I'm John Bats for joining in with Professor John Cochran of the Hoover Institution,

who tells me there's a lively debate among economists and soldiers on the campus at Stanford as to whether economies can be marshalled the way militaries can be marshaled,

whether they can work together,

whether the contest we're witnessing now between the United States and China,

which is expanding to the whole planet, I believe,

whether that can result in a successful outcome,

or whether it's a prelude to kinetic action.

Don't know.

However, John, you pointed to chips and Luis Garacano. I hope I say that correctly.

Yes.

Trading with bullies.

It's charming.

And I read the setup.

Private companies decide whether to source chips from Taiwan or produce them at home.

Choices that have strategic implications beyond their

commercial calculations. The national security externality exists because private actors do not

account for how their decisions affect the government's bargaining power through resilience

to conflict. When the U.S. company imports cheap chinese chips and builds infrastructure dependent on them

it creates a strategic vulnerability

a cost not reflected in market prices

i take all this because

it's a real example although we could reverse it a little bit and say our chips are

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