China-US tech competition: J.D.Vance

Author J.D. Vance – yes, of Hillbilly Elegy fame – made a comment in an interview that neatly laid out the issue with China and technology, one that has ramifications for Australia.

J.D. Vance (CC City Club of Cleveland)

“One of the really worrying things that I think about from a macro perspective is, if you invest in a real technology enterprise, one of the things you have to be worried about is that, when that company hopefully goes global and scales, it may have the very thing that makes it a good investment just stolen by the Chinese.”

“And in that world where we’re worried about investing in real technology companies because we’re terrified that the Chinese are just going to steal it, we’re not going to have as much technology innovation.”

“That means we’re not going to have as much productivity growth.”

“And ultimately, that means we’re not going to have as many people with good American jobs who are building and creating those new technologies. So I think that China is the threat.”

Vance, who works in venture capital, hits on a point that really illuminates the nature of long term techno-competition with China. As it stands China’s technology policy can dissuade companies and investors from expanding into new areas or moving up the food-chain of innovation. Why do it, if it’s just going to be stolen by China?

One feature of the Cold War was the considerable ignorance of the rival bloc’s technology. Today, the arc of China’s modern rise is to use the internet to hack and download things that aren’t available through the open market or through forced-technology transfers. So the technology a Western company makes is likely to be stolen and sold right back to Western countries – partially or in full.

Of course, this effect alone doesn’t account for the lull in innovation the US and West has experienced. There has also been a laziness and lack of adventure, not to mention the effects of the seductive lure of free trade ideology in recent decades. But one of those effects in a globalized, free-trade market, is what Vance describes so well.

The US is just waking up from this. Joe Biden, while recently espousing industrial policy, observed that “we’ll see more technological change in the next 10 years than we saw in the last 50.”

The comment from Vance points to the long-term landscape of competition between free democracies and China. How do you plan and invest if at any time, you’re precious IP is swiped and copied? Western inventions, governments and investors must prepare for innovation in a world, where this thievery is the new normal. How can they be successful?

For Australia, the more it diversifies its economy away from commodities and education and into technology, the more this problem will emerge. In fact, the higher the food chain of tech development Australia’s goes, the more it will come into conflict with China’s privateering industrial policy.

The meaning of Facebook’s (brief) Australia news ban

On social media, even when a fact is agreed on, its meaning can easily be reverse-engineered. The thought came to mind watching Facebook’s battle with Australia over the country’s news media code.

The passage of the world-first News Media and Digital Platforms Mandatory Bargaining Code on February 25 handed a measure of commercial leverage back to Australia’s media, which had, like media elsewhere, seen its ad revenue chipped away at by the digital ecosystems created by Facebook and Google.

Following years of inquiries, the law was about to pass Parliament when Facebook, in what was seen as a hard-bargaining tactic, deplatformed Australian news. (Read the rest at Tech Policy Press).

US supply chains to reach ‘communities of color’

As noted earlier, the Biden Administration is seeking to link foreign policy with domestic policy. Specifically, Biden is seeking an economically stronger middle class and working class, while ensuring that historically disadvantaged communities, including those of color, benefit.

Yesterday, Biden signed an executive order aimed at more resilient supply chains with the longer-term strategic goal of competition with China.

The statement ends with a discussion about the impact on jobs and communities within the US.

President Biden has directed his Administration to ensure that the task of building resilient supply chains draws on the talent and work ethic of communities across America, including communities of color and cities and towns that have for too long suffered from job losses and industrial decline. As the Administration implements the Executive Order, it will identify opportunities to implement policies to secure supply chains that grow the American economy, increase wages, benefit small businesses and historically disadvantaged communities, strengthen pandemic and biopreparedness, support the fight against global climate change, and maintain America’s technological leadership in key sectors.

A warehouse (cc Reycenas)

So in the Biden playbook, the nation’s “unlimited competition” with China will run right through communities in need of jobs, higher wages and more opportunity. Whether Biden will be successful remains to be seen, of course. Biden will require support in Congress. Having said that, programs that see government dollars flowing to localities can always be shaped to gain a given representative’s support.

Is there any precedence for this? Yes, actually. NASA’s creation is a one example. People today wonder why NASA has so many facilities flung so widely across the US and the South. This was done during the Civil Rights era, in part, to assure that people in places like Arkansas, Mississippi, and Alabama benefited from the space race, as well as California, Texas, and Florida.

The US middle class and foreign policy: democracy’s new dance

Joe Biden

I wanted to push a little deeper on the question of how (or even why) US foreign policy should be more in sync with the middle class.

So I’ve recorded a podcast that discusses this potential new direction in US democracy – the effort, however early, to ensure that US foreign policy goals support working families. This is an idea US President Joe Biden mentioned in his foreign policy speech on February 4.

US President Joe Biden

In my podcast, I mention the report by the Carnegie Endowment for International Peace from 2020, which can be found here.

Also, the 2018 World Unpacked podcast, also by CEIP, hosted by Jen Psaki in which CEIP’s Salman Ahmed discusses his findings from visiting Ohio, can be found here.

Both the report and podcast are well worth digging into, especially as the ideas appear to be shaping Biden’s approach.