> 0:51:12.759 where Tracy and I have a blog, we post transcripts 0:51:12.760 --> 0:51:14.960 and we have a newsletter that comes out every Friday, 0:51:15.160 --> 0:51:18.280 and for more Odd Lots content, check out our discord. 0:51:18.440 --> 0:51:20.800 It's really fun people chatting in there twenty four to 0:51:20.840 --> 0:51:22.839 seven about all of the things we talk about on 0:51:22.880 --> 0:51:26.480 the show. Check it out at discord dot, gg slash 0:51:26.560 --> 0:51:27.120 odd Lots. 0:51:27.280 --> 0:51:28.000 Thanks for listening.