Author Archives: eehines

“Tit-for-tat”

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Commenting on tit-for-tat, former People’s Republic of China People’s Bank of China Governor Yi Gang offered this at an economic forum in Tokyo last December:

Tit-for-tat trade retaliation [he said] is “never a good choice” from an economic perspective…. “But there’s not much policymakers can do about that.”

He’s right on the first of that, but tit-for-tat is a terrible tactic in any venue, economic, military, political or other. The far better move, the only serious move, is to retaliate through escalation, escalating far higher and far faster than the enemy can adapt and respond. And keep on with that until the enemy adjusts his ways in manners suitable to us.

Yi is mistaken, though, in his claim that policymakers can’t do much. Of course, they can: they’re the ones who push the tit-for-tat retaliations and who should push escalatory retaliations.

An American general once said about getting into a fight: “Bring a gun, and bring all your friends with guns.” Use overwhelming force—economic, political, military, whathaveyou—to end the conflict the most quickly and the most favorably to you. Not a fair fight? Irrelevant. What’s not fair is losing the fight and having our national, economic, international behaviors dictated to us by the winner of that fight.

It’s time to get off the dime and move, promptly and at pace, to cut all economic ties with the PRC, whose stated goal is to overwhelm, replace, and dominate us. The PRC has already made its opening moves, cutting us off from the rare earths we need to manufacture our national defense systems, from weapons to computers, and flooding Mexican cartels with the precursors of fentanyl for the latter to produce and ship into the US along with mixing into what used to be legitimate medicines produced in Mexico.

It’s time to stop selling rope to the PRC.

I Can’t Think of a Reason

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Mark Zuckerberg wants to automate ad-creation in his Meta.

That’s not all he wants to do, though. Zuckerberg said this at his recent shareholder meeting (keep in mind that the these meetings generally are Zuckerberg talking to himself since he owns the controlling number of voting shares) [emphasis added].

In the not-too-distant future, we want to get to a world where any business will be able to just tell us what objective they’re trying to achieve, like selling something or getting a new customer, how much they’re willing to pay for each result, and connect their bank account and then we just do the rest for them[.]

Which of those processes—customer convenience or Meta convenience—is the one intended to be jumped on with both feet, and which is the one intended to be slipped past us?

I, for one, have no reason at all to let anyone other than myself or my wife have whenever-they-feel-like-it access to my financials.

Backwards

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Interior Secretary Doug Burgum thinks he has a deal with New York’s Progressive-Democratic Governor Kathy Hochul: he’ll lift the pause on an off-shore windmill project she wants if she’ll unblock a couple of natural gas pipelines that ex-Progressive-Democrat Governor Andrew Cuomo blocked. The pipelines would vastly lower energy costs for New York and for the northeastern States on the other side of New York from Pennsylvania, where the pipelines would have originated.

Burgum lifted the pause on the wind farm, and then—and only then—Hochul said she’d work with the Trump Administration and companies on “new energy projects.”

This is backwards, and it foolishly trusts a Progressive-Democratic Party politician to follow through in any serious fashion.

It’s easy enough for Burgum to lift the pause on the wind farm; he can do it with the stroke of his pen. It’ll take a while for Hochul to lift the ban on the pipelines—if she does it at all rather than just engaging in stalling rhetoric, empty words like work with…on “new energy projects.” The correct order for execution of this agreement would have been for Hochul to lift the ban and get construction started. Then lift the pause.

Nvidia and Investing in the PRC

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Nvidia‘s honcho, Jensen Huang, says it’s not straightforward for his chipmaker to leave the People’s Republic of China altogether. Many of his arguments, though, are irrelevant.

In the end, the platform that wins the AI developers wins AI. Export controls should strengthen US platforms, not drive half of the world’s AI talent to rivals.

You bet. But our chipmakers don’t need to be in the PRC to win the race—which isn’t a race, anyway, since technology always advances. It’s a never-ending journey. American chipmakers need to be elsewhere, tapping other talent, including American talent that still is second to none.

The US government’s decision in April to stop the company from selling its H20 chips to the Chinese market cost the company about $2.5 billion in lost sales in the April-ended quarter and will cost another $8 billion in the current period ending in July. That is because the H20 chip was designed specifically for the Chinese market to comply with then-current export restrictions, so it isn’t really salable anywhere else.

Avoiding export restrictions is entirely legal, but this is a trade and technology war that the PRC has been inflicting on us for years. Huang had to know that export restrictions would evolve in that war, just as weapons technology and export restrictions evolve in shooting wars. Again: American chipmakers don’t need to be in the PRC. American chips, of any generation, don’t need to be in the PRC.

Also, an irrelevancy from the peanut gallery:

“China is a quarter of the market. It’s a big number,” UBS analyst Tim Arcuri said in an interview. He added that Nvidia would have a “dominant hold” on that market if it were able to compete there.

Here’s a bigger number. Three-quarters of the market is not in the PRC. Nvidia would have a dominant hold on that market if it wanted to.

Dominant hold in the PRC chip market? What about all that PRC techie talent about whom Huang worries so much if left in isolation? Won’t they move even faster with American chips in their suite? Beside that, other companies, American and European, have held a variety of “dominant holds” there: GM, Tesla, Volkswagen, Nokia, Ericsson, and on and on, all had dominant holds, until they didn’t. And the reason they don’t anymore isn’t because they can’t compete on technology and market skill, it’s because they can’t compete with PRC government subsidies of domestic companies and PRC naked theft of intellectual property.

And this, from Huang, again:

China’s AI moves on with or without US chips[.]

Of course; that’s obvious. The PRC, though, does not need easy access to American chips—or those of other Western chipmakers’ chips—in order to do that. The presence of American chips (and others’) inside the PRC only makes it easier for PRC techies to “move on” through their reverse-engineering, theft of techniques, software, intellectual property, and so on.

Certainly, switching out of the PRC would be short-term disruptive to American chipmakers, but it would be mid- and long-term beneficial to them and to our nation. Especially if our chipmakers, and our government, were to arrange coalitions of Western chipmakers to do development and marketing rather than working strictly alone. There would be anti-trust problems here if the coalitions aren’t set up properly, but that’s doable, and has been done in many other venues.

Government Funding of Speech

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PBS has filed a lawsuit against the Trump administration over the latter’s moves to defund the service.

The system is centering its beef on two things: free speech and the potential to upend public television.

Last thing first. The risk of upending public television is wholly irrelevant. What’s relevant here is what our Constitution and the statutes cited in their suit say. What our Constitution says about PBS‘ business model or about any public business model is…nothing. There is no Constitutional right to a particular business model, and disruptions to models occur all the time, ranging from competitors to changing consumers to governments’ decisions to donate money or not.

PBS‘ crying about its business model is just cynical fear mongering.

PBS‘ free speech argument might have some force, but that one is centered on President Donald Trump’s (R) commentary regarding how little he likes PBS‘ own commentary and editorial decisions. However, Trump’s comments are irrelevant, also; what is relevant here, too, is what our Constitution and the cited statutes and Trump’s defunding EO say.

What our Constitution says about funding PBS is…nothing. There is no Constitutional obligation for our government to donate any money to it or to any public enterprise. The cited statutes create no such obligation. What Trump’s Executive Order says is this:

Government funding of news media in this environment [today’s, vs mid-last century when Corporation for Public Broadcasting was created] is not only outdated and unnecessary but corrosive to the appearance of journalistic independence.
…
No media outlet has a constitutional right to taxpayer subsidies, and the Government is entitled to determine which categories of activities to subsidize.  The CPB’s governing statute reflects principles of impartiality:  the CPB may not “contribute to or otherwise support any political party.”

And this [emphasis added]:

The CPB fails to abide by these principles to the extent it subsidizes NPR and PBS.  Which viewpoints NPR and PBS promote does not matter.  What does matter is that neither entity presents a fair, accurate, or unbiased portrayal of current events to taxpaying citizens.

In the end, whatever Government, or Trump, say about others’ speech, neither Government in general, nor the Trump administration in particular, are obligated to fund it; the only obligation is to not block it except under a few tightly circumscribed situations: lying under oath, false advertising, making threats or otherwise inciting violence, and the like. This is supported by PBS‘ own words:

After careful deliberation, PBS reached the conclusion that it was necessary to take legal action to safeguard public television’s editorial independence, and to protect the autonomy of PBS member stations[.]

What better way to safeguard public television’s independence and protect the autonomy of PBS member stations than to stop receiving corrosive government money, a point Trump made in the opening of his EO?