Conflicting Worldviews and Future Stability

Hello Before we start this week, a quick announcement Next month, june sixteenth, in Brooklyn, I'm going be part of a night of Readings. It's part of this reading series called Friends With Words, hosted by writer and director Susanna Fogl The theme of the night is writers reading risky work that they feel scared to read on stage I will be there alongside this American Life's Iyra Glass, Amelia Clark from Game of Thrones, fiction writer, Kristen Rupenion. It is a stacked lineup. There's even more people. I think it's gonna to be a special night The venue is Routte in Brooklyn. june sixteenth, tickets are twenty five bucks. There will be a link in our show notes. One night only Okay. Here's this week's episode after Th these ads This episode of Search Engine is brought to you in part by ProtonVPN You know that creepy feeling when you mention a specific pair of vintage boots once? and suddenly, your entire social media feed is just boots It's like the internet is reading over your shoulder, whichich is why you should try ProtonVPN, especially when you're working from a coffee shop and don't want the guy at the next table snooping on your data. Plus, we've all hit that annoying content not available in your region wall or trying to watch a show on the road Proton VPN, you or honestly me can just swap your virtual location and you or I am back in business It's a secure service built for people who actually care about digital privacy. Proton is backed by Swiss privy laws and has a strictly verified no logs policy It's even open source, so they aren't hiding anything behind the scenes. Right now, ProtonVPN is offering our listeners seventy percent off a two year plan when you go to protonvPN dot com slash search. That's PRo t nvpN d. com slash search for seventy percent off your two year plan. That's protonvPN dot com slash search This episode of Search Engine is brought to you in part by Atari Hotels Qick step for you. Phoenix tourism is up twenty three percent Hotel occupancy is at eighty nine percent And a developer called Intersection Development, who already has fifteen properties live and operating on Roosevelt Ro in downtown Phoenix has purchased the land for what might be the most interesting hotel project in the country It's the first ever Aari hotel. And before you write that off is a novelty concept, Consider that the gaming industry just cost four hundred fifty billion dollars, bigger than film and music combined This project sits at the crossover of that culture with one of the strongest hospitality markets in the US. 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President Trump met last week in China with President Xi Jinping They talked only a bit about one of the biggest points of contention between our two superpowers, the one I was listening for Taiwan Taiwan is an independent democracy one hundred miles southeast of China's coast China wants to take Taiwan for itself, but the US for decades has stood in the way Taiwan also happens to be where almost all of the high quality graphics chips driving the AI rerace are made If either country controlled Taiwan The AI race would be fundamentally over is most of what I knew about Taiwan before this week's episode I knew about it as an object in two other countries' designs I didn't know much more about the place itself How did Taiwan become a democracy How did Taiwan end up manufacturing all those high tech chips? How did an island this tiny become one of the most important places in the world So I did what I do these days when I'm curious. I asked Garret Graham, our show's senior producer, to find me one of America's foremost experts on Taiwan and also to select someone who's a really good storyteller It took them off two days So now I'm going to recreate for you the journey we took from seearch Engine Studios, a guided tour through modern Taiwan's history Do you mind just saying your name and what you do professionally ure My name is Shelley Rriger. I am the Brown professor of East Asian pololitics at Davidson College in North Carolina. And right now I'm also the Vice President for Academic Affairs and Dean of faculty here at Davidson And how did you find yourself curious about Taiwan in the first place many years ago When I was a college student in the early eighties, the US had just normalized relations with mainland China The People's Republic of China And broken formal diplomatic relations and in fact, ended recognition of the countryry that exists on Taiwan. which its formal title is the Republic of China. We always call it Taiwan, but it has another name. And so I took a class where we were going to figure out, you know, what's going to happen to Taiwan going forward. And so that's when I first became interested in Taiwan In particular, I was interested in the indigenous Taiwanese people who are about two percent of the population today and have been in Taiwan for Millennia did not originate on the Chinese mainland. You know, they sort of predate the idea of China So I spent the summer of nineteen eighty three in Taiwan learning about whatever happened to Taiwan's indigenous people. and then I was hooked. Interesting. So and help me understand like, you come into Taiwan studies curious about The Iigenous people of Taiwan. There's also overlaid on this very tiny country a vast history of colonization. L what other powers show up What do they do? and how does it shape the place So I love a good analogy. Me too. So I' gonna talk about this super famous object I guess it's an artwork that is in the National Palace Museum, which is in Taiwan. It's a rock. That looks like a kunkup pork. But it's a special kind of pork that Chinese really love. It's called Dg Por Ro. and it is like layers of fat and meat And then on the top is a sort of skin layer that looks delicious because it looks like it has all kinds of wonderful flavors soaked into it but it's actually a rock. and everybody in Taiwan wants to see it. And lots of people in mainland China want to see it too. When Chinese tourists come to Taiwan, they flock to the National Palace Museum and they want to see the meat rock. And Taiwan's human history. is a little bit like Right? There are all these layers that accumulated on top of one another, of human communities. And they've now all kind of melded together to form one thing The firstirst layer, of course, are the indigenous Taiwanese who have been there as long as anyone Imagine, remember Taiwan's indigenous people are Austronesian, meaning of the same kind of back in in you know, deepest Ancient history origins as other South Pacific Islanders and they may have been the sort of original South Pacific Islanders, the linguistic and DNA research suggests that many of the other South Pacific islands, people came there from Taiwan, like in Moana with the boats, you know? The weather going from one island to another, that really happened. But it seems as if the original island whereere all that started may have been Taiwan. Fascinating. So they speak a different language, their cultures are very specific to Taiwan, the island where their cultures developed over thousands of years. And they were there already when Chinese started coming from the Chinese mainland about a hundred miles away in the fifteen hundreds and especially in the sixteen hundreds and later. But the second layer and in some ways the thickest layer are Oh. came to Taiwan A the mid fifteen hundreds for the most part. and before about nineteen hundred And these are the folks that we often call native Taiwanese or local Taiwanese The reason people came from mainland China to Taiwan was because it was very crowded in the mainland and there were opportunities for Economic benefit in Taiwan. It was rugged, it was far away from any of comfort or order. there was a lot of competition for land and resources. The indigenous people were already there. so, you know, they're going to fight back to hold on to their stuff newer migrants coming from the mainland competed with aller migrants from the mainland and different Communities from the mainland competed with one another. None of those groups got along with each other. So it was a pretty violent place. It was not the kind of place where you go because you're thinking about staying and setting your clan for all eternity Over the decades, some people did stay and they started to bring families over from the mainland, and Taiwan began to be a bit more of a kind of settled Chinese community. It's funny. the way you describe it sounds a little bit like the American frontier West. Like all these people going out to this rugged place to make a new life for themselves. There's already people there The people who are settling don't totally get along with each other, but it sounds like Deadwood or something like that. Yeah, it is a lot like that, actually. You know and I'm suddenly thinking about the gold rush, which was all meant you know, initially almost all men And then people said, well, actually, you know, I'm not panning for gold anymore. I'm doing something else. But this is pretty good. So let me get me a wife from back East and settle down here. So Over those centuries from about mid sixteen hundreds when Taiwan really starts to kind of gel as a place for Chinese settlement. population of Taiwan, the Chinese origin population increased very rapidly and the place became pretty important agricultural Source even for people back in the mainland. And as those kinds of things developed, the Chinese government started paying more attention, sending administrators over to Taiwan to try to kind of calm the chaos, take a little sheriff to Deadwood turn it into more of a part of the empire. So by the eighteen hundreds, Taiwan was pretty much governed more or less and some days more and some days less by the Qing Empire. But in eighteen ninety five, The ing Court seedated Taiwan to the Empire of Japan So in eighteen ninety four China and Japan started fighting and they were mostly fighting in the Korean peninsula Fighting in Korea. over Korea. But then the Japanese started moving in on actual Qing territory and the Qing to settle that war surrendered a lot of territory, including Korea. They accepted Japanese control over Korea, what we know is Korea today And they also ceded Taiwan to the Empire of Japan And so they're saying to Japan like as a peace offering, we're giving you territory. It's not within the mainland, but it's very close. So it's like a big give. Once Japan colonizes Taiwan, what is Japanese colonization looked like for Taiwan in Taiwan One of the motivations for Japan to ask for territory was that the Japanese also saw the Western powers leaning in in Asia You know, they'd watched the colonization of Latin America, of Africa, of South Asia, of Southeast Asia So they're coming for us next, right? That's the message. And starting in the eighteen sixties, the Japanese government did this huge campaign of modernization and really emulating features of Western societies and especially Western militaries and economies that they believed enabled the West to become so successful in colonization And they were like, all right, we're going to show that you can't colonize us because we're going to be just as good at colonizing other people as you are Interesting, but in Taiwan in particular there concept was this is going to be a model colony and we're going show how modern Japan is. because we're going to B roads, we're going to build reservoirs. We're going to build railroads and industry and telegraph lines In Taiwan too show that Japan is a modern country and can do all of these modernizing things So one of the features of colonization in Taiwan was It was actually quite developmental The Taiwanese population at the end of the Japanese colonial period was more educated than pretty much any other population in Asia So you know, it was kind of a mixed bag. It was definitely colonization and there was a certain kind of assimilationist spirit there so Taiwanese were educated in the Japanese language. And they were encouraged to take Japanese names. They were drafted into the Japanese army during the invasion of China, which started in the nineteen thirties But at the same time, looking back on it, a lot of Taiwanese recognize that it was also a period of order and development for Taiwan. So how does Japanese colonization end Taiwan's Japanese era ended in nineteen forty five with the surrender of the emmperor. Y know what you almost say. D. right the emperor surrendered And all of his subjects heard him on the radio Surrendering including his subjects in Taiwan So for Taiwanese, this was a really weird moment because on the one hand, they had been Japanese subjects for fifty years, which if you think about it, you know, in the early twentieth century, that's much of a lifetime for most people. Yeah. They'd been Japanese subjects, but they knew themselves to be Ancestrally, culturally, linguistically, Chinese So For many people in Taiwan, what they realized was that what was coming next, which was going to be a Chinese government, was something like a return. Also something new. becausecause they were not being returned to the China that they had left, which was the Qing Empire, which was gone. They were being returned to this new Chinese state, the Republic of China established in nineteen twelve by the Chinese nationalists whose leader by the end of World War two. was John Hai Sk. and girl to her General John Kaik. He's in full military uniform on an outdoor podium Delaring victory in nineteen forty five after the defeat of the Japanese. Fan for you, I h h you know h them it. King Cat Womans are seeing media. Sy After the Qing dynasty had fallen, China had fractured into territories, mostly ruled by regional warlords At the end of that fighting, JZeang Kaishek's group, the nationalists, had come out nearly on top with just one rival remaining Communists The Nationalist instsad also done something very smart during World War twoI They'd sided with the Allies and gotten something in return international recognition as China's legitimate rulers. And a promise that they would be handed all the territories Japan had seized from China at the war's end. including Manchuria including Taiwan During World War two, the US, Canada, Australia, and some of the other allies are fighting in Asia And a critical part of that action is happening in China And it's mainly the Chinese that are keeping that going. So from perspective of the Allied leaders It's extremely important to keep Jang Kai Shek and his nationalist army in the war They're thinking about, know what can we offer him to make sure that he stays motivated It is no exaggeration to say that to see General Chiian Kai Shek and his wife in this Allied assembly was a very real pleasure to everyone And one of the things they decided to offer him at the Cairo conference was anything that's a Japanese held territory that used to be Chinese will'll go back to the Republic of China Britain, America, and China expressed their resolve to exert unrelenting pressure on Japan, compelling her to disgaorge the territorory she has seized and occupied even before the First World War in nineteen fourteen. We won't have some kind of decision making process to see who should get it. We're just going to send it back to China. General Lhimo Chg Kai Sheik arrives in Shanghai and is greeted by General Weedemeyer, American commander in China. A huge crowd welcomes the Chinese leader. He was absent for nine years because of the war and Japanese occupation So nineteen forty five rolls around. The Japanese decamp back to Japan. And the nationalist government, the nationalist army comes to occupy Taiwan becausecause they've been promised that Taiwan will be Chinese territory after the war For a lot of Taiwanese, the feeling was, okay, we don't exactly know these people, but they have the same heritage that we do So we're sort of cautiously optimistic that this is gonna be fine. And they were really shocked what happened? After fifty years out of the Japanese, the transition to the rule of the Chinese was paintful. People have almost because the nationalists, they had just finished a war with Japan and they were caring actively for a civil war against communists. So the communists and the nationalists had made a temporary alliance to fight Japan, but as soon as the Japanese were defeated them The Civil War is just inevitable So the nationalists did not send the best of their forces over to Taiwan because they were getting ready for the next Who they sent to Taiwan were a lot of kind of conscripted soldiers, many of them not even equipped For battle, Taiwanese wrote about watching People come down off of the ships with like umbrellas and booking bags. Why umbrellas? Well, I guess because that's what that was their personal property that they had managed to hang on because they were snatched out of the rice fields in southern China to go be in the arrmy So the Taiwanese were like, whoa, you know The Japanese were all spit and polished, you know, They knew about army What is this? So it was kind of like a bad start to begin with. And then from the nationalist perspective, okay, one These people have been working for the enemy for fifty years and a lot of them in the Japanese Army So you know, from the nationalist point of view, we are taking over Kinda enemy territory So we want to tell the folks that live there, hey, we're all Chinese, but also picious And from the Taiwanese perspective, like who are these clowns with their cooking pots and umbrellas? Yes, exactly, exactly. The next thing the nationals decided to do is kind of pillage Taiwan for stuff they can use on the mainland.. So they start taking apart factories and moving equipment to the mainland. becausecause again, as far as they're concerned, this Taiwan thing, you know, that is like a sideid show that we can deal with later But right now, we've got to save the Republic of China from a communist takeover So goes from bad to worst in Taiwan with this kind of tensions rising between these two populations And then february nineteen forty seven, a Taiwanese woman was selling cigarettes She was selling single cigarettes just like some of the people who have gotten in trouble in the U.S and Cops came and someomebody hit her. And there were other Taiwanese bystanders and they were just infuriated. You know here's this woman just trying to get by and you have this stupid tax that doesn't allow you to sell single cigarettes. and now you are abusing this woman and they rioted. And that riot just kind of spread everywhere. and there was a whole island uprising. against the nationalists. And the nationalists were like Not ready for that. A lot of police and soldiers went back to barracks or even left the island altogether. And for a couple of weeks, it was like not clear who was in charge. There we bl M' the thing le, sire Rigning local nationalist, Governor General Chen Yi on the radio. telling the people he's declaring martial law in his words entirely to protect them This clip is a recreation, but those were his words What happened next is that on march eighth, nationalist troops landed on the island They began an indiscriminate campaign of violence against citizens soldiers fired into crowds, there street executions. People were pulled from their homes, tied together by wire to others, and thrown into Keyung Harbor to drown We'll never know the actual death toll. According to scholars, it's somewhere between ten thousand and twenty eight thousand people They killed a lot of the leaders, they killed a lot of kind of socially important people, landlords, professors, a lot of intellectuals were taken in either imprisoned or executed. And they kind of decapitated the society and those who were not personersally affected, were very well warned that You do not challenge This government So that is called the february twenty eighth or two twenty eight incident, and that's really the defining moment for Taiwan politics ever after where Taiwanese learned that the nationalists were not going them any slack just because they were Chinese too But we're going to impose their rule with an iron fist And that Taiwanese were gonna to have to figure out how to live under that regime Because it's just like an intensely, intensely sort of nationally socially traumatic event. After that, everything is just different Everything is different. after the two hundred twenty eight incident, but it gets really different in nineteen forty nine when the Communist Party And it's Red Army are successful in defeating the nationalists in the Civil War This is the part of the story where it goes from something tragic, colonial violence to something very, very absurd A plot twist transpires that does not resemble the history of any other country I've learned about So a nationalist who'd been ruling Taiwan from mainland China. The first thing that happens is that in nineteen forty nine, the nationalists suffer a huge defeat at the hands of the Communist army. October first, nineteen forty nine Mao Zedong declares the founding of the People's Republic of China A monster rally in Shanghai celebrates commommunism's greatest victory since the coup in Czechoslovakia. fiveive months ago, the troops of Mao Te Tung marched into Shanghai unopposed. That victory was celebrated in July at a gigantic parade in what is today the largest red city in the world now so is And anybody from the Nationalist movement, the Nationalist government army who can get out of mainland China. is out D C it Nationalist government gets transported to Taiwan Oh because this is where they have to go because they're being forced off the mainland. Exactly. They're defeated on the mainland. The only place left that they control is Taiwan. and that's where they go. They set up the government there. they take the legislators who were elected from all over China in nineteen forty seven. They become the legislature of. Republic of China, but they're chamber and their offices are in Taiwan And they cannot go back to China mean C Okay one here Hang up I'm gonna go. He h it. This is JZhang Kai Shek talking just a few years after decamping to Taiwan No longer the conquering young military leader Now a more tragic figure. The so called leader of the Republic of China exiled to a nearby island, claiming that any day now, his nationalist armies will return to the mainland, sweep through, vanquish the communists He's talking Sit ve gott to go back to China. They're convinced that they will because the mission The nationalist government sets for itself And for the people of Taiwan is we're going to fight back to the mainland. We're going to drive out communism and reestablish A real legitimate Chinese state over all of China, including Taiwan I had never known this. It's one of the things I learned from Dr. Rigger Well, I had actually known that Taiwan had often been ruled by a party called the Nationalists What I'd assumed, of course, was that the nation in nationalists meant Taiwan The nation, the rulers of Taiwan were obsessed with was China They saw themselves as Chinese, deeply Chinese, as the true Chinese government, not the imposter one run by Mao and the people after him tragedy they were experiencing The feeling that something else should have happened, that it was all going to get fixed next year or the year after It's the kind of agony you only normally encounter in sports fans And what would happen next was even more interesting As the decades passed, the nationalists running Taiwan would live among the Taiwanese people People who had been their colonial subjects, people they had treated with violence and subjugation. proroximity would change both sides would change the shape of the government the economy The nationalists would not get what they wanted You'd get something that was maybe better. 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Su our show and check them out at HEXclad d. com forward slash search Make sure to let them know we sent you. This is generineally great cookware Welcome back to the show The story of how Taiwan became a democracy is long grradual We're going to watch it in Fast forward Essentially, at the beginning of our montage, you have nationalists from China running Taiwan. But as the decades pass and they fail to take back their mainland, What will happen is they will get old and they will die and it will have to be replaced And the nationalists can't go to mainland China and go get more colonial rulers. That's the country they're in exile from So over time, the nationalists start letting the Taiwanese people run for office Low level office at first. The democracy just keeps going with help from activists, with help from time, from the bottom up And by the nineteen nineties, Taiwan has a very different government from mainland China Two states, siblings separated by a schism growing more and more different as the years pass Sometimes you could watch the same idea take hold in China and Taiwan, but expressed in crucially different ways For instance, in China in the nineteen fifties, Mao enacted land reforms He decides that landlords are evil, has one to two million of them killed. and gives their land to poor farmers It's an atrocity poor farmers in the end also don't actually get to keep the land Taiwan also does land reform but a gentler, more interesting kind Taiwan confiscated land from landlords who owned above a certain amount? The process was much less insane The landlords compensated by the government We're also given shares in some big state owned companies rather than shooting them M's version In Taiwan, the idea was to absorb these landlords into the state industrial class. kind of work Land reform in Taiwan had a little bit of a capitalist flare to it because you had to pay for it and the price was very low. And the government gave farmers a lot of support to be successful in agriculture. And then the people whose land was appropriated were also paid. Again, not as much as they would have liked to have been enough that it wasn't like the same vibe as in the mainland where it was a violent appropriation of land. It's not somebody shows up at your house and says like you capitalist pig. It's a little closer to like eminent domain. Yes. Yeah. Eactly And one of the things they did was they paid some of the landlords, not only in cash, but also in shares in companies. So they're already thinking ahead to industrialization, right So that unleashed a huge explosion of agricultural productivity and A lot of rural families very quickly began to accumulate money And what are they going to spend their money on? They're going to spend their money on making a little workshop or a little factory. And the government also made sure that as littleittle manufacturing industries appeared They would have what they needed So The state took over the upstream industrial sector. so Petrochemicals so that you have plenty of plastic. And if you think about Taiwan's exports in the nineteen sixties, seventies, eighties, plastic is at the core. Yeah. Cement, steel, shipbuilding, logistics, transportation, energy All the things you need to be sure that if you can make a Barbie You can get her two the U. S.. for sale, right So all over Taiwan, people start in their backyards, in their garages, in little factory buildings that they built in the middle of a village. They start making every kind of consumer doodad you can imagine. And is this are a lot of these consumer dude ads? I'm curious about America's relationship to Taiwan during this period. Is it like we are the buyers of these consumer dudood ads? Like how are we positioned We are one hundred percent the buyers of these consumer doads, right? And what are the consumer doodads? What are we buying? What are they sending us? Yeah, right after World War two, your listeners may not remember, but for your grandparents, everything was made in Japan, made in Japan, made in Japan For my generation, nineteen seventies Everything was made in Taiwan. And there's a funny moment in Toy Story where Buzz Lightyear, who remember, thinks he is a real guy Yeah. You know, they're telling him, dude, you're just a toy caps open the cuff of his glove and it says it right there madeade in Taiwan. That's when he knows. I'm not a real person. I'm actually a toy like everybody else in this box So it was toys, it was apparel. it was our bicycles, it was You know, our writing implements the Hens and pencils, the little stationary objects, but also all kinds of things that go into electronics You know, a transistor radio and actually the whole transistor radio could be made in Taiwan by nineteen eighty, maybe even before Lots of little connectors and wire specialized components for electronic devices thingsings like Christmas decorations, you know, all of those kind of High volume low tech consumer goods Production shifted from Japan to Taiwan and Korea. especially in the seventies and eighties as Japan is upgrading into auto manufacturing. and a lot more heavy industry and high value equipment So the US, for its part, is happy to get all this stuff because after World War two, the US wanted industrial upgrading. We don't want to be making in the U. S. Yeah. We want to be making expensive things that have a high profit margin So we threw open our market to these Northeast Asian manufacturing partners so that they would do t the low end and our consumers would benefit from low prices, and our manufacturers would be sort of driven up the value chain So that's what Taiwan was doing And that was a very sort of Democratic Economic patered because they weren't forming huge companies Most of Taiwan's expxort oriented manufacturers were and continue to be quite small by global standards and very nimble and flexible. So you know, if we're no longer making skkipper or we're making canen this year, all those Barbie villages where they literally made all the Barbies and all their clothes and they put it all in packages and all their shoes and pocketbooks and everything You know, we just get new molds from mel and we immediately shift production from one thing to another. Got it. So that Enriched most Taiwanese. So if you think about Taiwan in the post war period people saw was their standard of living steadily rising. quality of life. going from being a pretty rugged agricultural society to By the nineteen nineties, they're beginning to be post industrial So then you have democracy that is also a really serious economy. What I understand also is like how does Taiwan then go from there to now? 'cause now it's not like, oh the place that makes all the barbies, it's like the industrial powerhouse that is producing the thing that the entire world economy is obsessed with. Like how does that happen? Right nineteen eighty seven was a big year in Taiwan The president was Zhang Kaik's son, Jiang Jinggua, and he made a couple of super consequential decisions. In Taiwan today, the Parliament passed a new national security law that paves the way for ending martial law next month Martial law has been in effect on Taiwan for thirty nine years now, and the new law will permit civilian trials and greater freedom of the press. On the political side, he decided to lift martial law, which was a major obstacle to democratization. But the other thing he did was he said We need to let people travel to the mainland because we've got all these Former soldiers and administrators, you know all these people who came here between forty five and forty nine And they have not seen their parents' graves. They have not seen their wives and children that they left because they thought they were coming back. We need to let them go back before It's too late. So they opened travel to mainland China So, you know, a lot of old men get on airplanes, they fly to Hong Kong, then they fly to mainland China. Well, they've got their sons and sons in law I'm carrying the luggage, That's how I imagine it And they're not there to see people's graves. What they see is Spectacular economic opportunity. This is China ten years into reform and opening. So Deng Xiaoping has told every local official You got to make GDP happen in your locality, right? Find ways to grow, findind ways to bring industry into your village And here are these Taiwanese guys. They own manufacturing businesses back in Taiwan and they're being approached at the airport. by local officials from Chinese villages who say I can give you land, I can give you a building. I can give you a workforce that will be well behaved and very low paid I will not make you pay taxes for the first many years that you're here. Wow. I will set everything up for you if you will open a factory here So between nineteen eighty seven and about nineteen ninety two Taiwan's traditional manufacturing. So all these barbies just decamp. to the mainland and they set up factories. A lot of them using the same equipment, you know, they send the machinery and they send the managers all over to the mainland and they start making the same thing at a tiny fraction of the cost We talk about Walmart and the Walmartization of the U.S economy a lot Yeah. And we think about, you know when China became the factory to the world And you know, all of a sudden, Walmart can sell you all this stuff. so super cheap. These are Taiwanese companies, in very large part, Taiwanese companies They were selling you the same thing yesterday and it was made in Taiwan and their cost of production was, you know, ten Now they're making it in mainland China. It's the same thing made on the same machine with all the same techniques. But now it's made in China and the cost is too And you know, something that really scared people in the nineteen nineties was what do we do now, right? Because if you outsource all of your manufacturing What's left for your domestic economy? Where are people going to find jobs? And the most incredible part of Taiwan's story is that afterfter the Low value, low tech manufacturing shifted off to China. There's this kind of empty bucket And the state aring again with private entrepreneurs and scientists filled the bucket And what they filled it with was high tech manufacturing So they basically say, look, we were in the business of Barbies for America, Barbies for the world. That's going to happen in China now What does it look like for the state to decide we're going to make, I guess what ends up being chips? Like how do they do it? One of the really important compponents of Taiwan's economic policy has always been a certain amount of state direction Also a lot of state support for research and development So they founded this thing called the Industrial Technology Research Institute, Ity And that's a huge incubator for technology companies to help Taiwanese scientists engineers and entrepreneurs figure out how they could identify good concepts in the tech space and bring them to market So there's a lot of government money in that sector and The goal is to spin off private companies So TSMC, Tawan's semiconductor Manufacturing Corporation, is the most famous of these. TSMC was basically the brainchild of Maorris Chang. I was born in nineteen thirty one into a Middle class. family in China And I liivved in China until I was eighteen years old when I moved to the United States A Taiwanese American, right? She had been educated as a youth in Taiwan, moved to the U. S. for higher education and then worked for Texas instruments. But then Taiwan beckoned And The offer was to be the president of the Industrial Technology Research Institute history in Taiwan He was enticed to come back to Taiwan by the opportunity to do something unprecedented which was to make a foundry for semiconductor chips that would not be doing the design, that would not be involved in Marketing, sales but would just be manufacturing the chips specialized in that part of the process for other companies like Intel provided the design We have No strength in reesearch and development V very little anyway. We had no trend in Circuit design. P of pizign We had little strength in sales and marketing. And we had almost no strength in intellectual property. The only possible strength I one ahead And even that was a potential A Obvious one was semiconductor manufacturing Of course, TSMC has become incredibly innovative. It's not waiting on anybody to tell it how to advance the technology in that business, but the idea of what they call a pure play foundry So the goal is just making the chips That was Moris Chang's idea and He was able to partner with the Taiwanese government to turn that into a business to actually build foundriies, to get orders and to become D favored source not just for one company But for all companies that wanted to design chips and have them built somewhere. You know, and it's also a very Taiwanese thing to do, right? to say, I don't need a brand. I don't need my company to be famous. I don't need for anybody to say, ooh, that's a TSMC chip in there I just need to get really, really good at doing something and selling a lot of it to customers who they can worry about the marketing and the branding and you know, like if If your CEO gets in trouble, then suddenly nobody wants to buy your stuff like I don't want to worry about any of that. I just want to make shits that are going to be great and everybody's going to want it. And that's actually a really Taiwanese kind of way to look at it. Because why? like what is the cultural belief underneath it? Just like like a culture that like less celebrates marketing and image and more celebrates quality I don't think it's sort of cultural . I think it's what Taiwanese manufacturers learned from being contract manufacturers for international brands in the early years of their export oriented manufacturing. So like I said you heard the brands I listed Adidas Schwin Matel None of these are Taiwanese, right? Right. We never heard of a Taiwanese brand until Aer, Aus, and giant bicycles So it wasn't something that Taiwanese manufacturers thought they could do or even felt was necessary because they were doing really well doing contract manufacturing, meaning selling to someone else. And so I think maybe Marars Chang's mind was available for that concept in a way that someone who came up at Texas Inruments or IBM theirir mind was not available for that It's like there was a different model of what a kind of industrial success could look like because that model had been proven out Yes, exactly. And like today, twenty twenty six, like I'm sitting in a room right now with a laptop which has inside of it a chip by TSMC. I have my iPhone, which has a chip by TSMC, the chips powering Quad, to ChS UT in G. all these things are made by TSMC. It is still the thing that kind of like I think other people understood before me feel bogled by it, that like, So much of the technological progress is all coming from chips made in this one tiny island. Like it's a very strange thing. Well, I'm going to make it worse for you because it's not just the chips that are made on this tiny island, right Those chips are part of Industrial ecosystem They don't just make semiconductors. They make everything that you need Maybe not quite everything, but they make mostly everything you need to make these chips. And they make a lot of things from the chips And they make a lot of things that support the deployment of the chips. For example Another company that Ive visited say started out making those metal slides that you put in kitchen drawers, you know, to make your drawers smooth. Yeah. And then they got really good at that. So they started making slides for Chemistry labs. and NASA kinds of places, you know, places where the drawers need to slide really smooth. Yeah. And then they looked around and they were like, all right, what else can we do? And they saw that data centers The huge arrays of chips that is they're all interconnected and they're all talking to each other in a GPU that they got to be able to come in and out because they have to be replaced and serviced. they have to be cooled because that's another whole problem with data centers, you know, is just the heat that that stuff creates. So I said, well, we can make the slides. So every single bored in every single array, in every single data center in the whole world to be on one of these sliding. you know Thankies And you know, like All the stuff is being made in Taiwan. and none of these businesses are going to be easily transferred or replicated someplace else because they're super integrated with one another. They're all right next to each other. They talk to each other every day And they operate at an incredibly high level of efficiency and quality And I mean this is what I wanted to ask you is like, why can't someone else presumably someone in the United States or in China, do what Taiwan does. What you're talking about is it's a story about people. It's like you have all this expertise, all these people who've been getting better and better and better at doing things alongside each other. And the things they know how to do, the sort of process knowledge they have is integrated with process knowledge that other people around them have And If you really wanted to prepare an American community to take over one of these ecosystems or to create an ecosystem that could mirror what happens in Taiwan You would need to start with pre K Why? becausecause the society is being educated from early childhood be able to fit into that industrial structure Recently I was in Taiwan and we were on a bus going between two places and I saw a huge industrial park under construction. So it was a huge building. and I thought, I bet you that's a TSMC fab. couldn't see the sign on it later, one of the other people on the bus said, yeah, that was the TSMC Fab under construction. But what I could see was the sign on the building under construction right next to it And what it is is a technical high school. Wait, because why? Because high school and industry are joined kids who go to that technical high school. So it's like a vocational school Yeah. they will finish high school basically with the training of a, you know, BS degree engineer at a lot of American universities And they will walk straight into TSMC and go to work and they will have been trained and educated not only to do what TSMC needs them to do today, but to be able to grow with the company over time So they may be technicians, but they are really smart and they are really good at way more than just, you know like Soldering two things together. So like what is cool about the American education system is that We treat Our students often for the most part, as people who get a lot of time to ultimately figure out what they're going to do as adults. but then you have like people like me who graduate in college with a degree in like semiotics or whatever, or dp out of college with a degree in semiotics. What you're saying is that the Diwons education system is like For a lot of people, we know what this country is doing really, really well right now and we're going to start pointing you at that and specializing you at that at a way earlier time horizon. because the United States Vocational school exists, but it's not aimed at highly highly lucrative jobs necessarily, but I'm imagining that chip manufacturing in Taiwan is a highly lucrative job. And you have people specializing earlier and there's sort of like social upside to that. Right. And they learned a lot of math in elementary school. That's how they can be in a position to move through this technical high school So yeah. And not everybody wants to work at TSMC But I think what I see in Taiwan, although my friends there complain all the time in the same way that my friends here complain all the time But what I see in Taiwan is that this kind of foundational industrial strength has provided sufficient prosperity for people who would like to have a graduate degree in semiotics or political science for that matter Can. Do that can make a living Whereas in a country without that kind of powerful industrial foundation It is very hard to sustain a lifestyle that gives people choice and freedom So that's the story of how Taiwan became an indispensable manufacturer of the chips powering the AI race. We're gonna take a short break when we come back What the world might look like if war breaks out It' after the happens This episode of Search Engine is brought you in part by Instacart Whenever I host a last minute summer hangout, my go to move is just opening the Instagram app. Suddenly, needing ingredients or mixers or quality snacks can be stressful, But Instacart enables delivery in as fast as thirty minutes to save the day You must be twenty one plus wor alcohol are available and please enjoy responsibly For me, I just really love the convenience that I can actually order the things I want from the stores I want with a shopper who really cares about getting the order right It gives me my time back. 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Welcome back to the show So I asked Shelly just to help me picture the future that right now everyone's trying to avoid the world where some kind of conflict shuts down Taiwan and TSMC, its big chip manufacturer, stops producing where suddenly, the rest of the world cannot source the chips that drive so much of our technology. What she painted was less an apocalypse, more of a prolonged global interruption, which reminded me slightly of the pandemic actually Removing the option of having TSMC make specialized chips for your business means that Either you got to change the product, which you could do, right? You know rightight now, Chinese companies that could they would do a lot better if they only had access to TSMC's most advanced chips are managing without it. They're doing things in a different way. It might be a little bit more cumbersome, take longer not have the same high efficiency, but you can do it. O you have to just charge more because you've got to find another supplier who is not going to have that high efficiency So I don't think it's that Taiwan's ships are irreplaceable in the sense that there's some kind of value or utility that they provide that cannot be achieved other ways but they are irreplaceable certain price point they are at least temporarily irreplaceable in the sense that you know, no one else is making what they're making. But no one else is making it because no one else could make it as inexpensively and with the same quality loim So it's not like fver that it's irreplaceable. It's just that we would all change a lot and like the pace of AI development. would probably slow down a lot And you know, not everybody would think that was a bad thing No. thoseose are the changes that I think would ensue if we lost access So if like the factories went dark tomorrow a month later or six months later, you would have the world as a recognizable thing. It's just the pace of technology would greatly slow and the technology that we had access to would probably be much more expensive Right. And I think what really scares people about the kind of conflict or events that would cause those factories to go dark is not just the loss of their output the secondary effects on the global economy. So, you know, where is the growth in the global economy? It's in tech. It's in specifically the whole network of products and services surrounding artificial intelligence. So if we pull the rug out from under artificial intelligence What's the growth engine? Right, Right. Like people talk about how the U.S economy is basically like a recession tied to the balloon of AI. and that's also in many ways true globally. And so you have this this small place with an even smaller group of people with this very particular expertise, and they're just important in a way that would have been almost unfathomable years ago. Like it's just the degree to which both the global economy is very connected, but also The technology story is one technology story and the financial markets are that technology story. It's just like you have a kind of like concentrated vulnerability that is just kind of unprecedented. Right, right. And you know, it's at the moment, converging with another huge underappreciated vulnerability, which is the strait of Hormuz. Wh Why are those things converging? Well, I think it's I truly believe that the sort of Immediate convergence is coincidental, right Taiwan was going to be where it was. and then The U. S. decided to go to war with Iran, not really anticipating that Iran had the power to close the Strait of Hormuz plunge the world into an energy related recession. You know, I think we always talk about interdependence and people argue, scholars argue. Does globalization interdependence to these forces promote peace or not? becausecause the theory goes that they do And I think what we see is if we ignore peace We will feel the effect of having allowed ourselves to become so interdependent So they don't prevent conflict. The fact that everybody depends on the straight of hormos for their energy didn't Stop Trump from goingo to war? We are all paying a much higher price then we would be paying for this war. This dimension were not there And I think it's similar with respect to Taiwan I do think Taiwan's importance in the global economy is a factor in China's restraint so far. in taking military action against Taiwan, But that doesn't mean it's going to work forever. But when and if something happens in the Taiwan Strait, we will all feel the effects of that interdependence much more strongly than we would if We had not created these tech supply chains that chase quality and price across every global boundary And so for Taiwan right now, the fact of interdependence, it's like Temporarily, the best way to understand it is that in the short term, it is making Taiwan safer. It is not a kind of permanent shield, especially in a world where America is run by someone who seems to kind of bulldoze through what was the status quo in some part based on people's understanding of the consequences of breaking some of these agreements I think what I am learning as I get older is that nothing is permanent. And that what we are trying to do in international relations, is to maintained Kind of dynamic stability as long as possible while larger forces or moving the ground underneath us So I've always tried to impress upon my students in my international relations classes the bias of a policymaker in the international realm is always to do nothing, to do as little as possible to just prevent things from getting worse so unsatisfying and frustrating It is the wisdom I the international policymaker to understand that almost anything you do will have unintended consequences that will make the situation worse. So you just want to do as little as you can to hold things in kind of dynamic tension So I think the last thing I'm hoping to get is a picture of that dynamic tension as it exists right now, like this like not quite frozen status quo. what is What's the temperature in Taiwan right now towards China I think the essence of the disagreement. between