Arthur Kroeber: evaluation

Transcript context

…Another thing to consider when discussing the virtue of such a system is that you can't just look at the results over the course of 20-30 years and say, “Since they were able to pick the key technologies over this period, therefore this system is preferable.” It's somewhat similar to looking at one successful dictator and saying, “Because they made the right calls, dictatorship is the right model.” I actually don't know that much about what Japan was doing from the 40s to the 70s. But I assume MITI, or whatever, made some right calls about which electronics and cars are important. But in order to judge, how plausible is it that this level of competence and foresight and luck or whatever mixture they're in will continue into AI. What happens after that? Whatever's required as an input into that, speaking of which, let me ask you about that. Well, actually can I just stop you there. There are a couple of things that you touched on there that I think are really interesting that I'd just like to put on a little bit more. Past results are no guarantee of future returns, right? Just because you did it before doesn't mean you can keep doing it. We're seeing that now in the US. A few years ago, I would have said I had very high confidence that the US will be able to retain the basic political system and structure that it's had for a really long time. That's one of its enduring strengths, that that infrastructure remains. I'm much less confident about that. Similarly, in China, you have this problem that they've had a succession of top leaders since Deng Xiaoping with very different styles and power bases and so forth. They've managed to succeed through a range of these things. That gives you more confidence that they're probably more likely to do it right in the future than not. But there are still a lot of concerns about that. Xi Jinping has basically declared himself president for life. We haven't been in that situation in China for a long time. Last time we had that, it did not end well. There's always been a trade off between growth and control in China. This is kind of the central dilemma that the Communist Party has had, “We want as much growth as possible, but we also want to maintain a pretty high level of control.” That pendulum has swung much more towards the control side of the equation the last few years. Growth is slowing. So you have a lot of problems. However, I would make a couple of points. One is that China has been successful in its industrial policy less so because they picked the right industries and more because they were very adept at building the right enabling infrastructure. I would point to two things in particular. One was a program that they had starting in the 1990s, which in English has the very ungainly name of informatization. So it translates a Chinese term which just means “xìnxīhuà” (信息化). It means informatization, taking information technology and putting it everywhere in society. They were early adopters of the IT revolution, including the Internet. If you think back to the discourse around the Internet in the late 1990s, everyone was saying the Internet was the death knell of authoritarian regimes because it empowered everyone to have information. Information control is no longer possible. Social control is no longer possible. Would that that were true, right? The Chinese government very, very early said, “No, that is wrong.” We think that the Internet can be an instrument. We can use it to, number one, promote technological development at a high speed in China, and number two, enhance our control of society. They have been proved absolutely correct in that bet on both counts. They had a drive to network the entire society. velopment at a high speed in China, and number two, enhance our control of society. They have been proved absolutely correct in that bet on both counts. They had a drive to network the entire society. They started to invest in very, very early, initially just through ordinary fixed line telecoms networks, but then they were very early in mobile and then getting government network systems that communicated across the whole country. They invested huge amounts in that. It's been, I think, very beneficial to the rise of all kinds of things. It's why basically they were able to create an entire Internet of their own with its own companies that doesn't have the participation of the US global companies and is on its own terms basically just as successful. What they also recognized was that if everyone's on the Internet, and we have people watching the Internet, then we know what everyone is thinking all the time. We can see that. This is the holy grail of Chinese leadership since the second century B.C. They sit on top of this vast empire. It's great. They have all this territory, all of this wealth is flowing in. But they have no idea what people are thinking or doing far away. This has bedeviled every Chinese administration for thousands of years. Even into the 1990s, it was an authoritarian system but it was very fragmented and it was very, very hard for the central government to really have any idea what was going on. Now we have a panopticon because everyone is online. If we control the online universe, then we see everything and we're pretty confident that we can keep the discourse under control. They won that bet. The comparable move that they are making today, which I think is severely underappreciated, is that they believe in the power of electrification. Electricity has been around for a long time. Still in most countries it only accounts for about 15-20% of the total final consumption of energy. It is still actually a minor player in the global energy equation, despite having been around for 150 years and being very critical in a lot of applications. China very early on recognized that they needed a lot more electric power. The original reason was very prosaic. They had a lot of power shortages in the early 2000s that were making it hard for their factories to run. They said, “Oh, we have to build a lot more generating capacity, most of it fueled by coal, just so we can keep our factories running.” That was the first thing. Then they started to think about it a little bit more and they started to say, “Actually, what do we want? Well, we know we're failing in this drive to make cars with industrial combustion engines. It looks like we're never going to be able to crack that nut and have our own Toyota or General Motors. But no one's making electric cars. Maybe we can be the first to do electric cars” So they said, “We got to do that.” Then they said, “Oh, we need to enhance our domestic transport infrastructure. Wouldn't it be great if we had a giant high speed rail network just like Japan, except we're 20 times larger than Japan, so it has to be 20 times as big. Let's do that.…

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