um … er … don’t go there … please …

This isn’t a politcal blog, and this isn’t a political post. This is a blog about HPC, and the business of HPC. Which is global. Which means that HPC is impacted by political winds as surely as the political winds themselves blow.

Most of the time we can ignore it. Some of the time, bad ideas emerge. John West at InsideHPC.com pointed out some of the rhetoric circling about the massive spending bill under consideration in the US government. I for one would welcome a massive influx of spending on HPC, but hey, as we are an HPC solutions provider, I have no problem admitting our bias.

I think the US needs more HPC. As does the rest of the world, and we are happy to help make this so.

About the only things that could derail this would be some really poorly thought out policies that effectively cut off our markets from us by making our exporting to them, simply too high a price to effectively win business in. And yes, to answer your question, something like 33% of our business is in exports.

Bad policies would be protectionist policies, and policies that increase our costs with higher taxes. Protectionist policies are anti-competitive in nature, and seek to protect domestic companies against competition from foreign companies. Higher taxes seek to increase government inbound revenue at the expense of us spending this money.

Protectionist policies are always reciprocated on the foreign soil. They are well known as failures, and often lead to economic disaster themselves. Smoot-Hawley was one such example. I picked it for a juxtapositional reason. Quoting Wikipedia on this (other sources confirm this, so don’t get hung up on Wikipedia being quoted)

In the United States 1,028 economists signed a petition against this legislation, and after it was passed, many countries retaliated with their own increased tariffs on U.S. goods, and American exports and imports plunged by more than half. In the opinion of some economists, the Smoot-Hawley Act was a catalyst for the severe reduction in U.S.-European trade from its high in 1929 to its depressed levels of 1932 that accompanied the start of the Great Depression.

Other authors suggest that this was one of the two primary catalysts for the recession starting in 1929 turning into a depression after a massive speculation bubble.

Sounds familiar … doesn’t it …

The other policy that appears to be under more or less universal agreement as being culpable in the intensity and duration of the financial quagmire of 1929-1940 was a massive tax increase.

Coupled with capital being hard to get, not freely flowing, effectively cutting off our exports by protecting domestic companies, and increasing taxes on people and companies … we have a toxic mixture which isn’t going to do any of us in HPC any good.

Simply put, if we start making our imports more expensive, our exports are going to be more expensive, which will kill off markets for HPC for domestic companies. We increase our taxes, say by repealing tax cuts or simply letting them expire, then that is money that could have been spent by the private sector (e.g. flow of capital) which will not be spent by the private sector as it will be given to the government.

The bill before congress has a “Buy American” requirement that appears to be a stand-in for Smoot-Hawley, and the new administration is looking at either letting taxes rise after allowing tax cuts to expire, or simply raising taxes.

I guess we haven’t taken George Santayana’s maxim to heart.

Those who cannot learn from history are doomed to repeat it.

Please … lets not repeat that history. Ever.

It will be murder on HPC companies, and pretty much destroy HPC within the US as it will destroy the market for HPC consumers within the US by making their own exports non-competitive, as well as the HPC exports. It will reduce spending by companies/people who might otherwise spend on HPC and other enabling technologies that help them optimize products, reduce costs, increase competitiveness.

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