Posts Tagged ‘trade policy’
“Nanotechnology is an idea that most people simply didn’t believe”*…
Indeed, in the 1980s, even as nanotech pioneer Erik Drexler, a graduate student at MIT at the time, was doing the early work of defining and charting a course for the nascent field, MIT’s departments of electric engineering and computer science refused to approve his Ph.D. topic and plan of study (though ultimately the Media Lab did, and Erik earned his doctorate).
Today the reality– and centrality– of the field are only too apparent and have become the subject of trade and industrial policy… because while the U.S. led in the development of nanotech science, it lags in manufacturing and commercialization. In an excerpt from their book Industrial Policy for the United States: Winning the Competition for Good Jobs and High-Value Industries, Ian Fletcher and Marc Fasteau explain…
Nanotechnology is the manipulation of matter at scales from a fraction of a nanometer to a few hundred nanometers — sizes between individual atoms and small single-celled organisms — at which it has radically different properties. Nanotech is already significant in many industries. Integrated circuits are a form of nanotech. Other nanotech provides the light, strong composites in aircraft and space vehicles. Still other nanotech powers the solid-state lasers used to transmit information through the internet and the light-emitting diodes in LED light bulbs and flat-screen TVs. Nanotech also makes possible solar cells, the batteries in electric cars, and medical technologies such as vaccines. It is thus the unifying thread of many of today’s most advanced technologies. Unfortunately, America is falling behind.
In the future, nanotech-based quantum computing and communications will lead to more powerful computers, transforming national security and internet commerce by making currently secret communications insecure. Medical nanotechnologies will permit targeted interventions at the cellular level, providing new weapons against diseases, biological weapons, and defenses against them. China is known to be working on these.
Much of the science underpinning these advances was developed at firms and universities in the US. But the huge manufacturing industries built on it are mostly overseas. For example, the organic light-emitting diode (OLED) technology Kodak created didn’t save that firm from going bankrupt in 2012. But it did enable lucrative businesses for Korea’s Samsung, to whom Kodak licensed the technology, and LG, which bought Kodak’s entire OLED business in 2009. Today, American firms like Nanosys and Universal Display develop important nanotechnologies, but do not actually manufacture the end products and are thus relatively small.
How did the US get itself into this situation? A major government program, the National Nanotechnology Initiative (NNI), has been funded since 2001, but Washington failed to appreciate the importance of having both a technology and a manufacturing strategy. The prevailing wisdom was that if the academic science was supported, mass manufacturing would follow automatically. By contrast, successful rival nations in nanotech have focused on making these technologies manufacturable at scale, employing every policy tool from R&D subsidies to cheap capital to tariffs. A 2020 National Academies review of the NNI urged that the US recognize that ‘the recent, focused, and in some cases novel commercialization approaches of other nations may be yielding better societal outcomes.’…
A little wonky, but both fascinating and important: “Nanotechnology,” via the invaluable Delanceyplace.com.
(Image above: source)
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As we get small, we might send miniscule birthday greetings to a man who whose work has contributed to the development of medical applications of nanotech: Bert Sakmann; he was born on this date in 1942. A cell physiologist, he shared the Nobel Prize in Physiology or Medicine (with Erwin Neher) in 1991 for their work on “the function of single ion channels in cells”– work made possible in part by their invention of the patch clamp.
“For every complex problem, there’s a solution that is simple, neat, and wrong”*…
Last year, in explaining the Biden Administration’s emerging new economic policy, National Security Advisor Jake Sullivan talked of a “small yard, high fence” approach to its trade with China. The idea: to place strict restrictions on a small number of technologies with significant military potential while maintaining normal economic exchange in other areas.
The estimable Henry Farrell argues that this approach to technology and China is working poorly (though, he suggests, it will work much worse if Trump wins and takes office in January). Self-reinforcing political feedback loops and self-reinforcing expectations are leading to breakdown.
The fundamental problem of managing geopolitics through manipulating technological trajectories is not readily solvable given existing means, Farrell suggests. We live in a much more complex world than existing state institutions are capable of handling. Therefore, he argues, we need to remake the state…
… Making the right choices in a complex policy environment requires an approach that is a world away from the application of brute force at scale. Your maps of the environment are going to be all wrong when you go in, and brute force is likely to have unexpected consequences. It isn’t just that you are going to make mistakes (you are), but your map of the actual problem you are trying to solve is likely to be utterly out of whack. As you try to catch up with China on EV, you discover that you don’t understand the market right. As you try to impose controls on military use of semiconductors, you find out that you don’t have the information you need to really actually understand how the semiconductor market works.
The problem – as Jen Pahlka’s book Recoding America explains at length – is that addressing such complex problems does not fit well with the way that the U.S. government works. When you are trying to impose order a vast sprawling bureaucracy, which is its own mid-sized global economy, and when your people don’t trust government much, you rely on rigid contracting systems, which define the problem in advance down to its finest details, even if that definition is out of whack with reality. You don’t build connections between the bureaucracy and outside actors, unless they run through cumbersome and rigidly pre-defined channels because it takes months or years to get approval for such connections. And you certainly don’t try to remake policy in realtime as your understanding of the situation changes. Pahlka’s book is cunningly disguised as an account of US software outsourcing practices. If it mentions either ‘national security’ or ‘economic security’ once, I don’t remember it. But it is arguably (along with Dan Davies’ similarly motivated The Unaccountability Machine) the most important book on these topics of the last twenty years. [Your correspondent heartily agrees.]…
… what do you do – is this. You start to think… about how to build economic security institutions that are designed from the ground up to manage complexity. If you want to take ‘small yard, high fence’ seriously as a policy approach, you need to build the apparatus to discover what lies inside, what lies outside, and what the barriers ought be. That apparatus – and its prescriptions – need to change over time both to match a better understanding of the policy environment, and changes in the environment itself.
And we don’t have the apparatus to actually implement small yard, high fence properly. Nor do we have it for pretty well every other plausible economic security policy you might imagine, short of a brute force decoupling of the U.S. and Chinese economies. And if you did that, you would need enormous capacity to manage the horrifically complex aftermath, if that aftermath could even be managed at all.
Clearly, it is far easier to make these arguments in the general than the particular. Saying that you need reforms is straightforward, but figuring out what they ought to be, let alone how to implement them in current political circumstances, is an altogether more difficult challenge. But it is where the debate needs to be going – and there is a role for technology in it. We are in a situation that rhymes in weird ways with the situation discovered by Vannevar Bush after World War II – recognizing that the needs of government had changed, that vastly better information and feedback systems were required to meet those needs, and that even if we didn’t exactly know what those systems were, we needed to start figuring them out, and quickly. That world had its pathologies. This one does too. But to prevent them becoming worse, we need better ways to manage them, and to ensure that the solutions are better than the problems that they are supposed to mitigate.
This is – obviously – a radical set of claims. But it’s one that is entailed by the diagnosis of the problem that I’ve presented. If we need to manage complex challenges – of which the U.S. China relationship is only one – we need a state that is capable of managing complexities. We don’t have one. And that remains a first order problem, regardless of however hawkish or dovish you are…
We need a new kind of state for the new geopolitics: “‘Small Yard, High Fence’: these four words conceal a mess,” from @himself.bsky.social (and @pahlkadot.bsky.social). Eminently worth reading in full.
* H.L. Mencken
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As we ruminate on restructuring, we might recall that it was on this date in 1954 (7 years after the transistor was developed at Bell Labs) that Texas Instruments introduced the Regency TR-1, the first commercially-manufactured transistor radio. Its performance was mediocre, but its small size and portability drove sales of over 150,000 units.
Further to Farrell’s and Pahlka’s points, it’s instructive to ponder what became of the transistor radio as a product category (and of the competitors in it) over the next few decades– and the altogether-unanticipated plethora of small, convenient, hand-held product categories it spawned: calculators, mobile phones, tablets… and whatever comes next…
“In order for the United States to do the right things for the long term, it appears to be helpful for us to have the prospect of humiliation. Sputnik helped us fund good science – really good science: the semiconductor came out of it.”*…
Now the question is the semiconductor itself… and as Arthur Goldhammer explains in his review of Chris Miller‘s important new book Chip War, the answer may not be as clear as many suggest…
In left-liberal circles there is a rough consensus about what has gone wrong with our politics over the past 40 years. The critique can be summed up in two words: neoliberalism and globalization. Although these capacious ideological generalizations cover a multitude of sins, the gravamen of the charge against both is that, in the name of economic efficiency and growth, globalizing neoliberals of both the right and the left justified depriving national governments of the power to reduce inequalities of wealth and income, promote equal opportunity, and protect the health and welfare of the citizenry. Neoliberals prioritized property rights over social and political rights and protected markets from political meddling. They removed regulatory fetters on the movement of capital and sought the cheapest labor they could find to put their money to work. As a result, from the late 1970s on, governments across the developed world retreated from the social democratic reforms credited with fostering the harmonious prosperity of the three decades following World War II—the period the French have dubbed les Trente Glorieuses—thereby triggering a populist and xenophobic backlash while polarizing previously consensual political systems and weakening resistance to authoritarian demagogues.
This account of political change across the Western world since the 1980s has much to recommend it, not least the implication that the globalized neoliberal regime has sown the seeds of its own impending demise. This is the view espoused in one form or another by a number of excellent recent books, among them Gary Gerstle’s The Rise and Fall of the Neoliberal Order, Michael Tomasky’s The Middle Out, and Bradford DeLong’s Slouching Towards Utopia. Yet each of these estimable authors embraces the notion that the novel feature of the period was superstructural, to borrow a term of art from the Marxist lexicon: All believe that ideology was in the driver’s seat and that it was the readiness of left-liberals to accede to the tenets of market-first ideology that established neoliberalism as the unsurpassable political horizon of the age (to borrow a phrase from philosopher Jean-Paul Sartre).
But what if this superstructural interpretation is incomplete? What if it blinds us to a deeper transformation of the means of production themselves? What if the key innovation of the 1970s and ’80s was the advent not of neoliberal ideology but of the microprocessor, which simultaneously created new markets, dramatically altered trade flows, and shifted both the economic and military balance of power among nations? And what if this crucial technological innovation can trace its roots all the way back to the aforementioned Trente Glorieuses? What if the glory years of social democracy saw the benefits of higher education spread much more widely than ever before, disseminating technological skills throughout the world and making it possible to tap far more of humanity’s collective brainpower, while creating a web of interdependent corporations spanning both the developed and less developed worlds? The microprocessor not only became the flagship product of the neoliberal era’s dominant industry but also served as its indispensable instrument, without which it would have been impossible to tame the torrents of information necessary to manage far-flung supply chains and global capital flows.
Chris Miller’s Chip War deserves credit precisely for redirecting our attention from superstructure to base, from the high political drama of the past four decades to the more prosaic business of manufacturing microchips. At its most basic level, the book offers a masterful history of the semiconductor industry, from the invention of the first transistor in 1947 to the incredibly complex machinery required to deposit tens of billions of nearly atom-sized switches on a silicon chip no larger than a fingernail. Miller, who teaches international history at Tufts University’s Fletcher School, emphasizes the national security implications of a global supply chain in which components crucial to U.S. defense must pass through choke points such as Taiwan subject to intervention by commercial and strategic rivals. But the history he recounts in vivid detail also tells a more hopeful story, illustrating the way in which globalization has made it possible to mobilize humanity’s collective brainpower to achieve progress that no single country could have achieved on its own.
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In assessing the national security risks posed by China’s semiconductor ambitions, some analysts seem to have accepted Andy Grove’s adage that “only the paranoid survive” at face value. While one former UK intelligence official argued that “we should accept that China will be a global tech power in the future and start managing the risk,” the United States, taking a darker view of China’s aims, has set out to stop China in its tracks by pressuring allies to reject Huawei chips and by banning the export of certain U.S.-developed technologies to China, most notably with the CHIPS Act of 2022 and related legislation.
Such aggressive policies could backfire, however. Miller quotes China tech policy analyst Dan Wang, who argues that American restrictions have “boosted Beijing’s quest for tech dominance” by catalyzing new Chinese government policies that support their local chip industry, including the training of tens of thousands of electrical engineers and condensed matter physicists. There are good reasons to worry about China’s military ambitions, but it is probably futile to try to halt the spread of technology as though it were a bulk good susceptible to blockade. There are also less aggressive ways to alleviate Chinese threats to the global supply chain: For instance, U.S. incentives have encouraged TSMC to move some of its operations from Taiwan to Arizona.
Finally, history shows that trying to stymie competitors by impeding the flow of technical information is unlikely to work against an adversary like China, with a large pool of educated workers and substantial ability to invest in research and development. Remember that Britain tried to monopolize early nineteenth-century textile technology, but Samuel Slater, the “father of the American Industrial Revolution,” used his knowledge of British machine designs to develop better technology in his adopted country. The way to compete effectively with China is not to ratchet up bellicose rhetoric about defending Taiwan or attempt to halt the spread of technical know-how by drafting new CHIP Acts, but to educate American workers and foster closer cooperation with other countries that have taken the lead in developing key aspects of the semiconductor manufacturing process. The history that Miller recounts demonstrates that what matters most in achieving technological leadership is free movement of people and ideas, not tariffs, export controls, or paranoid levels of fear. The best counterweight to Chinese military and commercial ambitions is the collective brainpower of the democratic world, not chip embargoes and saber-rattling…
The United States wants to stop China’s semiconductor industry in its tracks. Here’s how that could backfire: “Chip Shots,” from @artgoldhammer in @DemJournal. Eminently worth reading in full.
See also: “No, I Do Not Think the Microprocessor Doomed Social Democracy,” an elaboration on and response to Goldhammer from Brad DeLong (@delong).
* Bill Gates
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As we ponder policy, we might recall that it was on this date in 1980 that Microsoft launched its first hardware product, the Z-80 SoftCard.
The brainchild of Paul Allen, the SoftCard was a microprocessor that plugged into the Apple II personal computer, allowing it to run programs written for the CP/M operating system. CP/M was a very popular OS for early personal computers, one for which much software was written. Indeed, the word processor WordStar was so popular that users purchased the SoftCard and a companion “80-column card” just to run it on the Apple II. At one point, the SoftCard product brought in about half of Microsoft’s total revenue. It was discontinued in 1986 as CP/M’s popularity waned in the face of competition from Microsoft’s own MS-DOS (and the growing popularity of Microsoft’s Word and Excel applications).
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