Even the early Roman legions were composed of land owning citizens. Partly because they could afford / knew people they could get equipment from. Also likely because you wanted people in the establishment that you could trust armed and the power that went with it.
I believe the latter was key and democratization of the armed forced was at least one reason the dictators (Julius etc) were able to maintain loyalty of their troops as they eliminated the republic as such. Im not super well read here though.
Higher level, Fukuyamas political order series does a great deep dive into these kinds of topics, really blew my mind, and made many archaic seeming political structures make far more intuitive sense to me afterwards.
If demand declines then the shortage is still solved regardless.
If it doesn't decline, than anyone who took that risk and increased their production capacity will benefit greatly, and those who didn't will lose market share.
And if they invest in new fabs and the bubble doesn't pop then they make a whole lot of that money they're in business to make.
The incentives here are naturally very well aligned with solving the shortage. If doing nothing is likely to solve the shortage, then they'll do nothing. If increasing supply is likely to solve the shortage, then they'll increase supply. If there's a 50/50 chance of both, then some will increase supply and some will do nothing, and the market will reward whichever group was right and punish the other.
Building a new factory would cost $20 billion and take 3 to 4 years [0,1]. With chip output capacity and AI boom profit margins, it would take just under a decade to break even. If the bubble bursts and chips return to pre-boom levels, then it would take over 30 years to break even.
Ford had almost $20 billion in EV car manufacturing investments planned for the mid-late 2020s and the abrupt end of the EV subsidies cost Ford billions of dollars and they have abandoned multiple investments.
If you do nothing, you still are rewarded because you are making pure profit in either scenario. If you invest billions then you are digging out of that for years regardless, and could be in the whole for decades if you bet wrong.
Correct, if you invest billions then you are taking a risk which could either pay off or not depending on whether you're right about that investment being an efficient use of society's resources.
Existing fabs are currently reaping the rewards of their previous wise investments in building out this capacity in the first place right before a shortage. Without those past investments, the shortage today would be even worse. Future rewards will be allocated based on who correctly predicts the best use of current resources to meet future demand (whether that includes huge investments to build even more fabs or not is yet to be discovered).
You forgot to say “Amen” at the end of your gospel.
I'm always baffled how seriously some people take that “market and incentives always lead to the greater good” religion despite plenty of empirical evidence against it.
But hey, there are creationists out there too so it's not too surprising I guess.
> “market and incentives always lead to the greater good”
I never said anything of the sort, I'm just explaining basic economic facts. Feel free to pretend they aren't true if you wish, but if you do then for all our sakes please stay as far away from the levers of economic policy as possible.
These aren't “basic economic facts”, these are basic pieces of economic liturgy, it's not grounded in any factual reality. It only works in microeconomics lalaland.
In the real world, executives simply aren't being incentivized for all-or-nothing risk taking and the shareholders of public industrial companies don't want the executives to make gambles in an attempt to make a big payout, they want steady yields with limited risks. And the financial actors who would be ready to take this kind of “high risk high reward” bets aren't operating in these kinds of markets.
Just look out of the window, semiconductor and electronics fabs aren't rushing to expand their capacity, they are very familiar with the issue of oversupply and are always very cautious before making capacity investment, because they know it could very well make them go under very quick should the market reverse.
The more time passes, the more convinced I am that nothing did more damage to the broader public understanding of economic dynamics than the average Econ 101 class.
The real world is indeed more complicated, but not in a way which renders the basic rules of economics untrue. What you're doing is the economic equivalent of pointing at an airplane and saying "Look at that! And you really still believe gravity exists?!? What an idiot!" I'm just pointing out some simple facts which tell us the plane will eventually come back down.
Except the “rules” in question are more akin to “the earth is the center of the universe” than they are to gravity. There's a strong religious aspect to it that make it stick no matter how many empirical refutation have been made.
That's the limit for continuous rated power. The motor's frequently have 600W-750W of peak power output, and can legally use this much for short amounts of time (usually seconds, like accelerating from a stop; but often also for going up a steep hill for several minutes).
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