America vs China on AI
Donald Trump is going all-in on Artificial Intelligence to ensure America continues dominating what is easily the most important technology in our lifetimes.
And easily the most dangerous if the American government -- or the Chinese government -- captures it.
Trump’s AI Agenda
Back in January -- just 3 days into office -- Trump issued an Executive Order directing federal agencies to come up with ways to "sustain and advance" America's AI dominance.
The Order focused on 3 areas:
Permitting data centers, which are the backbone of AI and need a lot of energy.
Preventing "woke AI" in the federal government -- which pretty strongly discourages it everywhere.
Ensuring America keeps our worldwide dominance in AI, including in military applications.
Putting Meat on the Bones
On July 23rd the White House issued a 26-page report putting meat on the bones of Trump’s AI agenda.
Probably the most important is that third: keeping dominance.
Specifically, by removing red tape and allowing for AI regulatory sandboxes like we did with the early internet.
While limiting state regulation — looking at you, California. Also like we did with the early internet.
This is a big reason why America dominates the internet: Unlike manufacturing, where American companies are crippled with green and labor regulation, up until the Patriot Act the internet was pretty much one giant sandbox.
Trump wants to replicate that in AI.
Which is in stark contrast to the Biden Administration, which effectively wanted a licensing regime for AI so it censors and gaslights as a government-managed cartel.
Tech pioneer Marc Andreessen called this "absolutely horrifying," warning that government-captured AI censorship would be "a million times more dangerous than social media."
The other two pillars of the new report are mandating federal procurement -- including the DOD -- only from "ideologically neutral" AI. Which should nudge AI models to reduce their blatant ideological bias.
And easing restrictions on data centers and the enormous energy and water infrastructure they'll need.
This last is important because Europe is fundamentally crippled in AI because of their insane green rules. But China is not: if AI needs it they'll drop a dozen coal plants. Or a canal.
In other words, without energy and water we literally hand the industry to China so it can impose that censorship regime on the entire world while running circles around the US military.
What’s Next
This all matters because AI is growing much faster than even cheerleaders expected a few years ago.
AI is now 71% of all venture capital in the US, running over $300 billion annualized.
At this stage of the internet -- call it 1997 -- internet VC was just $3.5 billion, inflation-adjusted.
So going by dollars in, AI is roughly 80 times the internet.
Goldman forecasts AI could increase real economic growth by 50% over the coming decade. Prominent MIT growth economist Deron Acemoglu thinks it could double.
Currently, according to Forbes, 64% of businesses plan to boost AI spending. McKinsey projects $4.4 trillion in productivity gains -- that's almost one fifth of our economy.
Now, this is all going to do a number on jobs, especially white-collar cubicle jobs. Suggesting it's very important to remove red tape on the rest of the economy so new jobs, gigs, and hustles sprout up to catch the layoffs.
But AI's coming either way -- 80 internets is a heckuva number.
And if we don't build it in America, China is chomping at the bit.
In short, AI is at an inflection point comparable to the 1990's internet, where Washington can either let it run or capture it. Bill Clinton, to his credit, let the internet run. Happily, Trump wants to do the same for AI.
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I would question if America is actually dominating. The Chinese have been amazing at creating AI without the super-expensive chips and this is just what we see in the public marketplace. What China is doing with AI for their military, we truly don't know much about. After all, they, and Russia, have hypersonic missiles already deployed and we don't have any in production yet. China and Russia reward engineers and scientists who do great things. In America, we reward CEOs and MBAs. It is clear who will dominate everything.
Pretending what the government requires for their use is going to influence Big Tech isn't realistic. Look at how the Internet went downhill until it is now dominated by all Big Tech companies. Search engines can ignore you, leaving your thoughts in the ghetto corner of the Internet, intentionally ignored. YouTube (Google) recently shut down a critic of Ukraine. You think AI won't be any different? Big Tech will reap all the rewards and the people will get nothing but electrical brownouts and water shortages. The states most certainly have every right to regulate datacenters which suck up such large amounts of electricity and water.
Predictions are relatively useless. How did the Internet work out? It helped kill and is continuing to kill, a lot of brick and mortar stores and jobs. Amazon is replacing people with robots. Remember the Internet bust? There will be an AI bust as well. Losing companies' stocks will drop like a rock. No one yet has come up with an AI which can do a job well because AI has no idea when output is absurd and makes it up when it simply doesn't know something.
Big Tech will do just like the Internet and the President and Congress will let them, as they love big campaign contributions. AI will be woke, no question there. You can see this now and the Administration will have zero influence on this. Just like the anti-Ukraine poster thrown off of YouTube, inside the Beltway no one cares.
"Suggesting it's very important to remove red tape on the rest of the economy so new jobs, gigs, and hustles sprout up to catch the layoffs." This deserves a post or series of posts. The subject can be taken well beyond red tape, banking, taxes, etc.