Mr. Chang’s comment in the title came a mere matter of months after a much-ballyhooed opening of a new Taiwan Semiconductor Manufacturing Corporation (TSMC) facility in Phoenix, Arizona, a heavily subsidized joint effort with the state of Arizona and the federal government’s CHIPS Act. President Biden gushed during the opening ceremonies that manufacturing in the U.S. “is back, folks.” However, Mr. Chang had a hard look at the financials and concluded that the Arizona plant was a loser and the CHIPS Act ($52 billion in chip subsidies) was a “very expensive exercise in futility.” TSMC is scaling back operations at the new plant.
Why the harsh assessment? The “folks” at TSMC came to realize that business activity in America is a much more expensive proposition than they had earlier contemplated. We are simply uncompetitive and the freebies – free infrastructure, other giveaways, tax goodies, etc. – can’t make up for the cultural, social, political, and economic deficits. The Rust Belt, California’s economic decrepitude, and the other blue states’ dismal economic futures are not magical, accidental happenstances. They are a byproduct of America’s current – and past – infatuation with government intervention for an ever-expanding list of excuses.
The Democratic Party is the institutional gatekeeper of this our bumbling central planning, with some Republicans tagging along in the hope of sharing in the reflected glory of a big and splashy event. But for the donkey party, they see themselves as the keeper of the lodestar – a sort of Ark of the Covenant – of their vision, and it is none other than the New Deal. It’s a forever template to be repeated endlessly. Of course, one must ignore the fact that it was a disaster. The depression became a Great Depression which persisted for a decade, was interrupted by the emergency of World War II, and was set to resume if subsequent Republican Congresses in the late 1940’s hadn’t interceded to quash much of the madness
Whenever the donkey party ascends the grimy pole of power, their favorite ploy is to imitate FDR. So, concerns of declining domestic manufacturing – which, if true, was a result of government interventions – is to be addressed by . . . more government intervention. Thus, the CHIPS Act is just another exercise in flooding the zone with taxpayer moneys like in the heady days of FDR’s meddling.
True, today, Trump and his cadre of “populist” Republicans also love the idea of slathering gobs of the public treasury on favorite obsessions such as manufacturing and employing the stick of government intervention in tariffs to protect their golden boy. They don’t have the smarts to understand that it’s central planning by another name. Call it “industrial policy”. It’s a rebranded New Deal for a new era of demagogues and nitwits.
Why did this latest effort at what doesn’t work fail? Mr. Chang belatedly noticed that he entered the snake pit that is America. The Rust Belt of the Upper Midwest became a rusty belt of abandoned factories, expanding slums, chronic unemployment, and a declining tax base because of the unrestrained greed of government-empowered labor unions, onerous taxation, and the country’s ascent to the zenith of reregulating its economy. Much of what made the Rust Belt rusty remains, and gets a boost whenever the donkey party is granted the keys to the kingdom.
Think about all the ways that America is an economic snake pit. Ever since FDR’s New Deal lavishly spent and bullied farmers, workers, and entrepreneurs for a decade, Democrats have assiduously worked to revive the monster. The 1970’s rise of environmentalism replaced the 1930’s corporatism and socialism as the go-to excuse to bring back the Leviathan. Out came the well-intentioned Clean Water Act, Clean Air Act, National Environmental Policy Act (NEPA), the California Environmental Quality Act (CEQA), and their subsequent amendments, and herd of agencies and regulations.
California has a housing crisis for the same reason that Mr. Chang has a gloomy attitude about chip manufacturing in Arizona, or any other place in America. Permitting and the host of other approvals easily doubles the cost of plant construction as compared to Taiwan. Additionally, labor costs are through the roof: triple, maybe four times the cost of Taiwanese workers when you factor in all the mandated benefits alongside the higher wages and salaries. Don’t expect these numbers to remain the same for long if local lefties discover America’s proven appetite for hiking the minimum wage. The jump in wages for fast food workers ripples through the economy all the way to the plant floor.
The quality of what economists call human capital is another troubling factor. Chief among the attributes of human capital is a robust work ethic, which includes timely, quick responses to problems at work. Shang-yi Chiang, TSMC’s head of research and development, was quoted as saying, “people worked so much harder in Taiwan.” He cites the example of an equipment failure at 1 a.m. being immediately repaired by 2 a.m. in Taiwan. In America, the plant has to wait till 10 a.m. He concludes about the island’s workforce, “They [workers] do not complain, and their spouse does not complain either.”
Of course, panderers at Fox News or MSNBC, and “populists” everywhere, would counter with something about Americans not being wage slaves, or similar rhetoric. But they ignore the time when Taiwan’s Horatio Algierses were actually Americans of the 19th century. A cursory biographical reading of the lives of Carnegie, Rockefeller, Vanderbilt, Ford, etc., reads like Chaing’s depiction of the average Taiwanese employee. Did we lose our va-va-voom in an avalanche of modern self-satisfaction, self-esteem, and victimhood indoctrination?
Indeed, indoctrination is the watchword in describing much of American public education today. As for teaching math, science, reading, history, literature, and civics, the academic core, NAEP scores have stagnated at embarrassing levels if not fallen. Proficiency in U.S. History and Civics by eighth-graders currently hovers around 14% and 22% respectively. The OECD’s Programme for International Student Assessment (PISA) shows a significant step down from Taiwan to the U.S. in academic performance in math and science.
The differential would probably be much worse if the U.S. hadn’t experienced a large influx of Asians over the past few decades who are still somewhat immune from our pop-cultural depredations. They dominate enrollments in elite high schools and college programs in math and science to such an extent that Big Academia practices covert reverse discrimination against them, treating them as “white” in this new era of blatant DEI racial favoritism.
Yes, friendly foreign investors face a snake pit of an ill-prepared labor pool, one with a declining appreciation for hard work, and an economic environment plagued by a host of collectivist busy bodies who are heavily bankrolled by the hyper-wealthy possessing the means to insulate themselves from the insipid consequences of their lofty ideals. Analogies work best in describing this state of affairs. A snake pit is an accurate depiction of the economic ecosystem but flies-to-cow-paddies or maybe piranhas-in-a-feeding-frenzy is a much better fit for our government interventions of regulation and subsidies. American government brings to the table its retinue of rent seekers and socialistic/neo-Marxist partisans to muck up the works. Throw out the money and regulatory power and like flies or piranha this brood shows up to feed on the carcass. Apparently, TSMC doesn’t relish being viewed as cold meat on the side of the road.
Welcoming TSMC with the CHIPS Act, our government hid the regulatory “guardrails” (Biden’s word) that turned the well-intentioned into a feeding frenzy. The law to replant chip manufacturing in the U.S. was saddled with mandates for favored demographics, our adversarial labor unions, greenie canards, and DEI and ESG and all the other acronyms of the hard left’s political project. As in “Arbeit Macht Frei” over the gates of Auschwitz, the “CHIPS Act Notice of Funding Opportunity” welcomes recipients of this government largesse. This gamut of insidiousness in the “Notice” was the translation of the Act’s language by the Department of Commerce and the National Institute of Standards and Technology into an expensive regulatory morass.
Since analogies work best, quicksand is more accurate than “revitalization”. “Revitalization” means to make healthy again, but health isn’t the actual goal. The CHIPS Act was just another vehicle to advance a political and cultural revolution. And these revolutions are expensive, and two centuries of experience shows them to be descents into a life of, in Thomas Hobbes’s words, the “solitary, poor, nasty, brutish, and short”.
Beware of our government’s handouts. Our dole didn’t benefit the poor – if their neighborhoods are any indication – and they won’t benefit anyone operating with a bottom line.
RogerG
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* For a account of the New Deal, go to the following: The Forgotten Man: A New History of the Great Depression, Amity Shlaes, Harper, 2008. The “forgotten man” in the title is a reference to the average worker, taxpayer, and businessman, not to the Left’s litany of the “oppressed”.
* The situation involving TSMC’s Arizona chips plant is appraised in “Why the CHIPS Act Will Fail”, Jordan McGillis (Manhattan Institute) and Clay Robinson (Arizona State graduate student), National Review, 5/11/23, at https://www.nationalreview.com/magazine/2023/05/29/why-the-chips-act-will-fail/
* For American student academic performance turn to “US eighth-grade history, civics scores fall to 1990s levels”, NewsNation, 5/3/2023; “Reading and mathematics scores decline during COVID-19 pandemic”, NAEP, National Center for Education Statistics, 2022, at https://www.nationsreportcard.gov/highlights/ltt/2022/
* “Chip War: The Fight for the World’s Most Critical Technology”, Chris Miller, Scribner, 2022.