cross-posted from: https://lemmy.crimedad.work/post/321458

I don't underestimate our Dear Leader's ability to do it badly, but isn't a sovereign wealth fund typically a good idea?

Relatedly, eight months ago: Google “We Have No Moat, And Neither Does OpenAI” Leaked Internal Google Document Claims Open Source AI Will Outcompete Google and OpenAI

Nvidia was propelled into becoming a titan of the hardware industry by the frenzy in the AI market. However, an unstable market driven by a speculative bubble is not a sound foundation. We can get an idea of what Nvidia can expect going forward by looking at what happened with Cisco during the dot-com bubble.

Cisco thrived as the backbone of the internet revolution, supplying networking equipment to a wave of startups and tech companies. But when the bubble burst, the contradictions of capitalism came crashing down. Overproduction led to a glut of hardware, bankrupt startups flooded the market with second-hand equipment, and demand for new hardware evaporated. Cisco quickly went from being a star to a company facing serious financial troubles.

Nvidia finds itself in a rather similar position today. The AI boom created a massive demand for GPUs, with VC funded companies investing billions into hardware. All of a sudden, DeepSeek disrupted both the need for Nvidia's hardware the whole AI as a service business model. When the bubble bursts, the market will be flooded with second-hand GPUs, driving down demand and undermining Nvidia's core business.

This is the essence of capitalist contradiction: the system’s drive for endless expansion leads to overproduction, while its reliance on speculative markets ensures that demand is inherently unstable. Both Nvidia's dependence on high-risk AI startups and Cisco’s reliance on dot-com companies illustrate how pursuit of profit creates fragile ecosystems that are vulnerable to sudden collapses.

The broader implications for the industry are equally damning. Companies that have invested heavily in expensive GPUs may pivot to new paradigms, leaving Nvidia with reduced relevance in a transformed market. Nvidia's current valuation, inflated by AI hype, could face a sharp correction as growth slows and the second-hand market undercuts new sales. Other players in the AI hardware ecosystem, dependent on Nvidia's dominance, could also face fallout, further destabilizing the industry.

This scenario isn't an isolated case of one company’s potential decline, it's a microcosm of capitalism’s inherent flaws. The system’s reliance on speculative booms, its tendency toward overproduction, and its inability to plan for long-term stability ensure that crises become inevitabilities. Nvidia’s trajectory, like Cisco’s before it, is a product of a system that prioritizes profit over sustainability, and short-term gains over collective well-being.

The cycles of overproduction and collapse will continue as long as the pursuit of profit remains the driving force of economic activity. The only way to break free is by building a new system based on rational planning, collective ownership, and the prioritization of human needs. Until then, the crashes will keep coming, and the working class will continue to pay the price.

Supply and Demand.

If there is no supply of good public infrastructure, inclusive institutions, good governance, etc. people will go elsewhere.

And also, lol.

TLDW

China uses its trade surplus with the US and EU to build infrastructure risk-free by lending the surplus in Euro and USD to BRICS countries instead of buying US Treasury bonds. The loans are used to build infrastructure, such as railroads, which benefits Chinese supply chains. China can afford to ignore whether the loans are performing because the stability of their supply chain is more important.

https://inequality.org/facts/global-inequality/

https://www.oxfam.org/en/press-releases/billionaire-wealth-surges-2-trillion-2024-three-times-faster-year-while-number

https://archive.ph/WsaRI

Trump has promoted a number of plans to make America strong – at other countries’ expense. Given his “we win; you lose” motto, some of his plans would produce the opposite effect of what he imagines.

That would not be much of a change in U.S. policy. But I suggest that Hudson’s Law may be peaking under Trump: Every U.S. action attacking other countries tends to backfire and end up costing American policy at least twice as much.

Income taxes can be made progressive. Sales taxes are almost always regressive. Businesses need to do a lot more paperwork to document these taxes.

Why don't leftist parties campaign to abolish sales taxes and replace the lost revenue with an increase in a progressive income tax?

Am I missing some critical functionality of sales taxes that income taxes cannot replicate?

Edit: Here's an important feature of sales taxes that a few commentators helped me realize. It's better if we think of a sales tax as a "revenue tax" instead. Let's say we are in a country with multiple provinces. A business sells stuff in province A. However, the business and its owners are both located in province B. If sales tax didn't exist, then all money earned by the business would go to province B's government. Province A cannot enact tariffs and stuff like that. Thus, it puts up a "revenue tax" that is taxed to business for all revenue earned, i.e., a sales tax.

For those wondering, no, a corporate tax is not a revenue tax. It's a tax on profit. Non profits for example, do not pay any corporate tax, but they do pay sales tax (which is basically, revenue tax).

TLDW

Resource-based economies control the essential raw materials needed for manufacturing and high-tech industries. This gives them leverage over nations that rely on these resources. China's dominance in gallium production is a great example as it's essential for making advanced semiconductors.

Real power resides at the top of supply chains, where raw materials originate. Controlling these resources allows countries to dictate terms and disrupt industries further down the chain.

Sanctions enacted by higher-level supply chain economies often fail because resource-based economies can retaliate by restricting access to essential raw materials. This renders sanctions ineffective and can even harm the sanctioning nation's economy.

BRICS economies, who control many of the essential resources, will continue to develop domestic industries to process and utilize their own resources. Doing so reduces reliance on imports and creates new economic opportunities.

Access to critical raw materials provides a significant advantage in developing and manufacturing key technologies like semiconductors, telecom equipment, and renewable energy systems. This ultimately leads to technological leadership and economic dominance in those sectors as we're seeing happening with China.

Economies higher up the supply chain become vulnerable to disruptions and price fluctuations caused by resource-based economies. This dependence weakens their negotiating power and hinder their economic growth in the long run.