2026-01-13 17:40:38
“Damn it feels good to be a gangsta/ Gettin' voted into the White House” — Geto Boys
I recently listened to an audiobook about the Napoleonic Wars. Overall, the book wasn’t very good, but there was one interesting part where it described Napoleon’s ruling style as being mafia-like. His insistence that other European countries buy French exports, his attempts to shut Britain out of European trade, and a bunch of his other economic policies were fundamentally gangster-ish — they were ad hoc impositions of personal power, often with an eye toward taking revenge on personal enemies and entrenching his own authority.
I immediately recognized this as Donald Trump’s style of governance. Like Napoleon, Trump’s top priority isn’t creating durable institutions that will outlive him — indeed, he regards any such institutions as threats to his own personal power. Many observers have labeled this approach “personalism” or “patrimonialism”, but it’s really just gangsterism. Trump treats America like a mafia organization, and himself as the godfather.
That’s what I thought about when I watched this remarkable video from Fed Chair Jerome Powell:
Powell reveals that Trump’s Justice Department has been investigating the Fed, with an eye to pressuring the Fed to cut interest rates:
On Friday, the Department of Justice [threatened] a criminal indictment related to…a multi-year project to renovate historic Federal Reserve office buildings.
I have deep respect for the rule of law and for accountability in our democracy. No one—certainly not the chair of the Federal Reserve—is above the law. But…This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings…The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.
This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.
This is remarkable and unprecedented. Nothing like this has ever happened in the history of the Federal Reserve. Powell is a consummate professional, who cares only about doing his job, and would only make a statement like this under extreme duress.
If a guy like Powell is accusing Trump of threatening lawsuits over interest rate policy, you know he’s not just going on a hunch or spinning a conspiracy theory — there must have been some very explicit backchannel communications from the White House indicating that the Fed could avoid a DOJ lawsuit by lowering interest rates.
This fulfills my pre-election prediction that Trump would spend much of his second term feuding with the nation’s institutions, and that the Fed would be a prime target. The shape of Trump’s strategy against the institutions is now clear. His two main weapons are A) executive orders, and B) DOJ lawsuits. He obeys the courts when they rule against him, but follows none of the traditional norms of the executive branch, using the DOJ and other administrative agencies as arms of his personal political machine. Trump has used this approach against law firms and media organizations that have challenged him, and now he’s running the same playbook against the Fed. It’s all very Napoleonic — which is a nice way of saying it’s gangster-ish.
The more interesting question is what Trump hopes to accomplish by forcing the Fed to cut rates. The conventional wisdom is that Trump is worried about a recession, possibly caused by his own tariffs, and wants rate cuts in order to boost the economy and employment. According to this theory, Trump is basically what I call a “macro-progressive” — he fears unemployment, and he doesn’t worry too much that low rates will cause inflation.
That’s consistent with Trump’s massive binge of deficit spending. Like the progressives at think tanks like the Roosevelt Institute, Trump may believe that inflation is best controlled with administrative measures, supply expansions, and price controls, rather than by the more traditional tools of high interest rates and fiscal austerity.
But I’m beginning to think there’s also something else going on here. Trump’s populist instincts are still strong. He knows that affordability, not jobs, is the American public’s main economic concern right now. For example, here’s a Gallup poll from last month:
General concern over “the economy” takes the top spot as usual, but worries about inflation and the cost of living top worries about unemployment, by a lot. In fact, inflation is the thing that voters seem to be most upset at Trump about, specifically:
Whether he’s concerned about the midterms, worried about his legacy, or intends to try for a third term, Trump knows that the best thing for his popularity would be to bring living costs down.
He also must know that this is easier said than done. Usually, reducing the cost of living means holding down the rate of inflation, so that wages outpace prices over time. But there’s evidence showing that many Americans expect the government to actually drive prices down, rather than just curbing the rate at which they go up:
Driving prices down is normally very hard to do without causing a recession. But a few weeks ago, I wrote a post about how there are actually some prices that the government could feasibly bring down:
I’m starting to think Trump read my post!1 The prices I mentioned are exactly the prices that Trump has targeted with a recent spate of highly unorthodox measures. The attacks on the Fed might be part of this strategy, because one of the items I mentioned is the price of credit.
In his own gangster-ish way, Trump may be trying to bring Americans the affordability they demand. The problem is that the gangster approach can have grave long-term costs in terms of economic stability and efficiency. Like Napoleon, Trump may be headed for a series of boondoggles and quagmires.
2026-01-11 10:27:39
“What if you knew her and/ Found her dead on the ground/ How can you run when you know” — Crosby, Stills, Nash & Young
I am neither a forensic expert nor a jury member, but it sure looks to me like an ICE agent shot and killed a woman who wasn’t threatening his life. We have video of the killing of Renee Good in Minneapolis on January 7th, and the Washington Post has a detailed blow-by-blow analysis of the video:
In the aftermath [of the killing], Homeland Security Secretary Kristi L. Noem said [Renee Good] had committed an act of “domestic terrorism,” first disobeying officers’ commands and then weaponizing her SUV by attempting to “run a law enforcement officer over.” President Donald Trump said the woman “violently, willfully and viciously ran over the ICE officer.”
A frame-by-frame analysis of video footage, however, raises questions about those accounts. The SUV did move toward the ICE agent as he stood in front of it. But the agent was able to move out of the way and fire at least two of three shots from the side of the vehicle as it veered past him…
The agent…can be seen standing behind Good’s SUV…The agent then walks around the passenger side…[T]wo additional agents…approach Good…A voice can be heard saying to “get out” of the car at least two times. One of the agents puts a hand on the opening of the driver’s side window and with his other hand tugs twice quickly on the door handle, but the driver’s door does not open…[T]he SUV begins to back up…
The agent who was first seen behind Good’s SUV reemerges in front of the vehicle…The SUV quickly pulls forward, and then veers to the right, in the correct direction of traffic on the one-way street…As the vehicle moves forward, video shows, the agent moves out of the way and at nearly the same time fires his first shot. The footage shows that his other two shots were fired from the side of the vehicle.
For more details surrounding the incident, and for the full video, check out the Washington Post article. Here’s a frame-by-frame analysis by Bellingcat:
Here’s another link where you can see videos of the incident from three different angles. Here’s a good post analyzing the videos in detail. Here’s an assessment by a 25-year ICE veteran whose job was to evaluate shootings by the agency.
It’s not clear whether Good meant to hit the ICE agent with her car, or meant to threaten to hit him, when she briefly pulled forward before driving away. Nor is it clear why Good was interacting with the agents in the first place. What does seem clear is that when the agent fired his second and third shots at Good, he was standing to the side of her car, and thus was not directly threatened by the car. Cars cannot drive sideways.
Again, I’m not a jury member, but my understanding of the law is that if you’re not defending yourself from a threat, you’re not allowed to kill someone. It’s possible that the agent — now identified as Jonathan Ross — fired those second and third shots at Good in retaliation for a threat on his life that had already passed. (The first shot was fired from diagonally in front of the car, where it might have been possible for Good to hit Ross.)
That’s just about the most charitable interpretation possible. But if someone threatens you and then runs away, you’re not allowed to shoot them in the back as they run. That’s not self defense.
And of course, there are more uncharitable interpretations here. It’s possible Ross shot Good on a pretext of self defense, because he was simply angry at her for refusing his demands to open the car door, or because she was trying to film him. One of the ICE officers can be heard yelling a vulgar insult at Good.1
Under normal circumstances, I suppose Ross might be prosecuted for manslaughter or something like that. But ICE has been heavily politicized, and so the Trump administration leapt doggedly to Ross’ defense. Trump’s Secretary of Homeland Security called Good a “terrorist”, and Trump, lying as usual, said that Good had “run over the ICE officer”. But it’s Vice President JD Vance who has been the most dogged and vociferous in his defense of Ross and vilification of Renee Good:
The Vice President’s claim that the shots were fired from the front of the car is pretty clearly false. He also repeatedly talked about ICE agents “going door to door” to deport illegal immigrants — pretty clearly ignoring the Constitution’s Fourth Amendment, which prohibits “unreasonable searches and seizures”.
Vance’s reception on social media — even from the kind of “tech right” types that are usually his fans — was largely negative. Here’s a fairly representative tweet:
That mirrors the overall mood in the country. Here’s Axios, two days after the killing in Minnesota:
Americans now disapprove of ICE and support protests against the agency, according to a new poll conducted the same day a federal officer fatally shot a 37-year-old mother in Minneapolis…A YouGov poll of over 2,600 U.S. adults on Jan. 7, found people don’t like the way ICE operates…About 52% either somewhat or strongly disapproved of how ICE was handling its job, compared to 39% who somewhat or strongly approved…Just 27% said the agency’s tactics were “about right” compared to 51% who called them “too forceful”. Another 10% said they were “not forceful enough.”…A 44% plurality of adults approved of recent ICE protests, while 42% disapproved…ICE had a +16 net approval rating last February at the start of Trump’s second term, according to YouGov…That rating cratered over the year to -14[.]
Two days is probably far too early for the killing of Good to have shifted national opinion radically. The negative drift in views toward ICE is probably due to their consistent record of brutality, aggression, dubious legality, and unprofessionalism in Trump’s second term.
Here’s a video of ICE agents in Arkansas beating up an unarmed U.S. citizen. Here’s a video of ICE agents arresting two U.S. citizens in a Target. Here’s a story about a similar arrest. Here’s a video of an ICE agent brandishing a gun in the face of a protester. Here’s the story of ICE agents arresting a pastor who complained about an arrest he saw. Here’s a video of ICE agents arresting an American citizen and punching him repeatedly. Here’s a video of ICE agents threatening a bystander who complained about their reckless driving. Here’s a video of ICE agents arresting a man for yelling at them from his own front porch. Here’s a video of ICE agents making a particularly brutal arrest while pointing their weapons at unarmed civilians nearby. Here’s a story about another ICE killing, this one in Maryland, under dubious circumstances. Here’s a video of ICE agents savagely beating and arresting a legal immigrant. Here’s a video of ICE agents storming a private home without a warrant.
These are all things I noticed on X within just the last two days. There has been a pretty constant stream of these for months. Here’s a roundup of some others, by Jeremiah Johnson:
For the past year, ICE has been involved in a series of escalating incidents that rarely result in repercussions for anyone involved. ICE agents have recklessly caused traffic accidents and then, in one incident, arrested the person whose car they hit. They’ve tear-gassed a veteran, arrested him, and denied him access to medical care and an attorney. They have attacked protesters merely for filming them in public. They’ve pepper-sprayed a fleeing onlooker in the eyes from a foot away. They’ve pointed guns at a 6-year-old. They’ve knelt on top of a pregnant woman while they arrested her. They have arrested another pregnant woman, then kept her separated from her newborn while she languished in custody. They have repeatedly arrested American citizens, and they’ve even reportedly deported a citizen, directly contradicting court orders.
These are anecdotes, but there have also been careful, systematic reports about ICE arrests and mistreatment of U.S. citizens and poor conditions in ICE detention centers.
The Wall Street Journal also reviewed some other videos and other records of ICE shootings, and found a similar pattern to the Renee Good killing:
The Wall Street Journal has identified 13 instances of agents firing at or into civilian vehicles since July, leaving at least eight people shot with two confirmed dead…The Journal reviewed public records—court documents, agency press releases and gun-violence databases—of vehicle shootings involving immigration agents, though video is only publicly available for four of them…The Minneapolis shooting shares characteristics with others the Journal reviewed: Agents box in a vehicle, try to remove an individual, block attempts to flee, then fire.
Instead of causing ICE agents to pause in consternation, the killing of Renee Good appears to have made many even more aggressive. Here’s a video of an ICE agent in Minnesota telling a protester “Have y’all not learned from the past coupla days?”. Here’s a video of an ICE agent kicking over candles at a memorial for Renee Good.
Perhaps this is unsurprising, given the ultra-low standards for recruitment and training of ICE agents under Trump:
A deadly shooting in Minneapolis at the hands of a federal immigration officer comes weeks after a bombshell report on President Donald Trump’s desperate drive to rush 10,000 deportation officers onto the payroll by the end of 2025.
The explosive Daily Mail report found that the administration's $50,000 signing bonus attracted droves of unqualified recruits — high school grads who can "barely read or write," overweight candidates with doctor's notes saying they're unfit, and even applicants with pending criminal charges…[O]ne Department of Homeland Security official [said]: "We have people failing open-book tests and we have folks that can barely read or write English."
Jeremiah Johnson has more:
Reporting shows that ICE is filled with substandard agents. Its aggressive push to hire more agents uses charged rhetoric that appeals to far-right groups, but the agency has run into problems with recruits unable to pass background checks or meet minimum standards for academic background, personal fitness, or drug usage. One career ICE agent called new recruits “pathetic,” according to The Atlantic, and a current Department of Homeland Security official told NBC News that “There is absolutely concern that some people are slipping through the cracks,” and being inadvertently hired.
It’s worth noting, though, that Jonathan Ross himself is well-trained, with plenty of experience in law enforcement and military combat operations. So it’s not always a matter of poor training.
A number of Republican politicians have defended ICE’s actions with rhetoric that sounds downright authoritarian. Texas Representative Wesley Hunt said: “The bottom line is this: when a federal officer gives you instructions, you abide by them and then you get to keep your life.” Florida Representative Randy Fine said: “If you get in the way of the government repelling a foreign invasion, you’re going to end up just like that lady did.”
Is this America now? A country where unaccountable and poorly trained government agents go door to door, arresting and beating people on pure suspicion, and shooting people who don’t obey their every order or who try to get away? “When a federal officer gives you instructions, you abide by them and then you get to keep your life” is a perfect description of an authoritarian police state. None of this is Constitutional, every bit of it is deeply antithetical to the American values we grew up taking for granted.
This tweet really seems to sum it up:
Why is this happening? Part of it is because of the mistakes of the Biden administration. For the first three years of his presidency, Biden allowed a massive, disorderly flood of border-hopping asylum seekers and quasi-legal migrants of all types to pour into the country, and as a result, Americans got really, really mad. That made immigration into a major issue in the 2024 election, helped Trump get elected, and provided political cover for a dramatic expansion of deportations. Now, probably thanks to ICE’s brutality and the administration’s lawlessness, support for immigrants and disapproval of Trump’s immigration policies are rising again. But the administration still has what it considers a mandate to act with impunity.
The deeper reason, though, is the ideology of the MAGA movement. Over the years, I’ve come to realize that most Trump supporters view immigration as a literal invasion of the United States — not a figurative “invasion”, but a literal attempted conquest of America by foreigners. This is from an Ipsos poll in early 2025:
And a substantial percentage of these folks believe that the purpose of this “invasion” is to “replace” the existing American population. This is from a PRRI poll from late 2024:
One-third of Americans (33%) agree with the “Great Replacement Theory,” or the idea that immigrants are invading our country and replacing our cultural and ethnic background. The majority of Americans (62%) disagree with this theory. Agreement with this theory has decreased by 3 percentage points from 36% in 2019…Six in ten Republicans (60%) agree with the “Great Replacement Theory,” compared with 30% of independents and 14% of Democrats. Among Republicans, those who hold a favorable view of Trump are more likely than those who hold an unfavorable view to agree that immigrants are invading our country (68% vs. 32%).
Perhaps some think that this “Great Replacement” is only cultural or partisan/political — the DHS recruits agents with a call to “Defend your culture!” — but many clearly think it’s racial in nature. The DHS recently posted this image:
100 million is far more than the total number of immigrants in the United States (which is estimated at around 52 million). Instead, it’s close to the total number of nonwhite people in the country. So the idea of “100 million deportations” clearly goes well beyond the idea of deporting illegal immigrants, and well beyond the idea of deporting all immigrants, into the territory of ethnic cleansing.
The DHS is posting these memes as a recruitment tactic, and polls about the “Great Replacement” show that there’s a large pool of potential recruits to whom this rhetoric is likely to appeal. In other words, many of the ICE agents now going around kicking in doors, beating up and threatening protesters, arresting citizens on pure suspicion, and occasionally shooting people believe that they are engaged in a race war. Many of them probably agree with Elon Musk’s assessment that White people have to maintain demographic dominance in order to avoid becoming an oppressed minority:
Musk is obviously thinking of his native South Africa. But this kind of politics is now commonplace in the United States as well. Observers of right-wing politics in America have noted the rise of sentiments like this. This hatred is likely fueling the brutality that ICE is displaying in the streets.
To be fair, the Great Replacement ideology didn’t arise out of nowhere. It’s an irrational and panicky overreaction that will lead America down the road to disaster — it’s full of hate and lies, it’s inherently divisive, it’s associated with some of history’s most horrible regimes, and it’s being promoted by some very bad actors. But it has also been egged on by a progressive movement that has made anti-white discrimination in hiring a pillar of its approach to racial equity, and has normalized anti-white rhetoric in the public sphere. This was an unforced error by the left — one of many over the past decade.
But whoever started America’s stupid race war, the real question is who will stand up and end it. The GOP, and the MAGA movement specifically, was offered a golden off-ramp from this dark path. In 2020 and 2024, Hispanic Americans, along with some Asian and Black Americans, shifted strongly toward Trump and the GOP. This was a perfect opportunity for the GOP to make itself, in the words of Marco Rubio, a “multiracial working-class” party. This would have been similar to how Nixon and Reagan expanded the GOP coalition to include “white ethnics” that the GOP had spurned in the early 20th century. But instead, MAGA took the victory handed to them by nonwhite voters and used it to act like exactly the kind of white-nationalist race warriors that liberals had always insisted they were.
I doubt that Donald Trump himself thinks of his administration as prosecuting a race war. He is certainly a nativist — he disdains immigrants from countries like Somalia, and believes that they’re “poisoning the blood of our country” — but at the same time he accepts America’s basic status as a multiracial nation. He has targeted many of his appeals toward Black and Hispanic voters, arguing that they, too, are threatened by waves of illegal immigrants and refugees from poor countries.
But Trump is an old man, and the younger generation was raised not on mid-20th-century nationalist rhetoric but on right-wing social media and memes. When Trump is gone, the MAGA movement will cease to be defined by his personal charisma, and will start being defined by the ideology of the Great Replacement — the same ideology that is now motivating many of the ICE agents acting like thugs in the streets of America.
And it’s increasingly clear that JD Vance, understanding that he lacks Trump’s cult of personality, has decided to make himself the leader, voice, and avatar of the “Great Replacement” movement — even if this arouses the disgust of many traditional conservatives and some figures in the tech right. With the disarray of the Democrats and the weakness of other GOP factions, Vance’s move may be a smart political bet, even if it comes at the expense of American freedom and stability.
The only thing left for America to do now is to fight against this ideology. There is no future for a country that declares a third of its people to be illegitimate, and which deploys authoritarian force to intimidate and expel as many of them as possible. Instead, Americans have to insist that the Trump administration stop these abuses, and they have to vote against any politician who embraces the ideology that led to them. Otherwise, events like the killing of Renee Good are likely to become a normal occurrence.
As she drove away, Good said to the officer: “It’s fine dude, I’m not mad at you.” Those would prove to be her last words.
2026-01-09 18:49:01
Elon Musk is America’s China.
That sounds like a silly thing to say, but what it means is that what the entire economy of China is set up to do — scale up high-tech manufacturing businesses — is something that only one man in America knows how to do. Only Elon has built China-like manufacturing businesses in America, and he has done it twice now — SpaceX and Tesla. When something like that happens twice, it wasn’t a coincidence.
Just to give you an example of how important this is, note that without SpaceX, China would be leaving America in the dust when it comes to space launches. But with SpaceX, it’s America leaving China in the dust:
One implication of this is that America needs to make it a lot easier to set up and scale a manufacturing business, so that our entire high-tech manufacturing sector isn’t dependent on one slightly kooky right-wing billionaire. But that’s a topic for another post.
A second implication is that if we want to know about the future of physical technology, we should listen to Elon Musk. In fact, Elon has a great track record of seeing and entering manufacturing industries that China zeroes in on later:
This is a good list, but it omits the most important items. The three industries that Elon zeroed in on very early, which made him much of his fortune — and which China has subsequently gone all-in on — are batteries, electric vehicles, and solar power. In fact, he still thinks these technologies are some of the most important in the world. In a recent interview, Elon said:
It seems like China listens to everything I say, and does it basically— or they’re just doing it independently. I don’t know, but they certainly have a massive battery pack output, they’re making a vast number of electric cars, and [a] vast amount of solar…
These are all the things I said we should do here [in America].
Elon didn’t go for batteries, EVs, and solar power because he was a climate-obsessed liberal; he correctly understood that there was a revolution underway in the technologies that humans use to produce, store, transport, and harness energy. He knew that whoever mastered that technological revolution would attain a dominant position in a bunch of different, seemingly unrelated industries.
In other words, Elon understood — and still understands — the importance of the Electric Tech Stack.
I’ve written a lot about electric technology, and why it’s the key to the future of every nation and every industry on Earth. In a post back in 2024, I argued that what we’re seeing is a wholesale shift away from combustion, toward technologies that harness electricity directly:
For a more in-depth explanation, I strongly recommend this very long post by Packy McCormick and Sam D’Amico:
Basically, electricity is more controllable than combustion; pushing electrons through a wire simply offers you much finer control over where the energy goes than blowing up hot gases to turn some gears. For a long time, electric technology was limited by low energy density, low power density,1 and weak magnetic field strengths — combustion gave us the oomph that electricity just couldn’t give us.
But then in the late 20th century, we2 invented three things that utterly changed the game. These three inventions were the lithium-ion battery, the rare-earth electric motor, and power electronics. A little over a year ago, I wrote a post about why these three inventions were such game-changers:
Basically, these three things allow electric motors to replace combustion engines (and steam boilers) over a wide variety of applications. Batteries make it possible to store and transport electrical energy very compactly and extract that energy very quickly. Rare-earth motors make it possible to use electrical energy to create very strong torques — for example, the torque that turns the axles of a Tesla. And power electronics make it possible to exert fine control over large amounts of electric power — stopping and starting it, rerouting it, repurposing it for different uses, and so on.
With these three technologies, combustion’s main advantages vanish in many domains. Whether it’s cars, drones, robots, or household appliances, electric technology now has both the power and the portability that only combustion technology used to enjoy.
Elon Musk understood this decades before people like me ever did, which is why he entered the electric car business very early. And over time, Elon’s vision for the car industry has increasingly been proven correct. Sales of internal combustion cars peaked almost a decade ago and have been declining ever since, while sales of electric cars have only grown:
This shift isn’t just being driven by Europe subsidizing EVs at the urging of climate activists, nor by China incentivizing its citizens to buy its companies’ cars. Much of the world, from Asia to Latin America, is beginning to make the switch:
As of 2025, more than a quarter of total global car sales were EVs.
This shift is likely to accelerate rather than slow down. As I wrote back in 2024, now that the basic problems of energy density, power density, and torque have been solved, EVs are simply a superior technology:
They have many fewer moving parts, meaning they’re a lot easier and cheaper to maintain. They’re a lot more energy-efficient. You can charge them at night at your house, meaning you rarely have to go to a charging station. They’re quieter, and they have faster acceleration. There are a number of popular arguments against EVs, and all of those arguments are wrong — EVs now have very long range, EV batteries last for many years, charging stations can charge your car very quickly, there are plenty of minerals to give everyone in the world an EV, batteries are easy to recycle, and so on.
EVs are going to win, and there will be a tipping point — different in each country — where the whole market just flips from combustion to electric. One reason that tipping point comes very fast is that gas stations have a network effect — when enough consumers switch to EVs, there aren’t enough gasoline-powered cars on the road to make gas stations profitable, so they start closing down, which makes EVs even more attractive.
Elon Musk understood all this long ago, and it made him the world’s richest man. China caught on a little bit later, and now dominates global auto exports as a result. Europe is starting to understand it as well.
But apart from Elon, the rest of America doesn’t yet understand it. The Trump administration has canceled subsidies for electric vehicles, and most of the U.S. auto industry (except for Tesla) is shifting away from EVs:
U.S. automakers are shifting production from electric vehicles to gas-powered vehicles and are reducing spending, laying off workers, and repurposing EV battery plants to energy storage plants due to reduced consumer interest in electric vehicles and fewer government incentives…The Trump administration rolled back financial incentives for consumers to buy electric vehicles…and is modifying automobile efficiency standards…to eliminate the requirement for EV purchases…
Ford is writing down $19.5 billion, with additional EV losses of $13 billion since 2023. The EV transition has cost the company $32.5 billion. Ford plans to switch production at a new factory in Tennessee to gas-powered pickup truck models from electric models, cancel an electric commercial van model, remake the F-150 Lightning vehicle into a hybrid from a pure electric vehicle, and convert its Kentucky EV-battery factory into a battery-storage business for utilities, wind- and solar-power developers, and AI data centers.
The main reason America is missing the EV transition is that we’ve insisted on thinking of EVs in terms of climate — as a “green” technology whose purpose is to save the environment, rather than a superior technology whose purpose is to save you time and money. Trump canceled EV subsidies because he associates them with the environmental movement and the political left.
American consumers are avoiding EVs because of this, and also because of a lack of charging stations. The Biden administration promised to build a vast network of EV charging stations, but managed to build almost zero, largely because the initiative was larded up with unrelated contracting requirements. So many Americans still think they won’t be able to charge their EV on a long trip, and are sticking with gas cars as a result.
The ramifications of this failure will go far beyond the auto market. The reason is that the components that go into making EVs — the batteries, the motor, and the electronics — are increasingly the same components that go into making a vast array of other high-tech products. I have a video interview with Sam D’Amico where he explains this, and Sam’s long post with Packy McCormick also explains it in detail. But for a shorter explanation, let me recommend this recent post by Ryan McEntush of a16z:
Ryan explains that when the components that go into electronics are the same as the components that go into cars, drones, robots and tons of other stuff. This allows Chinese manufacturers like BYD and Xiaomi to leverage truly awesome economies of scale:
Once [the iPhone] existed, everything else started to look the same. Your laptop, smart TV, thermostat, doorbell camera, refrigerator, industrial robot, drone: all of them follow the same basic recipe. Even an electric vehicle, once you peel back the sheet metal, relies on the same ingredients — batteries, sensors, motors, compute, and software, just in a different skin. We no longer live among truly distinct technological paradigms, but within a world of variations on one single idea: the smartphone, endlessly turned inside and out and scaled across every domain. Everything is a smartphone…
Consumer electronics is about scale…Unlike legacy internal-combustion vehicles, electric vehicles draw heavily on components and device primitives shared across many other industries…Much of today’s most important technology rests, almost inadvertently, on the foundations built by [the consumer electronics] ecosystem…An electric vehicle is a smartphone with wheels. A drone is a smartphone with propellers. A robot is a smartphone that moves…
BYD, the global leader in batteries, builds cars, buses, ships, and trains. DJI makes drones, but also cameras, radios, and robotics hardware. Even Dreame, a Chinese vacuum company, just debuted an electric supercar. These firms are not “diversifying” in the traditional sense. Rather, they are…repeatedly assembling the same electro-industrial stack — batteries, power electronics, motors, compute, and sensors — into new permutations.
This means that China’s Everything Makers can make not just cars and electronics more cheaply than America can, but almost everything else as well — because almost everything is being eaten by the Electric Tech Stack. Even the software industry is being eaten by the Electric Tech Stack — AI is eating software, and AI requires huge amounts of electric power and battery stabilization in order to run its data centers.
Currently, China generates much more electricity than the U.S. does — partly because it’s willing to build out solar power, where in the U.S. solar is often blocked by local NIMBYs, “environmental” permitting laws, and a hostile Trump administration. But China also builds most of the world’s batteries, meaning that American AI is going to be dependent on Chinese batteries as well.
On top of all that, America desperately needs the Electric Tech Stack for its national defense. I pointed this out in a post back in September, and Ryan talks about it a lot as well. Drones are taking over the modern battlefield, and drones require batteries and rare-earth electric motors — the same components that go into the EVs that America is now refusing to build.
Thus, America’s weakness in EVs, batteries, and rare earths threatens to become a weakness in everything — a weakness in AI, a weakness in drones, a weakness in robots, and so on. Because we collectively decided that EVs are hippie-dippy climate bullshit, we ignored the key physical technologies that increasingly underlie all of manufacturing, including defense manufacturing.
Throughout America’s history, we have been at or near the forefront of every single major technological revolution. We were leaders in railroads, mechanized agriculture, industrial chemistry, electricity, mass production, internal combustion/automobiles, aviation, plastics/polymers, nuclear, space, telecommunications/TV, genetics, semiconductors, computing, the internet, mobile, and AI. This technological leadership enabled us to remain the world’s leading nation for over a century.
But now we are missing the big one. We are missing the Electric Tech Stack. We treated it as a climate issue instead of an issue of raw national power and industrial might, and we allowed it to become a political football. As a result, China is mastering this crucial technological revolution, and America is forfeiting it. Our entire existence as a leading nation is under threat from this remarkable failure of vision and leadership.
We should have listened to Elon Musk about the importance of the Electric Tech Stack. We should still listen to him now.
Energy density means the ability to carry lots of energy around in a small package. Power density means the ability to get a lot of energy out of that small package very quickly.
“We” in this case means mostly the U.S. and Japan.
2026-01-08 00:42:44
Nicolas Maduro was a particularly unsuccessful dictator. He devastated Venezuela’s economy by continuing all the worst aspects of the irresponsible economic policies of his predecessor, Hugo Chavez, reducing much of his population to abject poverty. He stole elections, suppressed dissent, and killed many thousands of regime opponents. Venezuelans are unlikely to mourn his removal from power at the hands of Donald Trump’s lighting raid on January 3rd.
And yet Maduro’s capture has suddenly thrown much of the world into chaos and uncertainty. Trump ordered the U.S. Military to abduct a foreign head of state without Congressional authorization — a naked display of power in defiance of every international norm that had prevailed since World War 2. The geopolitical implications of that fact are going to reverberate a lot more than the abduction itself.
A little over two years ago, in the aftermath of the October 7th attacks in Israel, I wrote that Pax Americana was effectively dead:
The world is a more ungoverned, lawless place than it was 20 or even 10 years ago…The world is starting to revert into a jungle, where the strong prey upon the weak, and where there is a concomitant requirement that every country build up its own strength; if your neighbor is a tiger, you should probably grow some claws of your own. Old scores that had to wait can now be settled. Disputed bits of territory can now be retaken. Natural resources can now be seized. There are many reasons for countries to fight each other, and now one of the biggest reasons not to fight has been removed.
In that post, I wrote that the end of Pax Americana was due to America no longer being able to carry out its function of “world police”. Superficially, Trump’s capture of Maduro might seem to imply the opposite. Trump had Maduro arrested on drug trafficking charges, which is pretty much the definition of a police action. And the fact that the U.S. was so easily able to snatch Maduro — easily evading Chinese-made radars that were designed to catch stealth aircraft — might suggest that reports of the decline of American power had been premature.
In fact, the lesson is the opposite. America’s seizure of Maduro was not done in order to enforce global or international norms — it was done, purportedly, in order to enforce American domestic law. Trump wasn’t acting as “world police” — he was acting as the American police, under the assumption that Venezuela might as well belong to America.
The raid also exposed how mercurial American power has become. Trump claimed that his arrest of Maduro was due to Maduro’s membership in a drug cartel called “Cartel de los Soles”, but later admitted that no such cartel exists. Later, Trump implied that seizing oil had been part of his motivation, announcing that Venezuela would turn over 50 million barrels of oil (several weeks’ worth of production) to the United States. But as Eric Levitz points out, this doesn’t make a lot of sense either — the U.S. is not going to be able to confiscate large amounts of Venezuela’s oil, and flooding the world market with crude will simply depress the margins of America’s own oil producers.
In the absence of a clear motivation for the abduction, wild theories are being thrown around. Was this a bid to deter China from attacking Taiwan, by limiting Venezuela’s oil exports to China? Was it part of a deal between Trump and Russia/China, allowing Trump to dominate the Western Hemisphere in exchange for letting Russia have Ukraine and letting China have Taiwan? Was it the prelude to a U.S. invasion of Greenland? I saw all of these theories thrown around on social media, as well as some…um…less plausible ones:
No one really knows why this happened, and it seems like no one really expects to know. And the absence of a clear motivation for the attack makes it even more disruptive to whatever still existed of the old world order. In my post back in 2023, I wrote:
If the U.S. threat of intervention doesn’t depend on whether or not you send your army outside of your borders — if the U.S. might just attack you anyway because they don’t like you — then the incentive to avoid interstate conflict is reduced.
I was talking about the Iraq War; although Trump’s seizure of Maduro was far less bloody, it’s disruptive for similar reasons. Under Trump, America has gone from a source of stability in world affairs to a source of chaos.
At the same time, though, it would be wrong to place all or even most of the blame on Trump for the breakdown in the old international order.
2026-01-04 20:43:12
“You," Said Dr. Yavitch, "are a middle-road liberal, and you haven't the slightest idea what you want.” — Sinclair Lewis
Imagine being a French liberal in the year 1815. You spent your youth dreaming of an end to tyranny and the stultification of the estate society, reading the works of Voltaire and Rousseau and Montesquieu and Diderot, talking of liberty with your friends in cafes. Yours was not among the names that history would remember from that era, but you once attended a salon in a rich woman’s house in Paris. You were not part of the mob that stormed the Bastille in 1789, but you felt your heart leap when you heard the news, because you knew that now everything would change. When you read the terms of the Constitution of 1791, you saw the fulfillment of your youthful daydreams become the solid fabric of a new reality.
Imagine, then, standing in 1815, a quarter century after the Revolution, looking back at what it had all become. That first bright rush of freedom had given way, first to the murderous insanity of the Terror and the Committee for Public Safety, then to the thuggish new imperialism and endless bloody wars of Napoleon, and finally to the fall of all Europe to conservative reaction under the Congress of Vienna. Imagine looking back on the arc of your beliefs, your movement, and your life, now as an old man, with no prospects for another, better Revolution ahead of you.
Would you think your dreams had failed? Would you decide that everything you had believed had been an illusion, and that freedom, democracy, and the Rights of Man were false idols that led only to chaos and bloodshed?
If so, you would be utterly wrong. The two centuries after 1815 would see the ideals of the early French Revolutionaries continue to advance across the world — unevenly, in fits and starts, and with many reversals, yet almost always leaving society better off than before. Those centuries would also see plenty of successors to Robespierre and Napoleon, but just like the originals, they would usually go down to defeat or see their legacies overturned by people weary of war and oppression. Liberalism may have lost the first French Revolution, but it ended up winning the world — at least, for a while.
I think about this a lot when I reflect on the liberal dreams of my own youth.
I was raised a liberal, in late 20th century America. My parents were the kind of center-left Democrats who disgusted Cold War revolutionaries and conservatives alike — bookish academic types who hated Stalin but viewed Martin Luther King, Jr. as a prophet, who believed in private property and the welfare state, who protested the Vietnam War but hung an American flag in front of the house every year on the Fourth of July and Memorial Day and Veterans Day. My father told me George H.W. Bush was a good man, but when he won the election in 1988, my mother cried and said “Thank God for Teddy Kennedy.”
In my youth I believed what my parents taught me to believe — that America was a place of deep inequality, with millions condemned to grinding poverty that could only be solved if we had the will to build a real welfare state. And was I wrong? Beginning in the 1990s, America became a more redistributive, generous nation, under both Democratic and Republican presidencies:
That vague dream of 1980s liberalism became the Earned Income Tax Credit, the Child Tax Credit, the expansion of SNAP and Section 8 and Medicaid and Medicare — a Second Great Society. And thanks to my nation’s turn toward generosity, the rate of after-tax poverty fell:
I don’t yet know for sure if this was the right thing to do — perhaps the bolstering of America’s welfare state came only at the cost of ballooning public debt and withered military preparedness that will eventually come back to haunt us in the long run. But as of today, I would not go back. I would not force millions of Americans to return to the grinding, desperate poverty they suffered in 1985.
The same can be said of so many other liberal dreams of my youth. We dreamed that one day racial discrimination against Black Americans could be consigned to history; by 2010, it was a far less potent force, and by 2023, much of the Black-White employment gap had vanished. We dreamed that one day gay Americans would have their love recognized and honored by society as equal to love between men and women; by 2015, gay marriage was the law of the land. We dreamed that one day, Americans would not suffer economic ruin from the lack of health insurance; by the 2020s, the uninsured rate fell to 8%. We dreamed of a country where people wouldn’t be thrown in dungeons for smoking marijuana; this, too, eventually became our reality.
None of these victories came without cost, and we will never know the true and final consequences of any of them. And yet I would not give up a single one. When I look back at the long arc of American liberalism since my childhood in the 1980s, I see a record of success that I believe will endure.
And yet here I stand, in 2026, and America’s long arc of liberalism appears to have bent straight into the dirt. Americans may have soured on Donald Trump, and may hand the Democrats a victory in this year’s midterm elections, but at the same time, they despise the Democratic Party:
Some of this disapproval is from voters on the left, disappointed with their party’s inability to stymie Trump. But much of it is due to the deep disconnect between mainstream American beliefs and the progressive values that now animate the Democratic Party.
As the 2000s turned into the 2010s, I noticed that my fellow liberals had stopped using the word “liberal”, and begun to use “progressive” instead. At first I thought this was a defensive response to taunting from Fox News talk show hosts who had made “liberal” a dirty word. As late as 2013, I saw little difference between the values of Barack Obama and the ideals I had grown up with. But beginning in the mid-2010s, I began to understand that my political “side” had evolved beyond the goals and beliefs of the late 20th century.
Like many liberals of the old school, I watched with concern as the quest to end discrimination against Black Americans evolved into a desire to institutionalize discrimination against White Americans in universities, nonprofits, government agencies, and many corporations — something the liberals of the 1990s swore they would never countenance. I felt uneasy as the desire to expand the welfare state and universalize health care morphed into endless deficit-funded subsidies for overpriced service industries. I watched as the gay rights movement gave way to a trans movement that was deeply out of step with both America’s beliefs and civil rights law.
I watched, too, as “progressive” governance hollowed out the great American metropolises whose revitalization had been one of the quiet triumphs of late 20th century liberalism. A small anecdote illustrates this. Recently, a homeless man attacked and blinded an elderly woman in Seattle. Despite dozens of violent arrests, this man had been allowed to live on the streets of the city, attacking passers-by. A cop on the scene told reporters that “He’s a regular…he usually punches.”
“He usually punches”??? How has progressive governance allowed the people of America’s greatest cities to live like this? After decades of mass incarceration, a loose alliance of progressive DAs, judges, and anti-police protesters shifted blue cities toward far more permissive policies toward property crime, public drug markets, and low-level assaults and harassment. The progressivism that emerged in the 2010s seems to view anarchy as a form of welfare, believing that the best way to help the poor and unfortunate was to allow the worst and most violent among them to terrorize the rest of them without restraint or reprisal.
And at the same time, progressive governance threw billions of dollars at unaccountable and sometimes fraudulent NGOs, allowing state capacity to degrade. Blue states spent lavishly on infrastructure projects that created many jobs but created little actual infrastructure. Environmental mandates in California built less solar and wind power than simply liberalizing land use regulation in Texas. Blue cities failed to build housing, choosing instead to embrace the progressive myth that new construction fuels “gentrification”.
At this point, a litany of progressivism’s missteps reads like a rant. Progressive education policy, which in my youth focused on directing more resources toward the disadvantaged, now focuses on relentlessly dumbing down curricula and testing standards. Progressive scholars in academia have pushed to replace objective truth-seeking with political activism — something none of the liberal professors I knew growing up would have endorsed. Where the liberal culture I grew up with emphasized tolerance, intellectual argument, and broad-minded discourse, progressive culture in the social media age became strident and shrill — an endless cycle of purity spirals and denunciations whose mix of passion and paranoia would have been familiar to Robespierre.
At this point, it would probably save time to ask what modern progressivism gets right. It’s a very short list, and it’s possible that the only answer is “We’re not Donald Trump.” And it’s true — if you absolutely have to choose between voting for an insanely corrupt authoritarian at the head of a hate-filled anti-democratic personality cult and a gaggle of ineffectual ideologues who spend all day canceling each other and spending money they don’t have while their society slowly falls apart around them, you vote for the latter. But I wouldn’t blame you if instead, you opened your favorite LLM and typed “How easy is it to immigrate to Japan?”.
So far I’ve been a bit weaselly and self-exculpatory in my choice of words. There is no bright line between “liberalism” and “progressivism”, and there was no discrete moment when the ideas of the American left flipped from mostly reasonable to mostly unreasonable. The seeds of almost every progressive overreach of the 2010s were there in 1985.
American liberalism’s great historical successes were 1) abolitionism, 2) the New Deal, and 3) the Civil Rights movement. The more modest successes of 1990s liberalism were based on those precedents — a new civil rights movement for gays, an expanded New Deal to fight poverty, and so on. But there came a point when those approaches had succeeded so well that they hit the point of diminishing returns.
The mass incarceration of the 1980s was not actually a “new Jim Crow” — most of the people we locked up had committed serious crimes, and when people stopped committing so many crimes, the rate of incarceration fell. Rising service costs were not amenable to New Deal style solutions. Allowing people with penises to change in women’s locker rooms and giving teenagers puberty blockers upon request turned out not to be something that Americans could bring themselves to regard as a civil rights movement. Telling corporate America that hard work and rationality were part of “white supremacy culture”, or making AI art programs draw Black Nazis, was not the natural extension of the abolition of slavery.
Meanwhile, there were elements of the liberalism I grew up with that had always been deeply problematic, and which were allowed to fester and grow worse in the new century. The anti-development ethos of the 1970s may have once been useful for blocking industrial waste and ugly highways, but it destroyed American state capacity, ruined urban life for the working class by making housing unaffordable, and hollowed out much of the industrial capacity that sustained the working class.
Every social and political movement, if unchecked, tends to take things too far. Ultimately it was the collapse of liberalism’s great rival that allowed it to overgrow its bounds. The self-immolation of Reaganite conservatism in the 2000s — the disastrous Iraq War, the financial crisis and Great Recession, and the moral collapse of conservative Christianity — left liberalism with no real check on its ideological overgrowth. The replacement of the old conservatism with a shambolic rightist cult did little to provide a compelling alternative; instead it just excused progressivism’s worst excesses, by making sure everyone knew that the alternative was even worse.
I’ve spent much of the year since Trump’s election constructing the litany of progressivism’s sins and overreaches. That job is now complete, but the question is: Where does a liberal go from here? Those of us who grew up in the late 20th century liberal dream are now standing on the beach by the hulk of our wrecked ship, staring out to sea and contemplating our next move.
America is now unquestionably in a more conservative era. People crave law and order in their cities. They have soured on woke culture and progressive spending programs. They are groping around for reasons to re-embrace traditional values. This really is Europe after the Congress of Vienna — perhaps not just in the United States, but across much of the world.
But who will build that conservative era, and what form will it take? The many fractures within Trump’s coalition suggest that what he has built will not last; when his singular personal charisma is gone, a gaggle of white supremacists, elitist rich people, conspiracy theorists, and traditional conservatives will fight to claim the mantle of successor. Some disillusioned liberals will be tempted to ditch the Democrats and go over to the other side, throwing their hat in that ring and trying to bring sanity to the Republicans instead.
That would be an easy move. Like the “neocons” who abandoned the 1970s left for the GOP, or the “liberaltarians” who fled the right after the coming of Trump, just say: “I didn’t leave my party; my party left me.” Learn to speak the right-wing lingo, toss out a little red meat to the MAGA base, put on a red hat, and then start pushing the policy substance back toward an updated 21st-century version of Reaganism — race-blind meritocracy, deregulation, Cold War 2 foreign policy, and so on.
This is the path that some progressives, eager to denounce me, have long expected me to take. And if some liberals want to take this route, I won’t condemn them for it. A democracy can only thrive if it has two sane political parties, and the GOP needs a dose of sanity even more desperately than the Dems.
But no. That way isn’t for me. The project of making America sane again is a good and important one, but I’m not going to spend the rest of my political life as a pure pragmatist. The liberal ideals I grew up with still have power, and I still believe in them, even if the progressive movement stopped navigating toward those ideals a while ago.
Progressive “anti-racism” may have become the mirror image of the very thing it despised, but does that mean that the idea of a society free from racial division and “supremacist” movements is a bad one? Of course not. With the internet and modern air travel, diversity will only increase as time goes on — even if nativist backlashes temporarily close the borders, they will reopen. The whole world will need to see what a real post-racial society looks like, and even after all we’ve been through, the United States of America is uniquely well-positioned to create it.
Meanwhile, the project of creating economic security and abundance for the vast bulk of humanity is very far from finished. The 20th century taught us that while business is the engine of prosperity, simply throwing up our hands and leaving everything to the market will let far too many people fall through the cracks.
A clean and livable environment. Respect for free expression. Democracy and political inclusion. A tolerant society that lets people pursue their private desires. These are all not just good ideas, but necessary ones if humanity is to have the kind of future most people will want to live in. And whatever sort of creature is bubbling into existence on the political right, it’s unlikely to give people most of these things — no matter how many pragmatists manage to grab its reins.
And if you squint hard enough, you can start to see conditions becoming a bit more favorable to liberalism. Crime is falling again, and fast. Intermarriage is still on the rise. Young people are tempering their use of social media. People in places like Iran are still trying to throw off their chains, while autocratic regimes like Putin’s Russia are making plenty of mistakes. Any new liberal project will probably be forced to endure years of retrenchment and soul-searching, but there are still fundamental forces pushing us toward a more optimistic, empowered, and tolerant society.
So that’s what you do if you’re a French liberal in 1815. You try again. Looking back at history, we see that the project of human freedom and dignity has had plenty of low points, but that so far it has always recovered. Even if you’re old, you pick yourself up and move onward. Even if you’ve made mistakes and supported one or two bad ideas for a while, you get back on track and learn from your errors. Even if you don’t know exactly where liberalism goes from here, you sit down and you think and you read and you talk to smart people until you figure out a new direction. You try again. And if that doesn’t work, you try again, and again, until you die, and someone else sees how much you tried, and learns from your mistakes, and then they try again.
This climb is long. We have taken some dead-end paths, but the summit is still there, beckoning. We are not done.
2026-01-03 02:38:49
“The capitalists will sell us the rope with which we will hang them.”
In December of 2024, before Trump took office, I wrote about the disturbing possibility that the man once known as a consummate China hawk would sell America out to its great rival. I wrote that the key tell would be whether Trump dropped the export controls on chips and chipmaking equipment implemented during Biden’s presidency:
[T]here’s one big important thing Trump could do to sabotage America’s effort to stand up to Chinese power. He could cancel the export controls that the Biden administration placed on the Chinese semiconductor industry. Removing export controls wouldn’t require legislative action — Trump could just do it whenever he wanted. And because the policy is not really in the limelight, there probably wouldn’t be a popular backlash to its cancellation. So export controls are pretty much a pure test of Trump’s China policy — if he keeps them, it’s because he wants to stand up to China, and if he cancels them, it means he doesn’t…
[E]xport controls are doing what they’re designed to do. They’re not killing China’s chip industry, but they’re slowing it down in important ways, and letting the U.S. retain its technological edge…These export controls [are] absolutely crucial if the U.S. is going to maintain any kind of a military-technological edge over China. Chips are the foundation of all modern weaponry, from missiles to drones to satellites to advanced fighter jets. And AI itself, which depends on advanced chips for training and inference, is rapidly becoming an essential weapon of war. When autonomous drone swarms hit the battlefield, AI will become even more crucial to the military balance.
The U.S. probably cannot out-manufacture China, even with all the tariffs and industrial policies in the world. America needs to retain a technological edge to balance out its productive weakness — an advantage in quality to balance out its deficiency in quantity. Semiconductors are that edge. If Trump cancels the export controls, it will mean he’s destroying America’s best chance to keep its weapons ahead of China’s weapons.
In mid-2025 there was a rumor that Trump was going to allow sales of an Nvidia chip called the h20 to China. Ultimately the administration backed off amid a torrent of criticism from hawkish elites. But in December, Trump announced that he would allow the sale of a far more powerful Nvidia chip, the H200. The Institute for Progress had a good post explaining what this means:
The decision [to sell H200s] would be a substantial departure from the Trump administration’s current export control strategy, which seeks to deny powerful AI compute to strategic rivals. The H200 would be almost 6x as powerful as the H20…China would have access to chips that outperform any chip its companies can domestically produce, and at much higher quantities. Huawei is not planning to produce an AI chip matching the H200 until Q4 2027 at the earliest. Even if this timeline holds, China’s severe chip manufacturing bottlenecks mean that it will not be able to produce these chips at scale, reaching only 1–4% of US production in 2025 and 1–2% in 2026…Chinese AI labs would be able to build AI supercomputers that achieve performance similar to top US AI supercomputers, albeit at a cost premium of roughly 50% for training and 1-5x for inference, depending on workload…
With no AI chip exports to China and no smuggling, we estimate the US would hold a 21–49x advantage in 2026-produced AI compute, depending on whether FP4 or FP8 performance is used for Blackwell chips.7 This advantage would translate into a much greater American capacity to train frontier models, support more and better-resourced AI and cloud companies, and run more powerful inference workloads for more capable AI models and agents. Unrestricted H200 exports would shrink this advantage to between 6.7x and 1.2x, depending on the scale of Chinese demand and the degree of adoption of FP4. [emphasis mine]
IFP has a number of great graphics showing how much H200 sales to China will erode America’s advantage in AI compute:
If the U.S. cared about staying ahead of China in the AI race, why would we sell H200s to China? The obvious answer is that there is no reason we would, and that thus Trump does not care about staying ahead of China in the AI race — that for either personal or political reasons, Trump has decided to facilitate the rise of Chinese power rather than impede it.
Some people actually do argue that selling China H200s will maintain America’s technological advantage. They argue that if Chinese companies are allowed to buy H200s, they will remain dependent on American chip designs (and Taiwanese chip manufacturing), and will thus fail to build their own indigenous rivals to America’s AI chip industry. As Dmitri Alperovitch writes in the Wall Street Journal, this is a dangerous pipe dream:
Rather than grow dependent, China will take Nvidia chips while they are available, use them to train models to compete with American frontier variants and continue to invest heavily in domestic alternatives like Huawei’s Ascend chips. When those are good enough, the firms will drop Nvidia—and quickly.
The notion that restrictions “accelerate Beijing’s move toward alternatives” misses a critical reality: Technological self-sufficiency is a Xi Jinping mandate. He isn’t going to allow China to rely on an American tech stack. The Communist Party is already investing in an alternative supply chain and will limit Nvidia imports if needed to ensure sufficient domestic demand for Huawei. The question isn’t whether China pursues self-sufficiency; it’s whether we hand it advanced capabilities during its years-long catch-up period.
In a post back in November, I put it a little more bluntly:
If you want to keep China hooked on American products for strategic reasons, it’s probably a bad idea to scream “HEY CHINA, WE’RE SELLING YOU CHIPS AND EQUIPMENT SO YOU’LL STAY HOOKED ON OUR PRODUCTS, FOR STRATEGIC REASONS!!”. China’s leaders, being smarter than, say, a gerbil, will refuse to take this bait, and will work hard on developing their own indigenous chip supply chain anyway. Which is exactly what they’ve been doing for over a decade now.
In fact, we can already see my argument being proven right in real time. Chinese AI companies are simply buying chips from both Huawei and Nvidia:
This is why selling China H200s won’t actually slow down China’s indigenization efforts. China’s companies will buy as many Chinese-made chips as they can, and simply buy American chips on top of that.
This will give Chinese AI companies a huge advantage. Right now, despite its mighty efforts to catch up, China is proving unable to match America’s chip production capabilities (in large part because of export controls on chipmaking equipment):
Because China can’t match America’s chip production, selling America’s H200s to China will give Chinese AI companies a huge boost in their competition with American AI companies. Currently, China’s compute limitations are the main reason that America’s AI models are better:
Selling China H200s will help alleviate those constraints, and their models will catch up.
Opponents of export controls will doubtless retort by asking: So what? Why should the U.S. try to maintain a lead over China in AI modeling?
It’s a good and important question. The main reason is deterrence. Right now, China is menacing Taiwan and Japan, and threatening to start World War 3. The main thing stopping it from starting a war is the chance that it would lose such a conflict — which would doubtless end in Xi Jinping losing power, and quite possibly his life.
China can out-manufacture the U.S. easily at this point. So the main way China would lose a war is if the U.S. used its technological edge to prevail in a short, limited conflict. Thus, if that technological edge evaporates, China is much more likely to start a war of conquest.
As long as America is way ahead in the AI race, China will therefore be more hesitant to start a world-shattering war. There will always be the lurking possibility that America’s lead in AI tech will somehow allow it to thwart China’s attacks. It’s not clear how LLMs will be used for military applications — perhaps some sort of coordination of drone swarms, or large-scale hacking attacks — but as long as America is clearly better than China in the most versatile and important new technology, it will give China’s leaders one more reason to delay their attacks on Taiwan and Japan.
So it’s in America’s interest to preserve its technological edge in AI for as long as possible. If China can be kept from launching a war for just 5 or 10 more years, something could change that makes World War III far less likely — Xi Jinping could be unseated and replaced with a less bellicose leader, China’s rapidly aging demographics might reduce popular appetite for war, India could develop to the point where China doesn’t enjoy overwhelming primacy in Asia, and so on.
Selling China H200s thus makes World War III a bit more likely in the next decade.
On top of all of that, there’s also the possibility that denying China U.S. chips could cause their domestic tech ecosystem to become isolated from the global ecosystem — a condition known as “Galapagos syndrome”. If Chinese AI companies buy only from Chinese chip companies, then Chinese chips may become optimized for the domestic market rather than the international market. This could ultimately limit the scale of China’s chip industry, preserving an advantage for American and allied chipmakers — an advantage that would also have obvious military benefits.
China’s government knows all of this, of course, which is why it’s always calling for the U.S. to end its export controls. If export controls really helped China indigenize its chip industry, it would welcome the controls — or at least, accept them with minimal grumbling.
China also tries to give ammunition to America’s internal opponents of export controls, by announcing big “breakthroughs” in chip manufacturing. For example, back in 2022, China announced that it had manufactured 7nm chips — something that export controls on advanced chipmaking equipment was supposed to prevent. But as I wrote in 2024, this was a bit of a Potemkin breakthrough:
SMIC, the Chinese foundry company that created the 7nm chip, was rumored to be advancing quickly to 5nm. But the company has reportedly delayed its 5nm release until at least 2026. This has left SMIC’s customer Huawei in the lurch, relying on technology that’s fast becoming obsolete. Even SMIC’s 7nm process, hailed as a catastrophic failure for export controls, is actually not achieving good yields, and is reportedly having reliability issues. This is probably hurting Huawei’s production of leading-edge phones. In the last five years, over 22,000 Chinese semiconductor companies have reportedly shut down….Huawei’s own chip production is probably suffering as well, with very low yields…Meanwhile, Chinese companies are pessimistic about their ability to keep up with leading-edge chipmakers without access to the latest chipmaking tools from the Netherlands, the U.S., and Japan.
By 2025, it was clear that China’s chipmaking technology had actually stalled, with rumored further breakthroughs to 5nm failing to materialize, and with Huawei downplaying the importance of making 7nm chips at all.
But the Potemkin breakthrough of 7nm chips probably helped opponents of export controls make their case to the Trump administration, allowing them to claim that China’s indigenization drive was succeeding. With the lifting of export controls on the H200, China won on the battlefield of information warfare what it had been unable to win in the laboratory.
And as if on queue, I’m now reading that China has made a stunning breakthrough in Extreme Ultraviolet Lithography (EUV), the most powerful and important chipmaking technology in the world:
In a high-security Shenzhen laboratory, Chinese scientists have built what Washington has spent years trying to prevent: a prototype of a machine capable of producing the cutting-edge semiconductor chips that power artificial intelligence, smartphones and weapons central to Western military dominance…Completed in early 2025 and now undergoing testing, the prototype fills nearly an entire factory floor. It was built by a team of former engineers from Dutch semiconductor giant ASML.
It seems only a matter of time before opponents of U.S. export controls are using this stunning “breakthrough” to argue that the U.S. should allow ASML to sell EUV machines to China in order to keep China “hooked” on Western technology — the same terrible argument that resulted in the sale of H200s.
But read the fine print, and it turns out that China’s supposed breakthrough is less than it appears:
China's machine is operational and successfully generating extreme ultraviolet light, but has not yet produced working chips…China still faces major technical challenges, particularly in replicating the precision optical systems that Western suppliers produce…The availability of parts from older ASML machines on secondary markets has allowed China to build a domestic prototype, with the government setting a goal of producing working chips on the prototype by 2028…But those close to the project say a more realistic target is 2030.
So it’s not even clear that China’s supposed EUV prototype even works yet — or that it will ever work. Nor is it clear how China plants to source high-end components such as the ultra-smooth mirrors that only the German company Zeiss can make, and which are an essential input to EUV. There is every possibility that this is another Potemkin breakthrough.
Except it seems inevitable that before too long, ASML executives will be pointing to stories like this, and whispering to Trump that unless he lets them sell EUV machines, the Chinese will just invent their own. And it seems likely that as with H200s, the administration will fall for it, sacrificing one of the key technological edges that could have deterred WW3 — or helped America win it. Whichever communist said that “capitalists will sell us the rope with which we will hang them” appears to have been right on the money.
