> Budget brands normally buy older DRAM fabrication equipment from mega-producers like Samsung when Samsung upgrades their DRAM lines to the latest and greatest equipment. This allows the DRAM market to expand more than it would otherwise because it makes any upgrading of the fanciest production lines to still be additive change to the market. However, Korean memory firms have been terrified that reselling old equipment to China-adjacent OEMs might trigger U.S. retaliation…and so those machines have been sitting idle in warehouses since early spring.
This seems to almost be mentioned off-hand, but isn't this a really bad and un-free market, and a much bigger issue? Korean companies are afraid of doing business with Chinese companies because of the US, because of retaliation? This was not the "free and global market" I thought we were supposed to have at this point.
If production lines of DRAM are hindered by the politics of a unrelated 3rd party, then this seems to be a stronger cause of the current shortage than "a very large customer buying a lot in a short period of time".
> This was not the "free and global market" I thought we were supposed to have at this point.
Perhaps you haven't noticed but the pendulum has been swinging the other way for a while already and has a lot of momentum behind it. It's mentioned off-hand because the ongoing return to a multi-polar global order is covered elsewhere already, across dozens of articles every day.
Admittedly, Europe was being slow to reconfigure until finally forced to do so this year but they've jumped on board now too.
And in typical historical fashion, everybody with less little influence/independence to project their own sphere are now cautiously but attentively jockeying to accumulate the best deals they can gather among those they do.
The world is far from united, even if many do happen to share opinion about the administration.
In a world of international tensions, governments tend to favor their mega-corps and monopoly. It is a way of weakening your adversaries. It is commercial war.
You're not wrong, globalism and nationalism go hand in hand. All those Twitter bluechecks glazing Trump and trying to drum up the right-wing controversy of the day were exposed as people from third-world countries shitting up the American infosphere for cash. When British far-right nutters say "We can't import the third world", keep in mind that third-world dictators are saying the exact same shit about other parts of the third-world. Nationalists work in lock-step.
Left-wingers are only globalist in the most literal sense of "well, I'd like it if we got rid of these migration barriers". "Internationalist" would be a better term for them.
Globalist Nationalism is an ideology of contradictions. It purports that, no really, you're the real master race and everyone else's just a stooge that'll get taken out the moment we can get rid of these pesky liberals with their freedoms. They need shittons of spatial partitioning to make that work.
You can't get rid of migration barriers without getting rid of the welfare state. Do left-wingers want to get rid of the welfare state? Do they even want to get rid of the migration barriers that can be done away with freely, namely barriers to movement for highly skilled labor and services?
This wasn't what I was talking about, but for what it's worth I don't think welfare and migration are exclusive. If your concern is free-riding, then you can require a certain number of working years before a migrant is eligible for certain social services; or have a scheme in which free migration is required to be reciprocal and bundled with a minimum standard for welfare programs. I believe the EU does both.
The phrase "left-winger" is also kind of vague; lefties in America are very specifically left-libertarians and it was specifically that strain of leftism I was referring to. A lot of, say, European lefties are far less internationalist and far more authoritarian for my tastes. There's an argument in here that American lefties haven't ironed out the contradictions in their political ideologies yet. A lot of the support for free migration from American lefties and liberals only started because Trump took the opposite position and did so extremely. But I'd rather that than, say, mainstream American politics' obsession with endianness[0].
Additionally, the welfare state is currently being crushed under the weight of a bunch of retiring Baby Boomers. Which isn't a uniquely American problem. Every rich country with a welfare state has too many old people in the system. That's due to demographic collapse, which is itself a consequence of children being too expensive to raise in a world where effective birth control is easy to access. Immigration can actually make this less of a problem, by adding to the tax base. They don't even have to be highly-skilled immigrants, they just have to be generating taxable income that goes into the welfare system.
The Globalist Nationalist argument is that this is bad because Those People™ are criminal or uncivilized in some way. But that begs the question: where do we find more taxpayers to keep our welfare state solvent? The answer is to take away birth control and hope enough horny teenagers get pregnant to fix the shortfall eventually. Except this doesn't solve the affordability problem[1]. So all those kids are going to be in broken homes or no home at all. This creates a crime wave. In fact, this is exactly why Those People™ from Those Countries™ are so damned scary!
tl;dr The integrity of the welfare state is only tangentially related to the openness of its migration programs, because migrants can be both beneficiaries of and contributors to the system.
[0] In the original sense of endianness being a culture war over what side to break eggs on.
[1] The affordability problem is itself a cluster of related cost diseases endemic to urban centers. More people want to live in the city than there is housing available for them, so prices have to rise until somebody loses. And increasing the housing supply creates further demand for land, construction labor, and materials. That raises cost, meaning that housing has to get more expensive to make new units economic. And as housing gets more expensive, there's less children being born, which means less people working to build that housing, which makes the housing more expensive, so there's less children being born...
China did not let US companies establish completely foreigner subsidiaries, yet the US granted it MFN status.
However, the US had protective tariffs since ever too.
Not to mention the controls on migration and remote work (which is a very significant drag on economic growth, as it prevents more efficient allocation of labor).
Err… is there any question that the US is trying to slow down China’s high-tech computer development? I thought that was our open goal.
Countries decided the extent to which they’d like to engage in free trade together. It is a knob that we’d hope our leaders would turn strategically. (Regardless of whether or not we think our leaders actually are doing a good job of it…).
On paper it can sound rational. In reality you look at stuff like cars, for only so long people will tolerate buying a car for $60k when other countries, whom you are also competing with, get buy similar cars for $10-20k from China. Those same vehicles are used to boost productivity in your own domestic industries.
There is always a ton of risk involved with protectionism. Primarily whether your taxpayer-subsidized domestic jobs and hypothetical national security risk significantly outweighs all the very real economic costs.
> buying a car for $60k when other countries, whom you are also competing with, get buy similar cars for $10-20k from China
I'd love to hear your examples of this happening. For $22K you can get a BYD Dolphin Surf in Europe. And that's a pretty small car. What are you paying $60K for in the US that's the same size?
Maybe let's try a different match up. The BYD Atto 3 seems to start around 40K in Europe. It's smaller than a Model Y, and people say it is slightly lower in market position, but close enough. The Model Y starts at around 40K as well.
Are the comparisons between expensive US cars (remember the average is just above 50K, and plenty of perfectly good cars like a Honda Civic can be had for half that) and Chinese cars in China?
I read that's not really the case - there's a bunch of equipment on EU-spec (and some other market) BYDs that comes from EU vendors such as Bosch. It additionally has a completely different AC unit as the kind of refrigerant BYD uses in China is illegal in the EU.
I'm not saying it justifies the price difference, but there are changes between the cars.
Right, so we are never going to see it for 20 grand in the US. Maybe because of tariffs and taxes, as you say, or maybe just because BYD isn't going to set the price at 20K in a market with 10x the average income.
That is a fair point. But then it just reveals that the comparison was contrived from the outset and there was no point to be made. It has never been the case that products in different markets were priced in coordination. The price is always whatever the market will bear, it has zero relationship to the cost to produce unless the market has a lot of competition.
What better way to hurt the designated enemy and make others bare the cost?
Trump's America First in practice relies on a near-sided and overly simplistic understanding of the world (Win-lose, whatever is benefitting others must be a hinderance to the USA). Hence fighting the tariff wars against allies (Canada, Eu). Hence destroying Nato' credibility that was carefully built for 70 years. Hence ceasing to be Ukraine's ally (but continuing to be a trade partner, that sells weapons as long as Europe is paying). Hence helping Putin. Hence instigating problems with Taiwan if that means that TSMC will move some manufacturing to the USA.
It's a really miopic view, but at least on their part the behavior is intentional (consequences, on the other hand, are surprise for them).
That’s more or less how a trade war works, yes. Obviously, it’s not just Korean dram manufacturers that have been or will be the only collateral damage.
Is it collateral damage if they get sky-high prices for their products instead of a smaller amount for the production equipment? The US thing seems like a convenient excuse of sorts for cartel behavior.
I don't think you can have a "free and global market" when countries participate in large-scale state industrial policy. Given those constraints, you have to either enforce a zero-subsidy environment (the US has no power to do this) or you have to accept that trade control is one arm of your foreign policy goals and surrendering it entirely is unlikely to help your aims.
For the most part, free and open trade is beneficial to the Western world order. But I think it's quite straightforward to imagine conditions under which it is not, many of which are currently in effect.
US control of EUV technology is probably the most obvious present one, but limitations on nuclear proliferation are an obvious case where there is no free market. Even selling civilian nuclear technology is controlled.
You may think of it analogously to Free Speech. The dream is complete and total expression. The reality is that if you allow convincing enough liars, your society starts to falter. Consequently, certain kinds of expression are not permitted - notably defamation. Think of it as more a North Star navigation ideal constrained by the trade winds (I suppose the Westerlies would be more relevant, but I couldn't resist the pun).
If you want a couple of reads, I enjoyed A Splendid Exchange about the history of trade, which I followed by the resurgent-though-once-dismissed Zeihan's Disunited Nations (which is more a hypothesis book than a history book).
> I don't think you can have a "free and global market" when countries participate in large-scale state industrial policy.
All industrialized countries participate in large-scale state industrial policy. It's a pre-condition of industrialization. A nation cannot industrialize without large scale state policy. And once industrialized, all nations maintain large-scale state industrial policy. Are you saying there never has or can be a "free and global" market? Or just when china does it?
> You may think of it analogously to Free Speech.
It's nothing like free speech as free speech is a constitutional right granted within a nation.
> The reality is that if you allow convincing enough liars, your society starts to falter.
That's rich coming from someone peddling zeihan. I've always wondered what kind of morons actually believe his nonsense. Now I know.
The US industrialized without much in the way of large scale state industrial policy. The federal government was quite weak in the 19th century and, excepting tariffs on British goods, I can't think of any explicit policies it established that were intended to foster industrial capacity. And I think it's debatable how much tariffs actually helped the US develop its manufacturing capacity
> The US industrialized without much in the way of large scale state industrial policy.
What? From funding the Lewis&Clark missions, to forcing japan open, to clearing out the natives for railroad companies, to helping found colleges ( check out many engineering/tech focused colleges like MIT was founded in the 1800s ). You can even argue that american independence and the civil wars were about expanding state industrial policy.
> The federal government was quite weak in the 19th century
So "weak" that we went from 13 small states on the east coast and expanded 3000 miles all the way to the pacific? What the hell are you talking about?
> I can't think of any explicit policies it established that were intended to foster industrial capacity.
The US became the dominant industrial power in the 1800s and you can't think of any policies that helped? You think all the territories in the ohio valley, texas, oklahoma, california, etc chock full of oil were just given to americans by overly generous natives, brits or mexicans? Are you a moron?
If the US didn't have state industrial policy, the US would have never become and industrial power. We'd have just gone down the jeffersonian agrarian paradise road.
Having access to large tracts of land is not a necessary precondition to industrialization (see South Korea). Did the capital accumulation from the exploitation of resources in the American West make it easier to industrialize? Probably. But America would have industrialized if it never expanded beyond the Ohio River valley (access to coal probably was necessary).
Also, as an aside, yes, most of the American West was largely lucked into. America was lucky that France and Spain were dirt broke, that Britain was distracted by continental conflicts with France and Russia, and that native societies had been decimated by disease and a subsequent collapse in governance. That's not to say that there wasn't smart, farsighted leadership in American government, but it was a weak power.
We left behind any pretense of a free global market once we entered a post-tariff world. You can't have large universal tariffs or even the threat of them and expect the market to act freely, the two are fundamentally incompatible.
> This seems to almost be mentioned off-hand, but isn't this a really bad and un-free market, and a much bigger issue? Korean companies are afraid of doing business with Chinese companies because of the US, because of retaliation? This was not the "free and global market" I thought we were supposed to have at this point.
The globalized free market wasn't all it was cracked up to be, so 90s-era understandings of how things are "supposed" to be will need to be revised.
If the free market requires both that companies both ignore that they exist in a world with consequences and that they manage to perfectly predict future demand, that sounds more like an issue with the idea that the free market will solve everything than an issue with the market not being free enough. Otherwise, if you're not happy with the way a company acts, and you don't seem to trust that another company will come and rest their lunch for their perceived poor decisions, your only remaining remedy is to pressure them by non-economic methods to increase production, at which point you don't really believe in the free market either.
This seems to almost be mentioned off-hand, but isn't this a really bad and un-free market, and a much bigger issue? Korean companies are afraid of doing business with Chinese companies because of the US, because of retaliation? This was not the "free and global market" I thought we were supposed to have at this point.
If production lines of DRAM are hindered by the politics of a unrelated 3rd party, then this seems to be a stronger cause of the current shortage than "a very large customer buying a lot in a short period of time".