Decoder with Nilay Patel
00:46:48 · Willy Shih, S5, Nilay Patel
[00:46:48] S3: I think what you're highlighting is it's really the power of the market. In the case of closing the Strait Of Hormuz, you know, Brent Brent and North Sea crude prices didn't go to a $150 a barrel like I was afraid they would, and a lot of people were afraid they were because the market adjusted. Right? We applied a lot of tariffs on Liberation Day. The first response was circumvention, okay, or front running. Okay. The next response was tariff engineering. Okay. And the next response has been... It's like, let me move production to Vietnam and... Or let me move production to Viet... Mexico. Okay. And I'll find a way around that. Now, eventually, when you, close down all those things, then prices eventually have to rise. Now in the case of memory chips, that's a different problem because the demand, you know, far outstripped the capacity. You know, I used to always buy memory cards on Black Friday. Forget that this year. You know? It's like that... It's that... I'm just glad I stocked up on a previous Black Friday. Okay. [00:47:53] S5: But here... If you want if you [00:47:54] S2: wanna know my prediction for when the AI industry will will meet its true political end, it's when Grand Theft Auto six comes out and everyone goes out to buy a PS five, and they realize it's more expensive now at the end of its life cycle than it was at the beginning because the price of memory has skyrocketed.
00:47:54 · Nilay Patel, Willy Shih
[00:47:54] S2: wanna know my prediction for when the AI industry will will meet its true political end, it's when Grand Theft Auto six comes out and everyone goes out to buy a PS five, and they realize it's more expensive now at the end of its life cycle than it was at the beginning because the price of memory has skyrocketed. [00:48:11] S3: Yeah. No kidding. Right? And we're we're talking about huge amounts. But, you know, that's the same thing. We're in a phase where we see all these tactical actions from, you know, taken by the government, okay, very transactional, very tactical, without necessarily understanding the interconnections and the... All the complex interconnections and interdependencies. But you see some... Some of those things. You may have noticed, for example, the administration temporarily suspended the Jones Act, right? I don't know if you remember that. Why do they temporarily suspend the Jones Act? Because oil refineries on the East Coast Of The US couldn't get their oil from Texas cheap because there were no domestic supertankers. Right? Because, you know, the Jones Act requires to move stuff from Texas to New Jersey. You have to have a US owned, US crude, US built, a very large crude carrier. There aren't any. Right? Because we don't build those in The US. Right? So, you know, that's why it's cheaper to bring oil from Algeria to New Jersey than it is to bring it from Texas.
00:49:26 · Nilay Patel
[00:49:26] S2: I know at least some of our audience is is gonna be listening to this conversation, and you're steeped in in global trade. You wrote a book to educate our government about how it works from the basics, which I think is sorely needed. But a lot of the promise for young people in our politics lately is we will rebuild American capacity. Right? We will rebuild manufacturing capacity. We will bring back a bunch of jobs where you don't need an advanced degree in AI prompt engineering or whatever to to see the future. We will bring back the dignity of work. Politicians on both sides are making these promises all the time, and a lot of that requires closing down trade. Right? Forcing that economic activity back within our borders. It just seems like that isn't likely. So I'm not gonna ask you whether or not that is totally likely. I'm gonna say what's more likely instead?
00:50:18 · Willy Shih, Nilay Patel
[00:50:18] S3: Well, I see we will... I I think what's more likely is we will see efforts as you describe. I mean, I would love to sit down with people and say, okay. We wanna move this type of production back to The US. Let's take a more strategic, a more nuanced approach, understanding that bigger picture, what kind of levers are available. I mean, The US is still a big attractive market. It is the largest market in the world. It is the most attractive market in the world. That's, by the way, why the Chinese all want to come here because they can make some money here that they can't make elsewhere. Okay? So then how do we harness that market power and that market pull with a more nuanced understanding of why our supply chains organized the way they are today. And recognizing that, can I build a strategy to bring kind of important things that are very strategic for The US to know how to do? Okay. So then let's think about how do we fix this problem with an understanding of that bigger picture. [00:51:24] S2: Willy, it's been great to talk to you. It is always just a pleasure. We have to have you back faster than five years. Thank you so much for being on Decoder. [00:51:31] S3: Thanks for having me.
00:51:31 · Willy Shih, Nilay Patel
[00:51:31] S3: Thanks for having me. [00:51:33] S2: I'd like to thank Willy Shih for joining me and thank you for checking out this episode of Decoder. His new book, Where Does My Stuff Come From? Is out on November 3. I really recommend it. To get new episodes every Monday and Thursday, subscribe to our YouTube channel at Decoder Pod and find us on TikTok and Instagram under Decoder Pod as well for more fun stuff we put out every day. If you'd like to let us know what you thought about this episode or really anything else at all, drop us a line. You can email us at Decoder@TheVerge.com. We really do read every email or hit me up directly on threads or blue sky. If you like Decoder, please share it with your friends and subscribe wherever you get podcasts. Decoder is a production of The Verge and part of the Vox Media Podcast Network. The show's producers are Greg Ott, Kate Cox, and Nick Statt. This episode was edited by Eileen Felix. Our editorial director is Kevin McShane. Decoder music is by Breakmaster Cylinder. We'll see you next time.
00:52:15 · S0, S5, Nilay Patel, S6
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