4 ms·

Maybe 'amoral' is a bit strong, but I think there is something wrong with an economic system where producers destroy wealth, rather than distribute all that is

Maybe 'amoral' is a bit strong, but I think there is something wrong with an economic system where producers destroy wealth, rather than distribute all that is produced. If it's wrong for the government to pay farmers to burn crops during a depression, then it's wrong for a monopoly to disable chip capabilities during a chip shortage.

jvanderbot 5y ago
I think you're framing the supply chain in a very personal (strawman) way. The problem is just one of "efficiency". The production is not perfectly aligned with where people are willing to spend money. A purely efficient market exists only in theory / textbooks / Adam Smith's Treatise. The chips that roll off a fab are not done. They aren't "burning crops". Perhaps they are abandoned (not completed) perhaps because they need to recoup or save resources to focus on finishing and shipping the working (full core) products. They aren't driving their trucks of finished products into the ocean.
- scoopertrooper 5y ago
  > The problem is just one of "efficiency". The production is not perfectly aligned with where people are willing to spend money. A purely efficient market exists only in theory / textbooks / Adam Smith's Treatise. Destroying wealth is not appropriate the market mechanism to deal with disequilibrium. Producers should either lower the price to meet the market or hold inventory if they anticipate increased future demand. However, the latter may be harder to do in the CPU business because inventory depreciates rapidly. Intel has hitherto been minimally affected by market pressures because they held an effective monopoly on the CPU market though that is fast changing. So, there is nothing necessarily "efficient" about what Intel is doing. They're maximising their returns through price discrimination at the expense of allocative efficiency. > The chips that roll off a fab are not done. They aren't "burning crops". Perhaps they are abandoned (not completed) perhaps because they need to recoup or save resources to focus on finishing and shipping the working (full core) products. They aren't driving their trucks of finished products into the ocean. That may be true in some cases, but not in others. I'm speaking directly to the case where a component is deliberately modified to reduce its capability for the specific purpose of price discrimination.

jvanderbot 5y ago

I think you're framing the supply chain in a very personal (strawman) way. The problem is just one of "efficiency". The production is not perfectly aligned with where people are willing to spend money. A purely efficient market exists only in theory / textbooks / Adam Smith's Treatise. The chips that roll off a fab are not done. They aren't "burning crops". Perhaps they are abandoned (not completed) perhaps because they need to recoup or save resources to focus on finishing and shipping the working (full core) products. They aren't driving their trucks of finished products into the ocean.

scoopertrooper 5y ago
> The problem is just one of "efficiency". The production is not perfectly aligned with where people are willing to spend money. A purely efficient market exists only in theory / textbooks / Adam Smith's Treatise. Destroying wealth is not appropriate the market mechanism to deal with disequilibrium. Producers should either lower the price to meet the market or hold inventory if they anticipate increased future demand. However, the latter may be harder to do in the CPU business because inventory depreciates rapidly. Intel has hitherto been minimally affected by market pressures because they held an effective monopoly on the CPU market though that is fast changing. So, there is nothing necessarily "efficient" about what Intel is doing. They're maximising their returns through price discrimination at the expense of allocative efficiency. > The chips that roll off a fab are not done. They aren't "burning crops". Perhaps they are abandoned (not completed) perhaps because they need to recoup or save resources to focus on finishing and shipping the working (full core) products. They aren't driving their trucks of finished products into the ocean. That may be true in some cases, but not in others. I'm speaking directly to the case where a component is deliberately modified to reduce its capability for the specific purpose of price discrimination.