Like many others, I’ve recently joined Mastodon. You can find me there as @DianeCoyle1859@econtwitter.net
Author Archives: Diane Coyle
Use it or lose it – semiconductor version
I highly recommend Chris Miller’s Chip War: The Fight for the World’s Most Critical Technology. It starts with the history of the development of semiconductors, which might be familiar from other Silicon Valley histories (such as Margaret O’Mara’s also excellent The Code). But the book then goes on to less familiar and more recent territory, encompassing the technological changes needed to manufacture ever-more precise chips and the huge scale, complexity and sophistication of their fabrication. This introduces companies that have recently become familiar (AMSL in the Netherlands, making the machines that are needed to do the fabrication, and TSMC in Taiwan, which produces more than 90% of the most advanced chips) – and also others key to the process that are still not very well known in general.
The narrative arc is a steady shift from US leadership in both technology and manufacturing, to Asian leadership in manufacturing and rapid catch-up – especially in China thanks to large-scale subsidies and IP theft – in some slices of the technology. The result is an extraordinarily complex global supply chain with a number of very narrow 1 or 2 firm bottlenecks. The best to hope for seems to be a version of the Mutually Assured Destruction doctrine: no country can afford disruption. The worst? Massive disruption of all aspects of modern economic life.
That there would be some shift seems inevitable: as East Asian economies developed in the late 20th century they would always try to move up the value chain into more sophisticated sectors. However, the book is quietly but strongly critical of the pro-globalisation philosophy of the US (and rest of the west) that gave up on retaining core manufacturing and engineering competencies at home – their loss didn’t matter until it really did, with the re-emergence of geopolitical strife. As the book puts it, there was a “liberal internationalist ethos that guided officials of both political parties amid America’s unipolar moment.” Yet Andy Grove’s paranoia was valid, when he said in the early 2010s: “Abandoning today’s ‘commodity’ manufacturing can lock you out of tomorrow’s emerging industry.” (One of the best summary articles making eactly this point is Gregory Tassey in JEP in 2014.)
There is a lot of interesting detail. For example, I hadn’t realised how much Darpa focused on educational infrastructure – funding students and workshops, and university computer equipment, as well as futuristic tech research. There are lots of great examples of the difficulty of copying advanced chip technology because of the necessary tacit knowledge: for instance, every AMSL photolithography machine comes with a lifetime supply of AMSL technicians to tend to it. This is either hopeful – China will find it hard to catch up fully – or not – the US or EU will not be able to catch up with TSMC because of the latter’s vast embedded know-how. Another example is the fact that defence dollars bought 72% of all integrated circuits produced in 1965, but Robert McNamara’s deffence budget cuts led Robert Noyce of Fairchild to bet on the consumer market and slash chip prices from $20 to $2. Annual US computer sales went from 1000 in 1957 to 18,700 a decade later.
All this and much more. The book has no easy policy solutions but is an essential contribution to current debates about industrial policy.
An economic experts paradox?
Anna Killick’s book Politicians and Economic Experts: The Limits of Technocracy makes for interesting reading, if you’re an economist interested in policy. The book summarises a research project based on interviews with politicians engaged (currently or in the recent past) in economic policy issues, in five countries: Denmark, France, German, UK and US. My main takeaway from the book is that politicians on average have low respect for economists – albeit for varying reasons depending on their country and ideology. For example, some see economists as political commentators, a comment made about someone like Paul Krugman in the US. Others despair more generally about the lack of consensus in economic advice. One quoted comment is that there have been no new big ideas in economics since Keynes, and no substantive progress, unlike medicine. Many comments complain about economists’ inability either to communicate effectively or to appreciate political constraints (the latter being something I’ve written about – if the outcome of an economic analysis simply can’t be implemented, the analysis is at best incomplete.)
The book concludes: “The most powerful insight into politicians that this study offers is their unease about any further ceding of power to economic experts…. they have been shaken by the populist manifestations of the past five years; Brexit, Trump, the rise of the AfD, the RN and the yellow vests. They have only one choice: to re-engage with voters on economic issues, in a contested form, in the political domain.” I agree that previously technocratic areas of policy are becoming unavoidably areas of political contestation.
So why a paradox? Because the language and concepts of economics still hold such powerful sway in many areas of policy – a case Elizabeth Popp Berman makes for the US, or debate about ‘the Treasury View’ in the UK. And indeed I would argue strongly for the importance of technocratic input into decisions concerning complex areas, with better communication, and a sensitivity to the political dimensions. There’s also a lot of interesting detail in the book – the distinctiveness of the French, the much greater polarisation of the Americans, the identity of the economists or schools of thought different politicians cite.
Enlightened Economist Prize 2022 – the winner
It’s always much harder to select a winner than to decide on the 10 (occasionally 12) books on the longlist, and somehow harder than usual this year. For I’ve decided there are two that have the combination of interest, distinctiveness and excellent writing I’m looking for. So, with the usual caveat that this is an entirely personal decision based on what I happen to have read, my own interests, (and no doubt my mood at the time), I’m offering a free lunch to both Brad DeLong for Slouching Towards Utopia and James Bessen for The New Goliaths. Congratulations to both!
Times without a rulebook
“This is a short book on a vast topic.” So starts Rules: A Short History of What We Live By, by Lorraine Dalston. I enjoyed reading it without ever feeling I got to grips with what it’s about, and the vastness of the topic might be the explanation – or the fact that it’s a lecture series in origin. The chapters work roughly chronologically from the ancient world to today, exploring different aspects of rules – rules versus discretion, rules as regulations, rules of art, rules as laws or norms, rules as algorithms. The book is packed with historical nuggets of information, of the kind I very much enjoy. On the other hand, there’s no narrative arc. It’s a pointillist painting of a book at a focal length that doesn’t reveal the big picture.
Perhaps this is a bit unfair. There are some mid-level conclusions. ‘Thin’ rules such as routine algorithms or traffic regulation work well in stable contexts, and require a good deal of pre-existing infrastructure, be it training data or investment in traffic lights and cameras. ‘Thick’ rules are needed for situations requiring flexibility and judgement, and tend to have exceptions to prove them. “Low tolerance for discretion indexes rampant distrust in society,” she writes. Either governments which don’t trust their citizens, and so apply pettifogging rigour, or sometimes citizens who don’t trust authority.
Sometimes explicit rules need implicit ones to support and enforce them; the ideal of sufficient stability and predictability to do without the implicit is perhaps a modernist interlude. But the book’s final conclusion? “In abnormal times, when we are thrown into the breach without a rulebook, we once again become aware that there are no rules to help us reason about rules.”
