Chip shortage: Toyota to cut global production by 40% • Hacker News Board

Re: Chip shortage: Toyota to cut global production by 40%

#421

Post by Slartie » Thu, Aug 19, 2021, 3:40 PM UTC

freewilly1040 wrote: post #388

Slartie wrote: post #355

Earlier quoted context omitted.

That sounds nice, but a singular entity within a government, entrusted with the necessary power to regulate the relevant parts of the market without too much coordination overhead with other government entities, is actually much more efficient at resolving market inefficiencies than the free market. Case in point: production of vaccines. That's also obvious: the inefficiency in governments originates largely from coo…

The government did very little in managing vaccine production other than act as purchaser, how is this an example of them managing a market?

The US government regulated critical parts of the supply chain of raw materials and preproducts in order to ensure that US manufacturers have no sourcing problems. It then compelled the manufacturers into exclusively servicing the US purchase contracts first before fulfilling competing contracts from other global buyers with any of the finished product produced on US territory.

I'd call that quite a lot of "market management". But as everyone could see it resulted in the fastest vaccination ramp-up worldwide (excluding Israel, which was a bit faster, but is also much smaller than the US and which had its own way to get "preferred" access to vaccine produced in the EU).

Re: Chip shortage: Toyota to cut global production by 40%

#422

Post by bumby » Thu, Aug 19, 2021, 3:41 PM UTC

abfan1127 wrote: post #404

bumby wrote: post #379

Earlier quoted context omitted.

This take might have some hindsight bias. While a lot of industry seem obvious and worth the investment today, when they were nascent that wasn't the case. Would GPS exist if private companies had to fund the rocket and satellite research just to tell you where you are on the map? Or would the aircraft industry exist? Most of those types of high-risk, nebulous reward (at least on short-to-near-term timescales) indust…

it certainly does have hindsight bias, on both sides. The Satellite TV and Radio industries spend the money to launch. Back in the 90s (during the age of early GPS), Motorola (iirc) tried to launch a satellite phone company too. NASA isn't that big of a customer. DirecTV was a huge consumer of rockets. As it turns out, SpaceX doesn't sell to them because they own their own rocket company.

>The Satellite TV and Radio industries spend the money to launch.

Correct, but this is an after-the-fact understanding. They spend money to launch now because the industries are no longer nascent and being launched on platforms designed around government investment. The key to my point is that the government spends money when the industries are young and risky to develop platforms. If those platforms work out that helps the private sector have a less risky path down the road. This is why telecoms weren't rushing to develop rockets in the 1960s.

>NASA isn't that big of a customer.

This is very much the same thing. Early on, NASA was really the only SpaceX customer and NASA helped keep them from going bankrupt [1]. In addition, NASA made early launches more palatable because the government is self-insured. Government contracts help usher along young, risky companies until they could have a less risky business model that the private sector feels more comfortable with. It's very similar to aerospace development over 100 years ago with the Wright brothers and Curtis vying for Army contracts. Without those contracts, they are as much hobbyists as entrepreneurs.

[1] https://www.ndtv.com/offbeat/elon-musk-says-nasas-1-5-billio...

Re: Chip shortage: Toyota to cut global production by 40%

#423

Post by metalliqaz » Thu, Aug 19, 2021, 3:41 PM UTC

istjohn wrote: post #136

lotsofpulp wrote: post #66

Earlier quoted context omitted.

> Vehicle assumptions: 200 000 km lifetime mileage I was under the impression decent quality ICE vehicles are proven to last at least 320k km these days, and can easily last 15+ years. Have electric vehicles even been in use long enough to have sufficient data to compare?

Electric vehicles are far simpler mechanically, so I expect they will last much longer.

only if they have been built to do so.

the same busted (and hard to repair) body parts will occur in both. Think AC, window motors, lamps and switches, etc.

plus, none of the manufacturers seem to be investing in easily replaceable batteries. They'd rather you buy a new car. May as well right? the batt replacement is 60% of the cost!

Re: Chip shortage: Toyota to cut global production by 40%

#424

Post by imtringued » Thu, Aug 19, 2021, 3:41 PM UTC

abfan1127 wrote: post #329

blululu wrote: post #264

Earlier quoted context omitted.

This is a pretty axiomatic view that governments can never be as responsive or as efficient as markets. The more commonly accepted economic wisdom is that they are usually less efficient and responsive than free market forces operating under ideal conditions. There is a lot of room for market failures, inefficiencies and temporal dynamics to change the balance. The are plenty of examples of government regulatory bodi…

The Federal Reserve hardly responds to market conditions. Their free and open printing of money is arguably the greatest risk to our economy. Milton Friedman has great resources on this, including a video series from the 1970s (based on clothing alone) called Free to Choose. Its on Youtube, amongst other places.

I was looking for a comment like this:

http://rootbug.com/how-could-it-be-solved/taxing-money-throu...

Let me put it in my own words:

If republicans think that unemployment benefits compete with private businesses on labor, then I get to think that 0% interest money competes with labor for capital.

The fundamental problem is that the 0% lower bound combined with a deposit guarantee represents not only a minimum wage for capital. It also presents a job guarantee. A minimum wage doesn't guarantee you a job.

So yes, the Federal Reserve is not responding to market conditions at all. It's artificially holding up interest rates at zero or above. This is causing massive distortions in the economy that can only be fixed by a swiss-army knife of policies. Among one of the needed responses is "free and open printing of money". The world economy is already flirting with disinflation (a reduction in inflation). If you don't have negative interest rates you will need a whole load of "money printing" to keep the system standing in place.

The assumption that a scarce money system (i.e. guaranteed non negative interest) has a fixed velocity of money is absurd. Put interest at -5% and just watch everyone withdraw cash from their bank account. The velocity of cash would be basically be zero and the velocity of money on bank accounts would be extremely high. As the government is doing deficit spending all the money just piles up somewhere and ends up doing nothing. QE is even worse because you cannot spend centralbank reserves to buy groceries.

https://youtu.be/j5l_Oeg6kMo

Ok, let's do the negative interest thing. It sounds like a big hassle right? Just think about the benefits: The first step after negative interest ratess would be to adjust the inflation target to 0% meaning perfect price stability. Actually, you wouldn't target inflation at all because the negative interest rate completely replaces the need for inflation. You would target the CPI itself meaning your goal as the government would be to maintain a CPI of 100 for all eternity. Any deviation would become inexcusable. Meanwhile today inflation is a hack to make a broken money system work.

Don't blame the fed. Blame the money.

Re: Chip shortage: Toyota to cut global production by 40%

#425

Post by nickff » Thu, Aug 19, 2021, 3:43 PM UTC

kube-system wrote: post #342

abfan1127 wrote: post #329

Earlier quoted context omitted.

The Federal Reserve hardly responds to market conditions. Their free and open printing of money is arguably the greatest risk to our economy. Milton Friedman has great resources on this, including a video series from the 1970s (based on clothing alone) called Free to Choose. Its on Youtube, amongst other places.

Natural boom-and-bust cycles are a huge risk to economies as well, despite the fact that they're natural and don't have anyone for which we can point a finger at.

The Federal Reserve was originally devised to put an end to the boom-bust cycle... Well before the Great Depression.

If you're going to point a finger, the Federal Reserve is a very good institution to point at.

Re: Chip shortage: Toyota to cut global production by 40%

#426

Post by varispeed » Thu, Aug 19, 2021, 3:43 PM UTC

dd36 wrote: post #21

Veliladon wrote: post #7

Toyota was one of the few (only?) companies to keep a large stockpile of chips on hand to continue production in case of a supply interruption. They kept something like two years worth on hand. I guess 18 months of doing the extremely heavy lifting for the whole industry has taken its toll and now they're in the same boat.

I thought Toyota invented not doing that.

Power 101: Preach one thing, do the opposite

It is smart to project to the world that just in time manufacturing is effective and then stockpile parts. This will get you ahead of competition if there is a problem like we experience now.

Re: Chip shortage: Toyota to cut global production by 40%

#427

Post by diveandfight » Thu, Aug 19, 2021, 3:43 PM UTC

throwawaygh wrote: post #385

cutemonster wrote: post #370

Earlier quoted context omitted.

> picking and choosing which industries are important voting bases. And on a bribes and corruption basis, to some extent, too? For example, I never thought about what are the strategic industries, when voting.

> For example, I never thought about what are the strategic industries, when voting. You're clearly not a dairy producer in Wisconsin, a military contractor in Virginia/Maryland, or a property owner in Southern Pines, NC.

Is there something uniquely strategic about property owners in Southern Pines?? If anything, based on my knowledge, military contractors would be the strategic play down there (just as in VA/MD).

Re: Chip shortage: Toyota to cut global production by 40%

#428

Post by throwawaygh » Thu, Aug 19, 2021, 3:43 PM UTC

robotresearcher wrote: post #415

a9h74j wrote: post #369

Earlier quoted context omitted.

It does have negative external effects, as you observe, in the sense of a viscious circle. But even a viscious circle, mathematically, has positive feedback, resulting initially in a positive exponent growing against time, not a negative exponent damping out in time.

Doesn’t positive feedback require a positive loop gain? Right now, not enough chips are available to make new chips. So the loop gain is less than zero, damping the output recursively.

I'm also confused by the confusion here... probably naive pattern matching? Reminds me of TAing undergrad courses where you could get more than half the class to confuse "positive feedback" and "negative feedback" on a midterm by just giving examples where stability = bad :)

Re: Chip shortage: Toyota to cut global production by 40%

#429

Post by WillPostForFood » Thu, Aug 19, 2021, 3:43 PM UTC

whall6 wrote: post #332

HideousKojima wrote: post #98

Earlier quoted context omitted.

Robustness isn't incompatible with capitalism, it's incompatible with any system where the government is willing to swoop in and bail out companies that fail. Companies that plan around failures/shortages/disruptions lose the ability to profit from their planning, while those that didn't plan ahead get showered with free money or cheap loans.

I don’t understand why this is getting downvoted considering this is almost verbatim what Taleb preaches.

he forgot the trigger warning: this post does not blame capitalism for all modern ills.

Re: Chip shortage: Toyota to cut global production by 40%

#430

Post by mindslight » Thu, Aug 19, 2021, 3:44 PM UTC

verdverm wrote: post #401

mindslight wrote: post #382

Earlier quoted context omitted.

> Need to let people raise prices to encourage slack in the system You're assuming that increased profit margins will automatically increase supply chain buffers. But rather, the same incentive to hire too many financialists that "save the company money" will exist, and the extra profit margin will just go to increased dividends. And increasing the supply chain buffers won't help much right now either, it has to be d…

> You're assuming that increased profit margins will automatically increase supply chain buffers. I read GP's comment as increase prices to decrease hoarding, which in theory could provide the slack in the system. Problem might be that certain products may not be viable if prices get too high. Only those with sufficient margins prior.

I don't see that raising prices would make consuming companies want to stock up less. A company that requires an input to manufacturing is going to have a pretty steep price-demand curve for every individual component. Even if prices for one of their scarce inputs doubles, they're still going to buy as much as they can rather than risk shutting down their entire production if they run out. Since their competitors are feeling the same pressure, they'll just raise their own prices to compensate.

It's like foodstuffs during the early pandemic - when you finally found something that they had been out of, you didn't particularly care about the price, and you generally bought extra so you wouldn't run out if it went missing again.