International

What We’ve Lost and Must Find

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We read regularly that many of our traditional strengths as a nation are being undermined in this administration.   But frequently such pieces end up tempering their concerns with a belief in America’s fundamental dynamism and vision, as contrasted with (say) the central control of the Chinese regime.  I’m all for believing in progress, but we’re not going to make any if we refuse to recognize how deep a pit we’ve fallen into.  Like it or not we are living with an administration that has deliberately attacked precisely those “American values” we want to believe in.

Here is a notion of what we’ve lost and need to find.

  1. Americans used to believe in the future.

 It was our future, and we did all we could to own it.  Our research institutions were the peak of the world, and people came from everywhere to participate. The list of Nobel Prizes records our success.  Part of that enterprise was to understand what was possible, and we built science into the functioning of government, so we knew where we were going.

All of that is now by the wayside, replaced by Trump’s “intuitions”.  He knows everything there is to know, and what he likes is by definition truth.  That holds for climate change, for research grants, and even (incredibly) for airplane launchers on aircraft carriers.  Even for NIH—a critical source of US competitiveness—grant money has been reduced and RFK’s decision logic hidden.   We’re not looking for truth, we’re looking for loyalty.

We still have the fruits of past successes in AI, SpaceX, and BioTech (all started with pre-Trump government money) and we even have a venture capital community to help fund it.  But all of that is today.  VC’s may sound future-looking, but they’re not going to fund anything that doesn’t pay back big and soon.  All of our present investments are at risk, because we’re too busy selling the present to think more than a step ahead.  The idea that we’re going to win with bigger and bigger investments in AI hardware sounds like the Maginot Line from pre-World War II France.  That was a huge defensive investment based on their experience with World War I, but the German Blitzkrieg just went around it.  In our case the Chinese, with a broader view of AI applications, may do the same.  In addition the obligatory government payoffs from big corporations mean that new entrants face vested interests with government-protected monopoly powers.  It’s like the old joke that someone in the nineteenth century patent office proposed to close it down because everything important had already been invented.  We just did that.

The Chinese have built up their universities and research institutions to be world class.   They figured out the coming importance of rare earths, solar cell and battery technologies, and medical research.  They may have government-defined five-year plans, but at least they have competent technical input and in many areas they have more internal competition than we do.  By contrast our focus now seems to be on the past—strong-arming our friends in hopes of delivering the jobs of the 1950’s.  What we call American dynamism comes not just from individuals, but also from the opportunities for such people to succeed.  For our current leadership that dynamism is unwelcome competition for its own all-embracing genius—something to be stamped out ASAP.

To succeed we must work to see the future and provide means to go there.

  1. Americans used to believe in our people

The American belief in its people goes all the way back.  The whole point of American democracy was to capture the strength of the population.  That’s why George Washington stepped down as President from the dictatorship that most of the world expected to see.  That’s why Lincoln talked about how “government of the people, by the people, for the people, shall not perish from the earth.” The democracy was far from perfect, but it was still a big step forward.

Coming out of that mindset was the revolutionary idea of education as essential to the role of the population in a democratic state.  This country pioneered the idea of educating the whole population, first at the high school level and then for colleges.  The power of the country expressed the capabilities of its people. Even the “robber barons” of the nineteenth century recognized the need to in some sense or other give back to the society to which they belonged. Immigration has always been a tricky issue, but we have learned that a multiplicity of people can participate in the democratic experiment and that diversity can be a source of strength.

Today we have replaced all of that with a dramatically different model.  We live in an age of self-declared superheroes.  We have a President who thinks he is infallible (and spends much of his time on monuments to himself), and business leaders who are convinced they belong to a different race.

Nothing in the Big Beautiful bill shows government has a role to play specifically for the population.  We’re running a huge deficit and cutting desperately-needed benefits to poor people so we can have big tax cuts for businesses and rich people.  There’s more detail on who gets benefits here.  When Trump talks about the golden future, there is no mechanism for it other than to make rich people richer.  When he attacks Social Security (e.g. with bogus claims of fraud) he’s attacking the whole idea of direct government support for the welfare of the population.  Crucially government has no role in protecting the population from the powers-that-be running everything for themselves.  Government of, by, and for the people should perish from the earth. 

People don’t necessarily see things that way, but one way or another they understand that there is no one protecting them from the abyss.  So the AI future looks pretty damn scary, and they’re not so enthusiastic about those datacenters either.  Owning the future sounds ridiculous.

To succeed we must support our people.

  1. Americans used to believe in our role in the world.

Coming out of the horrors of the Second World War, we and everyone else hoped for a better future, a new world where this horrible thing would never happen again.  America, as the major power of the age, took its responsibilities seriously.  A world at peace was a world where everyone could prosper.  That meant rules and responsibilities for everyone and institutions to support them.  It was easy for the US to want to be magnanimous; we were the richest, most powerful nation hands down.

We’re actually much richer now than we were then, but something else has also happened.  On an international front we are no longer so dominant, with China specifically challenging us in just about any dimension of wealth and power.  That’s our primary subject of discussion for international affairs these days, but in fact that’s only part of the picture.

The other part is about American society.  After World War II our nation was as equitable as it had ever been, with prosperity widely shared and new opportunities for personal success, particularly through the GI bill and expansion of education.  In the years since then that equality has been eroded until today, we have reached unheard-of levels of wealth and poverty, beyond even the Gilded Age of the nineteenth century.  The following charts show the magnitude of the changes to both wealth and income:

There is no question that the quality of life for many people has deteriorated.  And it is conventional to say that the international idealism of the post-war years has been replaced by a grubbier reality where we are no longer dominant and every country struggles to compete with all others.  And the quality of life issue reflects that grubby struggle, in particular with the Chinese.  So the post-war idealism makes no sense anymore—we just have to win.

It is no accident that this conventional picture elected Trump.   That’s what it was created to do.  There is no shortage of money in this country, but in the years since World War II the powers-that-be have learned to protect their wealth from the population at large.  And electing Trump has enabled a pillaging of the country without precedent.  You have to blame someone, and it’s always the foreigners and the immigrants.

We certainly do have competition with other countries.  But the idea that all our economic problems are because we are under assault from the rest of the world is patently false.  Trade deficit numbers simply don’t tell today’s true story.  An example is the Apple iPhone—a big winner for the USA but counted as a trade deficit loser.  Much of the economy works like that. And the quality of life issue is unquestionably something we have done to ourselves.  This is a prosperous country, but not everyone has felt that prosperity.

In other words we as a nation are in the curious position of carrying out a foreign policy designed to protect domestic inequality! Of course it’s all about those foreigners! In that we are doubly hurt.  We are unable to deal with the actually tractable problem of population insecurity.  And we have lost our essential (and historical) role of helping worldwide stability in the face of the huge problems of climate change, nuclear proliferation, and the unclear consequences of AI.

To succeed we must—especially now—be able to recognize our broad interest as a nation in the world, above and beyond any corruption or special interests.   

We (and everyone else) need a stable, prosperous, and peaceful world for our success.  That is a worthy and achievable goal.  We used to understand these three keys to doing that, and we can do it again.  Our challenge is to recapture them—for ourselves and for our children.

America First

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It goes down too easily “America First”.  On the face of it, it’s an obvious goal for anyone running the country.  But in fact that’s not right.  The real objective is the well-being of the country and everyone in it.  “America First” doesn’t say that, and the difference is important.

America First has embedded in it the idea that all our problems are because someone else has put himself first in line.  So it sells you on what the problems are without even pretending to look at what’s true.  And it’s not just a matter for foreign affairs.  Any problem you have becomes someone else keeping you from getting what’s yours.  It’s a slogan of grievance masquerading as a solution. It doesn’t want you to ask questions.  We know who’s evil and we’ll get rid of them. It’s a slogan to hide behind.

Economics can be complicated, but this story doesn’t have to be.  Let’s talk about the good old days that Trump says he is bringing back—the postwar decades of the fifties and sixties.  What made those times happen?  Coming out of World War II we were the most equitable society we had ever been. The difference between CEO’s and working people’s wages was laughable compared with today.  The GI Bill made college affordable.  Government-funded research and development won the war and established the US predominance that remade the world. That model in one form or another also produced the post-war miracles in Japan, China, and Korea.

What’s the message today about how to reestablish that prosperity?  It’s certainly not what worked before.  No major government role in education, infrastructure, and forward-looking research.  No commitment to democracy.  No unions.  The solution is simple: the rich and powerful will make you rich, so you just get rid of anything in their way and all will be golden.  Don’t look at us–it’s other countries and immigrant parasites stealing everything that’s yours.

The one thing you can say for all that is that it has certainly been great for making them richer.  Inequality in America has reached levels far beyond even the “gilded age” of the nineteen century.  There’s a reason why we need a new message about prosperity: they’re so rich they can run the country for themselves. The following chart of net worth values show the magnitude of the change. The recent Big Beautiful Bill also fits that picture well.

Elon Musk is worth a trillion dollars.  Trump has made on the order of 10 billion for himself and his family since the election. But the broader payoff is for the indefinite future–maybe.  After all we’re told the economy is already great, the greatest economy ever.

What about all those people we’re getting rid of?  Is it really all about them?  We were told they were all murderers and rapists, but that’s not who they’re rounding up–productive families who’ve been here decades.  Supposedly that’s still okay, since once we get rid of the immigrants there will be more of the pot for everyone else.  It hasn’t worked that way.  And  there’s a lesson for that also from the good old post-war days.   The war didn’t bring all elements of society together, but it did bring some marginal groups—Jews and Italians for example—into the mainstream.  That didn’t make things worse for the others, it made things better.  Bringing everyone in meant everyone could contribute. 

What matters is to grow the pot for everyone, and that’s actually more true now than ever before.  Most of the pot is being reinvented before our eyes.   We live in a time where winners and losers are decided by companies and technologies coming from nowhere to dominate the world.  We’ve lost the real main message—what works for individuals and our country is full opportunity for everyone. We need the best and brightest from everywhere to help reinvent the future.  But we can’t work at that one, because we’re too busy spending fortunes on ICE. 

Finally we need to get back to the international part—it’s “America First” after all.  To begin with we need to recognize that the rhetoric about the whole world taking advantage of us is manifestly false.  Apple is an example of why.  We import the hardware and sell it in a combined hardware/software product worth far more than the input.  This is hugely profitable but a net negative for the balance of payments.  The rest of the world is not predatory in this transaction—we retain the high margin part, and the hardware is an intermediate product we can’t make without destroying the economics of the deal. (TSMC does make chips here, but only a small, lower-tech part of their output.) The balance of payments calculation is hardware-based and doesn’t capture what we earn from trade-enabled business.  Even adding in the contribution to balance of payments from services misses most of it.  However once you actually try, it’s not hard to show that the Apple example is far from unusual and that our trade relations with the rest of the world are a clear net positive.

It’s possible in  the future that some currently outsourced production comes to the US, but the main driver for such cases will be robotics bringing down production costs. Despite all the rhetoric, there’s no change to this picture that will recreate lots of 1950’s jobs.  If we want to solve the problems of people left behind in the last decades, we need to get past the blinders of “America First”—and follow the money. To really create jobs we’ll need some of those billionaires’ stratospheric profits. So the situation in the end amounts to something like this:

For the international case too there is a lesson from the good old days.  After World War II we put real money into the Marshall Plan for the recovery of Europe.  That money paid itself back in spades with the spectacular growth of GDP in the whole Euro-American zone.  America First would have left us vastly poorer.  The world is different now, but the economic realities are more similar than you might think.

We have to recognize now as we did then that stability has enormous value.  Even today we can see how war hurts. Conflicts are prodigiously expensive, and nuclear proliferation risks even worse.  The only way out is an international system that works for everyone—American gains far more from a system of rules than it does from turning alliances into protection rackets.  We haven’t profited from the freedom to start wars whenever we want.  And American’s freedom to declare climate change a hoax and sabotage climate action will hurt everyone—with ourselves as deniers most of all.

We as a country and as a world have a primary interest in stability and making things work.  There is no golden age to be found in holding everyone hostage—such a world would be less prosperous, and we have no assurance it would be peaceful or that we will always be on top.  Peace and prosperity are the objectives—nothing less.

Choke Points

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Everyone talks about choke points. The Strait of Hormuz was always there and occasionally mentioned as a theoretical issue–until we blundered into it. Now people talk about choke points, but still as something around the edges. Hormuz affects others but not so much us.

However choke points aren’t just geographic. Rare earths were and still remain choke points that the Chinese can use any time they want something from us. Even the military can’t function without them. The Chinese figured out those choke points and prepared, while we just trusted our future–a cautionary tale. But that’s just the beginning.

Let’s go back to a chart from our piece on trade:

🏆 Top 10 U.S. Companies by Market Capitalization (2026 estimates)

  1. NVIDIA Corporation – approx. $4.5 trillion (currently world’s largest)
  2. Apple Inc. – ~$4.0 trillion
  3. Alphabet Inc. – ~$3.8 trillion
  4. Microsoft Corporation – ~$3.6 trillion
  5. Amazon.com, Inc. – ~$2.5 trillion
  6. Meta Platforms, Inc. – ~$1.4 trillion
  7. Broadcom Inc. – ~$1.7 trillion
  8. Tesla, Inc. – ~$1.3 trillion
  9. Berkshire Hathaway Inc. – ~$1.0 trillion
  10. JPMorgan Chase & Co. – ~$0.6–0.7 trillion (approximate, rounding into the top decade range)

As noted, the top two companies are 100% dependent on hardware from TSMC in Taiwan. The companies do the design work, and TSMC builds it. For Nvidia that’s everything. For Apple there is some manufacturing in the US, but not the more advanced, product-defining chips. So the two most valuable companies in the US can do nothing without Taiwan. And again that’s just the beginning. It also says that the entire AI infrastructure on which we are basing the future of the country and for which we are investing inconceivable sums of money is close to 100% dependent on hardware from Taiwan. Those Nvidia cards from Taiwan are our supposed key advantage to win the AI race with China!

So Taiwan is a monumental choke point now and for the foreseeable future. It’s not simple for China to use it, but even harder for us to stop them. Xi made very clear to Trump that he was not to get in the way of China’s plans for the future of Taiwan—whatever those might be—and Trump immediately backed off on planned US arms sales. For the record we have also depleted our own munitions in the Iran war. And our behavior toward Cuba is hardly a model of respect for independence of an island 100 miles off the coast.

Where does that leave us? We may continue to strut around as if we still owned the world, but China has the keys. The idea that we can shake down the rest of the world because no one can touch us is patently false. We need an orderly world where we can avoid wars and count on stability of choke points. That doesn’t happen by itself; it requires allies and international norms. Otherwise it’s no longer our world, as we want to think God made it.

The Fight to the Death

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We should be explicit about the path we’re on.  We are engaged in a winner-takes-all fight for AI supremacy.  The operative assumption is that whoever wins will rule the world, because that country will control a version of AI so powerful that it can improve itself to be invincible.  Whoever wins will liquidate all opposition, so there can be no challenge to its power.  That’s the story, true or not. We’ve got to win.

There are many consequences to this.  To start with, no effective regulation of AI is possible, because it is impossible to say what constraints on AI development would get in the way of the fight to the death.  In particular some of the most obviously risky issues—such as autonomous military decision making—are the most untouchable. This the worst kind of arms race, where it’s not just a matter of parity.  Only victory is good enough. There are no effective limits to the amount of money it can take.

But even that is just the beginning.  Once you’re in a fight-to-the-death, any form of international cooperation becomes extraneous.  You can’t think too seriously about common interests when everyone is a mortal enemy.  That mindset is all too easy in any case, since common interests are always a hard sell (even for climate change). So we fall back on the world view we now get everyday—whoever has power deserves what he can get. With the Iran war we’ve gone a step farther, asserting that (with the closing of the Strait of Hormuz) we have absolute freedom to inflict damage on the rest of the world whenever we perceive gain for ourselves.

That this view is acceptable without much pushback is a matter of ultimate hubris.  It’s all okay, because we’re going to win.  In fact we’re not actually much interested in how international competition works or what it will really take to win.  We’ve been on top for so long that we’re entitled.  God will make us win.  That’s not an exaggeration of where we are. 

There’s a lot that we don’t know about the end to this story.  The future is never clear.  But there is one thing that is definitely true—we’re stumbling our way into real danger.  The risks are everywhere. For technology we’re certainly not necessarily on top—even today China is a serious competitor—and we’re burning bridges to the future by killing research investments and attacking all foreigners as parasites. Even for AI we’re a long way from the finish line, and it’s unclear whose paths will get there first. More generally we’re in a wildly unstable arms race with many new technologies, proliferating nuclear weapons, and no good way even to know who is ahead. Yet we’re using war as if it’s a regular element of national policy.

The only workable way to forestall conflict is viable common interest.  You don’t have war or countries laid waste if all parties recognize there’s a lot to lose.  (You can still have homicidal maniacs, but shared prosperity helps keep them out.)  The world needs order, starting with recognition that interdependence, economic and otherwise, is not going away.   So we had better fix it.  Start with economic issues—trade, climate change, AI—and then do something about war.  A fight to the death ends with just that, and who knows how many—both here and abroad—could pay.

The Revision of IPCC’s Climate Scenarios

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The UN’s international climate group has revised its set of possible climate change scenarios. They eliminated the most damaging scenario, because of progress in sustainable technologies and because details of the scenario itself seemed unlikely to occur. Trump and other climate deniers have seized upon this change to claim it shows all discussion of climate change is bogus. The following piece was done as a comment to an article in the NY Times.

It seems to me one of the problems with this discussion of scenarios is that people want the scenarios to tell them something different than what the scenarios are trying to do. The scenarios are attempts to model different levels of response to the problem of climate change. There is no default case where we do nothing. For that case the only limit to the temperature is the end year in the study—the temperature would just keep increasing.

The main thing that has happened since the original scenarios is that the world has taken some measures that help: costs of wind and solar solutions have come way down to the point that those make up the majority of new electricity generation worldwide. Electric cars have become cheaper, better, and more prevalent. So it’s not surprising that the current view is somewhat more optimistic.

Where that actually leaves us can never be completely clear. I’m willing to bet the models never considered that the most powerful country in the world would be run by someone trying to sabotage the whole effort. Or that data centers would suddenly demand more power than cities. Or that the Iran war would show everyone the risks of imported oil. There will always be reassessments.

This new set of scenarios should make us appreciate the work that has been done. We can make progress against climate change. But there is much that needs to happen and very strong forces against it. This will never be easy, but it needs to be done.

A Meeting in China

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Let’s talk about the basics of the Trump-Xi meeting.

What does Trump think about the situation?

He’s one of the smartest people who has ever lived and can only be compared to historical predecessors such as Julius Caesar or Alexander the Great.  His perfect intuition means that he has never made a mistake.  He is happy to be meeting with one of his only two peers on the planet—Xi and Putin.  And he has brought a bunch of his underlings (i.e. executives) as symbols of his power.  So he is there to glory in shared power and to bring back something he can tout as an achievement.  Glory is the thing.

What does Xi think?

On both ideological and racial grounds he is meeting with a representative of an old elite that is well past its prime.  Furthermore it is an elite that used its power to despoil China–Xi remembers the Opium Wars and the West’s abiding confidence in racial superiority. As for Trump, he actually started a trade war when the Chinese (with superior planning) held all the cards–i.e. complete control of “rare earth” resources required even for the military.  The Iran war is another sign of undisciplined impulsiveness—wasting enormous resources to achieve more damage than benefit.  So the challenge is how to take advantage of the opportunity. Strategy is the thing.

We can be more specific about objectives.  Trump wants some kind of big splash.  That can mean many things, but Trump’s weak position limits options. He’s not going to get a solution to Iran or a permanent relief from rare earths. One prediction has been a major new commitment of Chinese investment in the US.  That’s what he demanded from Japan and the EU. It’s true those are allies—as opposed to China—but Trump’s strategy document is more positive toward his two bros than toward them. That of course fits with Trump’s much-repeated story of all the new foreign-financed factories in the US that will make everyone rich.  On the Chinese side there are two objectives: opening the US market (e.g. for cars) and weakening of US resolve on Taiwan.  Both are useful near-tern and consistent with Xi’s longer-term goal of world economic dominance.

The scary thing is that those US and Chinese objectives could match up!  A big Chinese investment satisfies both—but only one outcome is real.  “Foreign-financed factories will make everyone rich” was always a fairy tale based on the world of the 1950’s.  It’s a mismatch with the world of today and even more so with coming AI and robotics. But Chinese involvement in US markets and technology could be very real.  Competing with the Chinese industrial machine is a challenge at best, and that would give them inside access to US markets and new means to get at US intellectual property.

The Iran war showed that Trump was ready to spend hundreds of billions of dollars and deplete US military inventories, so that he could imagine himself Napoleon.  (He’s given us every other possible explanation as well.) We may be on the verge of surrendering competition to China, so that he can imagine filling the country with 1950’s factories.

We’re so used to normalizing Trump, that we’ve become numb to consequences. This isn’t playacting; it can be real.

On Top of the Heap

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We’ve been there for more than 75 years, since the end of World War II.  We are the power that maintains the world order. As such we’ve overseen a remarkable period of growing global (and our own) prosperity.  People from both political parties agree that we are the ones that make things happen.  We’re so comfortable with that role we’ve come to believe it is ours by right and permanent.

Recently though our attitudes toward that role have changed.  We’ve now decided that since we’re in position to run the world, we ought to be able to keep more of the benefits for ourselves.  So instead of maintaining that world order, we’re now in it for everything we can get—confident that the sky is now the limit.

However we have found there’s a hitch.  We attacked a medium-sized country—Iran–to put them in their place, and we didn’t win.  Not only that, an even more minor power—Ukraine—has shown itself more capable of defending our allies than we are. We still have more bombs and aircraft carriers than anyone else, but somehow that doesn’t do the job anymore.  And the problem is getting worse.  We’ve been so preoccupied with China, we haven’t noticed that the problem is not just that.

With nuclear proliferation, computer-controlled drones, and rapidly evolving AI the past pecking order no longer holds.  Instead the future looks considerably more chaotic—with murky and changing notions of international strength and weakness and risks of conflict from both overconfidence and paranoia.  When we tell everybody our new story—that powerful countries should be able to do anything they want to everybody else (because that’s the way it ought to be)—it not always so clear which side of the story is us.  And lowering the threshold to war isn’t necessarily such a great idea either.

Whether we want to admit it or not, we were pretty stupid in the Iran war.  We ignored obvious issues when we attacked, and we were so overconfident that we didn’t do even the most basic job of preparing for the fight.  We didn’t win.  But that’s not the end of it.  Our changed notion of international roles was equally stupid and blind.  We gave up on the idea of international order just when we actually need it, when we can no longer count on always ruling the roost.

Neither problem has a simple solution.  We’re going to come out of the Iran war worse off than when we started.  It’s hard even to guess what we’ll have to give up.  For the world order things are different.  We have proven that a reasonable world order can benefit everyone (at least generally).  We don’t have to be able to shakedown everyone else.  We just have to participate in recreating and inventing conditions for international success.  That must now include addressing climate change, for example, in addition to preventing war.  The job is not simple but the choice itself is: we can either help to create a livable world or suffer in nuclear-armed chaos.

Disconnects

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One of the biggest problems with politics in this country is assumed connections that simply don’t exist.  DOGE and the closing of USAID and other government programs were money in the bank for the Trump base (instead it went to tax cuts for the rich).  Getting rid of immigrants would leave more of the pot of gold for everyone else (but growing the pot is the big issue and immigrants are contributors).   The reason we can’t have free public college here is that the Europeans didn’t contribute enough to NATO (though the Republican Party has consistently blocked any such public services).  And of course the big one—making rich people richer will trickle down to everyone else (which has never happened anywhere—they just get more power to help them keep it).

You have to be really careful with anyone’s tacitly-assumed connections.  Even if they existed in the past, there’s no guarantee they’re going to continue as before.  The particular case I want to talk about is the assumed link between national power (military and corporate) and population well-being.  For most of the 20th century that link was real.  That’s Trump’s factory economy with good jobs and the corporate might that won two world wars.  But that’s not the reality today–manufacturing is 8% of GDP, unions cover 10% of workers, and many service sectors are low-wage and dead-end.  It’s going to be even less the reality going forward.  The AI world is simply not going to supply that kind of employment-linked prosperity—there will be good jobs but not so many of them for a good long while. Experts spill ink arguing about the impact of AI, but the desperation of new college graduates (and current students) is the real world.

Many people have compared AI to the industrial revolution of the nineteenth century.  Britain at the time was the most powerful and prosperous country that had ever existed.  It was a world of fabulous wealth and horrendous destitution, both domestically and in its empire.  Eventually the world was able to adapt to the new reality, but that took a whole century of well-documented horrors.  Economies can’t adapt overnight.  The private sector will not miraculously solve the problem.  The only way is for government to create the link that is broken. (Note there is another side of this picture–we are all increasingly dependent on a relatively limited group who make the difference for rest of us. There is no alternative to spending money on education and research and also restoring our standing for the best and brightest from everywhere.)

Despite all the propaganda to the contrary, government needs a bigger role in employment. This isn’t charity. Government needs to finance work that needs to be done but won’t get done by the private sector alone.  An obvious case is climate change, which will require monumental transformations well beyond the cost of the new equipment.  (In this country we have the dubious distinction of currently paying for a huge, debt-financed, fossil-fuel-powered datacenter expansion–that will end up being reworked in short order for a cheaper sustainable successor that meets the actual needs of the 21st century.) There are also many other parts of the public sector that have been starved for years–for example in healthcare and education.  All of that sounds like a recovery plan from a depression—how to put people to work–but there’s a big difference: we have the money. As with the industrial revolution the problem is not a shortage of work or a shortage of money—it’s making the link.  This time we need to do it.

That isn’t a trivial problem, but it’s worth understanding it as THE economic challenge of our era.  The wealth growing out of the new AI economy has to benefit societies overall. In this it’s worth recognizing that the companies we’re talking about are not in cut-throat price competition with each other–if anything our problem today is too much consolidation and sector monopoly behavior.  Tech companies operate with profit margins that would have been unthinkable in competitive industries. Google’s operating margin runs over 25%. Apple’s over 30%. Microsoft’s over 40%. But we do need to be careful to make taxation work effectively, and we need to avoid an international race to the bottom.  I’m not going to attempt to solve all of that here. But I will note that the prevalence of stock buybacks is an indication that companies have more money than they know what to do with, and also that some kind of equity participation by the government in business is consistent with the value of the infrastructure provided. Fitting this wealth distribution into international trade rules isn’t simple, but we’ve done that sort of thing before–with labor standards and environmental regulations.

To end here I’d like to take the international part a step farther. There are many reasons why the world today needs new forms of cooperation–including tough problems like nuclear proliferation and war. This economic issue is everyone’s problem, and (as opposed to many other issues) it can be rationally addressed. It would also be stabilizing for the welfare of national populations.  So if we can make progress with this one, perhaps it is also a step towards the rest. We need to do it.