At least five interesting things for the middle of your week (#6)

My new podcast, China's chip struggles, where Americans are moving, strategies for growing exports, urban design, the IRA's effects, and Larry Summers' predictions

Exciting news, folks! For those who want to hear me talk — or even watch me talk — I’ve got something just for you! I’m doing a new podcast with the famed podcaster and entrepreneur Erik Torenberg. It’s called Econ 102, because A) we talk about econ-related things, and hopefully go a little beyond 101, and B) by a curious coincidence, I was a teaching assistant for Erik’s Econ 102 class at the University of Michigan. (The professor for that class was Miles Kimball, my PhD advisor, in case you’re wondering, Erik got a good grade). Erik is also a partner at Village Global, as well as a co-founder of Product Hunt and On Deck, and has hosted many podcasts in the past. Econ 102 is part of a new family of podcasts Erik is launching, called Turpentine.

Anyway, so Econ 102 is basically just Erik interviewing me about things I’ve written in recent weeks, and then us riffing on it — a bit like what Ben Thompson and Andrew Sharp do with their podcast Sharp Tech, but for econ stuff. You can listen to the first episode here on Spotify:

Or if you prefer Apple Podcasts, you can listen to it there. Or if you’d prefer to watch the video version, you can watch it on YouTube. If you’d like to subscribe to the podcast (which is free, though we plan on getting sponsors if people like the podcast), here’s a link where you can do that. And here’s a blog post that Erik wrote about our new show, in which he also thinks insightful thoughts about the immigration issue.

Anyway, Econ 102 is still in its infancy, so let me or Erik know any suggestions or feedback, via comments or email!

Of course, this doesn’t mean I’m canceling my previous podcast, Hexapodia, with the excellent Brad DeLong. Brad had to take a longish hiatus because he has a real job, but we’re back, and will try to post episodes every 2 weeks or so. In the latest episode, we talk about Daron Acemoglu’s idea that technological innovation can be steered or guided in advance in order to benefit workers — something I plan on writing a lot about in the weeks to come.

Hexapodia XLIX: We Cannot Tell in Advance Which Technologies Are Labor-Augmenting & Which Are Labor-Replacing

Anyway, here are your Five Interesting Things for this week. Which are actually Six Interesting Things, since I pulled an extra one from last week’s comments. As always, if you’re a paid subscriber, feel free to leave links in the comments if you’d like me to take a look!

1. Chip export controls are hitting China hard so far

This week I posted my interview with Chris Miller in which we discussed the U.S.’ semiconductor export controls on China. It’s always important to get some confirmation of whether controls like this are working. Fortunately, Joey Politano has an excellent deep dive on what we know about China’s chip industry in the wake of the controls.

To me, the most important graph is this one, showing how China’s imports of chipmaking equipment have been on a downward trend since the export controls were introduced in October 2022:

Source: Joey Politano

You can see that these imports were really ramping up in the late 2010s, as China worked hard toward self-sufficiency in the industry. Buying the tools to make chips is a big part of achieving self-sufficiency. Then the trend turned on a dime and seemingly hasn’t recovered since.

As Miller noted in our interview, chipmaking equipment is the hardest part of the supply chain to reproduce, because it’s so complex and has to work so consistently. The export controls are going to give China major difficulty here.

In terms of China’s actual chip production, the export controls were merely a bump in the road:

Source: Joey Politano

This isn’t surprising, because A) China’s government is pouring absolutely ridiculous amounts of money into chipmaking, and because B) with China now cut off from some types of imports, they have to make more of what they use. But don’t be fooled by aggregates here — the chips China is making will tend to be trailing-edge stuff, not the most advanced products. The leading edge is where the export controls are supposed to bite.

Anyway, one other interesting thing I noted in Politano’s post is that China’s electronics industry is suffering:

Source: Joey Politano

This is partly because of China’s general economic slowdown, of course; much of what China makes is for Chinese users, and the real estate bust is weighing heavily on the country’s domestic economy. But some of the dip between 2022Q4 and 2023Q1 might be from export controls throwing a wrench into Chinese electronics production. So that will be an interesting space to watch.

2. Where to put the housing in American cities

American cities aren’t dense enough. We need to upzone city centers and (especially) inner-ring suburbs if we’re going to avoid a crisis of affordability, especially in big coastal cities like San Francisco and NYC. The question is how best to do this, in order to create cities that feel nice to live in.

I’ve always believed that drawing pictures of cities is crucially important for helping Americans to visualize what greater density would look like. Urbanist Alfred Twu, who wrote a guest post for Noahpinion last October, is one of the best at this. In a recent blog post, Twu makes a powerful argument for why upzoning only along major streets is a big mistake:

In many North American cities, as more housing is built, it’s limited to a few places: downtown and along busy streets. This is known as Corridor Zoning…[Corridor Zoning] has downsides:

• Lots of people end up living on the noisiest, most polluted streets.

• Local businesses, historic buildings, and existing low-rent apartment buildings are at risk of demolition.

• Storefronts on the main street are replaced by garages, exit doors, private lobbies, utility rooms and other uninviting spaces.

• Limited number of sites causes land to be expensive.

• Narrow canyon of tall buildings creates a wind tunnel, makes being outside on the main street unpleasant.

Twu instead recommends something called Second Street Housing:

Second Street Housing…puts the biggest new apartment buildings behind, not on top of, the main commercial strip, separated by an alley for deliveries. Further back, still within a five-minute walk, are mid-rise apartments, and beyond that, a mix of houses, duplexes, fourplexes and courtyard apartments…In most places, Second Street housing can be implemented by rezoning the land closest to commercial zones.

He illustrates the difference with a pair of drawings:

Source: Alfred Twu

Source: Alfred Twu

This is a great idea, because it moves us a little closer to the type of urban design that makes Japanese cities such amazing places to live. I think American urbanists, as they think about how to redesign our cities, need to have concrete simple ideas like “Second Street Housing” in mind as they move forward.

3. Where Americans are moving to (and where they’re leaving)