Intel to Receive $8.5B in Grants to Build Chip Plants • Hacker News Board

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#641

Post by gen220 » Sat, Mar 23, 2024, 4:03 AM UTC

rhelz wrote: post #639

gen220 wrote: post #636

Earlier quoted context omitted.

I do think we can pay off the debt. It would require an increase in taxation that would cause an S&P 500 contraction. When it comes down to it, it'll be a political choice between cutting Social Security benefits (absolutely no way this happens) and a highly progressive tax on the country's wealthy. I don't think the first one is going to happen, and our two party system is so totally dominated by the country's wealt…

> I do think we can pay off the debt. It would require an increase > in taxation that would cause an S&P 500 contraction. I was very worried about the huge deficits from the Reagan era. But when Clinton was elected, and he raised taxes, I thought we were done for. Surely, raising taxes would cause the economy to contract more, which would lead to even less government revenue, a higher deficit, ever more impossible to…

I think one part that’s missing from this narrative that’s otherwise solid is that the Clinton administration raised taxes while simultaneously expanding globalization (NAFTA, expanded ties with China).

Nowadays, we’d be raising taxes while globalization is contracting. On-shoring is inflationary, because the same goods as before cost more.

Raising taxes in an inflationary environment is scarier than raising taxes in a deflationary environment.

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#642

Post by contrarian1234 » Sat, Mar 23, 2024, 5:12 AM UTC

_heimdall wrote: post #640

contrarian1234 wrote: post #629

Earlier quoted context omitted.

I meant "subsidy" in a more general sense. All goods will be more expensive. More people will be in poverty Imagine how much more expensive everything would be, and now imagine the cumulative amount of money that represents. Money that could be used to fund education or improve people's lives, or even build armaments if you really are worried about the commies. You're in effect paying an huge "tax"/premium indefinite…

Subsidies and tariffs have very specific meanings. They get at the same goal of increasing domestic production, but one increases government spending while the other increases government revenue through an import tax. Ultimately the domestic consumer pays either through taxes or increased prices, but they are very different mechanisms. Its overly simplistic to assume that a subsidy will increase prices and harm the e…

I mean that just goes against the very basics of economics.. Adam Smith, comparative advantage - and goes against the failed history of protectionist policies. You're basically advocating a version of mercantilist theory in the 21st century.. it's incredible anachronistic. But it's hard to argue when you're dismissive of all models

But I'm glad you see that chips are not really the top priority if this was really an issue of national safety. So one then has to wonder what are the real drivers of these jingoistic policies

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#643

Post by inemesitaffia » Sat, Mar 23, 2024, 7:54 AM UTC

fransje26 wrote: post #557

ufocia wrote: post #513

Earlier quoted context omitted.

Semiconductor manufacturing is very capital intensive so running the company as a nonprofit is a nonstarter. You've presented historical data to counter the of argument that wage/salary growth MAY lead to potential unprofitability solely on the basis of one year's profit numbers. That's literally driving forward looking in the rearview mirror because it says very little about how profitable the company would be if it…

Hiding behind "it's complicated" is an over-used excuse to avoid a more critical look at a problem. A one year point is a crude approximation, but it does illustrate the order of magnitude mismatch between what they could pay their employees vs what they actually pay them, which was the short point being made. More broadly, TSMC had no problem shelling out $9.9 billion to shareholders that same year (or $123,000+ per…

What's the EPS? Is the business doing better than the market?

When you open your business you're free to pay all your capital to your staff.

If you've ever changed banks or cards to get a better interest rate you deeply understand but haven't surfaced it here

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#644

Post by inemesitaffia » Sat, Mar 23, 2024, 8:01 AM UTC

rhelz wrote: post #335

chiefalchemist wrote: post #323

Earlier quoted context omitted.

When you connect those dots this feels more like a pseudo bailout in disguise.

Oh, its not a pseudo bailout. It's a bailout full stop. Doesn't mean its a bad idea.

8 billion can't build half a fab though.

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#645

Post by _heimdall » Sat, Mar 23, 2024, 11:37 AM UTC

contrarian1234 wrote: post #642

_heimdall wrote: post #640

Earlier quoted context omitted.

Subsidies and tariffs have very specific meanings. They get at the same goal of increasing domestic production, but one increases government spending while the other increases government revenue through an import tax. Ultimately the domestic consumer pays either through taxes or increased prices, but they are very different mechanisms. Its overly simplistic to assume that a subsidy will increase prices and harm the e…

I mean that just goes against the very basics of economics.. Adam Smith, comparative advantage - and goes against the failed history of protectionist policies. You're basically advocating a version of mercantilist theory in the 21st century.. it's incredible anachronistic. But it's hard to argue when you're dismissive of all models But I'm glad you see that chips are not really the top priority if this was really an…

I may have dove down to many rabbit holes there, sorry if I did.

To wind it back a bit, are you disagreeing that with the idea that subsidies are meant to reduce consumer prices and tariffs are meant to increase prices on imported goods?

Or are you disagreeing with my argument that economics isn't that simply and pulling one lever can have multiple impacts that together may move prices in an unexpected way?

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#646

Post by contrarian1234 » Sat, Mar 23, 2024, 3:19 PM UTC

_heimdall wrote: post #645

contrarian1234 wrote: post #642

Earlier quoted context omitted.

I mean that just goes against the very basics of economics.. Adam Smith, comparative advantage - and goes against the failed history of protectionist policies. You're basically advocating a version of mercantilist theory in the 21st century.. it's incredible anachronistic. But it's hard to argue when you're dismissive of all models But I'm glad you see that chips are not really the top priority if this was really an…

I may have dove down to many rabbit holes there, sorry if I did. To wind it back a bit, are you disagreeing that with the idea that subsidies are meant to reduce consumer prices and tariffs are meant to increase prices on imported goods? Or are you disagreeing with my argument that economics isn't that simply and pulling one lever can have multiple impacts that together may move prices in an unexpected way?

the first point is semantic, but sure. In effect a tariff functions as a subsidy for domestic companies. If it's a net income or expense is kind of irrelevant and matter of taxation or putting the expense on consumers...

To the second point... it's so vague to be meaningless. What you're advocating is basically mercantilism - which is widely seen as ineffective and counterproductive since.. the 19th century. "unexpected ways“ .. is it like the law of gravity and always going to hold? Probably not. But when you are talking about blocking international trade across whole sectors of the economy then it seems like a valid simplification. If you want to argue mercantilism is going to be a net benefit to the domestic economy then the onus is on the advocate of the outdated theory. All past historic experience points to the opposite and to the development of a stagnant backwards economy

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#647

Post by rhelz » Sat, Mar 23, 2024, 4:56 PM UTC

gen220 wrote: post #641

rhelz wrote: post #639

Earlier quoted context omitted.

> I do think we can pay off the debt. It would require an increase > in taxation that would cause an S&P 500 contraction. I was very worried about the huge deficits from the Reagan era. But when Clinton was elected, and he raised taxes, I thought we were done for. Surely, raising taxes would cause the economy to contract more, which would lead to even less government revenue, a higher deficit, ever more impossible to…

I think one part that’s missing from this narrative that’s otherwise solid is that the Clinton administration raised taxes while simultaneously expanding globalization (NAFTA, expanded ties with China). Nowadays, we’d be raising taxes while globalization is contracting. On-shoring is inflationary, because the same goods as before cost more. Raising taxes in an inflationary environment is scarier than raising taxes in…

> Raising taxes in an inflationary environment is scarier than raising taxes in a deflationary environment.

I know it can be scary, but, we are going to have to muster the courage to try unorthodox things--like actually paying the bills. Raising taxes in an inflationary environment can be a very beneficial move. Why? Higher taxes reduce demand, which helps fight inflation.

This takes some pressure off of the Fed. The Federal Reserve only has a very few policy tools to control inflation or to stimulate the economy: basically they can either rase rates or lower rates.

But if inflation is being controlled by increased taxes, the Fed doesn't have to raise interest rates as much--or even at all--to control inflation.

And a lower interest rate means that companies can afford invest in things which will increase profits and will raise the productivity of its workers. Which fights inflation.

In addition, higher taxes means lower deficits, which means the government isn't hoovering up all the money available for investment. It will issue fewer bonds, and people who would have bought those bonds will have to start investing their money in actual productive businesses. Which also helps inflation.

It doesn't have to be a doom spiral--we can spiral up if we just stop buying into the notion that we can get out of this if only we make the deficit large enough.

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#648

Post by gen220 » Sat, Mar 23, 2024, 6:21 PM UTC

rhelz wrote: post #647

gen220 wrote: post #641

Earlier quoted context omitted.

I think one part that’s missing from this narrative that’s otherwise solid is that the Clinton administration raised taxes while simultaneously expanding globalization (NAFTA, expanded ties with China). Nowadays, we’d be raising taxes while globalization is contracting. On-shoring is inflationary, because the same goods as before cost more. Raising taxes in an inflationary environment is scarier than raising taxes in…

> Raising taxes in an inflationary environment is scarier than raising taxes in a deflationary environment. I know it can be scary, but, we are going to have to muster the courage to try unorthodox things--like actually paying the bills. Raising taxes in an inflationary environment can be a very beneficial move. Why? Higher taxes reduce demand, which helps fight inflation. This takes some pressure off of the Fed. The…

I mean I totally agree with you, I just don't think there's political willpower to swallow the pill and actually pass legislation that would increase taxes.

Because, all else equal, capital owners (who set the policy agenda in Congress) would prefer to keep their wealth continue rolling the dice until they can't anymore.

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#649

Post by hnfong » Sat, Mar 23, 2024, 6:53 PM UTC

rhelz wrote: post #376

andyferris wrote: post #344

Earlier quoted context omitted.

Was it not possible to build two fabs and make $48 billion?

What would you do? Build two fabs and make $48 billion, or build two fabs and make $80 billion? It might be hard to remember now, but Intel was in the position NVIDIA is today: they could sell absolutely every x86 processor they could make, at pretty much any price they cared to name. So even if Intel could have built another fab (which, btw, it couldn't, the world only graduates so many solid-state physics Ph.D.'s p…

Google/Alphabet and Facebook/Meta sunk billions into ventures that aren’t half as profitable as your hypothetical 8B deal, and shareholders haven’t sued yet.

Of course the founders have majority voting shares, but that doesn’t prevent them from being sued. It only prevents them/their designated CEO from being fired.

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#650

Post by _heimdall » Sun, Mar 24, 2024, 2:37 AM UTC

contrarian1234 wrote: post #646

_heimdall wrote: post #645

Earlier quoted context omitted.

I may have dove down to many rabbit holes there, sorry if I did. To wind it back a bit, are you disagreeing that with the idea that subsidies are meant to reduce consumer prices and tariffs are meant to increase prices on imported goods? Or are you disagreeing with my argument that economics isn't that simply and pulling one lever can have multiple impacts that together may move prices in an unexpected way?

the first point is semantic, but sure. In effect a tariff functions as a subsidy for domestic companies. If it's a net income or expense is kind of irrelevant and matter of taxation or putting the expense on consumers... To the second point... it's so vague to be meaningless. What you're advocating is basically mercantilism - which is widely seen as ineffective and counterproductive since.. the 19th century. "unexpec…

Mercantilism is a top-down approach, I was never promoting that. My earlier comments specifically called out what may be possible if consumers prioritized domestic products, the government only came into the conversation when you raised concerns over subsidies.

With regards to subsidies and tariffs I disagree the distinction is semantic and unimportant, though it likely is irrelevant here since I started with the concept of a change in demand at the consumer level.