Posted by elorant 11/4/2025
We detached this comment from https://news.ycombinator.com/item?id=45816492 and marked it off topic.
Free market is not as free as the name would imply.
And tariffs and sanctions refer to what?
> A free market is a means towards a competitive market because it lowers the artificial barriers to entry into the market. Those barriers imposed by the universe simply are...
Are you talking about tariffs or about banning the sale of semiconductor equipment to China, so they can't compete in the market for high performance chips? Is that "a means towards a competitive market" or is it "barriers imposed by the universe"?
That's an interesting universe you live in.
>In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers.
https://en.wikipedia.org/wiki/Free_market
As long as a buyer and seller can negotiate whatever number they want, or walk away, it is a free market.
https://en.wikipedia.org/wiki/Free_market#Low_barriers_to_en...
> A free market does not directly require the existence of competition; however, it does require a framework that freely allows new market entrants. Hence, competition in a free market is a consequence of the conditions of a free market, including that market participants not be obstructed from following their profit motive.
The barriers to entry being referred to in the Wikipedia article are presumably government related. No government is stopping Intel or Samsung or any of the other chip makers from selling what TSMC sells, hence the “framework that freely allows new market entrants” is there.
And the subsequent paragraph seems to be exactly what is happening in the market of high end chips:
> Hence, competition in a free market is a consequence of the conditions of a free market, including that market participants not be obstructed from following their profit motive.
And no, it is not specifically referring to government related barriers, although those certainly count. Government is very often the thing that generates barriers to entry, but it is by no means the only barrier to entry. Any barrier to entry is, from a strict theoretical sense, a departure from a pure free market, although that's more in the "spherical cow" sense of the idea.
Economics is more concerned about whether "free market" is a useful description of the system. If there is nothing in principle to prevent the emergence of new competition, but barriers to entry (e.g. availability of capital / talent / machinery / raw materials, long-term contracts, or the time required to set up a new business) make it difficult in practice, the system may not behave like a market. Then you need to focus more on politics, both between and within governments and companies, to understand how the system is actually working.
And now that we've established that capitalism necessitates government intervention, capitalism is incompatible with such a simple definition of "free market." We can begin negotiating just how much government interference in the market is allowed before it's no longer a free market, but it's categorically impossible for a capitalistic free market to be pure expression of supply and demand.
It's unrealistic to expect just anyone to start up a new fab. But if not one person among billions will start up a new fab it points to intrinsic difficulty or unpleasantness or lack of prestige in the task. A correctively high price has all kinds of advantages for the society.
I haven't seen any argument that difficult tasks shouldn't be priced high. Only name calling.
Edit: per link below, seems like you need $100B+ and 10+ years
This business is expensive, making and running fabs is way way more expensive than most anybody thinks. There are very few companies able to do it profitably.
Absolutely nothing to do with this lol, and everything to do with it being ridiculously capital-intensive.
And no amount of money will get you one of ASML EUV machines any time soon as the entire production line for the next handful of years has already been spoken for.