This was quite a switch! At the founding of the American republic, the US refused to extend patent protection to foreign inventors. The inventions of foreigners would be fair game for Americans, who could follow their recipes without paying a cent, and so improve the productivity of the new nation without paying rent to old empires over the sea.

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It was only once America found itself *exporting* as much as it *imported* that it saw fit to recognize the prerogatives of foreign inventors, as part of reciprocal agreements that required foreigners to seek permission and pay royalties to American patent-holders.

But by the end of the 20th Century, America's ruling class was no longer interested in exporting things; they wanted to export *ideas*, and receive *things* in return.

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You can see why: America has a limited supply of things, but there's an infinite supply of ideas (in theory, anyway).

There was one problem: why wouldn't the poor-but-striving nations abroad copy the American Method for successful industrialization? If ignoring Europeans' patents allowed America to become the richest and most powerful nation in the world, why wouldn't, say, China just copy all that American "IP"?

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If seizing foreigners' inventions without permission was good enough for Thomas Jefferson, why not Jiang Zemin?

America solved this problem with the promise of "free trade." The World Trade Organization divided the world into two blocs: countries that could trade with one another without paying tariffs, and the rabble without who had to navigate a complex O(n^2) problem of different tariff schedules between every pair of nations.

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To join the WTO club, countries had to sign up to a side-treaty called the Trade-Related Aspects of Intellectual Property Rights (TRIPS). Under the TRIPS, the Jeffersonian plan for industrialization (taking foreigners' ideas without permission) was declared a one-off, a scheme only the US got to try and no other country could benefit from.

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For China to join the WTO and gain tariff-free access to the world's markets, it would have to agree to respect foreign patents, copyrights, trademarks and other "IP."

We know the story of what followed over the next quarter-century: China became the world's factory, and became so structurally important that even if it violated its obligations under the TRIPS, "stealing the IP" of rich nations, no one could afford to close their borders to Chinese imports.

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Every country except China had forgotten how to make things.

But this isn't the whole story - it's not even the most important part of it. In his new book *Breakneck*, Dan Wang (a Chinese-born Canadian who has lived extensively in Silicon Valley and in China) devotes a key chapter to "process knowledge":

danwang.co/breakneck/

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Breakneck: China's Quest to Engineer the Future | Dan Wang

Announcing my book; whalelore; Austrian Catholicism; the legacy of Moses and Rickover; Yunnan; influencer culture; how historians work.

^{Dan Wang}

What's "process knowledge"? It's all the intangible knowledge that *workers* acquire as they produce goods, combined with the knowledge that their managers acquire from overseeing that labor. The Germans call it "Fingerspitzengefühl" ("fingertip-feeling"), like the sense of having a ball balanced on your fingertips, and knowing exactly which way it will tip as you tilt your hand this way or that.

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Wang's book is big and complicated, and I haven't yet finished it. There's plenty I disagree with Wang about - I think he overstates the role of proceduralism in slowing down American progress and understates the role monopoly and oligarchy play in corrupting the rule of law. But the chapter on process knowledge is revelatory. Don't take my word for it: read Henry Farrell, who says that "[process knowledge] is the message of Dan Wang's new book":

programmablemutter.com/p/proce…

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Process knowledge is crucial to economic development

The message of Dan Wang's new book.

^{Henry Farrell (Programmable Mutter)}

And Dan Davies, who uses the example of the UK's iconic Brompton bikes to explain the importance of process knowledge:

backofmind.substack.com/p/the-…

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the brompton-ness of it all

process knowledge and such like

^{Dan Davies (Dan Davies - "Back of Mind")}

Process knowledge is everything from "Here's how to decant feedstock into this gadget so it doesn't jam," to "here's how to adjust the flow of this precursor on humid days to account for the changes in viscosity" to "if you can't get the normal tech to show up and calibrate the part, here's the phone number of the guy who retired last year and will do it for time-and-a-half."

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It can also be decidedly high-tech. A couple years ago, the legendary hardware hacker Andrew "bunnie" Huang explained to me his skepticism about the CHIPS Act's goal of onshoring the most advanced (4-5nm) chips.

Bunnie laid out the process by which these chips are etched: first you need to make the correct wavelength of light for the nanolithography machine.

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Stage one of that is spraying droplets of molten tin into an evacuated chamber, where each droplet is tracked by a computer vision system that targets them to be hit with a highly specialized laser that smashes each droplet into a precise coin shape. Then, a second kind of extremely esoteric laser evaporates each of these little tin coins to make a specific kind of tin vapor that can be used to generate the right wavelength of light.

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This light is played over two wafers on reciprocating armatures; each wafer needs to be *precisely* (as in nanograms/nanometers) the same dimensions and weight, otherwise the platters they slide back and forth on will get out of balance and the wafers will be spoiled .

This process is so esoteric, and has so many figurative and literal moving parts, that it needs to be closely overseen and continuously adjusted by someone with a PhD in electrical engineering.

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That overseer needs to wear a clean-room suit, and they have to work an 8-hour shift without a bathroom, food or water break (because getting out of the suit means using an airlock means shutting down the system means delays and wastage).

That PhD EENG is making $50k/year. Bunnie's topline explanation for the likely failure of the CHIPS Act is this is a process that could only be successfully executed in a country "with an amazing educational system and a terrible passport."

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For bunnie, the extensive educational subsidies that produced Taiwan's legion of skilled electrical engineers and the global system that denied them the opportunity to emigrate to higher-wage zones were the root of the country's global dominance in advanced chip manufacture.

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I have no doubt that this is true, but I think it's incomplete. What bunnie is describing isn't merely the expertise imparted by attaining a PhD in electrical engineering - it's the *process knowledge* built up by generations of chip experts who debugged generations of systems that preceded the current tin-vaporizing Rube Goldberg machines.

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