Innovation and adopting innovations requires trusted and functioning institutions. The US and Europe have neither
A lot has been written about the shift the US administration has caused in the global macroeconomic landscape over the past few weeks, most of it focusing exclusively on the near- or medium-term.
Like most epoch-ending ruptures, its effect is likely to be less than expected when you focus on the weeks that immediately follow and much greater than expected when looking at the years.
The US has effectively given up on trying to be competitive with the other leading economies of the world and the EU has a very short grace period for detaching itself from that sinking ship if it doesn’t want to get dragged down with it like a barnacle on the hull of the US economy. (Iceland, as a part of the broader European Economic Area would be a barnacle on the barnacle in this analogy.)
Innovation comes from research and education. Corporate research builds directly on public research, both in terms of the research itself but – just as importantly – in terms of recruitment and research talent. Universities are where researchers come from. Creating innovation requires institutions that both function and are trusted and it requires a functioning education system.
Innovation – new technologies and approaches – need functioning institutions if they are to be safely adopted. They need studies that are broader in scale than can be executed by individuals or smaller organisations to determine whether they are a net positive or not. Functioning institutions are how we get studies that demonstrate that homeopathy doesn’t work or that a particular drug performs about as well as a placebo.
Trusted innovation is also why people and companies feel safe to try new things. They assume that products that are outright unsafe would not be allowed on the market, so trying a new thing is unlikely to harm them or their company.
These assumptions have been unsafe for a while now.
Most public institutions in Europe, Canada, and the US were severely compromised by the austerity measures that were the standard western reaction to the 2008 financial crisis and have been starved of funds and resources since, which means they’ve never managed to repair the damage.
Outside of the universities, US public education has been poor for a very long time. My granddad used to work with a lot of accomplished Americans, but of the economic class that generally came up through the public education system (not privately educated) and he constantly joked about how incredibly ignorant they were about basic facts.
Post-war US has always siphoned off the best and the brightest of its allied countries. They come to study at their universities and stay and further the US economy and academia.
This is almost certainly over. Considering that our institutions never recovered from mere cutbacks during the austerity era, it’s outright impossible for US institutions to ever recover from the destruction being wrought against them today.
What this means is it doesn’t matter if there are safe and useful ways to use large language models or other generative models. We have dismantled our safeguards. They represent central control by tech companies over core parts of our culture and economy and there aren’t any checks on their misbehaviour or abuses. We can’t trust, as individuals, that they can be safely adopted because the institutions supposed to ensure that safety effectively no longer exist.
US and European states and companies are adopting volatile and unreliable mediocrity generators while broader institutional processes and safeguards are either being outright dismantled – in the case of the US – or still compromised from years of resource starvation.
This would be bad enough on its own if it weren’t for the competing economies in the world that are waiting to capitalise on the vacuum created by these actions.
They are all dysfunctional or even abusive in their own right, what’s important is they are dysfunctional in ways that are different from Europe, Canada, or the US.
- Their research institutions aren’t reliant on the Americans.
- Many of them aren’t cutting back on their investment in science or research and have instead been increasing their funding.
- They are, for the most part, ahead of the US and Europe when it comes to tech.
- Many of them have functioning institutions that can actually respond to crises and excessive corporate misbehaviour.
This means that we’re in the situation where US and European companies are likely to suffer when trying to adopt generative models for automation – chaotic, mismanaged, and misbehaving tech behemoths like Microsoft, Apple, Facebook, Amazon, or Google exacerbate the risks of the technology while at the same time compromising the (still) hypothetical benefits.
But companies outside of the US’s immediate sphere of influence are in a very different position. If there are to be non-hypothetical large-scale productivity benefits to the technology, companies based in countries with still-functioning and still-trusted institutions are much more likely to be able to adopt it safely.
The same applies to pretty much any productivity innovation you can think of. The same technology might result in a -10% decline in productivity in a “western” company – because of the unfettered chaotic and extractive behaviour of the “innovator” – might result in a +10% improvement in a company based in states with functional institutions.
To use a food safety analogy:
Promoting the drinking of milk should, in theory, improve public health. Calcium strengthens bones which benefits both the young and the elderly.
But if you can’t vouch for the safety of the milk – if you can’t be sure that it isn’t adulterated with something harmful or that it hasn’t been contaminated with a bacteria – then the more people drink milk, the more people die.
Same action; opposite results.
It’s hard to see how our economies can continue for long in their current form. Much of what keeps the economies of Europe, Canada, and the US relies on the US being institutionally functional. When those institutions start to fail – and they will, it’s now just a matter of time – then those failures are likely to cascade into the rest of the economy as innovations and actions that formerly provided a benefit will shift to being a negative.
This is a separate issue from the ongoing work done by public institutions for preventing and mitigating disasters, such as hurricanes, epidemics, or natural disasters.
The basic contract that holds together our markets is threatening to unravel.
There’s a chance that European countries and Canada might step up and bolster their own institutions as a response to US failures, but it’s equally likely that they will respond with austerity measures that compound the problem.
Just look at what’s happening in the UK. It’s an economy in a death cycle – British citizens are living on a corpse ruled by the maggots feasting on the remains.
And, unless the rest of us are careful, it’s where we’re all heading.