[seieste]

> But economics works on incentives.

> The economics don't line up.

Suppose you're Google. You know what's cheaper than investing $100m in a new chip manufacturing company? Lobbying for the government to invest $100m in the chip manufacturing company.

This is why "the economics don't line up", and "the incentives don't align". No shareholder would want you to do the financially irresponsible thing of investing in a risky, capital-intensive venture when governments can do that for you.

As a result, companies have the incentive to invest in lobbying rather than actually fund the chip production themselves. Essentially the companies believe that chip production will result in $X/yr, but investing in it themselves would be $Y/yr, whereas they could just invest in lobbying for $Z/yr, where $Z << $Y.

[majormajor]

I'm not sure I see the problem, government is for these cases where every player individually has a cheaper option for the short term, but one that might not be as good for the city/state/country overall. I don't want Google to spend a hundred million dollars on chip production for just themselves that would add to the price of their products - but not their competitors - and also not help out the broader market situation... it's not in my interest for every company to go their own way here, either.

[zitterbewegung]

ROI of investing the money vs Lobbying is ~ $100 to $1

[1] https://www.bloomberg.com/news/articles/2021-04-23/google-am...

[syrrim]

Ummm if the government does the investing they get all the returns. If google does the investing they get the returns. If they are lobbying rather than investing, this suggests they think the ROI would be negative.

[Mountain_Skies]

That's not how government funding of sports stadiums work, why would fabs be any different?

[syrrim]

>Usually, the local government owns the stadium, while the team and its ownership control the revenues. This arrangement leaves taxpayers on the hook for maintaining the stadium year after year, team or not.

From here: https://www.johnlocke.org/policy-position/publicly-funded-st...

The problem for sports stadiums seems to be a monopsony relationship. That wouldn't be true for a fab, which can sell to anyone.

It seems like this relationship is desirable because a sports team can't benefit from all the profit they generate, for example at restaurants near the sports stadium, whereas the city can, by taxing those businesses. I suppose there might be an equivalent relationship with respect to a fab, but I'm not sure what it is.