So, by a curious coincidence, my address has been tagged by a long-time and established polling organization, to receive increasingly plaintive pleas for any adult in the household to participate in whatever line of questioning on important matters which they have been asked to research. I guess that someone doing basic research has tagged my residence as representative of a demographic, based on value of home, area of address, ethnic background, income, education, profession … or whatever judgment is used to select respondents for national surveys. One of those mailers even included a $5 bill as token of earnest intent. I pocketed the bill hey, five bucks that I didn’t have before and threw the rest of it in the recycle bin.
Time was when I would have been Nancy Nice Person and signed on to give my opinion hey, I signed up to review movies and books, yea these many years ago, mostly for the freebies which that exercise offered, and once again to give judgment on various surveys that my local grocery store chain offers (in hope of scoring one of those drawings for gift cards) but all that is merely a matter of consumer aesthetics and tastes. This polling enterprise is on a whole ‘nother level. It may touch on the political, and that like the electrified rail in subway routes is a thing that I will not venture in these present times. Although I post here, on matters social and political, it is not with my given legal name and residential address firmly attached to said opinions and comment.
Capitalism
Nancy Pelosi and I Have Something in Common
…both of us will benefit from increases in the price of Nvidia stock.
Paul Pelosi acquired 20,000 shares of NVDA (via a call option exercise) in June of this year. I’ve been an NVDA shareholder for several years, and sold part of the position at prices considerably more favorable than today’s price of $178/share.
Given that the CHIPS act, which is intended to benefit the US semiconductor industry, is now before Congress, concerns have been raised about whether Paul Pelosi’s purchase might have been influenced by insider information related by his wife.
I note that Nvidia is not thrilled with the bill as currently drafted: it provides benefits for semiconductor manufacturing companies, and Nvidia is not a manufacturer…it is a ‘fabless semiconductor company’, ie, a design, software, and marketing house. The actual manufacturing is done by contract manufacturers, especially Taiwan Semiconductor Manufacturing Company. Some market participants do, however, have hopes that in the final version of the bill the subsides will be expanded to encompass chip-design companies.
The bill would include ‘guardrails’ to prohibit recipients of the subsidies from making investments to expand chip manufacturing capacity in countries of concern, namely China. There may be an exemption for countries-of-concern whether that chips being made are at >28nm notes, ie, a long way from high-end. But one industry analyst said:
The guardrail doesn’t change that most of Intel’s or Texas Instruments’ test and packaging is done in China and will continue to be done in China. What use are new fabs for national security if they have to go to China for test and packaging anyways?
I think there are a couple of issues here. First is the issue of Congresspeople potentially profiting from inside information. The Pelosi buy does look very bad from this standpoint, especially when there are headlines associating Nancy Pelosi’s support for the CHIPS bill with increases in certain stocks–which include NVDA. It’s quite possible that this particular transaction is an innocent one, given that the bill as it stands is not one that Nvidia would have preferred, and also that NVDA price is now low enough, in the context of recent history and the general excellence and positioning of the company, that one could develop an entirely reasonable ‘buy’ case without benefit of any inside information. But the issue of officeholders profiting from inside information is a serious one, and becomes more serious with every further entwinement of government into the details of the economy.
But there is an even more important issue: Do we really want the level of investment in particular industries to be largely controlled by government? It is true that the semiconductor industry is vital to the US economy and to US national defense…but this is true of a lot of other industries as well. How about pharmaceuticals and their precursor materials, for example?…I seem to remember threats from Chinese sources to let American burn in the fire of Covid by withholding pharmaceuticals. What about large transformers, which are vital to the electrical grid and take a long time to manufacture? What about key minerals, many of which are in fact present in the United States but are mostly sourced from elsewhere because of legal and cultural hostility toward mining? What about machine tools?
I have low confidence in the ability of Congress, or of government in general, to determine what industries and what specific segments of those industries are truly vital. There are many complex interconnections which are not easily understood. I remember that during the pandemic, GE Healthcare was asked to produce a large number of ventilators in an accelerated timeframe. It turned out that they were using a very small contractor…a 3D printing shop, IIRC…which had been shut down as ‘nonessential’.
I’d prefer to see legislative solutions which improve the US business climate for manufacturers in general and for ‘thing’ businesses in general, to the crafting of specific ‘solutions’ for specific industries. Legislation should deal with the general case as much as possible, rather than functioning as a Reverse Bill of Attainder. But developing such legislation requires ability to think in abstract terms, and is not a comfortable to politicians who think mainly in terms of interest groups to be used or placated.
Here is the text of the CHIPS bill.
There is also a proposed broader US competitiveness bill, the United States Innovation and Competition Act.
Here’s a WSJ Opinion piece on the CHIPS bill and its proposed galactic expansions.
And here’s Intel CEO Pat Gelsinger and Ford CEO Jim Farley arguing the case for semiconductor subsidization.
Thoughts?
Advanced Incompetence
The grim and cynical judgment is that advanced incompetence is indistinguishable from deliberate malice. I am certain that grimmer and more cynical commenters than me have long since concluded that the advanced and mind-boggling incompetence of the Biden Administration is indeed indistinguishable from deliberate malice, at least as far as results are concerned. The staggering increase in the price of gas at the pump is the one thing that almost everyone, save the impossibly-out-of-sight-rich are feeling. When the price leapfrogs twenty cents a gallon from one day to the next, it excites notice from ordinary people, who need to drive to the jobs that they still have. And what is the barely sentient vegetable in the White House, or the individuals who are manipulating his strings doing about all that? Essentially nothing, save lip service and pointless gestures.
They want gas prices to go sky-high. No, that’s the take-away. In their fantasy-world, having the price at the pump be equivalent to prices at European pumps will move us all gently, painlessly, and inexorably towards driving electric cars, (and living in high-rise prole cubes in big cities, and eating protein derived from bugs) never mind that the tech and infrastructure to support that kind of thing isn’t even remotely possible, now or ever.
Nope the Biden administration wants us unbiddable red-state, fly-over proles to suffer, to grind us all into the dirt. They want this, they are panting for it, orgasmically. Mostly because we don’t and won’t do what they order us to do, and so we must be punished for disobedience.
Cloward Pivening
Once upon a time in the mad 60’s a pair of mad lefty (but I repeat myself) socialist sociologists refined a strategy for bringing about the blessed socialist utopia by overloading and bankrupting the welfare system. This, they confidently hoped, would crash the capitalist system and bring about the longed-for socialist utopia. Essentially, they drafted the poor and unprivileged into an army demanding services which the state ultimately could not provide; somehow, this would crash the system and bring about radical social reform. The whole thing sounds rather like the Underpants Gnomes theory of economics or the cartoon showing a pair of white-coated scientists examining a complicated mathematical sequence on a chalkboard with a notation in the middle of it which says, “And here a miracle happens.”
A Promise Or a Threat?
Put me down firmly on the side of those who see “You’ll own nothing and you’ll be happy” as more of a threat; I see “You will be happy” with special emphasis on “will” and the unstated addendum to that statement as “You damn peasants better be happy, or else!”
The simple fact is that owning things especially things which can be construed as tools allow one a degree of independence, and even a mild degree of comfort over and above the norm. This was suggested to me in a college class four decades and more since. I think it must have been the required readings for medieval history course; dedicated medievalists had gone into various probate records and wills in England or France and studied the inventories of barely-above-survival peasant households. Nothing really notable in the main just basic tools, household and farm implements like butter churns, cheese presses, cooking pots, some simple furniture. But at least one of the readings pointed out how possession of certain tools like a cheese-press, hinted that the owner of that item was in fact, making cheese, possibly for their own use or for the market. The very fact that they owned something with which to turn a farm product like milk, into something to sell or barter for in the marketplace implied a slightly higher level of comfort and security for that household.