I Invented My Own Utility Certainty Anchor Theory, and Using a Game-Theory Matrix I Prove Mathematically: The Collapse of China's Technological Innovation Is Nobody's Fault — Swap in a Different Batch of Elites and the Outcome Is Still Locked In; the Soviet N1 Rocket's Four Consecutive Explosions, Hanxin-1 Sanding Off the Logo to Swindle Hundreds of Millions — It's All the Same Nash Equilibrium

The host has created a "Utility Deterministic Anchoring Theory" and uses a game theory payoff matrix to prove from a mathematical foundation that the collapse of technological innovation under an authoritarian regime is an inevitable outcome of the system's design. Even if a different group of elites were in charge, the outcome would still be locked by a Nash equilibrium into "packaging fraud" and "turning a blind eye to waste." Whether it is the collapse of Soviet computing, the explosion of the N1 rocket, or the Hanxin No. 1 scam in China, all are the repeated operation of this mathematical formula.

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Observe things as they are, and reject fragmented cognition. Recently, Cloud has banned a large number of IP addresses in the Hangzhou area.

They say it's because Alibaba opened 24,000 to 25,000 accounts to frantically distill the Qwen model, which led to a very interesting situation where regional IPs became the basis for account bans. Actually, has everyone thought about a question? Why is it that China's basic science never takes off no matter how they try, and no matter how much fucking money is invested, it's useless. Today, let's talk about this again. Today, I'm not just talking; I'm going to prove why the CCP cannot produce basic science. Now, this technological trend has become the CCP's standard national policy for bragging. Today, I will chat with everyone about why it is basically very difficult for the CCP to produce original technological innovation. This is not just a problem for the CCP; it is a flaw inherent in authoritarian regimes. Moreover, this is not a problem of accidental execution, nor is it a problem that China lacks scientific talent, because this matter has been an inevitability from the very beginning. I can.

To prove this, I will now pull out the truly useful theoretical foundation for everyone. What do I call this thing? I call it the Deterministic Anchoring Theory. This is an interesting thing I created myself! Moreover, I want to use a game theory payoff matrix to prove to everyone from the mathematical bottom, the very bottom, that this kind of collapse is not anyone's fault. It's not that replacing a corrupt person or finding a more brilliant scientist would solve the problem, but rather that the entire system's settings locked the whole outcome from the very first step. In other words, if you replaced everyone inside with people of high moral character or superior intelligence, as long as the rules remained unchanged, they would inevitably end up at the same rotten conclusion. I will try my best to explain this theory to everyone in plain language. After listening, when you look at those bullshit news stories about "choke points," "subsidy fraud," and "unfinished projects," you will have a sense of enlightenment, because at that time you will discover that behind them is the same.

A mathematical formula running repeatedly. This entire theory unfolds around an extremely rigorous causal chain. Everyone, please remember this chain first: anchoring the source of deterministic utility will inevitably lead to the distortion of game relationships within the organization, and will inevitably lead to a path of choosing bad money over good. These three steps are progressive and irreversible. I will prove it to everyone step by step. Let's start with the first step, which is the master switch of the entire theory, or the premise of the entire theory, called the source of deterministic utility. So, in order to measure the bullshit practices of the CCP, let's first find an environment that is absolutely opposite to the CCP to use as a ruler. What is this ruler? This ruler is the market. What is a normal market economy essentially? It is a huge system of uncertainty. If a company wants to survive in it, if it wants to obtain utility from this market, what must this company do? This company must.

To establish this stability upon uncertainty, in other words, you must cling tightly to the things with the highest public value. For any product, the features should be the same no matter who uses it, and it must be stable. If these two conditions need to be met, then the two most basic things are required. One is objective physical laws, which means hard technology; the other is what the true market preferences are—namely, what do users actually want? In this kind of environment, what is the market to an enterprise? It is a mine waiting to be excavated forever, and furthermore, the market in the eyes of enterprises is an infinitely incremental space; otherwise, they couldn't possibly make massive investments. In other words, within a market environment, innovation is the only tool for enterprises to cope with uncertainty and survive. If you do not innovate, you die. However, once you enter a centralized or authoritarian system, the nature of this system instantly reverses. Your certainty no longer comes from the market, but from two entirely new things, the first of which is politics.

The fiscal resources of the government and the acceptance and preferences of government power—the consequences of this reversal are extremely destructive. In other words, when your technological research and development no longer targets conquering the market, but instead anchors its effects on obtaining subsidies or engaging in political exemption of liability, then the resources of the entire system transform from that infinite increment of the market into a known and finite stock. Just feel how fundamental this difference is. In the market, the pie is made larger by yourself; the more awesome your innovation is, the fucking better the features are, the bigger the pancake you roll out, and the more everyone gets to share. Therefore, it encourages you to take risks and explore the unknown. This is a positive-sum game. But within the system of the the Chinese Communist Party (CCP), or in all centralized societies, everyone anchors themselves to fiscal resources. Thus, a psychological mechanism of fixed-sum game is established: fiscal resources are a fixed quantity, the pie is just that big, and it is a fixed slice cut out for you from above.

A single piece, and moreover, if you take one more bite, someone else eats one less bite. Therefore, who can get how much, and who can get how much—this does not depend on how solid your technology is, but on what? It depends on how close you are to the power that distributes the money. This leads to the second step, which is the distortion of game relationships. Just imagine, when everyone thinks they are facing a definite, finite pie, what will the survival strategy of those people inside the organization—such as scientists, technocrats, or experts responsible for acceptance inspection—become? It will instantly degenerate from positive-sum cooperation into what? It degenerates into zero-sum distribution of spoils. Because in a real market, you will be ruthlessly eliminated if you fake things. But in this system anchored to the will of power, truly engaging in hard technology has extremely high costs, long cycles, and high risks of failure. In the payoff matrix of the game, this is definitely an inferior strategy. Conversely, what do technocrats want? They want short-term visible KPIs to do what? To fucking get promoted! These scientists also need funding to maintain their status, the acceptance experts also need money to consolidate human connections, consolidate circles, and grasp this power. Then, the interests of all parties become highly consistent in the face of this certain prey of CCP fiscal allocation.

Where exactly will this kind of game be locked into? This is the main highlight today; I am going to write it directly into a standard non-cooperative game model. There are two players in this model. The first group of players is enterprises or scientists, meaning they are the ones receiving the money. They have two choices: either engage in genuine research and development facing the market, or engage in packaging fraud facing administrative resources. The second player is the payer—the bureaucrats or acceptance inspection personnel. They also have two choices: either strict review, rejecting fault tolerance; or turning a blind eye and letting things pass to pursue short-term political achievements. In other words, both groups of players each have two choices, which constitutes a two-by-two payoff matrix with a total of four outcomes. Let's look at this, everyone. I will first explain the first few key variables in plain language, and then everyone will understand. The capital letter S is the certain huge fiscal subsidy allocated by the system, which is the prey everyone is fighting for.

E is the expected return of truly engaging in technology in the real market. Note that this thing is extremely uncertain in the short term and very likely even negative, because true innovation is a narrow escape from death. subscript H is the high cost of truly engaging in hard technology, while subscript L is packaging fraud—the cost of such superficial show is extremely low, and the relationship between the two is also very certain, namely that is much greater than because real R&D really burns money while fraud costs almost nothing. is the bureaucrat turning a blind eye and letting things pass, completing the paper KPIs on time, and obtaining the certain political promotion return, while is the bureaucrat strictly reviewing, waiting hard for true breakthroughs to get low returns. There is also a restriction here, which is that their tenure cannot be infinite either; this true breakthrough very well might not have happened yet by the time they fucking step down, so is much greater than . Finally, the capital D is the project fraud being exposed, and the bureaucrat having to bear the extremely severe political consequences.

What about capital P? That refers to the fine when a company's fraud is investigated and punished. Alright, now that the variables are explained, I have marked all four of these moths on the chart. In the parentheses, the front part represents the enterprise's payoff, and the back part represents the bureaucrat's payoff. Now, it is a moment to witness a miracle. Hey, we are going to solve this game and see which path it is strictly locked into. This method of solving is called finding a Nash equilibrium in game theory, which sounds quite mysterious. In fact, it is just two people guessing each other, and in the end, neither wants to break the deadlock. Let's first look at the bureaucrat's side. Thinking from the bureaucrat's perspective, hey, if I conduct a strict review, what happens if the enterprise commits fraud or innovation fails? Then I am forced to uncover the lid myself, and furthermore, I will bear the extremely heavy political collective punishment, which is negative D. But if you turn a blind eye and let it pass, regardless of whether the enterprise is genuinely working or committing fraud, hey, you can ensure the grand bookkeeping targets are met in the short term, steadily securing the political achievement VH, because VH.

is both greater than vl and greater than negative d, so the conclusion is very clear: turning a blind eye is a strictly dominant strategy for the bureaucrat mathematically. What is a strict dominant strategy? It means no matter what move the other side makes, choosing this is always the most cost-effective. So what is the bureaucrat's strategy? It is to turn a blind eye and let it pass without any hesitation. Next, let's look at the enterprise. The enterprise is smart; it has long calculated that the bureaucrat will inevitably let it pass, hey, and maybe even share the loot together. Therefore, its choice is suddenly simplified; it only needs to compare two numbers. One is the utility gained from packaging and fraud, which is the subsidy s minus the extremely low cost of fraud cl; the other is what can be gained from genuine R&D, which is the market return e minus the high R&D cost ch, plus the subsidy s. As we just said, this R&D cost ch is extremely high, the short-term e is approximately zero, and cl is extremely low. When you plug these numbers in, mathematically it inevitably results in.

the payoff of taking the fraud path being firmly higher than genuine R&D, so the enterprise's only rational choice is to package fraud. Some friends might find these symbols a bit overwhelming, so I will give you a set of concrete numbers, and you will understand immediately. Suppose the subsidy S from the Chinese Communist Party is, say, one billion. The cost CH for doing real hard tech is at least eight billion. Hey, just an example, the short-term market return rate is almost zero, while the cost CL for faking a superficial product only requires, say, ten million. Now let's calculate the enterprise's ledger: taking the fraud path, what it gets is one billion minus ten million, with a net profit of about nine hundred and ninety million, hey, net gain. On the other hand, taking the genuine R&D path, what it gets is zero minus eight billion, plus the eight billion subsidy, leaving only two hundred million, and what else? It still has to worry and be terrified that this thing won't come out. Nine hundred and ninety million versus two hundred million, if you were a business owner, which path would you choose? There is no need to hesitate at all. Let's calculate the bureaucrat's ledger as well: if you turn a blind eye and let it pass, the KPI above can be met on time, and promotion can also be steadily secured. If you do strict review, hey, in case a project explodes, what you ruin is your own future, and this fucking job also offends people. If this project doesn't explode, another one will, and you'll get screwed by others. So of course they also close their eyes and stamp. So you see, once you put these numbers out, you don't even hesitate; this is inevitable. It really has nothing to do with Brother Shan himself, nor does it have anything to do with technology; it is purely calculated out. Thus, two players meet with their respective optimal choices, and the unique Nash equilibrium of this game is firmly locked onto the grid of packaged fraud and turning a blind eye. What does this mean? It means this outcome is not about moral corruption, nor is it about having a few bad guys; rather, under this set of rules, every rational person calculating to the end can only arrive at this grid, and no one can jump out.

This perfectly explains from the lowest layer of mathematics the famous Gresham's Law in economics, which is bad money drives out good. So why does this set of routines repeatedly play out in the authoritarian sci-tech sector? In fact, the reason is very simple: when this system uses administrative endorsement of the same face value—that is, that fixed subsidy S—to simultaneously reward high-risk genuine innovation and low-quality counterfeits, that superficial product with extremely low actual cost—namely bad money—will inevitably win big in the game, and it will completely wipe out the down-to-earth, isolated faction doing R&D, which is good money. There is a point here that is very counter-intuitive: the worst part of this mechanism is not that it raises a bunch of scammers, but that it systematically punishes honest people. For example, a scientist who actually has some pursuits and really wants to achieve something will find that because they cannot produce results in the short term nor report pretty data, they cannot get funding. Not only do they not get funding, but they also get marginalized by the circle. In the end, they either change careers or wake up. One day, hey, I get it, and I'm forced to join the ranks of fraud. Thus, in the entire ecosystem, truly capable and idealistic people are screened out batch by batch. What kind of trash is left behind? The most rubbish, best at packaging, and best at rent-seeking. This is the most fatal part of Gresham's Law. It is not a one-time thing; it is a system that continuously refines and gets worse with each screening.

Well, I've finished explaining my theory and the mathematical proof, and you might still find it a bit abstract. That's fine. Next, we will use real history to verify the predictions of this matrix one by one. Let's look at the Soviet Union first; it is simply the most perfect natural experimental field for this mechanism. I don't know if you have heard of a Soviet computer project called the ES EVM project. This project was launched around the 1950s and 1960s, and don't underestimate it. After World War II, the Soviet Union brought back a group of scientists and equipment from Germany. At that time, Soviet products were actually not bad and were once on par with the West. However, by 1969, the Ministry of Radio Industry, which controlled resource allocation—the Soviet Union had all kinds of ministries, and China learned from them, like the Ministry of Foreign Economic Relations and Trade, all that stuff—what was the certainty anchor for these bureaucrats? It was the KPI of completing mass production of computers within the Eighth Five-Year Plan, while also avoiding political accountability for failed technical exploration. Under this anchor, a game between bureaucrats and local scientists unfolded, just as we discussed earlier. At first, these scientists were quite naive and wanted to pursue independence in the underlying framework. But what did the highly uncertain bureaucrats want? They craved short-term political achievements with absolute safety; that was the high-certainty outcome, no suspense there. These fucking bureaucrats in the Communist Party of the Soviet Union completely suppressed the scientific community and chose the path with the highest certainty. How did they do it? These guys, through KGB theft and smuggling, fully reverse-engineered and plagiarized the American IBM 360 product. Once they copied it, these bureaucrats over-fulfilled the production plan of tens of thousands of units, and the political effect was maximized. But what was the cost? The cost was that domestic hardware R&D entered a state of permanent stagnation. When the PC era arrived, the entire Soviet computer industry simply vanished into thin air. This kind of thing was fucking commonplace in the Soviet Union. Then there's the N1 moon rocket, which is a violent version of the highest political power directly intervening. At that time, the anchor for these fucking bureaucrats in the Communist Party of the Soviet Union was rigid to the point of death. Why was it extremely rigid? These fucking bureaucrats in the Communist Party of the Soviet Union set a goal that was truly baffling: they had to land on the moon before the American Apollo mission. This was a political deadline that overrode everything else. This N1 rocket had 30 engines. If you followed objective physical laws, you would have to spend at least several years on R&D and spend huge sums of money to build a giant test stand for static ground ignition. But the political deadline was right there. If they built that test stand, it would mean absolute political failure because you would have wasted time and ended up after the fucking Apollo mission. Consequently, the Soviet engineering team was forced into a dead end and chose the most extreme path in the game: skipping the ground test firing, concealing the serious problems discovered, and pushing an unverified scientific blind box directly onto the launch pad. What did they get in exchange? They passed politically. But on November 23, 1972, a chain reaction of explosions occurred 90 seconds after the rocket lifted off, and it was four launches and four failures. The dream of landing on the moon was completely shattered.

After looking at the Soviet Union, you might think, well, that was all about the planned economy decades ago. Don't be so sure; isn't the CCP picking up right where they left off? I won't even bother digging up old history; just look at modern China, and what do you find? Even though the tools have changed to things like industrial funds or high subsidies—which are just a modern financial veneer—the game mechanism, where the power of resource allocation remains highly concentrated, has not only failed to change but has evolved into an even more blatant rent-seeking network. And it's not like it only became this way in the era of that fucking idiot Xi Jinping; it has always been this shitty. Even around the year 2000, at the peak of reform and opening up and the highest degree of marketization, it was the same. You've all heard of the Hanxin No. 1 incident, right? That was in 2003, and it was practically a live performance of this game matrix. In fact, the CCP had already started tinkering with chips back then and allocated 110 million yuan in special funding. Around the year 2000, that was truly a massive sum of money. At that time, the average monthly wage was only a few hundred yuan; it was definitely a huge fortune. What is this 110 million? It is a certain prey that can be obtained without market testing, which is the 'S' held up in that matrix. The most brilliant part of this game, or rather the part that played out exactly according to the script, was that the experts or the acceptance committee members involved in the appraisal were by no means incompetent; they were the top authorities in China at the time, including the Dean of the Institute of Microelectronics at Peking University, the head of the 863 Program Integrated Circuit Expert Group, academicians from the Chinese Academy of Sciences, and academicians from the Chinese Academy of Engineering—they were all in on it. And what happened to this group of people? They collectively went blind. Because once this certain sum of money served as an anchor, it was essentially already in a zero-sum game. If you were to expose the scam, the consequence would be that you would definitely offend all parties. If you were to smash this big cake, it would be a purely negative-sum game. If you were to blow the whistle, you probably wouldn't get the money, and you'd be finished off by others. But if you chose to turn a blind eye and give a high evaluation? Well, then everyone could share the spoils, yourself included, and enjoy this feast of plunder. This is the Nash equilibrium where 'I'm good, you're good, everyone is good,' which is exactly the same as the 'close your eyes and release the water' scenario derived from our matrix. And who was the enterprise side? It was Chen Jin from Shanghai Jiao Tong University. He chose the path with the lowest cost and highest utility, which is the 'faking' held up in that matrix. The work he did was also very crude, not refined at all. The fake he made was also fucking shoddily produced. How did he do it? He directly hired a group of people to take fine sandpaper and grind off the original manufacturer logos from Motorola and Freescale chips they had bought, then reprinted the words 'Hanxin No. 1' on them. Isn't ZTE doing the same thing now? Chen Jin can be considered their predecessor. Relying on this extremely shoddy disguise, plus the endorsement of these blind academicians, Hanxin successfully swindled over 100 million in funding and countless political honors. Everyone look at this absurd operation of using sandpaper to grind chips; it is the most precise realization of that mathematical equilibrium. The subsequent scripts are all recent, and everyone is familiar with them—things like new energy subsidy fraud, or using zombie production capacity to assemble industrial garbage, and the most famous one, the Big Fund for semiconductors; aren't they all the same script?

Well, when this causal chain begins to continuously loop, what is the ultimate cycle for a production line that heavily relies on an internal abundance of resources from a certain type of household? It inevitably ends up treating the common people at the bottom as another deterministic source of fiscal revenue. To put it bluntly, it is the weaponization of human beings, while externally it runs into real technological blockades. Squeezed from both sides, the ultimate collapse of the system will follow a three-stage process. The first stage is called the period of prosperity illusion, which can also be called the carnival of utility arbitrage. What is the most symbolic action of this stage? It is the massive flooding of funds by the authoritarian regime. How will enterprises act during this period? Various levels within the system will rapidly produce a large number of patents through reverse engineering, data falsification, and mutual endorsement, and then the optical machinery department will create a so-called self-developed product with you. Back when the massive semiconductor fund was set up, countless shell semiconductor companies popped up overnight. When building cars, there was also a huge crowd of so-called new car-making forces, just dropping out of nowhere like fucking magic. So what will you see? That is, all the surface indicators are completely glowing red. But you need to understand that this is a false prosperity created by overdrawing fiscal reserves. The second stage is the atrophy of the ecosystem, the fracture of the lower classes, and the complete collapse of fission. As the game of reserve allocation solidifies, innovators who genuinely grind away at the bottom-layer architecture will be ruthlessly marginalized or even directly eliminated. Where has the concentration of resources gone? It has gone into the hands of those who are good at institutional arbitrage. Then the entire system will completely lose its basic ability to independently perceive cutting-edge technology, and the local native technology ecosystem will suffer an irreversible death, which is also the end that the Soviet Union met. The third stage is the disappearance of the deterministic anchor and an avalanche-like collapse. What kind of period is this? For example, when Western society imposes a severe technological decoupling on the Chinese Communist Party, or hits you with the Entity List and export controls, it will cut off all inputs of underlying technologies. At this point, if the internal economy continues to decline and the fiscal revenue begins to gradually dry up, what will happen? When they can no longer afford to feed that massive subsidy funding pool, the deterministic anchor that supports everything will completely disappear. What to do at this time? Organizations that have long been accustomed to the game of dividing the spoils will instantly fall apart, just like a massive debt explosion. For example, the 200 billion bankruptcy case of Tsinghua Unigroup, the endless corruption of the big semiconductor fund, and then the Chinese Communist Party will also launch a brutal rectification storm to shift the blame, meaning that all those fund executives fucking went down together, didn't they? This is not even the most important thing; what is the most important? It is that after the Chinese Communist Party burned through several generations of wealth accumulation, not only did you not produce a fucking thing, but what else did you destroy? You destroyed the entire technology ecosystem. By then, they will keep putting a stranglehold on you, putting a stranglehold on you, mainly because the fucking Chinese Communist Party still loves to act cheap; when they don't strangle you, you fucking howl like crazy.

So let's look at where the true effectiveness of the utility-deterministic-anchor theory lies. It tells you that the authoritarian system's intervention in technological innovation was already doomed to failure right from the starting point of the micro-game. This is not poor execution; this is dictated by the rules. As long as resource allocation is still monopolized by the power of the Chinese Communist Party—as long as this monopoly is not broken for a single day—and as long as the deterministic returns led by those fucking idiots at Galaxy remain vastly greater than the uncertain rewards of trial and error facing the market, then things like the sandpaper of Hanxin, some empty shell companies of GMS, and the serial massive explosions of the N1 rocket will be locked inside a system forever, repeating in a cycle over and over again. Let's make it even clearer: in this closed-loop zero-sum game, how many people actually want to accomplish something? What is the optimal solution? It is how to use the most realistic-looking facade to exchange for utility constituted by power, right? This also explains why there is simply no one in those fucking state-owned enterprises who genuinely wants to do things, because they will make it impossible for you to do anything, and there is also fucking backstabbing and infighting inside state-owned enterprises. Why? Because it is still a deterministic utility anchor, and how do resources flow within state-owned enterprises? Resources are still allocated downward according to hierarchy, and what every level faces is also what? It is the inventory game under deterministic utility, and in the end, it gets firmly pinned to the ground by the Nash equilibrium.

In fact, this also triggers a very profound question. Hey, for example, if you are a manager, hey, you have your career, then do your subordinate employees take the market as their anchor, or do they take you, the boss, as their anchor? This is the question we truly need to ponder. Alright, that's all for the broadcast with everyone today. If you like my program, please click the bell below. If you want to support me, you can join the membership channel. The membership channel features four deep-dive programs every month. Welcome to join the hardcore crew. See you in the next program.