Microprocessors as a Leading Sector
& BRIEFLY NOTED: For 2022-03-03 Th
First: Microprocessors as a Leading Sector
How important a leading sector can possibly be depends on (a) what share of the economy it starts out at, (b) what is its average price elasticity of demand, and (c) how fast its rate of technical progress turns out to be.
If you simplify and assume you have a real income elasticity of one, the boost to properly-measured real income from technological progress is roughly equal to the speed of the proportional read price decline of the commodity times the share of total purchases spent on that commodity. That means that for a commodity with a price elasticity of demand of 1/2—so that total revenue spent on the commodity is proportional to the inverse of the quantity produced—the maximum possible gain, no matter how far and fast technological progress proceeds, is simply twice the initial spending share. (At the limit, when making the good is free, the real income surplus you gain is simply twice of the value of your initial spending on it: all the resources used to produce that, you can now redirect to other purposes, plus there is an equal amount from the surplus created as the quantity demanded grows when the price declines.) If the price elasticity of demand is 1, then the spending share is constant, so that the boost is constant over time if the rate of technological progress and thus of price decline is constant.
And if you have a commodity for which the price of demand is greater than one, like microprocessors appear to be? Then the rate at which the surplus accumulates grows over time. And that is where we seem to be right now:
Pushkar: Chip Wars: ‘Even though TSMC commands an enormous manufacturing scale and market valuation, it is not entirely at liberty to set the direction and cadence of Moore’s Law on its own…. Its technology roadmap is heavily influenced by the product roadmaps and requirements of its largest customers and the roadmaps and capabilities of its suppliers like ASML and Applied Materials…. Fifteen years ago, Intel annual revenues were 3X larger than those of either Google or Amazon, while Intel made nearly 2X the revenue of Apple! Microsoft was the only one of these 4 companies with a revenue higher than Intel. Today, these four companies earn 10X more in combined revenue than the three largest chipmakers!…
A consistent cadence of technological progress has set apart the semiconductor industry from any other in human history and has underpinned nearly all aspects of technological evolution; indeed, of all human progress over the last 50 years. The mobile wave of computing flattened the semiconductor world order and created a multi-polar industry wherein the predictable pace of progress is no longer driven by a single entity alone; rather this progress will now require close collaboration between multiple large and disparate corporations and governments alike. It will also require massive capital outlays, beyond the reach of any single entity alone. And finally, it will require collaboration across international borders while maneuvering around geopolitical hotspots…
LINK:
Yes, I know that the aggregate numbers the BEA calculates do not show it, and have not shown it for a long time. But I have good reason, I think, to believe that precisely because information goods are non-rival, and hence it is difficult to capture value from selling them, that the ratio of user surplus to factor cost for those information goods we do manage to produce is much higher than for physical brick-and-mortar. And progress in microprocessors is enabling us to produce ever larger quantities and qualities of information goods.
If these powers are used for good, and not for evil…
One Video:
Marc Sumerlin: United States Economic History, 1790 – 1930 <https://www.youtube.com/watch?v=U5j83u-q1LE>:
One Picture:
Very Briefly Noted:
Tim Duy: Powell Sticks With the Hawkish Script: ‘I am not so confident, although I guess it depends on your definition of soft-landing. I only think of 1995 and 2019 as soft landings. In any event, I still think it most likely that we are past the point of no return on this issue. By the end of the year, the choice between recession and inflation will be stark, putting a stagflationary outcome in play. On that question specifically, Powell is cautiously optimistic...
FRED: Nonfarm Business Sector: Labor Productivity (Output per Hour) for All Employed Persons: ’6.62%… <https://fred.stlouisfed.org/graph/?g=MAnB>
Lorena Hernandez Barcena & David Wessel: How Does the Fed Define “Maximum Employment”? <https://www.brookings.edu/blog/up-front/2022/02/23/how-does-the-fed-define-maximum-employment/>
Jean-Baptiste Jeangène Vilmer: Putin Loses No Matter How This Plays Out, But We Might Too<https://warontherocks.com/2022/03/putin-loses-no-matter-how-this-plays-out-but-we-might-too/>
Bill Browder: ’The elephant in the room. The U.K. and US committed in 1994 to protect the territorial integrity of Ukraine in exchange for Ukraine giving up its nuclear weapons. Now that is being threatened, we have a moral imperative to at least set up a no-fly zone… <https://twitter.com/i/timeline>
Carole Cadwalladr: ’The Germans are seizing yachts. The French are seizing yachts. Meanwhile, Britain is letting oligarchs quietly put their affairs in order before slipping out of the country. If you were furious about the Downing Street parties, you should be sick to your stomach about this…
Jo Walker: Parsimony is when a wild animal virus escapes from a lab and then causes an outbreak at an unconnected wild animal market: “just because we pulled a dead guy covered in bite marks out of shark-infested waters doesn’t disprove the possibility that he got mauled by a lion and then decided to take a swim”… <
Mueller, She Wrote: ’THREAD: as promised, here is my breakdown of the 1/6 committee filing asserting that donald trump and John Eastman violated federal criminal law…
Aram Zucker-Scharff: ’Individualized user tracking & targeting generates negative societal outcomes for no real societal value other than cheaper ads. Which is not good!…
Brian Tyler Cohen: ’NEW: Both Georgia and Moldova apply to join the European Union…
Paragraphs:
Arjun Appadurai: The Dawn of Everything?: ‘What is the argument of the book?… Our ancestors were… self-conscious political actors, playing with different models of social life, experimenting with forms of trading, kinship, farming and transportation which would best suit their ecological niches and their built-in preference to live as they pleased.… [But] if many million human beings from the Arctic to Amazonia, and from the Balkans to East Asia, had invented and deliberately chosen, defended and sustained social designs to prevent permanent stratification, exploitation and oppression… how do we account for the steady drift, later a sprint, towards cities, classes, taxes, exploited labour surpluses and permanent elites, in the whole of the known world?… States, charisma, bureaucracy. It is not surprising that an invented question (why do free people eventually get seduced into unfreedom) leads to an artificial answer (because they allowed bureaucrats to get a nose inside their tents)…
Ellen Ioannes: Vox Sentences: ‘“We’ve reached a new moment in the fight against Covid-19 where severe cases are down to a level not seen since July of last year,” Biden said during Tuesday’s State of the Union address. However, he stressed that although the new plan is aimed at making the crisis less acute, “we never will just accept living with Covid-19, we’ll continue to combat the virus, as we do other diseases.” The new plan will expand access to Covid-19 oral antiviral treatments… along with rapid tests…. All the new initiatives will require new funding from Congress, which will go toward increasing vaccine manufacturing capability; replenishing the national stockpile of tests, masks, and antiviral pills; and increasing monitoring capabilities to detect variants…
Steve Saideman: Irredentism 101: ‘Efforts by groups or countries to reunify lost territories with a homeland…. This is a bad move for Russia and the Russian people and much worse for Ukraine. Whether it pays off politically for Putin is not clear. Many irredentist efforts are gambles that do not pay off very well…. In sum, irredentism means war, and it is not easy to deter or prevent. Ukraine is screwed, and there is not much we can do about it but make it costly…
LINK: <http://saideman.blogspot.com/>
Ian Millhiser: Amy Coney Barrett Is Not Being Honest About What the Supreme Court Is Up to: ‘The rhetoric of judicial restraint is potent, so it is understandable why Barrett wants to tap into that potency…. Barrett is hardly the only justice to engage in such rhetoric…. Gorsuch recently published an entire book claiming that judges should rely almost exclusively on the text of a statute or constitutional provision…. Thomas frequently calls for radical shifts in the law… to restore the “original understanding” of the Constitution…. Alito, the Court’s most partisan justice, recently attributed his new, entirely atextual limits on the Voting Rights Act to having taken “a fresh look at the statutory text”…
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Subject: Prospects for World Peace & Prosperity Through World Law?
Until last week, I thought that the prospects for world peace and prosperity through world law were on the decline. I gave a talk back in 2013 about how the European Union had fumbled it—had failed to deal properly with the Great Recession, and so it was losing energy and credibility. And that was my view—up until last week. It seemed as though cosmopolitanism and democracy were on the retreat, and that we were not doing well at strengthening the "peace interest" that Karl Polanyi first identified as a principal feature of the 1815 to 1914 version of the 19th century.
I may be imagining things. But now it seems to me as though everything has changed. Brexit has crystallized, even for many of those were formally its cheerleaders, as much more a demonstration of what not to do then what to do, as Britain finds itself we cannot just economically but politically and morally as well. And the invasion of Ukraine has made everybody keenly aware of how much and how important it is for them to be Europeans united, in a way that has not been the case since the end of the Cold War:
Does anyone have the full text for Arjun Appadurai's comments?