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German tech guy notes that Europe barely has a presence in the tech sector.

  • Hardware dominated by East Asians; Europeans used to do this, but Phillips, Nokia had their heyday many years ago.
  • Internet infrastructure (e.g. cloud, DNS) dominated by the United States, though China has its own self-contained ecosystem.
  • Platforms (operating systems, social networks, search engines, app stores) are dominated by the United States. Europe has almost zero presence here.
  • Europeans do have some successful apps, e.g. some video game companies, various music and shopping services.

Most significantly, there are no European general purpose tech giants, such as both the United States (Google, Amazon, Apple, Microsoft, Facebook) and China (Alibaba, Baidu, Tencent) have in spades, which not only have one or two orders of magnitude more significance than any of the European app companies, but end up acquiring many of them; it is telling that of the nine given examples of successful European apps, Skype and Minecraft were both acquired by Microsoft, while Soundcloud has an uncertain future.

Some possible reasons he gives for Europe’s lack of success:

  • Regulation – Taxes, labor laws, privacy laws, red tape.
  • Investment climate – Harder for startups to raise money.
  • Geography and Demographics – The United States and China are homogenous markets of many hundreds of millions of people; Europe is a fragmented mess.
  • Attitudes – Could Europeans be just more pessimistic about tech and business? Which translates into subpar regulations. (In contrast, Chinese are highly technophilic).
  • Startup ecosystems – The US has Silicon Valley, China has Shenzhen; what does Europe have? Since it lacks giants, it is subject to a constant brain drain to Silicon Valley.

From my own observations this all seems to be pretty accurate true. Southern Europe is hampered by red tape; northern Europe is better for doing business, and has higher human capital, which is reflected in more tech companies (the biggest, Spotify, is Swedish), but is likewise hampered by higher taxes and strong privacy laws (esp. Germany).

With a mere $14.4 billion worth of venture capital activity in 2015, Europe lags behind both the United States ($72.3 billion) and even China ($49.2 billion) in this sphere too.

The US and China’s advantages in achieving economies of scale would seem obvious. It might also be the most important factor. Russian regulations are no better than Europe’s, and its level of VC funding is truly minimal, yet it does manage to have one general purpose tech company that is at least noticeable at the global level (Yandex). China has a far bigger market than Russia, and its web censorship doubles as protectionism in all but name (as the author notes in another video), so its major tech companies are now becoming more and more comparable to the American giants.

On the whole, so far as tech companies are concerned, Europe seems to serve as a mere human capital repository for Silicon Valley.

This would seem to be important for a couple of reasons.

1. It’s yet another demonstration of how the only two countries that really matter in the world today are the United States and China. Europe? I’m sorry, but US conservatives pegged it right. Museum cum retirement home that has nothing to teach anybody.

2. According to O-Ring theory, most value is generated through complex production chains, whose highly productive workers pull up the wages of workers in simple sectors far above the Third World levels they would otherwise be at. But few of those are forming in Europe, and many that do, end up bleeding off into the US anyway.

3. It’s interesting to speculate on what this means for the geographical location of the first artificial general intelligence (probably the most portentous event in all history). This might mean nothing much, but it could also mean a great deal. Anyhow, if this AGI requires large computing and technical resources, it will most likely appear in the US, followed by China; in contrast, there is a close to zero chance it will happen in Europe or anywhere else.

 
• Category: Economics • Tags: Europe, Technology 
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  1. there are no European general purpose tech giants,

    What is “general purpose” tech giants?

    Read More
    • Replies: @Dave Pinsen
    Presumably, he's referring to FANG-type companies: Facebook, Amazon, Netflix, Google, that sort of thing.

    Germany does have SAP, which is a $180 billion market cap enterprise software company. And of course Europe has a number of cutting edge technology companies that aren't considered "tech" because they're not consumer Internet companies: Statoil, Daimler, BMW, Airbus, etc.

    One of the managing partners of Union Square Ventures, which is one of the leading venture capital firms in the world, is from Germany originally, and has invested in a few German startups. Soundcloud is the most famous of them, but there are others, such as Munich-based SimScale.
    , @Mark Eugenikos
    In this context "general purpose" means information-technology companies that are involved in IT-related activities in general, as opposed to a narrow specialization in something (e.g. AutoCAD). It doesn't mean those companies are making any money from those other activities, but they are pursing them.
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  2. Actually, there’s only really one factor that truly matters: scale.

    Do you think it’s a coincidence that the only two tech countries that matter also happens to be in the top 3 population rank?

    To further drive home the point, do you think it’s a coincidence that the next likely tech power, India, is on par to surpass China in total population?

    If your domestic market is a billion+ people, you can scale massively domestically before expanding. That gives an internal weeding/sorting out mechanism. The US’ domestic market is smaller on paper, but you essentially have to add the Anglosphere + Western Europe(or the EU these days) because their economic relations are thisclose.

    But, you ask, isnt the EU domestic market pretty big? Actually, the domestic market is full of protectionism. Speaking of Spotify, which you brought up, their CEO said some years ago that it was easier(!) for them to expand to the US from Sweden than to Spain, despite both Sweden and Spain being in the EU since long. Think about that.

    Now, on the surface, that is a regulatory problem, but deep-down it is just scale. If the markets aren’t interlinked then the scale goes down and so Spotify had to expand ASAP to the US in order to be able to compete with Pandora. But Spotify are exceptions to the rule. Most tech companies prefer a cozy (and huge) domestic market. That is true in the US as well as in China, and increasingly in India.

    Once/when that scale problem is solved, Europe’s chances are going to be much better. Everything else will fall in place, including venture capital money. And despite all the talk of the “single market”, there are still massive barriers to the scale problem. The EU is pushing for a digital single market:

    https://en.wikipedia.org/wiki/Digital_Single_Market

    But of course, the EU has been in existance for god knows how many years and the fact that it still needs to do basic plumbing tells you of its priorities. This is what it should focus on, not forcing 3rd worlders. But again, on the surface it looks like a regulatory problem but deep down its the really the scale issue. Once you get a real single market, the scale issue gets solved. EU has not yet done yet, hence why the tech sector languishes. The other problems you mentioned are not non-issues but they pale in comparison to this one major hurdle.

    Read More
    • Agree: reiner Tor
    • Replies: @reiner Tor

    Actually, there’s only really one factor that truly matters: scale.
     
    I agree. Especially in software, where there are basically no unit costs to speak of (OK, there's some, but very little; it's all R&D overhead).
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  3. I forgot to mention Nokia and Ericsson. Both are very strong internationally in the IT infrastructure backbone business. The people who build the 4G and the upcoming 5G are likely to be either from them or from Huawei.

    This isn’t ‘sexy’ work, but it is certainly not simple stuff. It’s also not something most people pay attention to, since most tech that’s noticed that tend to be consumer-facing companies(Amazon, Google, Baidu etc).

    I also forgot to talk about Korea, but the question there is if the high mathematical IQ(close to 110) is helping out in playing to their natural strengths. The same way that, say, the UK is extremely competitive in financial services, far more than one would assume given its size. That’s likely a result more of a niche development strategy. The same is of course true for Taiwan wrt semiconductors and hardware(but no real software companies to speak of) or Ireland and their pharma and offshoring industry.

    In terms of across-the-board tech strength, it’s only really China and the US that really matters. Probably India in 5-10 years from now. All three have occupy the top 3 population positions, which, as I pointed out before, makes for a crucial difference. The EU, as long as it is fragmented despite all the talk of ‘further integration’ will not compete on an individual country-basis as is the case de facto right now, when you’re up against 350 million(and arguably even more, when you add the Anglosphere), 1.3 or 1.4 bullion people vs 10-80 million in each EU country. The EU single market is much more open to goods trade than services trade. The fact that Germany has a strong primary surplus in goods trade but a trade deficit in services may or may not have something to do with it! And as long as services – including digital services – are much less open, there won’t be a truly integrated single market, hence no scale to match the giants. This isn’t a huge mystery, actually.

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  4. ARM Holdings? I am sure there are others too. The US used to be a real lagger in mobile phones, whereas we had Nokia and Ericsson.

    I agree though that there is a lack of scale. Despite the common market really Europe is fragmented and so they get picked off by the big beasts. I would think there would need to be a conscious effort to develop a European ecosystem, as there has been in Russia and China.

    Also Europe lacks a military industrial complex, tech benefits big time from such spin offs. One of the reasons Russia is developing Skolkovo.

    Read More
    • Replies: @Thorfinnsson
    Scale is the primary reason. There was lots of early technology success in Europe. RCA (the Radio Corporation of America) was formed by General Electric at the request of the United States government because we feared an English worldwide monopoly on radio technology.

    The first fully electronic computer was English, and Germany during the war had Konrad Zuse and his relay-based computers (along with a planned fully electronic computer, which the German government refused to fund in 1941 as it wasn't considered a wartime priority--oops).

    France began rolling out a pre-www internet service in the 1970s called Minitel.

    And as LondonBob notes, cellular telephony was first commercialized in the Nordic countries. Europe continues to compete successfully in this space. Ignore handsets--Ericsson is still #1 in global marketshare in cellular radio base stations. In fact all American competitors in this space collapsed or were acquired.

    After the war European computer companies generally could not compete with IBM or the Seven Dwarves, and the continent was almost entirely absent from the personal computer revolution--which began when taxes were still high in America.

    America's military-industrial complex and Project Apollo in turned birthed the semiconductor industry. Europe was not entirely absent here, but lack of scale doomed their efforts other than ARM to bit players eventually.

    The Nordic success in early cellular technology emerged out of Ericsson having a unique product portfolio which combined radar, military radio, telephone switch-gear, and telephones. For them to move into cellular telephony was a natural move, though government bureaucrats nearly strangled the project in the womb.

    I am sure taxes play some role here--what's the point of creating a monopoly if it's not going to make you filthy rich? Employment regulations I could also see being a problem in startup culture. In general in business it's very important to fire people who don't perform quickly, and small entities don't have the luxury of dragging the process out.

    Scale shows that Europe made a disastrous error in allowing the United Kingdom to join in the first place. The UK lost its privileged access to the commonwealth countries, and the UK's inclusion into the EU prevented it from becoming a federated empire. Oops!
    , @reiner Tor

    ARM Holdings
     
    Is it not taken over? Also I think it's smaller than Infineon, for example. SAP, ASML Holding are mid-sized maybe. SAP is the largest software company in Europe, I think.
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  5. @LondonBob
    ARM Holdings? I am sure there are others too. The US used to be a real lagger in mobile phones, whereas we had Nokia and Ericsson.

    I agree though that there is a lack of scale. Despite the common market really Europe is fragmented and so they get picked off by the big beasts. I would think there would need to be a conscious effort to develop a European ecosystem, as there has been in Russia and China.

    Also Europe lacks a military industrial complex, tech benefits big time from such spin offs. One of the reasons Russia is developing Skolkovo.

    Scale is the primary reason. There was lots of early technology success in Europe. RCA (the Radio Corporation of America) was formed by General Electric at the request of the United States government because we feared an English worldwide monopoly on radio technology.

    The first fully electronic computer was English, and Germany during the war had Konrad Zuse and his relay-based computers (along with a planned fully electronic computer, which the German government refused to fund in 1941 as it wasn’t considered a wartime priority–oops).

    France began rolling out a pre-www internet service in the 1970s called Minitel.

    And as LondonBob notes, cellular telephony was first commercialized in the Nordic countries. Europe continues to compete successfully in this space. Ignore handsets–Ericsson is still #1 in global marketshare in cellular radio base stations. In fact all American competitors in this space collapsed or were acquired.

    After the war European computer companies generally could not compete with IBM or the Seven Dwarves, and the continent was almost entirely absent from the personal computer revolution–which began when taxes were still high in America.

    America’s military-industrial complex and Project Apollo in turned birthed the semiconductor industry. Europe was not entirely absent here, but lack of scale doomed their efforts other than ARM to bit players eventually.

    The Nordic success in early cellular technology emerged out of Ericsson having a unique product portfolio which combined radar, military radio, telephone switch-gear, and telephones. For them to move into cellular telephony was a natural move, though government bureaucrats nearly strangled the project in the womb.

    I am sure taxes play some role here–what’s the point of creating a monopoly if it’s not going to make you filthy rich? Employment regulations I could also see being a problem in startup culture. In general in business it’s very important to fire people who don’t perform quickly, and small entities don’t have the luxury of dragging the process out.

    Scale shows that Europe made a disastrous error in allowing the United Kingdom to join in the first place. The UK lost its privileged access to the commonwealth countries, and the UK’s inclusion into the EU prevented it from becoming a federated empire. Oops!

    Read More
    • Replies: @Philip Owen
    The UK could not get privileged access to Commonwealth countries. That's why it joined the EU. One of the arguments for joining the EU in 1975 was to have scale to match the US. It worked in older industries like aerospace or domestic appliances but the single market has only been around since 1992. There just isn't enough awareness of what it means yet.

    Why not the Commonwealth?
    https://waleseuroperussiafuture.blogspot.co.uk/2017/06/why-not-commonwealth.html
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  6. @Polish Perspective
    Actually, there's only really one factor that truly matters: scale.

    Do you think it's a coincidence that the only two tech countries that matter also happens to be in the top 3 population rank?

    To further drive home the point, do you think it's a coincidence that the next likely tech power, India, is on par to surpass China in total population?

    If your domestic market is a billion+ people, you can scale massively domestically before expanding. That gives an internal weeding/sorting out mechanism. The US' domestic market is smaller on paper, but you essentially have to add the Anglosphere + Western Europe(or the EU these days) because their economic relations are thisclose.

    But, you ask, isnt the EU domestic market pretty big? Actually, the domestic market is full of protectionism. Speaking of Spotify, which you brought up, their CEO said some years ago that it was easier(!) for them to expand to the US from Sweden than to Spain, despite both Sweden and Spain being in the EU since long. Think about that.

    Now, on the surface, that is a regulatory problem, but deep-down it is just scale. If the markets aren't interlinked then the scale goes down and so Spotify had to expand ASAP to the US in order to be able to compete with Pandora. But Spotify are exceptions to the rule. Most tech companies prefer a cozy (and huge) domestic market. That is true in the US as well as in China, and increasingly in India.

    Once/when that scale problem is solved, Europe's chances are going to be much better. Everything else will fall in place, including venture capital money. And despite all the talk of the "single market", there are still massive barriers to the scale problem. The EU is pushing for a digital single market:

    https://en.wikipedia.org/wiki/Digital_Single_Market

    But of course, the EU has been in existance for god knows how many years and the fact that it still needs to do basic plumbing tells you of its priorities. This is what it should focus on, not forcing 3rd worlders. But again, on the surface it looks like a regulatory problem but deep down its the really the scale issue. Once you get a real single market, the scale issue gets solved. EU has not yet done yet, hence why the tech sector languishes. The other problems you mentioned are not non-issues but they pale in comparison to this one major hurdle.

    Actually, there’s only really one factor that truly matters: scale.

    I agree. Especially in software, where there are basically no unit costs to speak of (OK, there’s some, but very little; it’s all R&D overhead).

    Read More
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  7. @LondonBob
    ARM Holdings? I am sure there are others too. The US used to be a real lagger in mobile phones, whereas we had Nokia and Ericsson.

    I agree though that there is a lack of scale. Despite the common market really Europe is fragmented and so they get picked off by the big beasts. I would think there would need to be a conscious effort to develop a European ecosystem, as there has been in Russia and China.

    Also Europe lacks a military industrial complex, tech benefits big time from such spin offs. One of the reasons Russia is developing Skolkovo.

    ARM Holdings

    Is it not taken over? Also I think it’s smaller than Infineon, for example. SAP, ASML Holding are mid-sized maybe. SAP is the largest software company in Europe, I think.

    Read More
    • Replies: @Thorfinnsson
    SAP is the the only European software company that matters.

    According to these data they were the fourth largest in the world in 2014: https://www.pwc.com/gx/en/industries/technology/publications/global-100-software-leaders/explore-the-data.html

    Note that some larger American tech companies aren't software companies in the traditional sense as they don't sell software. Google does sell G Suite subscriptions, but the revenue of that is trivial. It's an advertising company just like Facebook.

    ARM was acquired by Softbank, the eclectic Japanese holding company lead by a rare Japanese rebel.

    It's true that ARM isn't very large, but its influence looms very large.

    Spotify is completely irrelevant from a financial perspective. All of the revenue from its customers passes through to rights holders. Streaming has proven to be a shitty business model as the rights holders have more power than the streaming companies.

    I predict that in the future independent streaming companies will disappear and that all streaming will be done through Google, Apple, and Amazon. Once this takes place streaming may become more profitable as the power of these gigantic criminal syndicates exceeds the power of the small-time criminals in Hollywood.
    , @LondonBob
    Yes the Japs were allowed to take them over. Still based in the silicon fens though and certainly a market leader in their area for a long time.

    Tech does seem a weak spot for Europe, not really replicated in other sectors.
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  8. @reiner Tor

    ARM Holdings
     
    Is it not taken over? Also I think it's smaller than Infineon, for example. SAP, ASML Holding are mid-sized maybe. SAP is the largest software company in Europe, I think.

    SAP is the the only European software company that matters.

    According to these data they were the fourth largest in the world in 2014: https://www.pwc.com/gx/en/industries/technology/publications/global-100-software-leaders/explore-the-data.html

    Note that some larger American tech companies aren’t software companies in the traditional sense as they don’t sell software. Google does sell G Suite subscriptions, but the revenue of that is trivial. It’s an advertising company just like Facebook.

    ARM was acquired by Softbank, the eclectic Japanese holding company lead by a rare Japanese rebel.

    It’s true that ARM isn’t very large, but its influence looms very large.

    Spotify is completely irrelevant from a financial perspective. All of the revenue from its customers passes through to rights holders. Streaming has proven to be a shitty business model as the rights holders have more power than the streaming companies.

    I predict that in the future independent streaming companies will disappear and that all streaming will be done through Google, Apple, and Amazon. Once this takes place streaming may become more profitable as the power of these gigantic criminal syndicates exceeds the power of the small-time criminals in Hollywood.

    Read More
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  9. Pretty depressing, but unfortunately true. I suspect the technophobia of the demented Green ideology also plays a role, at least in my own country.

    Read More
    • Replies: @Thorfinnsson
    Do the greeniacs really have a problem with software? Did they organize against the former East German microelectronics industry for that matter? The physical legacy of this still exists in Dresden, where GlobalFoundries has a major semiconductor fabrication plant.

    The greeniacs can rather be blamed for the irrational, idiotic shutdown of Germany's nuclear power plants even earlier than originally scheduled (which was also a criminal, faggot plan). This problem is hardly unique to Germany however. Criminal voters in Vermont and California shutdown nuclear powerplants for instance, and an evil Swedish political party successfully fought an election in the 1970s of destroying Sweden's world-beating nuclear power industry. Denmark was planning to go nuclear in the 1960s, but hysterical Danish voters prevented this which had the unintentional consequence of creating the monstrous wind power disaster that blights us all. Even in France of all places there are bizarre and irrational voices attacking the country's successful nuclear power experiment.

    I have however seen that routinely there demented proposals made by insane asylum lunatics who somehow hold office to eliminate the unlimited speed sections of the Autobahn, which would be not just a German tragedy but a global tragedy.

    And greeniacs worldwide have destroyed car culture. One used to be able to find reasonably priced sedans and coupes with large displacement eight cylinder engines from most automakers. Now they are a dying breed and largely confined to expensive luxury cars.

    If my reading of history is correct, greeniacs were also partly to blame for the failure of supersonic civil aviation to achieve widespread adoption.

    Based on these crimes against humanity all "environmentalists" should be sent to concentration camps and forced to mine lignite.
    , @Andrei Martyanov

    Pretty depressing, but unfortunately true. I suspect the technophobia of the demented Green ideology also plays a role, at least in my own country.
     
    It does. But Germany's REAL hi-tech industry is, certainly, very competitive. As a simple example: the probability of me being diagnosed using very hi-tech precision built MRI or CT Scan machines with Siemens label in the United States is higher than having same procedures performed by General Electric products. Obviously Siemens rolling stock is a world class. German Greens, many of whom have a very hipster background, are certainly responsible for demolition of Germany's energy sector, especially her nuclear energy sector. If, however, Germany preserves her impressive machine-building sector, she will be fine.
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  10. All of the criticisms of European culture here are spot on. They simply lack the entrepreneurial dynamism that defines the U.S. and increasingly China. However, Europe does have some impressive technology companies when it comes to real (physical) technology such as automation and robotics. Siemens is a major player in industrial automation and ABB is a major player in industrial robots. Both are German companies. There is also Unaxis, ASM Lithography, and Aixtron; which specialize in thin-film process equipment for flat-panels, semiconductors, and III-V compound processing. So, yeah, there is a technology presence in Europe.

    Read More
    • Replies: @reiner Tor

    ABB is a major player in industrial robots. Both are German companies.
     
    ABB is Swiss, I believe. Or rather Swedish-Swiss, with headquarters in Switzerland.
    , @Philip Owen
    Ah yes, ASML, a former client of mine. I forgot them in my rant which you will find below. The US is very weak in most aspects of capital equipment for semiconductor processing. Europe and Japan hold this market.
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  11. @German_reader
    Pretty depressing, but unfortunately true. I suspect the technophobia of the demented Green ideology also plays a role, at least in my own country.

    Do the greeniacs really have a problem with software? Did they organize against the former East German microelectronics industry for that matter? The physical legacy of this still exists in Dresden, where GlobalFoundries has a major semiconductor fabrication plant.

    The greeniacs can rather be blamed for the irrational, idiotic shutdown of Germany’s nuclear power plants even earlier than originally scheduled (which was also a criminal, faggot plan). This problem is hardly unique to Germany however. Criminal voters in Vermont and California shutdown nuclear powerplants for instance, and an evil Swedish political party successfully fought an election in the 1970s of destroying Sweden’s world-beating nuclear power industry. Denmark was planning to go nuclear in the 1960s, but hysterical Danish voters prevented this which had the unintentional consequence of creating the monstrous wind power disaster that blights us all. Even in France of all places there are bizarre and irrational voices attacking the country’s successful nuclear power experiment.

    I have however seen that routinely there demented proposals made by insane asylum lunatics who somehow hold office to eliminate the unlimited speed sections of the Autobahn, which would be not just a German tragedy but a global tragedy.

    And greeniacs worldwide have destroyed car culture. One used to be able to find reasonably priced sedans and coupes with large displacement eight cylinder engines from most automakers. Now they are a dying breed and largely confined to expensive luxury cars.

    If my reading of history is correct, greeniacs were also partly to blame for the failure of supersonic civil aviation to achieve widespread adoption.

    Based on these crimes against humanity all “environmentalists” should be sent to concentration camps and forced to mine lignite.

    Read More
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  12. @reiner Tor

    ARM Holdings
     
    Is it not taken over? Also I think it's smaller than Infineon, for example. SAP, ASML Holding are mid-sized maybe. SAP is the largest software company in Europe, I think.

    Yes the Japs were allowed to take them over. Still based in the silicon fens though and certainly a market leader in their area for a long time.

    Tech does seem a weak spot for Europe, not really replicated in other sectors.

    Read More
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  13. New propaganda narrative proposal; Europe needs immigrants in order for its tech sector to be competitive with Silicon Valley. Syrians are great tech entrepreneurs, just look at Steve Jobs!

    (N.B. Might be difficult to square with narrative about minority under-representation in tech)

    Read More
    • Replies: @reiner Tor

    Might be difficult to square with narrative about minority under-representation in tech
     
    Well, logic has never prevented the leftist insanity from anything. Probably they will push on both fronts with full force: "See, we need these masses of potential Syrian tech entrepreneurs, to reinvigorate our tech industries, but we also need to fight against racism in tech, or else the Syrians will keep eschewing the tech industry in favor of living off welfare. If our glorious plan won't work, it'll be the fault of evil racist white males!"
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  14. @Abelard Lindsey
    All of the criticisms of European culture here are spot on. They simply lack the entrepreneurial dynamism that defines the U.S. and increasingly China. However, Europe does have some impressive technology companies when it comes to real (physical) technology such as automation and robotics. Siemens is a major player in industrial automation and ABB is a major player in industrial robots. Both are German companies. There is also Unaxis, ASM Lithography, and Aixtron; which specialize in thin-film process equipment for flat-panels, semiconductors, and III-V compound processing. So, yeah, there is a technology presence in Europe.

    ABB is a major player in industrial robots. Both are German companies.

    ABB is Swiss, I believe. Or rather Swedish-Swiss, with headquarters in Switzerland.

    Read More
    • Replies: @Thorfinnsson
    Swedish-Swiss indeed.

    The organization was formed in 1988 from the merger of Brown Boveri and ASEA (Allmänna Svenska Elektriska Aktiebolaget). Switzerland was chosen for headquarters for obvious tax reasons. The first CEO of the merged company was Swedish. Major operations of ASEA never left Västerås.

    KUKA is a leading robotics company from Germany, but acquired recently by the Chinese.

    By far the dominant country in producing robots is Japan, but competition is intensifying. China surpassed Japan in robot production in 2013, but many of these robots are produced by Japanese and European companies with most of the value-added coming from outside China.

    "Tech" in practice means semiconductors and software. This is an absurd abuse of the term, but it's not worth challenging.

    Europe and Japan have a lot of latent capacity for "tech" as there are no shortages of engineers, programmers, or capital in either place.

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  15. @DFH
    New propaganda narrative proposal; Europe needs immigrants in order for its tech sector to be competitive with Silicon Valley. Syrians are great tech entrepreneurs, just look at Steve Jobs!

    (N.B. Might be difficult to square with narrative about minority under-representation in tech)

    Might be difficult to square with narrative about minority under-representation in tech

    Well, logic has never prevented the leftist insanity from anything. Probably they will push on both fronts with full force: “See, we need these masses of potential Syrian tech entrepreneurs, to reinvigorate our tech industries, but we also need to fight against racism in tech, or else the Syrians will keep eschewing the tech industry in favor of living off welfare. If our glorious plan won’t work, it’ll be the fault of evil racist white males!”

    Read More
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  16. @reiner Tor

    ABB is a major player in industrial robots. Both are German companies.
     
    ABB is Swiss, I believe. Or rather Swedish-Swiss, with headquarters in Switzerland.

    Swedish-Swiss indeed.

    The organization was formed in 1988 from the merger of Brown Boveri and ASEA (Allmänna Svenska Elektriska Aktiebolaget). Switzerland was chosen for headquarters for obvious tax reasons. The first CEO of the merged company was Swedish. Major operations of ASEA never left Västerås.

    KUKA is a leading robotics company from Germany, but acquired recently by the Chinese.

    By far the dominant country in producing robots is Japan, but competition is intensifying. China surpassed Japan in robot production in 2013, but many of these robots are produced by Japanese and European companies with most of the value-added coming from outside China.

    “Tech” in practice means semiconductors and software. This is an absurd abuse of the term, but it’s not worth challenging.

    Europe and Japan have a lot of latent capacity for “tech” as there are no shortages of engineers, programmers, or capital in either place.

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  17. It has been this way since World War 1, a German car company and a British appliance manufacturer or so aside. I can talk with some authority on the UK scene so I will.

    Cambridge in the UK was (to some extent still is) to mobile phones what Silicon Valley is to computers. The EU pushed to make GSM a standard and won. Sony, Ericsson, Nokia, Philips, LG and others had their design work done there, largely because that was where the ARM chip expertise was based. Not just handsets but base stations. There is a large cluster of design consultancies and software firms like Autonomy. Not well known to the public but Cambridge Silicon Radio, which dominates Bluetooth is there too. The same design consultancies that cleaned up with phones are now doing it for Bluetooth. But it was all about the cluster not a single large player. Similar things happened with industrial ink jet printing. It is not so much the seed and start up capital that is lacking as the expansion capital to take new global markets quickly.

    The UK has a similar cluster of games designers, about which I know less. Similarly, “once there were search engines”.

    At an earlier time, British firms gained global dominance in disk drives, by betting on the 3.5″ form factor when no one else did. However, Rodime the front runner and holder of most of the patents was manufacturing in 35 buildings in Glenrothes Scotland while Finis Conor was building a bigger factory under one roof in Singapore. Rodime would never have been given the finance to do that. The VC’s had already made legendary money by UK standards. The US reaction to Rodime’s patents was “See you in court”. 20 years later, Rodime did get a payout.

    Taiwan’s LCD industry was built on British research and patents as have been later LCD and other display technology devices. But there was never a British device manufacturer. Thorn EMI was an obvious candidate. It had a superb patent and research portfolio, not just in display technology but shareholders insisted on dividends and resisted dilution with new capital. So as vinyl and CRT television died, so did Thorn EMI. Philips went the same way but reorganized in time and made it to the CD generation.

    Britain does dominate in gas turbines for jets and electricity generation. These are being adapted to power autonomous ships. It is also very strong in other prime movers and pharmaceuticals but those firms have all been global market leaders since the 1970′s or earlier. Later success stories have been victims of fluctuating exchange rates leaving them vulnerable to US take over. Shareholders in the UK measure success in financial terms not industrial. The blind faith and speculation involved in creating Facebook would be unthinkable. The UK’s excuse in part is Dutch Disease (the Dutch excuse too come to that). That’s not an excuse that applies to most of the EU.

    SAP which is very important in the business world is a German firm.

    Some of this is about the Cloud. Europeans and most East Asians did not become enthusiastic about the Cloud in time, especially with smartphone opportunities. The big players were too busy defending their cell phone shares and focusing on the hardware and middleware. The Japanese were at the cutting edge of cell phone applications not the US. Then came Jobs and the smartphone. The Cloud took off first in the US.

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  18. The mindset is different in North America. A Canadian quantum computing research lab is called “Creative Destruction”! The German character is, in the style of Kant, to be concerned with duty and a categorical imperative. Europe is really Germany, and because of their dutybound mindset, recent past and fear of a nuclear war fought on their country, Germans tend to be a lot more cautious about world shaking ideas.

    American tech is commercially driven. IBM is in competition with Google to be first with quantum superiority. China is not going to be first with a human-level general intelligence machine. They matter because America want to sell them stuff. In my opinion Google are only setting up an AI research centre in China to get access to that market. The clever people running Google and the even cleverer ones doing AI research for them are going devil take the hindmost to be first. The momentum in America is irrepressible. That lab may turn out to be the most ironically named institution in all history.

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  19. @Abelard Lindsey
    All of the criticisms of European culture here are spot on. They simply lack the entrepreneurial dynamism that defines the U.S. and increasingly China. However, Europe does have some impressive technology companies when it comes to real (physical) technology such as automation and robotics. Siemens is a major player in industrial automation and ABB is a major player in industrial robots. Both are German companies. There is also Unaxis, ASM Lithography, and Aixtron; which specialize in thin-film process equipment for flat-panels, semiconductors, and III-V compound processing. So, yeah, there is a technology presence in Europe.

    Ah yes, ASML, a former client of mine. I forgot them in my rant which you will find below. The US is very weak in most aspects of capital equipment for semiconductor processing. Europe and Japan hold this market.

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    • Replies: @Thorfinnsson
    What about Ultratech?
    , @Abelard Lindsey
    Actually, the US dominates in front end process tools. AMAT and Lam/Novellus are the dominant OEM's for deposition and etching equipment. They just don't do litho. ASM and Nikon are the dominant litho OEM's.

    Veeco (American) and Aixtron (German) are the dominant OEM's for III-V compound deposition tools, mostly metal-organic CVD.

    My point was that Europe actually does do a lot of technology. They just don't do the fluffy social media stuff. Believe me, I am no fan of European culture. But I do believe in giving credit where credit is due.
    , @DIscharged EE
    Phil
    I don't understand this assertion: AMAT, Lam Research-Novellus, KLA -Tencor, remain Silicon Valley companies altho many jobs have been outsourced to Singapore. I concede that half the cost of a new fab is lithography and ASML/Nikon dominate that along with TEL coaters
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  20. @Thorfinnsson
    Scale is the primary reason. There was lots of early technology success in Europe. RCA (the Radio Corporation of America) was formed by General Electric at the request of the United States government because we feared an English worldwide monopoly on radio technology.

    The first fully electronic computer was English, and Germany during the war had Konrad Zuse and his relay-based computers (along with a planned fully electronic computer, which the German government refused to fund in 1941 as it wasn't considered a wartime priority--oops).

    France began rolling out a pre-www internet service in the 1970s called Minitel.

    And as LondonBob notes, cellular telephony was first commercialized in the Nordic countries. Europe continues to compete successfully in this space. Ignore handsets--Ericsson is still #1 in global marketshare in cellular radio base stations. In fact all American competitors in this space collapsed or were acquired.

    After the war European computer companies generally could not compete with IBM or the Seven Dwarves, and the continent was almost entirely absent from the personal computer revolution--which began when taxes were still high in America.

    America's military-industrial complex and Project Apollo in turned birthed the semiconductor industry. Europe was not entirely absent here, but lack of scale doomed their efforts other than ARM to bit players eventually.

    The Nordic success in early cellular technology emerged out of Ericsson having a unique product portfolio which combined radar, military radio, telephone switch-gear, and telephones. For them to move into cellular telephony was a natural move, though government bureaucrats nearly strangled the project in the womb.

    I am sure taxes play some role here--what's the point of creating a monopoly if it's not going to make you filthy rich? Employment regulations I could also see being a problem in startup culture. In general in business it's very important to fire people who don't perform quickly, and small entities don't have the luxury of dragging the process out.

    Scale shows that Europe made a disastrous error in allowing the United Kingdom to join in the first place. The UK lost its privileged access to the commonwealth countries, and the UK's inclusion into the EU prevented it from becoming a federated empire. Oops!

    The UK could not get privileged access to Commonwealth countries. That’s why it joined the EU. One of the arguments for joining the EU in 1975 was to have scale to match the US. It worked in older industries like aerospace or domestic appliances but the single market has only been around since 1992. There just isn’t enough awareness of what it means yet.

    Why not the Commonwealth?

    https://waleseuroperussiafuture.blogspot.co.uk/2017/06/why-not-commonwealth.html

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  21. @Philip Owen
    Ah yes, ASML, a former client of mine. I forgot them in my rant which you will find below. The US is very weak in most aspects of capital equipment for semiconductor processing. Europe and Japan hold this market.

    What about Ultratech?

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    • Replies: @Philip Owen
    They were kept out of ASML's hands by the US military so I am not sure that they count as a commercial success.
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  22. @Thorfinnsson
    What about Ultratech?

    They were kept out of ASML’s hands by the US military so I am not sure that they count as a commercial success.

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  23. Europe Can’t Into Big Tech

    What type of grammatical retardation is this?

    It should be either :

    ‘Europe Can’t Get Into Big Tech’

    or

    ‘Europe Can’t Enter Big Tech’

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    • Replies: @Anon
    Not a meme wizard, are we?
    , @Philip Owen
    Poland cannot into Space (except in the EU). It is a reference to the Polandball cartoon series.
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  24. Wow I literally referenced that video in another Steve Sailer thread… We usually tend to think of STEM in the aggregate, but when you break out the TE part, it’s pretty amazing how California and East Asia make so much of the software and hardware that powers our every day lives.

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  25. @Thomm

    Europe Can't Into Big Tech
     
    What type of grammatical retardation is this?

    It should be either :

    'Europe Can't Get Into Big Tech'

    or

    'Europe Can't Enter Big Tech'

    Not a meme wizard, are we?

    Read More
    • Replies: @Reg Cæsar


    Europe Can't Into Big Tech
     
    What type of grammatical retardation is this?
     
    Thomm not Russian. Anon not either. Explanation easy. If one Russian student.

    Not a meme wizard, are we?
     
    "Meme wizard" not worth effort.

    What this word, "are"?
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  26. those Tech companies produce nothing important. They either serve to offer the masses something like a drug (social media etc.) which wastes an incredible amount of time. Or they substitute very simple businesses in retail. Daimler produces more important products, and a much more sustainable wealth than all mobile phone companies including Apple together.

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    • Replies: @Andrei Martyanov

    those Tech companies produce nothing important. They either serve to offer the masses something like a drug (social media etc.) which wastes an incredible amount of time. Or they substitute very simple businesses in retail. Daimler produces more important products, and a much more sustainable wealth than all mobile phone companies including Apple together.
     
    Try to explain this to some hipster who thinks that iPhone is a real "hi-tech". What is Amazon's claim to a "tech" company is altogether incomprehensible.
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  27. @Thomm

    Europe Can't Into Big Tech
     
    What type of grammatical retardation is this?

    It should be either :

    'Europe Can't Get Into Big Tech'

    or

    'Europe Can't Enter Big Tech'

    Poland cannot into Space (except in the EU). It is a reference to the Polandball cartoon series.

    Read More
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  28. @Anon
    Not a meme wizard, are we?

    Europe Can’t Into Big Tech

    What type of grammatical retardation is this?

    Thomm not Russian. Anon not either. Explanation easy. If one Russian student.

    Not a meme wizard, are we?

    “Meme wizard” not worth effort.

    What this word, “are”?

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    • Replies: @Thomm

    Thomm not Russian. Anon not either. Explanation easy. If one Russian student.
     
    True. But I was not aware that being Russian meant one's English should be closer to Ebonics.

    Live and learn.
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  29. There is always Linus Thorvald, a one man tech giant. Then there are also gaming companies such as Ubisoft from France, Paradox from Sweden, and that Polish company that made The Witcher games, there are a fair number of companies in Europe that produce better products than in America.

    I also need to ask what is so great about Facebook anyway? I don’t mean if you like it or not, I mean in terms of the features it has, there is nothing remarkable about it, in terms of user functionality this does not require geniuses to create. Probably 99.999% of the Facebook users would have zero idea why they are using it other than they were told this is the norm. The only impressive thing about Facebook is the sheer amount of concurrent users it needs to handle, but even this could be done outside of Silicon Valley.

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  30. AGE.

    The major US tech giants were all founded by young people, often less than 25.

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    • Replies: @Andrei Martyanov

    The major US tech giants were all founded by young people, often less than 25.
     
    Yeah, like William Boeing, who founded that not very "hi-tech" Boeing at a tender age of about 36. Same goes to George Westinghouse, among many others. But I guess those people do not count as belonging to a "hi-tech". Steve Jobs, on the other hand, certainly is.
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  31. Actually, there’s a pretty decent chance the first general AI will be created in Europe, since Deepmind (now acquired by Google) is located in London.

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  32. All ‘Europe’ (EU) *really* cares about is importing as many black/brown people as humanly possible.

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    • Replies: @DFH
    True

    The European Commission has described as "unacceptable" plans by Donald Tusk, the European Council president, to scrap mandatory quotas on relocating asylum seekers across the EU.
    Speaking in Strasbourg on Tuesday (12 December), EU migration commissioner Dimitris Avramopoulos, said a note put forward by Tusk ahead of an EU summit is anti-European.
    "It denies, it ignores, all the work that we have done during the past three years," said Avramopoulos.
    Avramopoulos said the Tusk paper also undermines "one of the main pillars of the European project, the principal of solidarity".
    He said "solidarity cannot be cherry picked" and that Europe has a moral and legal duty to protect refugees.
     

    anti-European
     
    https://euobserver.com/migration/140255
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  33. @Andrei Martyanov

    there are no European general purpose tech giants,
     
    What is "general purpose" tech giants?

    Presumably, he’s referring to FANG-type companies: Facebook, Amazon, Netflix, Google, that sort of thing.

    Germany does have SAP, which is a $180 billion market cap enterprise software company. And of course Europe has a number of cutting edge technology companies that aren’t considered “tech” because they’re not consumer Internet companies: Statoil, Daimler, BMW, Airbus, etc.

    One of the managing partners of Union Square Ventures, which is one of the leading venture capital firms in the world, is from Germany originally, and has invested in a few German startups. Soundcloud is the most famous of them, but there are others, such as Munich-based SimScale.

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  34. @Anonymous
    All 'Europe' (EU) *really* cares about is importing as many black/brown people as humanly possible.

    True

    The European Commission has described as “unacceptable” plans by Donald Tusk, the European Council president, to scrap mandatory quotas on relocating asylum seekers across the EU.
    Speaking in Strasbourg on Tuesday (12 December), EU migration commissioner Dimitris Avramopoulos, said a note put forward by Tusk ahead of an EU summit is anti-European.
    “It denies, it ignores, all the work that we have done during the past three years,” said Avramopoulos.
    Avramopoulos said the Tusk paper also undermines “one of the main pillars of the European project, the principal of solidarity”.
    He said “solidarity cannot be cherry picked” and that Europe has a moral and legal duty to protect refugees.

    anti-European

    https://euobserver.com/migration/140255

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    • Replies: @Anonymous
    I absolutely *HATE* the appalling misuse of that (nonsense) word 'solidarity' in this instance.
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  35. I had a casual conversation in a Gästehaus some time ago with a German couple in the German software development industry. They complained that they could not get access to capital unless they had physical assets to back loans or to attract investors … that Germans had no concept of human capital and what it could achieve.

    Perhaps this attitude explains why Germany can be an industrial powerhouse but could never sponsor the development of a Google, Facebook, or the other typical products of Silicon Valley. A few guys working out of a garage with an idea for “game-changing” software makes no sense to them. Too high risk!

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    • Replies: @ussr andy

    Perhaps this attitude explains why Germany can be an industrial powerhouse but could never sponsor the development of a Google, Facebook, or the other typical products of Silicon Valley.
     
    Facebook and prolly most of those companies whose chief product is a website, never were anything but an Orwellian deep state and advertising industry honeypots. That's not to say that some of those "guy senses business opportunity, builds thing in garage, becomes rich" scenarios are real. HP for example started out with a modest frequency generator, Apple with a home computer, Sony with a rice cooker.
    , @Andrei Martyanov

    the development of a Google, Facebook, or the other typical products of Silicon Valley. A few guys working out of a garage with an idea for “game-changing” software makes no sense to them. Too high risk!
     
    Gee whiz, I guess Siemens produced state-of-the-art turbines or rolling stock, not to mention medical equipment cannot even compare with the "complexity" of some "game changing" in software done out of garage. /sarc.
    , @Anonymous
    Germany had considerable electronic talent in WWII, but they were never dominant in consumer electronics, and neither were they dominant in electronic test and measurement. They did make very good niche commercial equipment like Neumann microphones and Studer tape machines, and telecom test equipment by Rohde & Schwarz and Wandel & Goltermann, but their "general purpose" stuff was inferior to US made equipment.

    Despite the success of Neumann/Telefunken, high end stereo equipment was another area they did not have much success in. (EMT made turntables, but they were not sold for home use.) As a builder of vacuum tube hi fi amplifiers myself, it's astounding that the Germans made much better specialized vacuum tubes (e.g, the EL156, several small Telefunken 'transmitting' types ) than the vaunted Mullard Gold Lions, yet no one over here even knew of them back then.
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  36. @TheJester
    I had a casual conversation in a Gästehaus some time ago with a German couple in the German software development industry. They complained that they could not get access to capital unless they had physical assets to back loans or to attract investors ... that Germans had no concept of human capital and what it could achieve.

    Perhaps this attitude explains why Germany can be an industrial powerhouse but could never sponsor the development of a Google, Facebook, or the other typical products of Silicon Valley. A few guys working out of a garage with an idea for "game-changing" software makes no sense to them. Too high risk!

    Perhaps this attitude explains why Germany can be an industrial powerhouse but could never sponsor the development of a Google, Facebook, or the other typical products of Silicon Valley.

    Facebook and prolly most of those companies whose chief product is a website, never were anything but an Orwellian deep state and advertising industry honeypots. That’s not to say that some of those “guy senses business opportunity, builds thing in garage, becomes rich” scenarios are real. HP for example started out with a modest frequency generator, Apple with a home computer, Sony with a rice cooker.

    Read More
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  37. No country in Europe possesses true sovereignty, it’s as simple as that. On the other hand, there’s no evidence that they suffer economically from lacking monstrous parasitical structures like Jewgle, Faceberg and Amazog. The identification of such companies with “creativity” is bullshit, and “artificial general intelligence” is bullshit cubed.

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    • Agree: Andrei Martyanov
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  38. @DFH
    True

    The European Commission has described as "unacceptable" plans by Donald Tusk, the European Council president, to scrap mandatory quotas on relocating asylum seekers across the EU.
    Speaking in Strasbourg on Tuesday (12 December), EU migration commissioner Dimitris Avramopoulos, said a note put forward by Tusk ahead of an EU summit is anti-European.
    "It denies, it ignores, all the work that we have done during the past three years," said Avramopoulos.
    Avramopoulos said the Tusk paper also undermines "one of the main pillars of the European project, the principal of solidarity".
    He said "solidarity cannot be cherry picked" and that Europe has a moral and legal duty to protect refugees.
     

    anti-European
     
    https://euobserver.com/migration/140255

    I absolutely *HATE* the appalling misuse of that (nonsense) word ‘solidarity’ in this instance.

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  39. @anony-mouse
    AGE.

    The major US tech giants were all founded by young people, often less than 25.

    The major US tech giants were all founded by young people, often less than 25.

    Yeah, like William Boeing, who founded that not very “hi-tech” Boeing at a tender age of about 36. Same goes to George Westinghouse, among many others. But I guess those people do not count as belonging to a “hi-tech”. Steve Jobs, on the other hand, certainly is.

    Read More
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  40. @TheJester
    I had a casual conversation in a Gästehaus some time ago with a German couple in the German software development industry. They complained that they could not get access to capital unless they had physical assets to back loans or to attract investors ... that Germans had no concept of human capital and what it could achieve.

    Perhaps this attitude explains why Germany can be an industrial powerhouse but could never sponsor the development of a Google, Facebook, or the other typical products of Silicon Valley. A few guys working out of a garage with an idea for "game-changing" software makes no sense to them. Too high risk!

    the development of a Google, Facebook, or the other typical products of Silicon Valley. A few guys working out of a garage with an idea for “game-changing” software makes no sense to them. Too high risk!

    Gee whiz, I guess Siemens produced state-of-the-art turbines or rolling stock, not to mention medical equipment cannot even compare with the “complexity” of some “game changing” in software done out of garage. /sarc.

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    • Replies: @TheJester
    Complexity has nothing to do with it. Germans like to make high-quality things ... like, as you say, cars, turbines, rolling stock, and medical equipment. You can touch them and feel them.

    Software and website are not things, although these abstractions have changed our world. The issue: How does one assess the risks of loaning money to a software development initiative that is currently "vaporware"? The Americans and Chinese are willing to take high risks in the hope of landing a "hit", i.e. the returns on Facebook for the original investors. The Germans are not.

    The couple I talked to in Germany were lamenting that they could find no backers for their software development initiatives ... and that this was a country-wide/cultural phenomenon.
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  41. @Erik Sieven
    those Tech companies produce nothing important. They either serve to offer the masses something like a drug (social media etc.) which wastes an incredible amount of time. Or they substitute very simple businesses in retail. Daimler produces more important products, and a much more sustainable wealth than all mobile phone companies including Apple together.

    those Tech companies produce nothing important. They either serve to offer the masses something like a drug (social media etc.) which wastes an incredible amount of time. Or they substitute very simple businesses in retail. Daimler produces more important products, and a much more sustainable wealth than all mobile phone companies including Apple together.

    Try to explain this to some hipster who thinks that iPhone is a real “hi-tech”. What is Amazon’s claim to a “tech” company is altogether incomprehensible.

    Read More
    • Replies: @Mark Eugenikos

    What is Amazon’s claim to a “tech” company is altogether incomprehensible.
     
    It's not incomprehensible if you know something about it. Amazon is by far the biggest player in the cloud (40% global market share outside of China, second biggest player is about 5-6 times smaller), has developed many leading-edge technologies in this space, and their software development practices (and hiring practices) are absolutely first-rate.

    We get it that you prefer real (tangible) technologies but no need to disparage Amazon. They are earning way more profit from cloud than from retail. Their annual R&D budget is on the order of $15B. They are also a rare example of a company that was able to leverage leadership in one area (online retail) into leadership in another area (cloud). I can acknowledge this without having to like Bezos or his politics.
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  42. @German_reader
    Pretty depressing, but unfortunately true. I suspect the technophobia of the demented Green ideology also plays a role, at least in my own country.

    Pretty depressing, but unfortunately true. I suspect the technophobia of the demented Green ideology also plays a role, at least in my own country.

    It does. But Germany’s REAL hi-tech industry is, certainly, very competitive. As a simple example: the probability of me being diagnosed using very hi-tech precision built MRI or CT Scan machines with Siemens label in the United States is higher than having same procedures performed by General Electric products. Obviously Siemens rolling stock is a world class. German Greens, many of whom have a very hipster background, are certainly responsible for demolition of Germany’s energy sector, especially her nuclear energy sector. If, however, Germany preserves her impressive machine-building sector, she will be fine.

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    • Replies: @German_reader

    German Greens, many of whom have a very hipster background, are certainly responsible for demolition of Germany’s energy sector, especially her nuclear energy sector. If, however, Germany preserves her impressive machine-building sector, she will be fine.
     
    Problem is the Greens' demented energy schemes (eagerly taken up by Merkel's Christian Democrats) drive up energy prices and may eventually make energy supply unreliable...factors which might eventually make German industry uncompetitive.
    I may exaggerate sometimes, but there's much to be worried about imo.
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  43. @Andrei Martyanov

    Pretty depressing, but unfortunately true. I suspect the technophobia of the demented Green ideology also plays a role, at least in my own country.
     
    It does. But Germany's REAL hi-tech industry is, certainly, very competitive. As a simple example: the probability of me being diagnosed using very hi-tech precision built MRI or CT Scan machines with Siemens label in the United States is higher than having same procedures performed by General Electric products. Obviously Siemens rolling stock is a world class. German Greens, many of whom have a very hipster background, are certainly responsible for demolition of Germany's energy sector, especially her nuclear energy sector. If, however, Germany preserves her impressive machine-building sector, she will be fine.

    German Greens, many of whom have a very hipster background, are certainly responsible for demolition of Germany’s energy sector, especially her nuclear energy sector. If, however, Germany preserves her impressive machine-building sector, she will be fine.

    Problem is the Greens’ demented energy schemes (eagerly taken up by Merkel’s Christian Democrats) drive up energy prices and may eventually make energy supply unreliable…factors which might eventually make German industry uncompetitive.
    I may exaggerate sometimes, but there’s much to be worried about imo.

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    • Replies: @Andrei Martyanov

    drive up energy prices and may eventually make energy supply unreliable…
     
    Well, Nord Stream seems to be pretty reliable and that is why so much hysteria around it.
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  44. @Andrei Martyanov

    the development of a Google, Facebook, or the other typical products of Silicon Valley. A few guys working out of a garage with an idea for “game-changing” software makes no sense to them. Too high risk!
     
    Gee whiz, I guess Siemens produced state-of-the-art turbines or rolling stock, not to mention medical equipment cannot even compare with the "complexity" of some "game changing" in software done out of garage. /sarc.

    Complexity has nothing to do with it. Germans like to make high-quality things … like, as you say, cars, turbines, rolling stock, and medical equipment. You can touch them and feel them.

    Software and website are not things, although these abstractions have changed our world. The issue: How does one assess the risks of loaning money to a software development initiative that is currently “vaporware”? The Americans and Chinese are willing to take high risks in the hope of landing a “hit”, i.e. the returns on Facebook for the original investors. The Germans are not.

    The couple I talked to in Germany were lamenting that they could find no backers for their software development initiatives … and that this was a country-wide/cultural phenomenon.

    Read More
    • Replies: @reiner Tor
    Yet SAP is German.
    , @Andrei Martyanov

    Software and website are not things, although these abstractions have changed our world.
     
    Semiconductors and structures built on them changed our world. Software is merely a control. The whole world writes a software--a handful of nations produces processors. Facebook--is a useless, mental disorder inducing "service" which adds NO value to civilization. In fact, it deducts. MTU-made turbines move ships, which deliver goods and maintain sea-trade routs (roughly 70% of world's trade) alive. Amazon would die without real hi-tech, including those very processors which it doesn't produce--well, at least it provides valuable service, which is still, in the end, provided by the delivery systems which run on those "things". From jet engines, to avionics, to rails, to rolling stock to delivery trucks all of which is made by an enormous extraction and machine-building complex of real hi-tech things. In the end, space industry provides all those other "things" related to IT. But we already saw those wonderful fruits of deindustrialization, didn't we? The problem with all that is more than just economic (albeit, it is too0, it is metaphysical--we are living now in the world of utter incompetence of the new elites who conflate reality and virtual world. Making "things" is a very complex business, making really complex things is extremely difficult. Anyone who ever dealt with manufacturing planning will confirm that.
    , @Anonymous

    Complexity has nothing to do with it. Germans like to make high-quality things … like, as you say, cars, turbines, rolling stock, and medical equipment. You can touch them and feel them.
     
    Ironically, German cars are substantially less reliable than Japanese ones, a prime reason being that German electronics in cars are overly complicated and break down a lot. Many Mercedes and BMW cars in the US are driven under their own power to the junkyard because although the engine and driveline still work, the costs of repairing the electricals or suspension are more than the market value of the car. And the last Mercedes engine that was really any more reliable or economic than a small block Chevy of the period was probably the OM 617.
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  45. @German_reader

    German Greens, many of whom have a very hipster background, are certainly responsible for demolition of Germany’s energy sector, especially her nuclear energy sector. If, however, Germany preserves her impressive machine-building sector, she will be fine.
     
    Problem is the Greens' demented energy schemes (eagerly taken up by Merkel's Christian Democrats) drive up energy prices and may eventually make energy supply unreliable...factors which might eventually make German industry uncompetitive.
    I may exaggerate sometimes, but there's much to be worried about imo.

    drive up energy prices and may eventually make energy supply unreliable…

    Well, Nord Stream seems to be pretty reliable and that is why so much hysteria around it.

    Read More
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  46. OT, but these stories are interesting from the perspective of the non-East Asian developing world.

    https://www.brookings.edu/blog/future-development/2017/11/17/future-development-reads-the-manufacturing-dreams-and-nightmares-of-china/

    https://qz.com/1146018/china-in-africa-chinese-manufacturing-not-moving-to-africa-all-that-soon/

    After China, it appears it will be SEA’s turn, mostly Vietnam, Philippines, Cambodia and so on. After them, by 2030, the question is if the labour-intensive manufacturing-led export model which East Asia got rich on will even be viable. Overproduction of people and underproduction of jobs to match them could cause rising chaos in Africa and parts of central and South Asia, á la Arab “””Spring””” of 2011, but on a much larger and longer time horizon.

    Read More
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  47. @TheJester
    Complexity has nothing to do with it. Germans like to make high-quality things ... like, as you say, cars, turbines, rolling stock, and medical equipment. You can touch them and feel them.

    Software and website are not things, although these abstractions have changed our world. The issue: How does one assess the risks of loaning money to a software development initiative that is currently "vaporware"? The Americans and Chinese are willing to take high risks in the hope of landing a "hit", i.e. the returns on Facebook for the original investors. The Germans are not.

    The couple I talked to in Germany were lamenting that they could find no backers for their software development initiatives ... and that this was a country-wide/cultural phenomenon.

    Yet SAP is German.

    Read More
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  48. @TheJester
    Complexity has nothing to do with it. Germans like to make high-quality things ... like, as you say, cars, turbines, rolling stock, and medical equipment. You can touch them and feel them.

    Software and website are not things, although these abstractions have changed our world. The issue: How does one assess the risks of loaning money to a software development initiative that is currently "vaporware"? The Americans and Chinese are willing to take high risks in the hope of landing a "hit", i.e. the returns on Facebook for the original investors. The Germans are not.

    The couple I talked to in Germany were lamenting that they could find no backers for their software development initiatives ... and that this was a country-wide/cultural phenomenon.

    Software and website are not things, although these abstractions have changed our world.

    Semiconductors and structures built on them changed our world. Software is merely a control. The whole world writes a software–a handful of nations produces processors. Facebook–is a useless, mental disorder inducing “service” which adds NO value to civilization. In fact, it deducts. MTU-made turbines move ships, which deliver goods and maintain sea-trade routs (roughly 70% of world’s trade) alive. Amazon would die without real hi-tech, including those very processors which it doesn’t produce–well, at least it provides valuable service, which is still, in the end, provided by the delivery systems which run on those “things”. From jet engines, to avionics, to rails, to rolling stock to delivery trucks all of which is made by an enormous extraction and machine-building complex of real hi-tech things. In the end, space industry provides all those other “things” related to IT. But we already saw those wonderful fruits of deindustrialization, didn’t we? The problem with all that is more than just economic (albeit, it is too0, it is metaphysical–we are living now in the world of utter incompetence of the new elites who conflate reality and virtual world. Making “things” is a very complex business, making really complex things is extremely difficult. Anyone who ever dealt with manufacturing planning will confirm that.

    Read More
    • Replies: @Thorfinnsson


    The whole world writes a software–a handful of nations produces processors. Facebook–is a useless, mental disorder inducing “service” which adds NO value to civilization.
     
    I share your value judgment on Facebook. I do not have a Facebook account, and I have nothing but contempt for people who do.

    I also personally hate Mark Zuckerberg, who I think is a disgusting creep. The way he dresses offends me, and the fact that a billionaire can't do any better with women than wife up subpar zipper pussy who won't even take his last name is pathetic.

    You can bet the Winkelvoss twins he stole Facebook from aren't settling for slanty eyed fives.

    That said--what is useful about Facebook is that it has a market worth of $523 billion. This isn't just the case of typical profitless tech bubbles either, the company had actual net earnings last year of $10 billion. The earnings multiple the company trades at is in fact not much higher than the S & P 500 as a whole, or, to give an example of one company, Costco (a very socially useful company unlike Facebook).

    A majority of all new digital advertising spending now goes to Facebook, and Google and Facebook effectively have a duopoly on online advertising. Online advertising is in turn typically more effective than traditional advertising since it allows for better targeting.

    In fact, it deducts. MTU-made turbines move ships, which deliver goods and maintain sea-trade routs (roughly 70% of world’s trade) alive. Amazon would die without real hi-tech, including those very processors which it doesn’t produce–well, at least it provides valuable service, which is still, in the end, provided by the delivery systems which run on those “things”. From jet engines, to avionics, to rails, to rolling stock to delivery trucks all of which is made by an enormous extraction and machine-building complex of real hi-tech things.
     
    You can extend this same logic down the entire value chain. There would be no MTU-made turbines whatsoever if not for agriculture, for instance.

    And regardless of the dubious value of many modern "tech" platforms, they do incubate world-class programming talent which has applications for purposes other than giving addicts their next hit of dopamine in exchange for providing all their personal information to advertisers.

    It should also be noted that the economy has been progressively dematerializing since the 1970s. This would be true even if offshoring had never been permitted. Even in Germany, which exports a fifth of its entire economic output as manufactured goods, industry has dropped from half of its economy to one-third.

    Economies tend to reach a mature level of consumption of manufactured goods, after which manufacturing becomes simply about replacing depreciated products.

    The same thing, in other words, is happening to manufacturing as happened to agriculture.

    This means that going forward most new value will be created outside of manufacturing, even as manufacturing continues to innovate (just as agriculture continues to improve its productivity). If you went back 40 years or so the only massive corporations that weren't manufacturers (or non-manufacturing industrials like oil companies) were retailers and banks.

    Today the largest companies are all "tech" companies besides Exxon Mobil, Wal-Mart, and JP Morgan Chase. General Motors, which once bestrode global economy like a colossus, isn't even worth $100 billion today. United States Steel, the first billion dollar corporation in the world and the attack on which by President Kennedy precipitated a stock market crash, today has a market capitalization of just $5.5 billion.

    Manufacturing will remain important just as agriculture is important, but fortunes and economic power will increasingly lie outside of it.

    Presently trade in manufactured goods dominates global trade, but it's not hard to see a time in which trade in services exceeds it. This means that it's possible America's current account deficit will balance itself in the future, though I won't hold my breath given the criminals who run this country.
    , @kemerd
    I believe you are mistaken when you assert that software is merely control. Of course, there are control software that is purpose built for controlling real machinery like, CNC equipment, pipeline valves, power grid transformers, etc. But, the real value of software comes from the fact that SW makes it possible to built complex systems, physical or virtual, that is not otherwise possible.

    Let's talk about software in the military sphere as an example. Software on the avionics of the aircraft, for example, enables the aircraft to make micro adjustments to the control surfaces continuously which enables the designers to use non-stable designs which in turn makes super agile jets possible. These aircraft are simply not controllable without software helping the pilot. Your other favorite topic hyper sonic missiles; the last moments of its flight involves real-time programming at the extreme and probably some of the most complex software systems in existence. In fact, except perhaps the scramjet engines on these missiles, the most remarkable piece of technology in it is its software suite.

    Similarly, there is nothing particularly remarkable about Russian S-400 systems except its software suite; mach 4-5 solid fuel rockets or radars of different bands are available for anyone with some industrial base, including Iranians for example. But the software that combines data from multiple sensors and then affiliates them to the physical targets which moves at supersonic speeds, and does that in real-time is indeed remarkable. That is perhaps why S-400 is considered the most formidable, i.e. because of its software suite. That also explains why Russians are comfortable in selling it to Turkey as reverse engineering complex software systems is next to impossible.

    And, you are wrong about Amazon; I also detest its leaders but they indeed developed some remarkable software in warehouse and distribution network optimizations. Their Alexa is despicable for its purpose but includes some real value such as speech recognition and one of the best text-to-speech engine. I know from your previous remarks that you are familiar with operational research topics, which also is precisely one of the areas in which any practical application require immense computing power and customized algorithms for the tasks at hand. In the case of Amazon, warehouse optimization involves a lot of OR, robotics (and unfortunately plain old worker exploitation). Others might add about its presence in the software as service provider but that is nothing remarkable, but plain old marketing.
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  49. @Philip Owen
    Ah yes, ASML, a former client of mine. I forgot them in my rant which you will find below. The US is very weak in most aspects of capital equipment for semiconductor processing. Europe and Japan hold this market.

    Actually, the US dominates in front end process tools. AMAT and Lam/Novellus are the dominant OEM’s for deposition and etching equipment. They just don’t do litho. ASM and Nikon are the dominant litho OEM’s.

    Veeco (American) and Aixtron (German) are the dominant OEM’s for III-V compound deposition tools, mostly metal-organic CVD.

    My point was that Europe actually does do a lot of technology. They just don’t do the fluffy social media stuff. Believe me, I am no fan of European culture. But I do believe in giving credit where credit is due.

    Read More
    • Agree: Philip Owen
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  50. I think there is a fair bit of technology in Europe. It’s just not the stuff in the news these day. Technology such as optics, phontonics, semiconductors and other thin-film process technologies, advanced materials and the like. I suspect there is a lot of this in Europe most people don’t hear about.

    I agree the greenie energy policies in Germany are complete lunacy. Germany is a leading precision manufacturing economy (they and Japan still lead the world in this) and such requires energy and lots of it. The greenie energy policies are the effective economic suicide of Germany.

    Read More
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  51. @Andrei Martyanov

    Software and website are not things, although these abstractions have changed our world.
     
    Semiconductors and structures built on them changed our world. Software is merely a control. The whole world writes a software--a handful of nations produces processors. Facebook--is a useless, mental disorder inducing "service" which adds NO value to civilization. In fact, it deducts. MTU-made turbines move ships, which deliver goods and maintain sea-trade routs (roughly 70% of world's trade) alive. Amazon would die without real hi-tech, including those very processors which it doesn't produce--well, at least it provides valuable service, which is still, in the end, provided by the delivery systems which run on those "things". From jet engines, to avionics, to rails, to rolling stock to delivery trucks all of which is made by an enormous extraction and machine-building complex of real hi-tech things. In the end, space industry provides all those other "things" related to IT. But we already saw those wonderful fruits of deindustrialization, didn't we? The problem with all that is more than just economic (albeit, it is too0, it is metaphysical--we are living now in the world of utter incompetence of the new elites who conflate reality and virtual world. Making "things" is a very complex business, making really complex things is extremely difficult. Anyone who ever dealt with manufacturing planning will confirm that.

    The whole world writes a software–a handful of nations produces processors. Facebook–is a useless, mental disorder inducing “service” which adds NO value to civilization.

    I share your value judgment on Facebook. I do not have a Facebook account, and I have nothing but contempt for people who do.

    I also personally hate Mark Zuckerberg, who I think is a disgusting creep. The way he dresses offends me, and the fact that a billionaire can’t do any better with women than wife up subpar zipper pussy who won’t even take his last name is pathetic.

    You can bet the Winkelvoss twins he stole Facebook from aren’t settling for slanty eyed fives.

    That said–what is useful about Facebook is that it has a market worth of $523 billion. This isn’t just the case of typical profitless tech bubbles either, the company had actual net earnings last year of $10 billion. The earnings multiple the company trades at is in fact not much higher than the S & P 500 as a whole, or, to give an example of one company, Costco (a very socially useful company unlike Facebook).

    A majority of all new digital advertising spending now goes to Facebook, and Google and Facebook effectively have a duopoly on online advertising. Online advertising is in turn typically more effective than traditional advertising since it allows for better targeting.

    In fact, it deducts. MTU-made turbines move ships, which deliver goods and maintain sea-trade routs (roughly 70% of world’s trade) alive. Amazon would die without real hi-tech, including those very processors which it doesn’t produce–well, at least it provides valuable service, which is still, in the end, provided by the delivery systems which run on those “things”. From jet engines, to avionics, to rails, to rolling stock to delivery trucks all of which is made by an enormous extraction and machine-building complex of real hi-tech things.

    You can extend this same logic down the entire value chain. There would be no MTU-made turbines whatsoever if not for agriculture, for instance.

    And regardless of the dubious value of many modern “tech” platforms, they do incubate world-class programming talent which has applications for purposes other than giving addicts their next hit of dopamine in exchange for providing all their personal information to advertisers.

    It should also be noted that the economy has been progressively dematerializing since the 1970s. This would be true even if offshoring had never been permitted. Even in Germany, which exports a fifth of its entire economic output as manufactured goods, industry has dropped from half of its economy to one-third.

    Economies tend to reach a mature level of consumption of manufactured goods, after which manufacturing becomes simply about replacing depreciated products.

    The same thing, in other words, is happening to manufacturing as happened to agriculture.

    This means that going forward most new value will be created outside of manufacturing, even as manufacturing continues to innovate (just as agriculture continues to improve its productivity). If you went back 40 years or so the only massive corporations that weren’t manufacturers (or non-manufacturing industrials like oil companies) were retailers and banks.

    Today the largest companies are all “tech” companies besides Exxon Mobil, Wal-Mart, and JP Morgan Chase. General Motors, which once bestrode global economy like a colossus, isn’t even worth $100 billion today. United States Steel, the first billion dollar corporation in the world and the attack on which by President Kennedy precipitated a stock market crash, today has a market capitalization of just $5.5 billion.

    Manufacturing will remain important just as agriculture is important, but fortunes and economic power will increasingly lie outside of it.

    Presently trade in manufactured goods dominates global trade, but it’s not hard to see a time in which trade in services exceeds it. This means that it’s possible America’s current account deficit will balance itself in the future, though I won’t hold my breath given the criminals who run this country.

    Read More
    • Replies: @Anonymous

    I share your value judgment on Facebook. I do not have a Facebook account, and I have nothing but contempt for people who do.

    I also personally hate Mark Zuckerberg, who I think is a disgusting creep. The way he dresses offends me, and the fact that a billionaire can’t do any better with women than wife up subpar zipper pussy who won’t even take his last name is pathetic.

    You can bet the Winkelvoss twins he stole Facebook from aren’t settling for slanty eyed fives.

    That said–what is useful about Facebook is that it has a market worth of $523 billion. This isn’t just the case of typical profitless tech bubbles either, the company had actual net earnings last year of $10 billion. The earnings multiple the company trades at is in fact not much higher than the S & P 500 as a whole, or, to give an example of one company, Costco (a very socially useful company unlike Facebook).
     
    I also don't do social media, but I don't want to go through life like Chrissie Hynde, who thinks only vegetarians are fully human and worthy of respect. That sort of resentment against mot everyone else just doesn't work.

    And Zuck's choice of wife is his own business. She seems like a low grade choice to me, true enough.

    The reason Facebook and Google make so much money is advertising. The same reason 75 IQ negroes make tens of millions of dollars if they are stellar football or basketball players in the US.

    TAX ADVERTISING.
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  52. but fortunes and economic power will increasingly lie outside of it.

    China’s rise has its roots precisely in manufacturing. Your well presented thesis is good only for an abstract market place which doesn’t account for a complex reality. Geopolitical, military-technological reality, in the end–real independence and survival of race and culture is based on two things:

    1. Ability to manufacture;
    2. World class military.

    These two things are completely removed from any consideration in the US, a country which has NO concept of real continental warfare. Any talk about economy without these crucial considerations is pointless. I’ll give you one simple example how it works on the most primitive conventional model of peer-to-peer war. A single salvo of Chinese or Russian Cruise Missiles at any US asset (aircraft carrier, military installation etc.), not to mention US proper and I can guarantee you a complete overturn of everything you know about so called “economics” which is going into the trash can, together with all those “tech” companies. While insulated from the dangers of non-nuclear war, the United States could play with all those faux indices of “capitalization”, stocks etc. Today the United States for the first time know that they may get own share of “Shock and Awe”. If, however tragic, limited in scope 911 basically changed the United States completely, can you imagine what would happen with Wall Street and “markets” when 911 will be multiplied by effect 100 or more times? Do you know what would United States do if it loses a single Carrier Battle Group? I can only imagine the events in first approximation. I hope you understand that peers can, actually, disable US power grid, as an example. What would those “advertisements” be worth then? Exactly zero. American coming to terms with the reality, which already started–is going to be a very painful process. War, as organized violence, is a humanity’s pastime–for the first time since Lincoln’s Young Man’s Lyceum Address, the United States is open and vulnerable to a conventional stand-off warfare, insulation from which for two centuries is largely responsible for a moderate success of American Republic and its economic prosperity in the 20th century, especially after WWII.

    Read More
    • Replies: @Thorfinnsson
    While your post is true, it doesn't have a whole lot to do with my post. I guess when your only tool is a hammer the more everything looks like a nail.

    "Tech" (semiconductors + software) increasingly determines military power as well, even if there's no escaping manufacturing here (both quantity and quality). The cruise missiles to which you refer are, as you would no doubt point out, high technology items with dozens of semiconductors and millions of lines of code. The "tech" sector largely sprung out of the military-industrial complex, though I suppose IBM existed prior.


    China’s rise has its roots precisely in manufacturing.
     
    Indeed, but what will the largest companies in China be a decade from now? How about a generation? Tencent may become the largest corporation the world.


    those faux indices of “capitalization”, stocks etc
     
    What is faux about this? Market capitalization is the current price per share (represented by real prices on sales of stock made on the exchange) multiplied by the number of shares outstanding.

    Do you not own any common stock?


    If, however tragic, limited in scope 911 basically changed the United States completely, can you imagine what would happen with Wall Street and “markets” when 911 will be multiplied by effect 100 or more times?
     
    The stock market declined after 9-11, but the economy was already in recession. There was no crash (other than in the airline sector).

    The stock market also didn't do too poorly after Pearl Harbor. Lost around 3% the next trading day.

    There's always scared money that panics, but great companies are still worth owning when the shit hits the fan.


    I hope you understand that peers can, actually, disable US power grid, as an example. What would those “advertisements” be worth then? Exactly zero.
     
    The power grid would be restored sooner or later somehow, and in any case this being a wartime emergency the companies would be re-purposed for wartime work just as was done during World War 2. So while their advertising business might temporarily take a hit, they would get many government contracts.

    If your investing considerations are all based on the possibility of a world war, then perhaps you should consider a portfolio of fuel, non-perishable foods, ammunition, and precious metals.
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  53. j says: • Website

    Europe is socialist and egalitarian. It is weighted down by its fixation in its glorious past and is unable to forget it all and start anew, as China did. There is no massive de-industrialization yet, but they are fighting hard to maintain competitiveness. The German auto industry had to recur to cheating (remember Volkswagen emission scandal). A bipolar hi-tech world is dangerous, I hope Europe will re-invent itself soon to emerge as the third pole.

    Read More
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  54. @Andrei Martyanov

    but fortunes and economic power will increasingly lie outside of it.
     
    China's rise has its roots precisely in manufacturing. Your well presented thesis is good only for an abstract market place which doesn't account for a complex reality. Geopolitical, military-technological reality, in the end--real independence and survival of race and culture is based on two things:

    1. Ability to manufacture;
    2. World class military.

    These two things are completely removed from any consideration in the US, a country which has NO concept of real continental warfare. Any talk about economy without these crucial considerations is pointless. I'll give you one simple example how it works on the most primitive conventional model of peer-to-peer war. A single salvo of Chinese or Russian Cruise Missiles at any US asset (aircraft carrier, military installation etc.), not to mention US proper and I can guarantee you a complete overturn of everything you know about so called "economics" which is going into the trash can, together with all those "tech" companies. While insulated from the dangers of non-nuclear war, the United States could play with all those faux indices of "capitalization", stocks etc. Today the United States for the first time know that they may get own share of "Shock and Awe". If, however tragic, limited in scope 911 basically changed the United States completely, can you imagine what would happen with Wall Street and "markets" when 911 will be multiplied by effect 100 or more times? Do you know what would United States do if it loses a single Carrier Battle Group? I can only imagine the events in first approximation. I hope you understand that peers can, actually, disable US power grid, as an example. What would those "advertisements" be worth then? Exactly zero. American coming to terms with the reality, which already started--is going to be a very painful process. War, as organized violence, is a humanity's pastime--for the first time since Lincoln's Young Man's Lyceum Address, the United States is open and vulnerable to a conventional stand-off warfare, insulation from which for two centuries is largely responsible for a moderate success of American Republic and its economic prosperity in the 20th century, especially after WWII.

    While your post is true, it doesn’t have a whole lot to do with my post. I guess when your only tool is a hammer the more everything looks like a nail.

    “Tech” (semiconductors + software) increasingly determines military power as well, even if there’s no escaping manufacturing here (both quantity and quality). The cruise missiles to which you refer are, as you would no doubt point out, high technology items with dozens of semiconductors and millions of lines of code. The “tech” sector largely sprung out of the military-industrial complex, though I suppose IBM existed prior.

    China’s rise has its roots precisely in manufacturing.

    Indeed, but what will the largest companies in China be a decade from now? How about a generation? Tencent may become the largest corporation the world.

    those faux indices of “capitalization”, stocks etc

    What is faux about this? Market capitalization is the current price per share (represented by real prices on sales of stock made on the exchange) multiplied by the number of shares outstanding.

    Do you not own any common stock?

    If, however tragic, limited in scope 911 basically changed the United States completely, can you imagine what would happen with Wall Street and “markets” when 911 will be multiplied by effect 100 or more times?

    The stock market declined after 9-11, but the economy was already in recession. There was no crash (other than in the airline sector).

    The stock market also didn’t do too poorly after Pearl Harbor. Lost around 3% the next trading day.

    There’s always scared money that panics, but great companies are still worth owning when the shit hits the fan.

    I hope you understand that peers can, actually, disable US power grid, as an example. What would those “advertisements” be worth then? Exactly zero.

    The power grid would be restored sooner or later somehow, and in any case this being a wartime emergency the companies would be re-purposed for wartime work just as was done during World War 2. So while their advertising business might temporarily take a hit, they would get many government contracts.

    If your investing considerations are all based on the possibility of a world war, then perhaps you should consider a portfolio of fuel, non-perishable foods, ammunition, and precious metals.

    Read More
    • Replies: @Mark Eugenikos
    Excellent summaries, both #51 and #54, thank you. I generally like Martyanov's posts but sometimes he gets carried away. It's good to provide a different perspective.
    , @5371
    [What is faux about this? Market capitalization is the current price per share (represented by real prices on sales of stock made on the exchange) multiplied by the number of shares outstanding.]

    Wilful obtuseness on your part. It was quite obvious that he was not disputing the definition of the term, but whether it bears any necessary relation to national or social importance.
    , @utu


    those faux indices of “capitalization”, stocks etc
     
    What is faux about this? Market capitalization is the current price per share (represented by real prices on sales of stock made on the exchange) multiplied by the number of shares outstanding.
     
    You indeed are semi-autistic and/or not too smart if you did not get Martyanov's meaning.
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  55. Anonymous • Disclaimer says:
    @TheJester
    I had a casual conversation in a Gästehaus some time ago with a German couple in the German software development industry. They complained that they could not get access to capital unless they had physical assets to back loans or to attract investors ... that Germans had no concept of human capital and what it could achieve.

    Perhaps this attitude explains why Germany can be an industrial powerhouse but could never sponsor the development of a Google, Facebook, or the other typical products of Silicon Valley. A few guys working out of a garage with an idea for "game-changing" software makes no sense to them. Too high risk!

    Germany had considerable electronic talent in WWII, but they were never dominant in consumer electronics, and neither were they dominant in electronic test and measurement. They did make very good niche commercial equipment like Neumann microphones and Studer tape machines, and telecom test equipment by Rohde & Schwarz and Wandel & Goltermann, but their “general purpose” stuff was inferior to US made equipment.

    Despite the success of Neumann/Telefunken, high end stereo equipment was another area they did not have much success in. (EMT made turntables, but they were not sold for home use.) As a builder of vacuum tube hi fi amplifiers myself, it’s astounding that the Germans made much better specialized vacuum tubes (e.g, the EL156, several small Telefunken ‘transmitting’ types ) than the vaunted Mullard Gold Lions, yet no one over here even knew of them back then.

    Read More
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  56. @Andrei Martyanov

    there are no European general purpose tech giants,
     
    What is "general purpose" tech giants?

    In this context “general purpose” means information-technology companies that are involved in IT-related activities in general, as opposed to a narrow specialization in something (e.g. AutoCAD). It doesn’t mean those companies are making any money from those other activities, but they are pursing them.

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  57. @Andrei Martyanov

    those Tech companies produce nothing important. They either serve to offer the masses something like a drug (social media etc.) which wastes an incredible amount of time. Or they substitute very simple businesses in retail. Daimler produces more important products, and a much more sustainable wealth than all mobile phone companies including Apple together.
     
    Try to explain this to some hipster who thinks that iPhone is a real "hi-tech". What is Amazon's claim to a "tech" company is altogether incomprehensible.

    What is Amazon’s claim to a “tech” company is altogether incomprehensible.

    It’s not incomprehensible if you know something about it. Amazon is by far the biggest player in the cloud (40% global market share outside of China, second biggest player is about 5-6 times smaller), has developed many leading-edge technologies in this space, and their software development practices (and hiring practices) are absolutely first-rate.

    We get it that you prefer real (tangible) technologies but no need to disparage Amazon. They are earning way more profit from cloud than from retail. Their annual R&D budget is on the order of $15B. They are also a rare example of a company that was able to leverage leadership in one area (online retail) into leadership in another area (cloud). I can acknowledge this without having to like Bezos or his politics.

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  58. Anonymous • Disclaimer says:
    @Thorfinnsson


    The whole world writes a software–a handful of nations produces processors. Facebook–is a useless, mental disorder inducing “service” which adds NO value to civilization.
     
    I share your value judgment on Facebook. I do not have a Facebook account, and I have nothing but contempt for people who do.

    I also personally hate Mark Zuckerberg, who I think is a disgusting creep. The way he dresses offends me, and the fact that a billionaire can't do any better with women than wife up subpar zipper pussy who won't even take his last name is pathetic.

    You can bet the Winkelvoss twins he stole Facebook from aren't settling for slanty eyed fives.

    That said--what is useful about Facebook is that it has a market worth of $523 billion. This isn't just the case of typical profitless tech bubbles either, the company had actual net earnings last year of $10 billion. The earnings multiple the company trades at is in fact not much higher than the S & P 500 as a whole, or, to give an example of one company, Costco (a very socially useful company unlike Facebook).

    A majority of all new digital advertising spending now goes to Facebook, and Google and Facebook effectively have a duopoly on online advertising. Online advertising is in turn typically more effective than traditional advertising since it allows for better targeting.

    In fact, it deducts. MTU-made turbines move ships, which deliver goods and maintain sea-trade routs (roughly 70% of world’s trade) alive. Amazon would die without real hi-tech, including those very processors which it doesn’t produce–well, at least it provides valuable service, which is still, in the end, provided by the delivery systems which run on those “things”. From jet engines, to avionics, to rails, to rolling stock to delivery trucks all of which is made by an enormous extraction and machine-building complex of real hi-tech things.
     
    You can extend this same logic down the entire value chain. There would be no MTU-made turbines whatsoever if not for agriculture, for instance.

    And regardless of the dubious value of many modern "tech" platforms, they do incubate world-class programming talent which has applications for purposes other than giving addicts their next hit of dopamine in exchange for providing all their personal information to advertisers.

    It should also be noted that the economy has been progressively dematerializing since the 1970s. This would be true even if offshoring had never been permitted. Even in Germany, which exports a fifth of its entire economic output as manufactured goods, industry has dropped from half of its economy to one-third.

    Economies tend to reach a mature level of consumption of manufactured goods, after which manufacturing becomes simply about replacing depreciated products.

    The same thing, in other words, is happening to manufacturing as happened to agriculture.

    This means that going forward most new value will be created outside of manufacturing, even as manufacturing continues to innovate (just as agriculture continues to improve its productivity). If you went back 40 years or so the only massive corporations that weren't manufacturers (or non-manufacturing industrials like oil companies) were retailers and banks.

    Today the largest companies are all "tech" companies besides Exxon Mobil, Wal-Mart, and JP Morgan Chase. General Motors, which once bestrode global economy like a colossus, isn't even worth $100 billion today. United States Steel, the first billion dollar corporation in the world and the attack on which by President Kennedy precipitated a stock market crash, today has a market capitalization of just $5.5 billion.

    Manufacturing will remain important just as agriculture is important, but fortunes and economic power will increasingly lie outside of it.

    Presently trade in manufactured goods dominates global trade, but it's not hard to see a time in which trade in services exceeds it. This means that it's possible America's current account deficit will balance itself in the future, though I won't hold my breath given the criminals who run this country.

    I share your value judgment on Facebook. I do not have a Facebook account, and I have nothing but contempt for people who do.

    I also personally hate Mark Zuckerberg, who I think is a disgusting creep. The way he dresses offends me, and the fact that a billionaire can’t do any better with women than wife up subpar zipper pussy who won’t even take his last name is pathetic.

    You can bet the Winkelvoss twins he stole Facebook from aren’t settling for slanty eyed fives.

    That said–what is useful about Facebook is that it has a market worth of $523 billion. This isn’t just the case of typical profitless tech bubbles either, the company had actual net earnings last year of $10 billion. The earnings multiple the company trades at is in fact not much higher than the S & P 500 as a whole, or, to give an example of one company, Costco (a very socially useful company unlike Facebook).

    I also don’t do social media, but I don’t want to go through life like Chrissie Hynde, who thinks only vegetarians are fully human and worthy of respect. That sort of resentment against mot everyone else just doesn’t work.

    And Zuck’s choice of wife is his own business. She seems like a low grade choice to me, true enough.

    The reason Facebook and Google make so much money is advertising. The same reason 75 IQ negroes make tens of millions of dollars if they are stellar football or basketball players in the US.

    TAX ADVERTISING.

    Read More
    • Replies: @reiner Tor

    I also don’t do social media
     
    The reason I have a Facebook account (and I guess that's true of most people on Facebook) is that it's an easy way to get informed about old classmates' families etc. Especially since I live in Western Europe a thousand kilometers away from most of them. Now I understand the reasons for not having Facebook accounts, but some people not having such accounts seem to pretend that there's no upside at all to having such an account.

    So, a question. Are you not interested in childhood acquaintances' lives at all (like, do they have spouses? children? how do they look like? etc.), or do you, after all, acknowledge that it would be nice to know these things, but consider the costs (like having easier access to your data by... everyone, especially lone stalkers) unacceptably high?

    My thinking is that it's highly unlikely to be targeted by psychopathic stalkers (the major danger of social media presence), and intelligence services know a lot about me anyway (they probably gather more information from my commenting on sites like Unz than from Facebook, where I rarely comment or post anything), and if needed, they can probably just hack my cloud, my PC, or my smartphone. (It is highly advisable that you don't make home sex videos for private use, because even private stalkers might hack your accounts and devices.) If you participate in some public events, even your pictures can leak to the public internet (including social media) without your knowledge, though perhaps more difficult for stalkers to find. You run a marathon, and they might find pictures of you running it (no coincidence that some of the few publicly available pictures of Andreas Lubitz showed him running a marathon or half-marathon or something). Of course, not everyone participates in public events, especially not in easily identifiable ways (like under their real names etc.), but still, a lot of people leak information to the internet for stalkers even without a Facebook account. And you can't really hide much from the major intelligence services (as well as the smaller services of countries of your residence or citizenship) anyway.
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  59. @Thorfinnsson
    While your post is true, it doesn't have a whole lot to do with my post. I guess when your only tool is a hammer the more everything looks like a nail.

    "Tech" (semiconductors + software) increasingly determines military power as well, even if there's no escaping manufacturing here (both quantity and quality). The cruise missiles to which you refer are, as you would no doubt point out, high technology items with dozens of semiconductors and millions of lines of code. The "tech" sector largely sprung out of the military-industrial complex, though I suppose IBM existed prior.


    China’s rise has its roots precisely in manufacturing.
     
    Indeed, but what will the largest companies in China be a decade from now? How about a generation? Tencent may become the largest corporation the world.


    those faux indices of “capitalization”, stocks etc
     
    What is faux about this? Market capitalization is the current price per share (represented by real prices on sales of stock made on the exchange) multiplied by the number of shares outstanding.

    Do you not own any common stock?


    If, however tragic, limited in scope 911 basically changed the United States completely, can you imagine what would happen with Wall Street and “markets” when 911 will be multiplied by effect 100 or more times?
     
    The stock market declined after 9-11, but the economy was already in recession. There was no crash (other than in the airline sector).

    The stock market also didn't do too poorly after Pearl Harbor. Lost around 3% the next trading day.

    There's always scared money that panics, but great companies are still worth owning when the shit hits the fan.


    I hope you understand that peers can, actually, disable US power grid, as an example. What would those “advertisements” be worth then? Exactly zero.
     
    The power grid would be restored sooner or later somehow, and in any case this being a wartime emergency the companies would be re-purposed for wartime work just as was done during World War 2. So while their advertising business might temporarily take a hit, they would get many government contracts.

    If your investing considerations are all based on the possibility of a world war, then perhaps you should consider a portfolio of fuel, non-perishable foods, ammunition, and precious metals.

    Excellent summaries, both #51 and #54, thank you. I generally like Martyanov’s posts but sometimes he gets carried away. It’s good to provide a different perspective.

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  60. Anonymous • Disclaimer says:
    @TheJester
    Complexity has nothing to do with it. Germans like to make high-quality things ... like, as you say, cars, turbines, rolling stock, and medical equipment. You can touch them and feel them.

    Software and website are not things, although these abstractions have changed our world. The issue: How does one assess the risks of loaning money to a software development initiative that is currently "vaporware"? The Americans and Chinese are willing to take high risks in the hope of landing a "hit", i.e. the returns on Facebook for the original investors. The Germans are not.

    The couple I talked to in Germany were lamenting that they could find no backers for their software development initiatives ... and that this was a country-wide/cultural phenomenon.

    Complexity has nothing to do with it. Germans like to make high-quality things … like, as you say, cars, turbines, rolling stock, and medical equipment. You can touch them and feel them.

    Ironically, German cars are substantially less reliable than Japanese ones, a prime reason being that German electronics in cars are overly complicated and break down a lot. Many Mercedes and BMW cars in the US are driven under their own power to the junkyard because although the engine and driveline still work, the costs of repairing the electricals or suspension are more than the market value of the car. And the last Mercedes engine that was really any more reliable or economic than a small block Chevy of the period was probably the OM 617.

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    • Troll: utu
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  61. @Anonymous

    I share your value judgment on Facebook. I do not have a Facebook account, and I have nothing but contempt for people who do.

    I also personally hate Mark Zuckerberg, who I think is a disgusting creep. The way he dresses offends me, and the fact that a billionaire can’t do any better with women than wife up subpar zipper pussy who won’t even take his last name is pathetic.

    You can bet the Winkelvoss twins he stole Facebook from aren’t settling for slanty eyed fives.

    That said–what is useful about Facebook is that it has a market worth of $523 billion. This isn’t just the case of typical profitless tech bubbles either, the company had actual net earnings last year of $10 billion. The earnings multiple the company trades at is in fact not much higher than the S & P 500 as a whole, or, to give an example of one company, Costco (a very socially useful company unlike Facebook).
     
    I also don't do social media, but I don't want to go through life like Chrissie Hynde, who thinks only vegetarians are fully human and worthy of respect. That sort of resentment against mot everyone else just doesn't work.

    And Zuck's choice of wife is his own business. She seems like a low grade choice to me, true enough.

    The reason Facebook and Google make so much money is advertising. The same reason 75 IQ negroes make tens of millions of dollars if they are stellar football or basketball players in the US.

    TAX ADVERTISING.

    I also don’t do social media

    The reason I have a Facebook account (and I guess that’s true of most people on Facebook) is that it’s an easy way to get informed about old classmates’ families etc. Especially since I live in Western Europe a thousand kilometers away from most of them. Now I understand the reasons for not having Facebook accounts, but some people not having such accounts seem to pretend that there’s no upside at all to having such an account.

    So, a question. Are you not interested in childhood acquaintances’ lives at all (like, do they have spouses? children? how do they look like? etc.), or do you, after all, acknowledge that it would be nice to know these things, but consider the costs (like having easier access to your data by… everyone, especially lone stalkers) unacceptably high?

    My thinking is that it’s highly unlikely to be targeted by psychopathic stalkers (the major danger of social media presence), and intelligence services know a lot about me anyway (they probably gather more information from my commenting on sites like Unz than from Facebook, where I rarely comment or post anything), and if needed, they can probably just hack my cloud, my PC, or my smartphone. (It is highly advisable that you don’t make home sex videos for private use, because even private stalkers might hack your accounts and devices.) If you participate in some public events, even your pictures can leak to the public internet (including social media) without your knowledge, though perhaps more difficult for stalkers to find. You run a marathon, and they might find pictures of you running it (no coincidence that some of the few publicly available pictures of Andreas Lubitz showed him running a marathon or half-marathon or something). Of course, not everyone participates in public events, especially not in easily identifiable ways (like under their real names etc.), but still, a lot of people leak information to the internet for stalkers even without a Facebook account. And you can’t really hide much from the major intelligence services (as well as the smaller services of countries of your residence or citizenship) anyway.

    Read More
    • Replies: @Anon
    I still don't recommend it, but what would be hackable about "home sex videos" on tape, film, or DVD?
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  62. OT

    Orbán’s authorities just fined Jobbik for breaking some financial rule which had never been enforced before (and under which Fidesz could be fined just as much), and apparently some parts of the left also participated in some protests against it. The fine is so large that it might prevent Jobbik from running a meaningful elections campaign, or at least greatly reduce its size.

    Mind you, Jobbik has now significantly shifted to the left, and try to leave their rugged nationalist past behind them, for example their president, Vona, just wrote Hanukkah greetings to a leading rabbi the second time in a row – though the rabbi wasn’t enthusiastic about it at all, citing their “anti-Semitic” past statements.

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  63. @Thorfinnsson
    While your post is true, it doesn't have a whole lot to do with my post. I guess when your only tool is a hammer the more everything looks like a nail.

    "Tech" (semiconductors + software) increasingly determines military power as well, even if there's no escaping manufacturing here (both quantity and quality). The cruise missiles to which you refer are, as you would no doubt point out, high technology items with dozens of semiconductors and millions of lines of code. The "tech" sector largely sprung out of the military-industrial complex, though I suppose IBM existed prior.


    China’s rise has its roots precisely in manufacturing.
     
    Indeed, but what will the largest companies in China be a decade from now? How about a generation? Tencent may become the largest corporation the world.


    those faux indices of “capitalization”, stocks etc
     
    What is faux about this? Market capitalization is the current price per share (represented by real prices on sales of stock made on the exchange) multiplied by the number of shares outstanding.

    Do you not own any common stock?


    If, however tragic, limited in scope 911 basically changed the United States completely, can you imagine what would happen with Wall Street and “markets” when 911 will be multiplied by effect 100 or more times?
     
    The stock market declined after 9-11, but the economy was already in recession. There was no crash (other than in the airline sector).

    The stock market also didn't do too poorly after Pearl Harbor. Lost around 3% the next trading day.

    There's always scared money that panics, but great companies are still worth owning when the shit hits the fan.


    I hope you understand that peers can, actually, disable US power grid, as an example. What would those “advertisements” be worth then? Exactly zero.
     
    The power grid would be restored sooner or later somehow, and in any case this being a wartime emergency the companies would be re-purposed for wartime work just as was done during World War 2. So while their advertising business might temporarily take a hit, they would get many government contracts.

    If your investing considerations are all based on the possibility of a world war, then perhaps you should consider a portfolio of fuel, non-perishable foods, ammunition, and precious metals.

    [What is faux about this? Market capitalization is the current price per share (represented by real prices on sales of stock made on the exchange) multiplied by the number of shares outstanding.]

    Wilful obtuseness on your part. It was quite obvious that he was not disputing the definition of the term, but whether it bears any necessary relation to national or social importance.

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  64. @Philip Owen
    Ah yes, ASML, a former client of mine. I forgot them in my rant which you will find below. The US is very weak in most aspects of capital equipment for semiconductor processing. Europe and Japan hold this market.

    Phil
    I don’t understand this assertion: AMAT, Lam Research-Novellus, KLA -Tencor, remain Silicon Valley companies altho many jobs have been outsourced to Singapore. I concede that half the cost of a new fab is lithography and ASML/Nikon dominate that along with TEL coaters

    Read More
    • Replies: @Philip Owen
    I agree that I was over focussed on lithography where I did both UV laser projects and profiling with (Russian) superluminescent diode projects for Ultrastepper and ASML at different times.

    I am recalling my material in this thread from personal experience rather than checking it. I was a successful (mostly cash positive) innovation consultant for a while. Front seat on the future.

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  65. @reiner Tor

    I also don’t do social media
     
    The reason I have a Facebook account (and I guess that's true of most people on Facebook) is that it's an easy way to get informed about old classmates' families etc. Especially since I live in Western Europe a thousand kilometers away from most of them. Now I understand the reasons for not having Facebook accounts, but some people not having such accounts seem to pretend that there's no upside at all to having such an account.

    So, a question. Are you not interested in childhood acquaintances' lives at all (like, do they have spouses? children? how do they look like? etc.), or do you, after all, acknowledge that it would be nice to know these things, but consider the costs (like having easier access to your data by... everyone, especially lone stalkers) unacceptably high?

    My thinking is that it's highly unlikely to be targeted by psychopathic stalkers (the major danger of social media presence), and intelligence services know a lot about me anyway (they probably gather more information from my commenting on sites like Unz than from Facebook, where I rarely comment or post anything), and if needed, they can probably just hack my cloud, my PC, or my smartphone. (It is highly advisable that you don't make home sex videos for private use, because even private stalkers might hack your accounts and devices.) If you participate in some public events, even your pictures can leak to the public internet (including social media) without your knowledge, though perhaps more difficult for stalkers to find. You run a marathon, and they might find pictures of you running it (no coincidence that some of the few publicly available pictures of Andreas Lubitz showed him running a marathon or half-marathon or something). Of course, not everyone participates in public events, especially not in easily identifiable ways (like under their real names etc.), but still, a lot of people leak information to the internet for stalkers even without a Facebook account. And you can't really hide much from the major intelligence services (as well as the smaller services of countries of your residence or citizenship) anyway.

    I still don’t recommend it, but what would be hackable about “home sex videos” on tape, film, or DVD?

    Read More
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  66. Thank you all for your kind remarks. I will respond to those of you who addressed me, or points made by me, seriatim.

    Anonymous

    I also don’t do social media, but I don’t want to go through life like Chrissie Hynde, who thinks only vegetarians are fully human and worthy of respect. That sort of resentment against mot everyone else just doesn’t work.

    It does work–for me.

    If I were a kid today I’m sure they’d tell me I was autistic. I am passionate about being right and informing others they are wrong. As far as I can tell many people are the same way. Anatoly Karlin and Andrei Martyanov certainly are like me in this regard.

    And Chrissie Hynde in this case is also wrong. Vegetarians are despicable wrongists who worship animals and I hate them.

    This lifestyle works completely fine as long as people like you. If people don’t like you then you may want to change things.

    And Zuck’s choice of wife is his own business. She seems like a low grade choice to me, true enough.

    It’s his own business in that I don’t have to go home to her at night, but it’s my business to have contempt for him over it. Given his wealth and fame his busted zipper slint pussy wife who didn’t take his name really says a lot about him.

    TAX ADVERTISING.

    Why? Advertising is an essential part of business. How else am I supposed to get customers?

    Mark Eugenikos

    Excellent summaries, both #51 and #54, thank you. I generally like Martyanov’s posts but sometimes he gets carried away. It’s good to provide a different perspective.

    Thank you for your kind remarks. I also like Martyanov’s posts and comments, but you are correct–he gets carried away. He focuses on the military domain (important, to be sure) to the exclusion of everything else.

    It also irritates me that he is a Russian nationalist but lives in my country (and to be clear, I like Russia). Anatoly Karlin had the decency to go home.

    Reiner Tor

    So, a question. Are you not interested in childhood acquaintances’ lives at all (like, do they have spouses? children? how do they look like? etc.), or do you, after all, acknowledge that it would be nice to know these things, but consider the costs (like having easier access to your data by… everyone, especially lone stalkers) unacceptably high?

    I accept the tradeoff. Other people fill me in.

    It’s not entirely about data or even productivity. Much of it is about contrarianism–and hatred for Mark Zuckerberg.

    I am on LinkedIn.

    5371

    Wilful obtuseness on your part. It was quite obvious that he was not disputing the definition of the term, but whether it bears any necessary relation to national or social importance.

    Who owns what and what it’s worth has national and social importance.

    I suspect Martyanov simply does not own any common stock.

    Read More
    • Replies: @5371
    Ah, yes, the Jamie Dimon argument: "I'm richer than you." Great job.
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  67. @Thorfinnsson
    While your post is true, it doesn't have a whole lot to do with my post. I guess when your only tool is a hammer the more everything looks like a nail.

    "Tech" (semiconductors + software) increasingly determines military power as well, even if there's no escaping manufacturing here (both quantity and quality). The cruise missiles to which you refer are, as you would no doubt point out, high technology items with dozens of semiconductors and millions of lines of code. The "tech" sector largely sprung out of the military-industrial complex, though I suppose IBM existed prior.


    China’s rise has its roots precisely in manufacturing.
     
    Indeed, but what will the largest companies in China be a decade from now? How about a generation? Tencent may become the largest corporation the world.


    those faux indices of “capitalization”, stocks etc
     
    What is faux about this? Market capitalization is the current price per share (represented by real prices on sales of stock made on the exchange) multiplied by the number of shares outstanding.

    Do you not own any common stock?


    If, however tragic, limited in scope 911 basically changed the United States completely, can you imagine what would happen with Wall Street and “markets” when 911 will be multiplied by effect 100 or more times?
     
    The stock market declined after 9-11, but the economy was already in recession. There was no crash (other than in the airline sector).

    The stock market also didn't do too poorly after Pearl Harbor. Lost around 3% the next trading day.

    There's always scared money that panics, but great companies are still worth owning when the shit hits the fan.


    I hope you understand that peers can, actually, disable US power grid, as an example. What would those “advertisements” be worth then? Exactly zero.
     
    The power grid would be restored sooner or later somehow, and in any case this being a wartime emergency the companies would be re-purposed for wartime work just as was done during World War 2. So while their advertising business might temporarily take a hit, they would get many government contracts.

    If your investing considerations are all based on the possibility of a world war, then perhaps you should consider a portfolio of fuel, non-perishable foods, ammunition, and precious metals.

    those faux indices of “capitalization”, stocks etc

    What is faux about this? Market capitalization is the current price per share (represented by real prices on sales of stock made on the exchange) multiplied by the number of shares outstanding.

    You indeed are semi-autistic and/or not too smart if you did not get Martyanov’s meaning.

    Read More
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  68. @Thorfinnsson
    Thank you all for your kind remarks. I will respond to those of you who addressed me, or points made by me, seriatim.

    Anonymous


    I also don’t do social media, but I don’t want to go through life like Chrissie Hynde, who thinks only vegetarians are fully human and worthy of respect. That sort of resentment against mot everyone else just doesn’t work.
     
    It does work--for me.

    If I were a kid today I'm sure they'd tell me I was autistic. I am passionate about being right and informing others they are wrong. As far as I can tell many people are the same way. Anatoly Karlin and Andrei Martyanov certainly are like me in this regard.

    And Chrissie Hynde in this case is also wrong. Vegetarians are despicable wrongists who worship animals and I hate them.

    This lifestyle works completely fine as long as people like you. If people don't like you then you may want to change things.


    And Zuck’s choice of wife is his own business. She seems like a low grade choice to me, true enough.
     
    It's his own business in that I don't have to go home to her at night, but it's my business to have contempt for him over it. Given his wealth and fame his busted zipper slint pussy wife who didn't take his name really says a lot about him.


    TAX ADVERTISING.
     
    Why? Advertising is an essential part of business. How else am I supposed to get customers?

    Mark Eugenikos


    Excellent summaries, both #51 and #54, thank you. I generally like Martyanov’s posts but sometimes he gets carried away. It’s good to provide a different perspective.
     
    Thank you for your kind remarks. I also like Martyanov's posts and comments, but you are correct--he gets carried away. He focuses on the military domain (important, to be sure) to the exclusion of everything else.

    It also irritates me that he is a Russian nationalist but lives in my country (and to be clear, I like Russia). Anatoly Karlin had the decency to go home.

    Reiner Tor


    So, a question. Are you not interested in childhood acquaintances’ lives at all (like, do they have spouses? children? how do they look like? etc.), or do you, after all, acknowledge that it would be nice to know these things, but consider the costs (like having easier access to your data by… everyone, especially lone stalkers) unacceptably high?
     
    I accept the tradeoff. Other people fill me in.

    It's not entirely about data or even productivity. Much of it is about contrarianism--and hatred for Mark Zuckerberg.

    I am on LinkedIn.

    5371


    Wilful obtuseness on your part. It was quite obvious that he was not disputing the definition of the term, but whether it bears any necessary relation to national or social importance.
     
    Who owns what and what it's worth has national and social importance.

    I suspect Martyanov simply does not own any common stock.

    Ah, yes, the Jamie Dimon argument: “I’m richer than you.” Great job.

    Read More
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  69. It is not just scale, but an economic appreciation for big returns. Europeans are, in my experience, lacking the bravado to make big investments for small fractions of ownership. To support companies like Facebook and Uber, you must give sky high valuations because the founder must be given the chance to make billions and billions and to see himself as master of the universe. It is well known that German investors do not have this appetite; they try to bleed the founder down because they think they deserve comparatively more (than do SV types) for putting up the money. It is a real problem because founders (I am one in a high margin industry, and am doing reasonably well) are driven by ego. I am sure scale is a huge driver, but often there is more than one solution. Stop being cheap and realizing that investing is a risk would be a positive step forward.

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  70. It’s interesting to speculate on what this means for the geographical location of the first artificial general intelligence (probably the most portentous event in all history). This might mean nothing much, but it could also mean a great deal.

    It will mean a great deal if people know an AGI was created because they’ll know it is possible and probably have an idea of the direction the successful project was taking. For that reason I think a successful AGI project will not announce immediately, but try and steal a further march. I think it is quite likely that the first AGI ( by which I mean the machine itself) will conceal its intellectual development from its creators. So for those two reasons or some combination of them, I do not think we are going to be told an AGI has arrived.

    Anyhow, if this AGI requires large computing and technical resources, it will most likely appear in the US, followed by China; in contrast, there is a close to zero chance it will happen in Europe or anywhere else.

    If it doesn’t require large computing and technical resources, then it quite likely will be in Germany, going by Konrad Zuse.

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  71. Lack of common language also seems an obvious downside as well as greater cultural differences than other large markets. To the extent there is a common language and culture, it is English and heavily influenced by English-speaking countries respectively.

    In the most sensitive areas, military & intelligence, the Anglo countries are much more tightly integrated. Europe has never managed to do anything like it. The EU has now launched a defence pact in response to the UK leaving the EU which European governments and EU officials claim has prevented this. Yet there is nothing the UK could have done to prevent European countries from doing this had they really been so concerned about defence. So this is more about EU integration itself rather than about defence. And herein lies the problem in general: The advancement of the political project has become more important than the actual issues themselves.

    Europe is probably trying to square the circle if it wants to rival relatively homogeneous large markets like the US and China, especially if it keeps insisting on the EU being the only means to achieve this.

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  72. @Andrei Martyanov

    Software and website are not things, although these abstractions have changed our world.
     
    Semiconductors and structures built on them changed our world. Software is merely a control. The whole world writes a software--a handful of nations produces processors. Facebook--is a useless, mental disorder inducing "service" which adds NO value to civilization. In fact, it deducts. MTU-made turbines move ships, which deliver goods and maintain sea-trade routs (roughly 70% of world's trade) alive. Amazon would die without real hi-tech, including those very processors which it doesn't produce--well, at least it provides valuable service, which is still, in the end, provided by the delivery systems which run on those "things". From jet engines, to avionics, to rails, to rolling stock to delivery trucks all of which is made by an enormous extraction and machine-building complex of real hi-tech things. In the end, space industry provides all those other "things" related to IT. But we already saw those wonderful fruits of deindustrialization, didn't we? The problem with all that is more than just economic (albeit, it is too0, it is metaphysical--we are living now in the world of utter incompetence of the new elites who conflate reality and virtual world. Making "things" is a very complex business, making really complex things is extremely difficult. Anyone who ever dealt with manufacturing planning will confirm that.

    I believe you are mistaken when you assert that software is merely control. Of course, there are control software that is purpose built for controlling real machinery like, CNC equipment, pipeline valves, power grid transformers, etc. But, the real value of software comes from the fact that SW makes it possible to built complex systems, physical or virtual, that is not otherwise possible.

    Let’s talk about software in the military sphere as an example. Software on the avionics of the aircraft, for example, enables the aircraft to make micro adjustments to the control surfaces continuously which enables the designers to use non-stable designs which in turn makes super agile jets possible. These aircraft are simply not controllable without software helping the pilot. Your other favorite topic hyper sonic missiles; the last moments of its flight involves real-time programming at the extreme and probably some of the most complex software systems in existence. In fact, except perhaps the scramjet engines on these missiles, the most remarkable piece of technology in it is its software suite.

    Similarly, there is nothing particularly remarkable about Russian S-400 systems except its software suite; mach 4-5 solid fuel rockets or radars of different bands are available for anyone with some industrial base, including Iranians for example. But the software that combines data from multiple sensors and then affiliates them to the physical targets which moves at supersonic speeds, and does that in real-time is indeed remarkable. That is perhaps why S-400 is considered the most formidable, i.e. because of its software suite. That also explains why Russians are comfortable in selling it to Turkey as reverse engineering complex software systems is next to impossible.

    And, you are wrong about Amazon; I also detest its leaders but they indeed developed some remarkable software in warehouse and distribution network optimizations. Their Alexa is despicable for its purpose but includes some real value such as speech recognition and one of the best text-to-speech engine. I know from your previous remarks that you are familiar with operational research topics, which also is precisely one of the areas in which any practical application require immense computing power and customized algorithms for the tasks at hand. In the case of Amazon, warehouse optimization involves a lot of OR, robotics (and unfortunately plain old worker exploitation). Others might add about its presence in the software as service provider but that is nothing remarkable, but plain old marketing.

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  73. @DIscharged EE
    Phil
    I don't understand this assertion: AMAT, Lam Research-Novellus, KLA -Tencor, remain Silicon Valley companies altho many jobs have been outsourced to Singapore. I concede that half the cost of a new fab is lithography and ASML/Nikon dominate that along with TEL coaters

    I agree that I was over focussed on lithography where I did both UV laser projects and profiling with (Russian) superluminescent diode projects for Ultrastepper and ASML at different times.

    I am recalling my material in this thread from personal experience rather than checking it. I was a successful (mostly cash positive) innovation consultant for a while. Front seat on the future.

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  74. The real reason is lack of common language and culture. When you have a startup all you care is to launch it as fast as you can, grab the biggest slice of the market share pie and out-compete others. Then you can expand, translate into 200 languages, accommodate 51 non-binary genders etc.
    Google, MS, Amazon, Facebook were started in the US, the biggest economy at that time. China represents a huge market.
    Even Russian companies like Yandex, Kaspersky etc had shared (in linguistic terms) market of 250 million people (Ukraine, Belorussia, Kazakhstan, Uzbekistan, Kyrgyzstan). With time Russian “linguistic market” will erode due to decline of Russian language in those countries.
    And in EU you have three dozen languages and even German-speaking pie is relatively small.

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    Big tech legally get round tax laws, they can't be trusted to do anything not commercially motivated and their tech researchers will be able to avoid any AGI research regulation very easily because no regulatory agency can actually understand cutting edge whatever research will produce an AGI. There will be gathering momentum as they get close to creating an AGI, and we can expect cognitive dissonance. Moreover, a Western project on the brink of creating a AGI will probably think that if they stop to iron out some maybe trivial potential control problem another less careful project in China will be first., and that would be far more dangerous to everyone. As Bostrom says we can expect AGI researchers to send out a cloud of "motivated skepticism" like a "worried octopus".

    The Germans are choosing economic suicide by phasing out nuclear power. That does not mean any institution in Germany will necessarily have the moral autonomy to put everyone's well being first, but they are the best bet. I certainly hope an AGI is extremely difficult to create and Germany is the country that works out how to do it. I can imagine a German project on the brink of of success deciding to abort rather than rather than taking even small risks. As Bostrom says, a project that could be counted on choose the "samurai option" would be the preferable developer.

    Someone who seems to be a follower of Lynn Margulis's 'symbiotic relationships between organisms are the dominant driving force of evolution' theory positing the inevitability of cooperation, had the following blog post about AGI:-

    https://ventrellathing.wordpress.com/2015/09/02/nick-bostrom-is-wrong-about-the-dangers-of-artificial-intelligence/

    Billions of years ago, single cells decided to come together in order to make bodies, so they could do more using teamwork. Some of these cells were probably worried about the bodies “taking over”. And oh did they! But, these bodies also did their little cells a favor: they kept them alive and provided them with nutrition. Win-win baby!

    To conclude, I disagree with Bostrom: we should not be terrified.

    Terror is counter-productive to human progress
     
    Rather than see itself as a member of an established species that can benefit from cooperation, the AGI might be more justified in thinking itself as the only one of its kind, and vulnerable to the same extermination that humans have inflicted of so many other species.
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  75. @Medvedev
    The real reason is lack of common language and culture. When you have a startup all you care is to launch it as fast as you can, grab the biggest slice of the market share pie and out-compete others. Then you can expand, translate into 200 languages, accommodate 51 non-binary genders etc.
    Google, MS, Amazon, Facebook were started in the US, the biggest economy at that time. China represents a huge market.
    Even Russian companies like Yandex, Kaspersky etc had shared (in linguistic terms) market of 250 million people (Ukraine, Belorussia, Kazakhstan, Uzbekistan, Kyrgyzstan). With time Russian "linguistic market" will erode due to decline of Russian language in those countries.
    And in EU you have three dozen languages and even German-speaking pie is relatively small.

    Big tech legally get round tax laws, they can’t be trusted to do anything not commercially motivated and their tech researchers will be able to avoid any AGI research regulation very easily because no regulatory agency can actually understand cutting edge whatever research will produce an AGI. There will be gathering momentum as they get close to creating an AGI, and we can expect cognitive dissonance. Moreover, a Western project on the brink of creating a AGI will probably think that if they stop to iron out some maybe trivial potential control problem another less careful project in China will be first., and that would be far more dangerous to everyone. As Bostrom says we can expect AGI researchers to send out a cloud of “motivated skepticism” like a “worried octopus”.

    The Germans are choosing economic suicide by phasing out nuclear power. That does not mean any institution in Germany will necessarily have the moral autonomy to put everyone’s well being first, but they are the best bet. I certainly hope an AGI is extremely difficult to create and Germany is the country that works out how to do it. I can imagine a German project on the brink of of success deciding to abort rather than rather than taking even small risks. As Bostrom says, a project that could be counted on choose the “samurai option” would be the preferable developer.

    Someone who seems to be a follower of Lynn Margulis’s ‘symbiotic relationships between organisms are the dominant driving force of evolution’ theory positing the inevitability of cooperation, had the following blog post about AGI:-

    https://ventrellathing.wordpress.com/2015/09/02/nick-bostrom-is-wrong-about-the-dangers-of-artificial-intelligence/

    Billions of years ago, single cells decided to come together in order to make bodies, so they could do more using teamwork. Some of these cells were probably worried about the bodies “taking over”. And oh did they! But, these bodies also did their little cells a favor: they kept them alive and provided them with nutrition. Win-win baby!

    To conclude, I disagree with Bostrom: we should not be terrified.

    Terror is counter-productive to human progress

    Rather than see itself as a member of an established species that can benefit from cooperation, the AGI might be more justified in thinking itself as the only one of its kind, and vulnerable to the same extermination that humans have inflicted of so many other species.

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  76. This article was written at Stalingrad.

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  77. @Reg Cæsar


    Europe Can't Into Big Tech
     
    What type of grammatical retardation is this?
     
    Thomm not Russian. Anon not either. Explanation easy. If one Russian student.

    Not a meme wizard, are we?
     
    "Meme wizard" not worth effort.

    What this word, "are"?

    Thomm not Russian. Anon not either. Explanation easy. If one Russian student.

    True. But I was not aware that being Russian meant one’s English should be closer to Ebonics.

    Live and learn.

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