The so-called “smart alecks” of recent years

City A builds solar panels, and so does City B. City A makes cars, and City B does too. So what does City B do if it lacks a competitive advantage? Pretty simple—crude but effective: subsidize the hell out of it. Where does that money come from? Often from transfers from City A. Armed with subsidies siphoned from City A, City B goes head-to-head in a price war with City A. The end result? Nobody’s making any money.

Now consider a company that’s already become the global monopoly in its industry. It could enjoy a 60% net profit margin, yet it deliberately cuts its own throat and voluntarily slashes its net profit down to 3%. Why on earth? There’s only one reason: the company worries that other domestic rivals will enter the market, so it intentionally makes the industry unprofitable for everyone else, killing off interest entirely. That way, it secures its dominant scale and pats itself on the back, convinced it’s being brilliantly clever.

Meanwhile, the performance metrics guiding local governments are shifting. What were the old targets? GDP. What are the new ones? Welfare.

In a nutshell: throw money at it. The old playbook was low income, low prices. The new one is high income, high prices.