Andy Grove’s Warning to Silicon Valley
The mystery at the center of all this is &quot;Why is it so astronomically cheap to do the x in Asia vs the U.S?&quot;.  Not just cheap as in low wage, but cheap as in finished goods costing less than the cost of materials delivered to the American factory.  It&#x27;s not just manufacturing.<p>In Thailand you can live in a high rise condo with a gym and maid service and eat out every day and do some traveling for $2000&#x2F;month.  That life style is 8x more expensive in San Francisco.  In Argentina before the 2002 crash, the country was very expensive, but it wasn&#x27;t some luxurious paradise, so it&#x27;s not just that it&#x27;s a developing country.  AFter the 2002 crash the prices were absurdly cheap.  Something just doesn&#x27;t make sense, and there&#x27;s an enormous amount of denial that anything&#x27;s amiss.  Prices are a mystical sacred phenomenon it would seem.  American companies don&#x27;t care why prices are cheap, they just build stuff where the prices are cheap and sell it where they are high.  They couldn&#x27;t care less about the mystery, neither could the politicians.  It&#x27;s just the magical mysterious market.<p>Health care prices are also a mystical sacred phenomenon.  Why are they 10x in the U.S what they are in other countries?  Other people get sick and die there and are willing to pay whatever money they have to get better.  Prices don&#x27;t necessarily scale with income per capita either.  I am sick of pat answers to this question and &quot;just-so&quot; stories.  Someone should take some cost accountants and figure out where all the money is actually going for these kinds of things and write some journal articles.  It would probably reveal a lot of bizarre and interesting rough edges on the economy and maybe a fair amount of business opportunity.<p>Some researcher should go look at the cost to build an Intel fab in Taiwan vs the U.S and start asking why.  Start with why is it 1&#x2F;5 the price to build the fab in Taiwan: 1. Because the construction company charges that much.  Why?  2. Because the labor is 1&#x2F;2 and the materials are 1&#x2F;3.  Why?  Because the labor&#x27;s rent is 1&#x2F;5?  Why?  Because the land for the apartment building was 1&#x2F;10 the price?  Why?  Because there are no mortgages and the land had to be bought with savings from an export business, etc, and follow it all the way down for everything.  Depth first search! Piles of fascinating economic nuggets are just sitting there untouched.