This is story of two parallel universes. Over in the western one, neoliberal capitalism rules. In the other – the Chinese universe – a different system presides. In both universes, government concern over the growing power of giant tech companies has been growing for a while, but there the similarities end.
In the west, governments and legislatures were asleep at the wheel as the tech companies zoomed along their rapid growth paths. But in the past few years, democratic institutions have belatedly lumbered into action, or at any rate into a semblance of activity…
This sudden outbreak of regulatory zeal in the DoJ raises two questions. The first is: what took it so long? The second is: why now? Of these, the second is easiest to answer. There’s an election coming and Bill Barr wants to be seen as fulfilling his boss’s threat to “do something” about the tech companies that, Trump believes, have recently turned against him by suddenly refusing their traditional role as relay stations and amplifiers for his lies.
The first question – about why it took so long for US authorities to complain about corporate behaviour that had been obvious for years and, indeed, had provoked responses from the European commission – is interesting…
Was my column (above) too cynical? Close reading of a lot of other commentary suggests that it was. Here, for example, is Sarah Miller in the Guardian:
This is the most significant antitrust case filed since the government suit against Microsoft in 1998, and it also ranks with the most important antitrust suits of all time, including Standard Oil and AT&T. The move by a conservative Republican administration to take on one of the largest companies in the world is a repudiation of the libertarian ideology that has dominated American politics since the 1980s.
Or here’s Matt Stoller on his (excellent) blog:
the Google suit is a stunning change in the consensus underpinning American politics. The complaint itself a tight, well-reasoned, and nicely framed case, and the scope will likely broaden over the next few months. What the DOJ is arguing is basically a carbon copy of the Microsoft case of the late 1990s, where the government accused Microsoft of illegally tying Internet Explorer to Microsoft Windows. Today, the DOJ is accusing Google of illegally tying Search to its mobile phone operating system Android and its browser Chrome. And the government is seeking to break up Google.
The Financial Times claims that “there’s rare bipartisan support“ (eh?) for the suit and that it “reflects a careful legal strategy designed to maximise the odds of success, while also acting as the first part of a broader legal campaign against Google and the Rest of Big Tech.” The DoJ has “opted for a more limited anti-trust action that many lawyers believe has a better change of winning.” By limiting the case to contracts then the DOJ stands a chance of a quick win.
Hmmm… First of all, that idea of a ‘quick win’ seems implausible. My guess that that the case won’t get to court until late 2021 or early 2022, with possible appeals after that.
The most insightful commentary I’ve read came from Ben Thompson in his (subscription) daily newsletter which I get every day. He’s famous for his ‘Aggregator Theory’ which he thinks provides the best explanation for the monopolistic success of the big tech companies. And he doesn’t think that the US can do much about them so long as they continue to provide high-quality ‘free’ services that users clearly value. For regulators to try to undo an Aggregator by changing consumer preferences is, he says, “like pushing on a string”.
What regulators can do though, Thompson thinks, is prevent Aggregators from artificially enhancing their natural advantages. And that’s what he sees the DoJ suit as trying to do. That’s why he says he’s “pleased to see how narrowly focused the Justice Department’s lawsuit it: instead of trying to argue that Google should not make search results better, the Justice Department is arguing that Google, given its inherent advantages as a monopoly, should have to win on the merits of its product, not the inevitably larger size of its revenue share agreements. In other words, Google can enjoy the natural fruits of being an Aggregator, it just can’t use artificial means — in this case contracts — to extend that inherent advantage.”
Two thoughts from all this.
The best comparison is with the DoJ case against Microsoft in 1998. And if that is indeed true, the the chances of a radical outcome are small. When the Microsoft case launched people thought the odds that the company would be broken up were high. But in the end and election intervened and it ended with a whimper (relatively minor behavioural changes imposed on Microsoft). (Though it’s also plausible that the stress of the case distracted Bill Gates & Co from strategic issues like mobile and search). And while the charge against Google may be limited and focussed in the way that delights the anti-monopoly optimists, I’ll be surprised if the DoJ can make it stick. The Google line is that paying Apple huge sums to make Google the default search engine on iOS is like a cereal firm paying a supermarket chain for preferential treatment for its brands.
Most of the commentary ignores the political context and the timing of the case — a couple of weeks before the most contentious presidential election in modern history. And no commentator seems to address the role of the Attorney General as Trump’s enforcer-in-chief. Yet Barr is — as Fintan O’Toole puts it,
the single most important figure on Trump’s transition team, but the transition in question is not the democratic transfer of power. It is the transition from republican democracy to authoritarianism. Because of his suave, courteous, even jovial demeanor and intellectual acumen, and his long record as a member of the pre-Trump Republican establishment, it seems superficially plausible to look to Barr as the one who might ultimately seek to restrain Trump and protect the basic institutional and constitutional order. All evidence—including ProPublica’s report on October 7 that the Department of Justice has now weakened its long-standing prohibition against interfering in elections by allowing federal investigators “to take public investigative steps before the polls close, even if those actions risk affecting the outcome of the election”—points in the opposite direction.
I’m with Fintan on this. `
No going back to the status quo ante
Just in case anyone thinks that a Biden victory will end the nightmare…
From an editorial in Noema magazine…
Let’s not forget that Trump and his populist comrades are a symptom, not a cause, of the decay of democratic institutions that, captured by the organized special interests of an insider establishment, failed to address the dislocations of globalization and the disruptions of rapid technological change. Those challenges remain unresolved. Indeed, they have only intensified since populist sentiment has transmuted the revolt against a moribund political class into a revolt against governance itself.
Above all, what has not disappeared is the quest for a sense of belonging that accords dignity to otherwise liquidized identities in a world in which individuals and communities alike feel that they are drowning in the swell of seemingly anonymous forces beyond their control.
Those who rightly believe that Trumpism and its fellow travelers are destroying the possibility of a civil society should not be consoled by a victory at the polls. Simply returning “our” partisans to the halls of power will only reproduce the problem. Neither a turn toward autocracy nor lame attachment to forms of democratic government and wealth distribution that have become dysfunctional will answer the question of how to govern open societies in the 21st century. That requires a clean slate for building a different future, not a relapse to what was already broken before populism made it worse.
Other, perhaps interesting, links
Dreams of a Red Emperor. Profile of Xi Jinping by Alice Su in the Los Angeles Times. He’s a powerful now as Mao once way, but he’s no revolutionary. Contains no mention of Winnie the Pooh, so may not be blocked in China. Link
Lovely 3-D Animation of How Medieval Bridges Were BuiltLink. HT Jason Kottke.
Does Palantir See Too Much? Terrific long read by Michael Steinberger on one of the world’s most enigmatic companies. Link
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I wonder if this is the only popular song ever written about a brand of photographic film. When I was an analog photographer, I always used Kodachrome for 35mm and Ektachrome for 6×6. But looking back on those old slides, it’s the fidelity of Kodachrome that still strikes one. It was a terrific film.
It’s funny also to think how dominant Kodak was in its heyday. It more or less defined photography. And look what happened to it — more or less overnight.
In recent times, the hulk of the old company has taken to making PPE equipment. And its share price jumped 1500% a few days ago on news that Trump wanted to give it a $765m loan to help pay for factory changes needed to make pharmaceutical ingredients in short supply in the U.S. The loan has now been ‘paused’ pending an inquiry into alleged insider trading.
The TikTok farce
Trump’s antics over TikTok — not to mention his administration’s sudden interest in the ‘national security’ aspects of the tech industry — defy parody. Among other things, he’s been leaning on Microsoft to buy TikTok, or at any rate the bit of it that operates in the US. And then, at one point, he started saying that the US should get a cut on the transaction. Among other things, just imagine what that does to the idea of impartial regulatory scrutiny of corporate mergers and acquisitions.
In the end, I gave up following the story, on the grounds that it’s just part of Trump’s desperate attempt to harness anti-Chinese sentiment to boost his electoral chances in November. But I did enjoy Ian Bogost’s summing-up:
TikTok might be pleasant, or joyful, or even subversive. But it is also an app on your phone, on the internet, connected to data centers and driving both corporate amalgamation and transnational entrenchment. It’s a bummer, but nothing is ever just an app anymore. Maybe Microsoft will save TikTok, or maybe not. Either way, there aren’t better and worse options here, so much as worse and even worse ones.
Trump’s Axios interview with Jonathan Swan
I watched it so that you don’t have to. It was like one of those discussions you used to hear in saloon bars, back in the day when we could go to pubs.
Jonathan Swan: (06:58) But here’s the question. I’ve covered you for a long time. I’ve gone to your rallies. I’ve talked to your people. They love you. They listen to you. They listen to every word you say, they hang on your every word. They don’t listen to me or the media or Fauci. They think we’re fake news. They want to get their advice from you. And so, when they hear you say, everything’s under control, don’t worry about wearing masks. I mean, these are people, many of them are older people, Mr. President.
Trump: (07:19) Well, what’s your definition of control?
Swan: (07:20) It’s giving them a false sense of security.
Trump: (07:21) Yeah. Under the circumstances right now, I think it’s under control. I’ll tell you what-
Swan: (07:25) How? 1,000 Americans are dying a day.
Trump: (07:27) They are dying. That’s true. And it is what it is. But that doesn’t mean we aren’t doing everything we can. It’s under control as much as you can control it. This is a horrible plague that beset us.
Swan: (07:39) You really think this is as much as we can control it? 1,000 deaths a day?
Trump: (07:43) Well, I’ll tell you, I’d like to know if somebody… First of all, we have done a great job. We’ve gotten the governors everything they needed, they didn’t do their job. Many of them didn’t and some of them did. Someday we’ll sit down. We’ll talk about the successful ones, the good ones. Look at that smile. The good ones and the bad. We had good and bad. And we had a lot in the middle, but we had some incredible governors. I could tell you right now who the great ones are and who the not so great ones are, but the governors do it. We gave them massive amounts of material.
Swan: (08:11) Mr. President, you changed your message this week, in terms of you canceled the Jacksonville convention, you said, “Wear a mask.” You’re saying that, “It’s going to get worse before it gets better.” It’s not something you’d like to say, I know. And you said that. The big question-
Trump: (08:23) By the way, not get worse like the original flow. You understand that.
Swan: (08:27) Well, I hope not. It’s a 1,000-
Trump: (08:29) But If you look, Arizona’s going down. Texas is going down, and Florida is going down.
Swan: (08:31) If I could just finish my question. The question is, even some of your own aides wonder whether you would stick to that message until Election Day, whether in a week or two, you won’t say, “Right, we’ve got to reopen again. We can’t do this stuff anymore.” That you’ll get bored of talking about the virus and go back to that sort of cheerleading.
Trump: (08:52) No, I’m not going to get bored. I never get bored of talking about this, it’s too big a thing.
Swan: (08:54) So will you stick to that message?
Trump: (08:54) And again, it should have been stopped by China, and it wasn’t.
Swan: (08:59) But now it’s here and you’re the President.
Donald Trump was right, the wars in Iraq and Afghanistan were mistakes. Mistakes that cost us almost 7,000 American souls, 208,102 Iraqi and 111,000 Afghan civilian lives, and $1.9 trillion (inflation adjusted). But Covid-19 will register an even greater toll of American blood and treasure. The response to the novel coronavirus would have been swifter and more disciplined if the pathogen had brown skin and worshiped a different god. Americans can’t seem to wrap their head around an enemy 10,000 times smaller than the width of human hair.
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Think ‘sanctions’ will trouble China? Think again.
Fascinating essay by Ai Weiwei, the Chinese artist and activist.
The US cold war with the Soviet Union was over ideology, but today’s standoff with China is different. The Chinese state has no ideology, no religion, no moral agenda. It continues wearing socialist garb but only as a face-saving pretence. It has, in fact, become a state-capitalist dictatorship. What the world sees today is a contest between the US system of free-market capitalism and Chinese state capitalism. How should we read this chessboard?
With hindsight, it’s almost comical to reflect on the West’s naiveté and wishful delusions about China. The high point of it, I suppose, was the idea of Cameron and Osborne about a new “golden era” opening up for UK-China trade and other relations. I remember the University’s pathetic nervousness about demonstrations and other signs of hostility when Xi Jinping came to visit Cambridge. And then of course there were the fond illusions of many other UK universities who were so keen to open campuses in China.
Ai Weiwei was never impressed by our naiveté.
Washington bears much of the responsibility for what has happened. In the years after the Tiananmen Square massacre in 1989, administrations of both parties touted the absurd theory that the best plan was to let China get rich and then watch as freedom and democracy evolved as byproducts of capitalist development.
But did capitalist competition, that ravenous machine that can chew up anything, change China? The regime’s politics did not change a whit. What did change was the US, whose business leaders now approached the Chinese dictatorship with obsequious smiles. Here, after all, was an exciting new business partner: master of a realm in which there were virtually no labour rights or health and safety regulations, no frustrating delays because of squabbles between political parties, no criticism from free media, and no danger of judgment by independent courts. For European and US companies doing manufacture for export, it was a dream come true.
In a way, it’s hard to avoid the conclusion that the hawks on China were right. We’re now back in a bi-polar world. China is a systemic challenge and has to be approached as such. What’s needed on the Western side is a new George Kennan. What we’ve got instead is a posturing imbecile in the White House.
So what would be a sensible approach for the West to adopt?
Tim Garton Ash suggested some answers in a Guardian piece last month.
We need to:
Think long term
Combine competition and cooperation
Focus on China’s internal dynamics
Don’t believe we can engineer their system
Always remember that we are addressing a society as well as a state
Remember that China is not the Soviet Union
Unity is strength something that Trump is incapable of understanding)
Remember that Cold Wars are won at home
I really like this last point. As Tim says:
By far the most important single thing that liberal democracies did to prevail in the first cold war was to make our own societies prosperous, free, open and attractive. The same will be true this time. A former Chinese student of mine has written a fascinating essay about the attitudes of Chinese students who return home after studying at western universities. His conclusion: the experience of living in the west does not make returning Chinese students, as we might once have hoped, perfect pro-western liberal democrats. Instead, they become “double dissidents”, highly critical of both systems. It’s not our foreign policy that will ultimately convince them. It’s what we do at home.
Yep.
The Workforce Is About to Change Dramatically
Three predictions for what the future might look like as a result of Covid-19. Mostly about the US, but might be relevant for us too.
1 The “Telepresence” Revolution Will Reshape the U.S. Workforce
Since 2000, as spending on travel, food, and entertainment has surged, employment in leisure and hospitality—a large category that covers restaurants, hotels, and amusement parks—has increased three times faster than the rest of the labor force.
But the boom times for this super-sector may be over, according to the economist David Autor, a co-chair of the MIT Task Force on the Work of the Future. In a new paper co-authored with MIT’s Elisabeth Reynolds, he forecasts that the rise of remote work—or what they call “telepresence”—will lead to a more homebound life that creates less work for others.
2 Remote work will increase free-agent entrepreneurship and decrease collegiality
In the past few decades, the office has served, for many people, as a last community standing. In an age where various associative institutions are in retreat—such as religious congregations, bowling leagues, and unions—there is one place where the majority of adults ages 25 to 55 have kept showing up, almost every day, of almost every week. At work.
Now many companies, thrown headfirst into the remote-work experiment, have had to hurriedly retrofit their office practices for a new world.For many workers, their emotional relationships with colleagues have changed because their spatial relationships with those colleagues have changed. Many white-collar companies have become virtual group chats punctuated by Zooms. This is not business as usual.
3 A Superstar-City Exodus Will Reshape American Politics
Today’s Democratic Party is inefficiently distributed across the country. In 2016, Hillary Clinton won Manhattan and Brooklyn by about 1 million votes—more than Donald Trump’s margins of victory in the states of Florida, Arizona, Georgia, North Carolina, Michigan, Wisconsin, and Pennsylvania combined. In election after election, liberals dominate in cities, running up huge margins in downtown areas while narrowly losing in sparser places. If Democrats abandoned liberal enclaves and spread into Red America, they could more easily win elections.
This could happen in the UK too. Tory shires beware.
The Impact of COVID-19 on the Nature of Work
Here’s the Abstract of an interesting NBER paper. It reads (in part):
We explore the impact of COVID-19 on employee’s digital communication patterns through an event study of lockdowns in 16 large metropolitan areas in North America, Europe and the Middle East. Using de- identified, aggregated meeting and email meta-data from 3,143,270 users, we find, compared to pre- pandemic levels, increases in the number of meetings per person (+12.9 percent) and the number of attendees per meeting (+13.5 percent), but decreases in the average length of meetings (-20.1 percent). Collectively, the net effect is that people spent less time in meetings per day (-11.5 percent) in the post- lockdown period. We also find significant and durable increases in length of the average workday (+8.2 percent, or +48.5 minutes), along with short-term increases in email activity.
Hmmmm…
Are humans intelligent?
This is nice: someone asked GPT-3 “are humans intelligent?”
Its answer is interestingly funny and subtle. Here’s an excerpt:
I will attempt to prove this new definition is superior to all previous attempts to define intelligence. First, consider humans’ history. It is a story of repeated failures. First humans thought the Earth was flat. Then they thought the Sun went around the Earth. Then they thought the Earth was the center of the universe. Then they thought the universe was static and unchanging. Then they thought the universe was infinite and expanding. Humans were wrong about alchemy, phrenology, bloodletting, creationism, astrology, numerology, and homeopathy. They were also wrong about the best way to harvest crops, the best way to govern, the best way to punish criminals, and the best way to cure the sick.
I will not go into the many ways humans have been wrong about morality. The list is long and depressing. If humans are so smart, how come they keep being wrong about everything?
So, what does it mean to be intelligent? Well, it’s clearly not the ability to form a correct hypothesis, because humans have failed at that thousands of times. Maybe intelligence is the ability to make the correct decision, but humans are also bad at that. They’re terrible at making decisions about politics, the economy, the environment, technology, education, medicine, and almost everything else. So, if intelligence isn’t the ability to make correct decisions or form correct hypotheses, then what is it?
Good question.
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75 years ago today, the nuclear age began. July 16 1945 was the day the first atomic bomb was detonated in the New Mexico desert in the Trinity test. To mark the anniversary the Bulletin of the Atomic Scientists has compiled a memorable assembly of personal reflections by the scientists who worked on the bomb and who were there when it went off. It’s an unmissable, moving read. Here are two of the reflections.
Val Fitch:
It took about 30 millionths of a second for the flash of light from the explosion to reach us outside the bunker at south 10,000. It took the blast wave about 30 seconds. There was the initial loud report, the sharp gust of wind, and then the long period of reverberation as the sound waves echoed off the nearby mountains and came back to us.
I got up from the ground and watched the now famous mushroom cloud rise in the morning sky. Apparently no one had told the military policeman, stationed at the door of the bunker to control access, what to expect. He was absolutely pale and a look of incredible alarm was on his face as he came away from the bunker door to stand beside me and view the sight. I simply said what was on my mind, “The war will soon be over.”
Kenneth Bainbridge:
After the blast wave had passed, I got up from the ground to congratulate Oppenheimer and others on the success of the implosion method. I finished by saying to Robert, “Now we are all sons of bitches.” Years later he recalled my words and wrote me, “We do not have to explain them to anyone.” I think that I will always respect his statement, although there have been some imaginative people who somehow can’t or won’t put the statement in context and get the whole interpretation. Oppenheimer told my younger daughter in 1966 that it was the best thing anyone said after the test.
Ancient history? Yes. But if China, fresh from subjugating Hong Kong, were to move on Taiwan…
The costs of the next Cold War: $3.5 trillion
And while we’re on the subject of China, this from yesterday’s FT:
A larger tech cold war is taking place that could cost $3.5tn over the next five years, according to a report today by Apjit Walia, Deutsche Bank’s Global Head of Tech Strategy. This permeates to the consumer level, with DB surveys recording 41 per cent of Americans and 35 per cent of Chinese saying they will not buy each other’s products.
The $3.5tn figure comes from a $400bn reduction a year in domestic end demand from China and $100bn a year as a “Tech Wall” creates extra costs for companies dealing with rival internet platforms, operating systems, and communications and payment networks. A further $1tn in costs would come from rebuilding and reconfiguring the supply chain, mainly falling on “final goods manufacturers” who currently use China as a manufacturing base.
If there is any upside, it might come from similar dynamics to the US-USSR cold war, where a ramp in spending on defence and the space race could translate as a leap in tech investment this century. US government spending alone on R&D more than doubled as a percentage of GDP between 1957 and 1964 — to 2.2 per cent. Tech investment might not match that in this post-Covid era, but it could still provide a much needed blast of warmth for the sector in icy times.
At this point, it dawned on Starmer that Boris almost certainly hadn’t read the report [from the Academy of Medical Sciences on the dangers of an Autumn surge in Covid cases] to which he had referred – a little slow on the uptake from the Labour leader as the prime minister never reads any reports of more than two paragraphs – so he asked him outright if he had. “Um … er …,” Boris hesitated. He was aware of the report. In the same way he is aware that he has children, but is unable to say exactly how many. And in the same way as I am aware of the space-time continuum but would be unable to explain exactly what the science meant to anyone. Though if it turned out that Boris only really existed in another parallel dimension then I’d happily settle for that.
Apple, Ireland and the saga of €13 billion
This is stuff you couldn’t make up.
Four years ago, the European Commission said that Ireland had failed to collect €13 billion in taxes from Apple. According to the Commission this meant that Apple had received illegal state aid and should have paid more taxes. Apple duly handed over the €13B to the Irish government, which put it in an escrow account (where it’s been sitting ever since earning interest). Apple appealed the ruling to the EU General Court. Even more intriguingly, so did the Irish government.
Today, the Court handed down its judgment — that the European Commission’s case had no legal basis. So unless the Commission appeals, then the Irish government — which will be strapped for cash because of Covid-19 and the forthcoming financial crash caused by the UK crashing out of the EU without a deal — will cheerfully refund Apple.
According to the FT the EU has two months and 10 days to appeal against the decision, and it believes that the commission is likely to file an appeal and the case will be heard by the European Court of Justice, the EU’s highest court, which will issue a final ruling.
All of this may make sense to lawyers. But Sinn Féin, the main opposition party in the Irish parliament is not amused. Nor, I suspect, are many of my fellow-countrymen and women.
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It’s back to the future time again. Boris Johnson is trying to wrap himself in the cape of Franklin Roosevelt and his famous New Deal, while his consigliere, Cummings, wants to go back to the 1950s and reboot Britain by building an imitation of the Pentagon’s Advanced Research Projects Agency (Arpa – later Darpa, with the D standing for defence).
Both projects have touching aspects of romanticism, ignorance and absurdity. In relation to Johnson’s FDR tribute band, his proposed £5bn splash on infrastructure comes to about 0.2% of GDP, whereas Roosevelt’s New Deal was estimated to be worth 40% of US national income in 1929. Roosevelt built dams, housing, roads and bridges across America. He restored the banking system, set up the Securities and Exchange Commission, encouraged trade unions. From 1933, his public works administration built the Lincoln Tunnel in New York, the Grand Coulee Dam and completed the Hoover Dam. Roosevelt instituted a minimum wage and maximum hours in certain businesses and asserted the right of workers to organise. For his part, Johnson will be refurbishing schools and repairing bridges – both good in their way, but on a minuscule scale. And he doesn’t seem to have any plans for reining in the City or for encouraging workers’ rights. So his Roosevelt rhetoric is basically back-of-the-envelope hogwash.
What, then, of Cummings, back from his victory tour of the north-east?
Watch Trump’s Inaugural Address with the benefit of hindsight. Sensitive souls may need to keep a sickbag handy. But in the light of what we now know, it’s a really instructive way of spending 16 minutes. Interestingly, the speech is well delivered; Trump’s speaking style has noticeably deteriorated since then, so the comparison is striking. My hunch is that the speech was written by Steve Bannon, who at that stage was playing the role for Trump that Dominic Cummings now plays for Boris Johnson.
A rare bird: a tech CEO with moral courage
Patrick Collison, the co-founder of the online-payments company Stripe, is one of the most interesting people in the tech world. Also, he appears to have a functioning conscience.
Covid simulations by Japanese supercomputer have bad news for open-plan offices
The bottom line: plexiglass screens don’t guarantee your safety.
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Some on the left drew a strange consolation from Trump’s hostility to foreign wars, as if it meant he could be a tactical ally against American imperialism. They failed to see that he wanted to wage war at home: his furious inauguration speech with its talk of ‘American carnage’ was a declaration of war on urban racial liberalism, especially as represented by New York, the city that had rejected him.
I started the day reading Peter Oborne’s piece on whether China will replace Islam as the West’s new enemy — and then got sucked into the rabbit-hole of whether we are sliding into a new Cold War, with China playing the role that the Soviet Union played in the old days. This is all about geopolitics, of course, about which I know little. But if you write about digital technology, as I do, this emerging Cold War is a perennial puzzle that pops up everywhere. For example, in:
the discussions about whether Huawei kit should be allowed in Western 5G networks;
whether we should be concerned about becoming addicted to Zoom, a company with a sizeable chunk of its workforce and infrastructure based in China;
what to make of China’s increasing technological assertiveness at the ITU over changing the centrals protocols of the TCP/IP-based Internet we use today
anxieties in (mostly-US companies and the US government) about the inbuilt advantages an authoritarian regime has in fostering the development of ‘AI’ (aka machine-learning) technology, the essential feedstock for which is unlimited volumes of user data — as compared with the way our liberal reservations about privacy and civil rights hobbles our tech giants.
the strange and enduring legacy of old Cold War attitudes in the Western military-industrial complex which continually obsesses about Russia rather than China.
This last factor is particularly weird. In the immediate post-war period, we lived in a genuinely bi-polar world, with competition between two different economic and ideological systems — the Soviet, centrally-planned one, and the Western liberal capitalist one.
As it happens, we in the West greatly over-estimated the capacity of the Soviet system, perhaps because it seemed to be very good at some things — nuclear weapons development and space science in particular. In part we owe the Internet to the fright the US received when in 1957 the USSR launched Sputnik, the first earth-orbiting satellite. This, among other things, led to the establishment of the Advanced Research Projects Agency (ARPA) in the Pentagon, which was the organisation that conceived and funded Arpanet, the precursor of today’s Internet.
Nevertheless, it remained true that the bi-polar world into which I was born was based on an ongoing contest between two socio-economic systems which could be — and were often — seen as genuine alternatives.
This bi-polar world evaporated in 1989 when the Berlin Wall came down and two years later the USSR imploded, leaving the Western model apparently triumphant. This was the moment that coincided with the publication of Francis Fukuyama’s ‘End of History’ essay, which argued that the post-1917 ideological competition about the best way to organise society had been decisively resolved with liberal democracy as the winning candidate. This was an overly-simplistic reading of Fukuyama, but what was indisputable was that, post-1989, we moved into a uni-polar world, with the US as the reigning hyper power, able to do exactly as it pleased. Which it did, including launching a disastrous war in Iraq on a pretext, and further destabilising the Middle East as a consequence.
But even before 1989, things were beginning to change elsewhere in the world. In 1978, in particular, as Laurie Macfarlane points out,
Deng Xiaoping became China’s new paramount leader, after outmanoeuvring Mao’s chosen successor, Hua Guofeng. Deng oversaw the country’s historic ‘Reform and Opening-up’ process, which increased the role of market incentives and opened up the Chinese economy to global trade. In the decades since, China’s economic transformation has been nothing short of astonishing.
In 1981, 88% of the Chinese population lived in extreme poverty. In the four decades since, nearly a billion people have been lifted out of poverty, leaving the figure at less than 2%. Over the same time period, the size of China’s economy increased from $195 billion – around the same size as the Spanish economy – to nearly $14 trillion today. By some measures, China’s economy has overtaken the US and is now the largest in the world. China is also home to the second largest number of Fortune 500 companies in the world, and more billionaires than Europe.
So even as the old bi-polar world was dying, a new alternative system was being born. I don’t think that Deng had many geopolitical ambitions, but his successors certainly had. And have.
China’s astonishing economic transformation has been engineered by a distinctive economic model which they call “socialism with Chinese characteristics”, combining strategic state ownership and planning with market-oriented incentives and a one-party political system to create a unique economic model that while poorly understood in the West is found interesting and perhaps attractive by a significant number of non-aligned countries.
It doesn’t look much like ’socialism’ to anyone who studies the tech sector, because the private sector accounts for the overwhelming majority of output, employment and investment in China; and there is — as Macfarlane points out, little sign of democratic workers’ control. But it’s a powerful and effective system, and — to date — it appears to be working. Which is more than could ever be said for the Soviet system.
So here we are in a bi-polar world again. But it’s nothing like its predecessor. In the old Cold War, for example, European democracies were resolutely anti-Soviet (even if they didn’t always pay their mandatory 2% of GDP into the NATO budget). But now, with China as the opposite ‘pole’ to the US, they’re much more ambivalent. As are many global companies. China’s role as the workshop of the world, and also as the fastest growing and potentially most profitable market, means that outright hostility to the new superpower looks like a self-defeating policy.
This doesn’t bother Trump, whose most desperate need is to find an enemy he can blame for the unfolding disaster of the pandemic that has occurred on his watch. And it isn’t just Trump, as Peter Oborne says:
China is being presented as the new existential enemy, just as Islam was 20 years ago. And by the very same people. The same newspaper columnists, the same think tanks, the same political parties and the same intelligence agencies.
After Huntington’s famous essay that led the charge against Muslims – or what they often call radical Islam – now they have turned their attention to the Far East.
US President Donald Trump, the world’s Muslim-basher-in-chief, has now started to attack China, rather as Bush, his Republican predecessor, attacked Iraq in 2003 and the “axis of evil” 20 years ago. During his campaign in 2016 he accused China of “raping” the US economy.
However, since the outbreak of Covid-19, Trump’s attacks have gained speed and traction. He has accused China of covering up the virus and lying about its death toll.
Leaving aside Trump, who thinks only in transactional terms and doesn’t seem to have any strategic sense, the impression one gets from the US foreign policy establishment is of hegemonic unease. The feeling that it would be disastrous if the US lost its position as the global leader in digital technology is palpable. And it’s ruthlessly exploited by the tech companies — as we saw when the Facebook boss ‘testified’ to Congress and hinted that not hampering (i.e. regulating) the tech giants is a way of ensuring the continuance of US technological hegemony.
So is American hegemony really in doubt? Writing in 2018, Adam Tooze was sceptical:
As of today, two years into the Trump presidency, it is a gross exaggeration to talk of an end to the American world order. The two pillars of its global power – military and financial – are still firmly in place. What has ended is any claim on the part of American democracy to provide a political model. This is certainly a historic break. Trump closes the chapter begun by Woodrow Wilson in the First World War, with his claim that American democracy articulated the deepest feelings of liberal humanity. A hundred years later, Trump has for ever personified the sleaziness, cynicism and sheer stupidity that dominates much of American political life. What we are facing is a radical disjunction between the continuity of basic structures of power and their political legitimation.
If America’s president mounted on a golf buggy is a suitably ludicrous emblem of our current moment, the danger is that it suggests far too pastoral a scenario: American power trundling to retirement across manicured lawns. That is not our reality. Imagine instead the president and his buggy careening around the five-acre flight deck of a $13 billion, Ford-class, nuclear-powered aircraft carrier engaged in ‘dynamic force deployment’ to the South China Sea. That better captures the surreal revival of great-power politics that hangs over the present. Whether this turns out to be a violent and futile rearguard action, or a new chapter in the age of American world power, remains to be seen.
And if you felt that this post was TL;DR. (Too long, don’t read) I perfectly understand. E.M. Forster once observed that there are two kinds of writer: those who know what they think and write it; and those who find out what they think by trying to write it. I belong mostly in the latter category.
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Social media has given new meaning to “the last post”. Many victims of Covid-19 live on through their final public words, the the Detroit bus driver Jason Hargrove, who died 11 days after recording a Facebook video scolding a woman for coughing on his bus without covering her mouth.”
To have one viral sensation, Oscar Wilde might have said, is unfortunate. But to have two smacks of carelessness. And that’s what we have. The first is Covid-19, about which much printer’s ink has already been spilled. The second is Plandemic, a 26-minute “documentary” video featuring Dr Judy Mikovits, a former research scientist and inveterate conspiracy theorist who blames the coronavirus outbreak on big pharma, Bill Gates and the World Health Organization. She also claims that the National Institute of Allergy and Infectious Diseases (which is headed by Dr Anthony Fauci) buried her research showing vaccines weaken people’s immune systems and made them more vulnerable to Covid-19. Just to round off the accusations, Mikovits claims that wearing masks is dangerous because it “literally activates your own virus”. And, if proof were needed that the pharma-Gates-scientific-elite cabal were out to get her, the leading journal Science in 2011 retracted a paper by her on a supposed link between a retrovirus and chronic fatigue syndrome that it had accepted in 2009.
The video went online on 4 May when its maker, Mikki Willis, a hitherto little-known film producer, posted it to Facebook, YouTube, Vimeo and a separate website set up to share the video…
Nouriel Roubini is not everybody’s cup of tea, but he saw the 2008 banking crisis coming and he doesn’t see many good outcomes for the aftermath of Covid-19.
New York magazine has an interesting interview with him. Here’s the bit that really interested me:
Q: Some Trumpian nationalists and labor-aligned progressives might see an upside in your prediction that America is going to bring manufacturing back “onshore.” But you insist that ordinary Americans will suffer from the downsides of reshoring (higher consumer prices) without enjoying the ostensible benefits (more job opportunities and higher wages). In your telling, onshoring won’t actually bring back jobs, only accelerate automation. And then, again with automation, you insist that Americans will suffer from the downside (unemployment, lower wages from competition with robots) but enjoy none of the upside from the productivity gains that robotization will ostensibly produce. So, what do you say to someone who looks at your forecast and decides that you are indeed “Dr. Doom” — not a realist, as you claim to be, but a pessimist, who ignores the bright side of every subject?
Roubini: When you reshore, you are moving production from regions of the world like China, and other parts of Asia, that have low labor costs, to parts of the world like the U.S. and Europe that have higher labor costs. That is a fact. How is the corporate sector going respond to that? It’s going to respond by replacing labor with robots, automation, and AI.
I was recently in South Korea. I met the head of Hyundai, the third-largest automaker in the world. He told me that tomorrow, they could convert their factories to run with all robots and no workers. Why don’t they do it? Because they have unions that are powerful. In Korea, you cannot fire these workers, they have lifetime employment.
But suppose you take production from a labor-intensive factory in China — in any industry — and move it into a brand-new factory in the United States. You don’t have any legacy workers, any entrenched union. You are States. You don’t have any legacy workers, any entrenched union. You are going to design that factory to use as few workers as you can. Any new factory in the U.S. is going to be capital-intensive and labor-saving. It’s been happening for the last ten years and it’s going to happen more when we reshore. So reshoring means increasing production in the United States but not increasing employment. Yes, there will be productivity increases. And the profits of those firms that relocate production may be slightly higher than they were in China (though that isn’t certain since automation requires a lot of expensive capital investment).
But you’re not going to get many jobs. The factory of the future is going to be one person manning 1,000 robots and a second person cleaning the floor. And eventually the guy cleaning the floor is going to be replaced by a Roomba because a Roomba doesn’t ask for benefits or bathroom breaks or get sick and can work 24-7.
The fundamental problem today is that people think there is a correlation between what’s good for Wall Street and what’s good for Main Street. That wasn’t even true during the global financial crisis when we were saying, “We’ve got to bail out Wall Street because if we don’t, Main Street is going to collapse.” How did Wall Street react to the crisis? They fired workers. And when they rehired them, they were all gig workers, contractors, freelancers, and so on. That’s what happened last time. This time is going to be more of the same. Thirty-five to 40 million people have already been fired. When they start slowly rehiring some of them (not all of them), those workers are going to get part-time jobs, without benefits, without high wages. That’s the only way for the corporates to survive. Because they’re so highly leveraged today, they’re going to need to cut costs, and the first cost you cut is labor. But of course, your labor cost is my consumption. So in an equilibrium where everyone’s slashing labor costs, households are going to have less income. And they’re going to save more to protect themselves from another coronavirus crisis. And so consumption is going to be weak. That’s why you get the U-shaped recovery.
There’s a conflict between workers and capital. For a decade, workers have been screwed. Now, they’re going to be screwed more. There’s a conflict between small business and large business.
And I thought I was enraged by the current UK government…
Well, AL Kennedy is even more infuriated — see her piece in today’s Observer For example:
For a few weeks I had red eyes, a strangled cough, an invisible shovel repeatedly hitting my head and something I visualised as a tiny rabbit kicking about in my chest. But I’m not dead, thanks to austerity and all those thought experiments, that’s now a wonderful luxury, an unlooked-for plus in British life. I locked myself away, just to be sure I didn’t share the plague (sorry, Dom) and I’m OK now. I function. Or maybe I was never ill, because any prolonged reflection upon our national circumstances produces identical symptoms. I suffer from fury. I beg your pardon, The Fury. Or, indeed, THE FURY.
I mean, it’s not just anger any more, is it? It’s not any kind of emotion on a familiar human scale, not after all this. Not after the tens of thousands of avoidable deaths. Not after the nurses, teachers, doctors, bus drivers, carers, checkout staff, warehouse staff – the whole army of the useful now declared expendable. Not after people who know their jobs may kill them, may send them home infected, but they go to work anyway to keep everything running, to save us, and still they don’t get adequate pay, or equipment, or even respect. Not after our leaders always have time for racism and PR, but never for even the level of planning you’d put into a sandwich. Not after millions of us have lain awake, just hoping the people we love won’t die. Not after the drowning on dry land alone, after the mourning. Not after the Brexit cult’s insistence that no-deal Brexit must still be imposed, so hop into the wood-chipper, everyone still standing. Not after Stay Alert.
We’re quiet now – we’re trying to save each other, staying home, not forming crowds, thinking, planning. But un-isolated life will eventually recommence. We’ll remember our wounds. We’ll remember who helped and who harmed. And, pardon my language, but our government is fucking terrified of what happens then.
Yep.
That Larry Summers interview
Terrific interview with the former US Treasury Secretary and Harvard President. Long read, but mostly worth it.
Some highlights
On US-China relations…
we need to craft a relationship with China from the principles of mutual respect and strategic reassurance, with rather less of the feigned affection that there has been in the past. We are not partners. We are not really friends. We are entities that find ourselves on the same small lifeboat in turbulent waters a long way from shore. We need to be pulling in unison if things are to work for either of us. If we can respect each other’s roles, respect our very substantial differences, confine our spheres of negotiation to those areas that are most important for cooperation, and represent the most fundamental interests of our societies, we can have a more successful co-evolution that we have had in recent years.
On globalisation…
We have done too much management of globalization for the benefit of those in Davos, and too little for the benefit of those in Detroit or Dusseldorf. Over the last two decades, better intellectual property protection for Mickey Mouse and Hollywood movies has been an A level economic issue. Better global tax cooperation, so that tech companies’ profits do not locate themselves in cyberspace and entirely escape taxation, has been a B-level issue. Achieving better market access for derivatives dealers has been an A-level global economic issue, while assuring that bank secrecy does not permit large-scale money laundering has been a B-level economic cooperation issue. The protection of foreign investors’ property rights has been an A-level issue, and the maintenance of worker standards, or the avoidance of unfair competition through exchange rate depreciation, has been a B-level issue. And ultimately, that has all estranged the elite from those they aspire to lead.
Someone put it to me this way: First, we said that you are going to lose your job, but it was okay because when you got your new one, you were going to have higher wages thanks to lower prices because of international trade. Then we said that your company was going to move your job overseas, but it was really necessary because if we didn’t do that, then your company was going to be less competitive. Now we’re saying that we have to cut the taxes on those companies and cut the calculus class from your kid’s high school, because otherwise we won’t be able to attract companies to the United States, and you have to pay higher taxes and live with fewer services. At a certain point, people say, “This whole global thing doesn’t work for me,” and they have a point.
On regulation…
So the case for regulation is not to be anti-business. Regulation needs to be supported because it enables the vast majority of businesses who want to do right by society to do so and still be able to compete. That’s how the case for regulation needs to be framed. We should not be waging jihad against business. We should be waging jihad against those who put profit ahead of every other value in the society.We should not be waging jihad against business. We should be waging jihad against those who put profit ahead of every other value in the society. And that’s where in the emphasis on profit, we have gone a bit awry.
On tax and taxation policy…
The single easiest answer is that we could raise well over a trillion dollars over the next decade by simply enforcing the tax law that we have against people with high incomes. Natasha Sarin and I made this case and generated a revenue estimate some time ago. If we just restored the IRS to its previous size, judged relatively to the economy; if we moved past the massive injustice represented by the fact that you’re more likely to get audited if you receive the earned income tax credit (EITC) than if you earn $300,000 a year or more; if we made plausible use of information technology and the IRS got to where the credit card companies were 20 years ago, in terms of information technology-matching; and if we required of those who make shelter investments the kind of regular reporting that we require of cleaning women, we would raise, by my estimate, over a trillion dollars. Former IRS Commissioner Charles Rossotti, who knows more about it than I do, thinks the figure is closer to $2 trillion. That’s where we should start.
Over time I think we are going to need a larger public sector in the United States to deal with the challenges of a more complex world: an aging society, more inequality that requires mitigation, and a huge change in the relative price of the things the public sector buys, like healthcare and education. We’re going to need more revenue, beyond the unsustainable borrowing that we’re engaged in now. But the first way to get it is enforcing the law we have, which will raise substantial revenue progressively and in ways that will actually promote economic efficiency.
On raising the minimum wage and Universal Basic Income (UBI)…
I do support raising the minimum wage. It’s a matter of balance. I don’t think the minimum wage was doing any significant damage in terms of causing unemployment when Ronald Reagan was president, and the federal minimum wage is now substantially lower, after adjusting for inflation, than it was at that time. I believe raising the minimum wage would help a lot of people who are in substantial need.
I’m not enthusiastic about a universal basic income because the fact that it is so poorly targeted, precisely because of its universality, mean that it will either be prohibitively expensively or will not provide adequate benefits to the poor. Imagine a universal basic income could pay $10,000 per person—that would require nearly a doubling in the federal budget, or more than a doubling in federal tax collection, in order to finance it. That doesn’t seem to me to be remotely tenable. If you make it inexpensive, then you’re not going to be doing very much to help poor people.
On where he disagrees with Keynes’s 1930 essay on “Economic Possibilities for our Grandchildren”…
There’s a lot of empirical evidence since Keynes wrote, and for every non-employed middle-aged man who’s learning to play the harp or to appreciate the Impressionists, there are a hundred who are drinking beer, playing video games, and watching 10 hours of TV a day.
Great stuff. The only thing the US now needs is a President who isn’t a toddler.
Errata The author of Universal Man: the seven lives of John Maynard Keynes mentioned in yesterday’s Diary is Richard (not Rupert) Davenport-Hines. Many thanks to Gordon Johnson for alerting me to the error.
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In the cafeteria of the factory that makes Lenovo products — including those lovely Thinkpad laptops.
Source: a post on Reddit
Why we need a new “Office for Black Swans”
Very thoughtful blog post by Steve Unger, who used to be a senior official at OFCOM and is now an associate at the Bennett Institute for Public Policy. The first part of the post is about how Britain’s Internet infrastructure has stood up to the strain of lockdown-generated traffic increases. But then he turns to the bigger question: why are democracies so bad at planning for remote but potentially disastrous contingencies? The UK government is providing us with a sobering case-study of this tendency.
There is a more fundamental question beyond communications about how we set priorities for policy in the absence of a crisis. In good times there is a tendency to focus on positive initiatives that will result in positive news stories. This is not meant as a criticism; indeed, the tendency to take an optimistic view of the future is generally a good thing.
But it does create a risk that work to prepare for bad times is crowded out. This capability does exist within government, but it does not always receive the visibility it merits, or the senior sponsorship necessary to drive sustained action across different parts of the public and private sectors. My own experience is that it is prioritised in the immediate aftermath of a crisis, but that other priorities emerge as memories fade.
Of course, a key characteristic of ‘black swan’ events such as the current crisis is that they tend to be obvious – with hindsight. However, that does not mean it is impossible to make any preparation for them: COVID-19 is novel, but infectious diseases are not.
I remember a government minister commenting, after several years of serious floods, that although any specific flood might be a once in a lifetime event, somewhere in the country will be flooded every year. That new-found appreciation of the nature of statistics led to greater priority being given to flood preparations. We should apply that same principle more generally.
There is a strong case for creating a new public body to give these issues the sustained attention they require. Its task would be to assess the risk associated with different categories of those low-likelihood high-impact events which may not be addressed by conventional business continuity plans. It would publish recommendations as to an appropriate response. The recommendation may be to do nothing, on the basis that advance preparation is either impractical or too costly – which would at least be the result of a conscious decision. Where some form of action is agreed, it would track delivery.
Another quango? Yes, that is exactly what the response to this crisis should include.
Yep. But how do we ensure that future governments pay attention to what this body warns us about? After all, it’s abundantly clear that the present government had a graphic warning about pandemic risklast year — and did nothing — probably because at the time it was obsessed with Brexit.
David Runciman on Hobbes and power
David Runciman has embarked on a series of podcasted talks on the history of ideas. The first talk, on Thomas Hobbes and his Leviathan, is a masterly, contextual introduction to the man and his book. I wish I’d heard it before, many years ago, I first embarked on Leviathan, which I found pretty hard going on the first pass. Listening to the talk brought home to me the perennial relevance of Hobbes’s thinking.
This continuing relevance is a theme that David flagged last month in an essay he wrote for the Guardian about the questions that have always preoccupied political theorists.
But now they are not so theoretical. As the current crisis shows, the primary fact that underpins political existence is that some people get to tell others what to do. At the heart of all modern politics is a trade-off between personal liberty and collective choice. This is the Faustian bargain identified by the philosopher Thomas Hobbes in the middle of the 17th century, when the country was being torn apart by a real civil war.
As Hobbes knew, to exercise political rule is to have the power of life and death over citizens. The only reason we would possibly give anyone that power is because we believe it is the price we pay for our collective safety. But it also means that we are entrusting life-and-death decisions to people we cannot ultimately control.
The primary risk is that those on the receiving end refuse to do what they are told. At that point, there are only two choices. Either people are forced to obey, using the coercive powers the state has at its disposal. Or politics breaks down altogether, which Hobbes argued was the outcome we should fear most of all.
It’s this last risk that keeps coming to mind when thinking about worst-scenarios if the virus overwhelms the ability of US authorities to manage it. Just think of how many unlicensed guns there are in that benighted country :-(
Terrific interview with Bill Gates on the Coronavirus crisis
Ezra Klein has interviewed Gates before, but this new interview is just great. It’s an hour long, But it’s accompanied by a transcript if you want to speed through it. Unmissable IMHO,
Van Gogh in 4K
Here’s something for a lockdown afternoon — a 4K video tour of the wonderful Van Gogh Museum in Amsterdam. It’s a vivid reminder of what a wonderful artist he was. When I lived in Holland it was my second-favourite museum (first was the nearby Stedelijk — which is now doing live online tours). But this set of videos brings back wistful memories of the Van Gogh museum — coupled with a resolution to go there in person whenever it becomes possible again.
The UK gets ready to launch its contact-tracing app
BBC report here. But the app uses a centralised database — which means that the matching process that works out which phones to send alerts to — happens on an NHS-controlled server. There’s also a claim is that the app doesn’t have the deleterious impact on iPhone battery life that comes from having Bluetooth running constantly (compared with Apple-API-compatible apps, which doesn’t require that). It’s not clear how the NHSx designers are confident about this.
But the most important thing is the NHSx app’s reliance on a centralised server, which has security and surveillance risks. What it means, really, is that the UK is taking the route explicitly rejected by the German authorities yesterday.
The BBC report has a good illustration of the difference between the two approaches.
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The FTC is suing Qualcomm, the chip maker, in the first major monopoly case since the Microsoft one all those years ago. In his weekly newsletter, Matt Stoller provides a useful historical comparison to put the case in its context:
Qualcomm is a very important corporation, but one you may not have heard of because it doesn’t do consumer oriented work. The company makes critical components for cell phones, the stuff you don’t see but that goes into the guts of telecom systems. Its technology connects phones to cell networks, and it makes its money by selling chips and by licensing its patents to device makers.
The story of how Qualcomm monopolizes is pretty simple. The corporation does what Bill Gates did to computer manufacturers and what John D. Rockefeller did to railroads, as I wrote a few weeks ago. Rockefeller’s oil was critical to railroads, and Gates’s operating system software was critical to computer makers. Both of them thus forced their dependents to give them a fee not just for every Rockefeller barrel of oil or Microsoft OS license, but a fee for every one of their competitors’ as well. They taxed their competition and made it impossible to compete.
Qualcomm does this as well. As its competitor Intel explained, Qualcomm “refuses to sell [phone makers] any chipsets unless those manufacturers also purchase separate patent licenses that require them to pay exorbitant royalties for every handset they sell, regardless of whether the handset contains a Qualcomm chipset.” In other words, it’s the Gates/Rockefeller playbook. Find an essential chokehold, and use it to control the industry.
Qualcomm uses a few other anti-competitive tactics. It refused to license its patents – essentially standard and necessary for the industry – to competitors. And it cut exclusive deal arrangements with customers to box anyone else out of the market. (You can read the rest of Intel’s amicus brief if you want to hear expensive lawyers accurately whine about being treated unfairly.)
The strange thing is, though, that important sectors of the US government are trying to intervene in the case, effectively opposing the FTC. Their argument is that the suit undermines national security.
The DOJ argument is basically saying, yeah, Qualcomm does all that stuff, but Judge Gorsuch said it’s all legal and efficient, and we don’t want to dissuade the liberty to abuse patents and market power. Two other officials, one at the Department of Defense and another at the Department of Energy, also weighed in. Ellen Lord, a former defense contractor and the Under Secretary of Defense for Acquisition and Sustainment for the DOD, argued that Qualcomm’s position as a monopolist enables it to support national security and help China. A Department of Energy official Max Everett basically said the same thing.
The national security argument is BS, says Stoller, but not for the reason you’d think. He quotes an excerpt from a WSJ OpEd by Michael Chertoff, a former senior Cabinet officer in previous US administrations.
In the technology race against China, the U.S. should prefer to let competition drive innovation rather than support exclusive national champions. Apart from the economic inefficiency, a single-source national champion creates an unacceptable risk to American security—artificially concentrating vulnerability in a single point. The government’s argument in support of Qualcomm isn’t prudent, and if courts accept it, the result would be a self-inflicted wound to U.S. national interests. We need competition and multiple providers, not a potentially vulnerable technological monoculture.
Underpinning this argument is a prevailing denialism about China in the American Deep State. What happens, Stoller says, is that China either hacks US corporations to steal their intellectual property, or acquires it legally when they try to do business in China. So: China innovates at speed by topping up its own (substantial) native ingenuity with the ideas and wisdom of its US competitors, while those same competitors are locked out by monopolisation and patent restrictions from exploiting that same, locally-developed intellectual property in their own country.
