Jan 28, 2025
The revelation that China’s DeepSeek has built a better artificial intelligence (AI) mousetrap than its much richer American counterparts set off a panic among tech investors Monday, causing the Nasdaq index to plummet. DeepSeek’s success despite Washington’s blockade on high-powered Chinese chips set off a similar freak-out among the ascendant AI barons — who just last week were in Washington cozying up to the political powers during President Trump’s inauguration. The chest thumping and fist bumping over the Trump administration’s grandly named Project Stargate and its half-trillion-dollar AI investment pledge looked a little ridiculous Monday when a Chinese firm with no such advantages seemed to become an overnight leader in the field. And there’s reason to freak out. If protectionism is not giving U.S. firms an advantage, maybe America’s technological edge of China will be much shorter than thought, if it still exists at all. The space race between the United States and the Soviet Union began in the middle of the last century. It was a military matter, since space represented the ultimate high ground from which the newly nuclearized foes could fight. It was also about national pride at home and global status abroad. Looking for allies and proxy states, it was nice to be able to be the master of the final frontier.  But it was about economics, too. America won the space race through ingenuity of our scientists and physical courage of our astronauts, but also through an overwhelming economic advantage. The U.S. has spent hundreds of billions of dollars on space exploration — the Apollo program that took us to the moon ate up more than $300 billion in modern-day dollars over its 1960-1973 run. You have to be a pretty rich nation to not only afford that but have it be a relatively minor expense compared to defense and welfare spending over the same period. Soviet communism could not keep up. Aptly, the Cold War came to its closing chapter on the subject of space. When President Reagan vowed to build a space-based missile shield to make Soviet intercontinental ballistic missiles irrelevant, the technology was nowhere near ready to back up the threat. But Premier Mikhail Gorbachev knew well what America had done and spent on space in the previous 30 years and couldn’t dismiss the threat. If America could go from humiliation at the launch of Sputnik in 1957 to hitting golf balls on the moon 14 years later, who could say for sure that Star Wars was a pipe dream? The Soviets couldn’t keep up, but still shoveled their scant resources at the problem, until their deprived people were ripe for rebellion. That’s been the model many American leaders have had in mind in dealing with China, our major geopolitical foe of this century. America, free and prosperous, versus China, oppressive and backward. But that is, at best, only half right. The Soviet Union devolved to brute repression to keep the ruling class in power and protect the premise that communism would prove to be a better system than Western liberal democracy. After the horrors of Mao Zedong’s rule, China’s leaders have built a hybrid system in which capitalism — or a cartel version of it — coexists with absolute state control over the lives of its citizens. China has been doing both for 40 years, but never has developed a broad middle class of the kind that demanded political reforms in the West from the 18th century onward. There are many reasons to think that China is in big trouble as it peers into a demographic abyss brought on by its former one-child policy, but that also adds urgency to Beijing’s project of winning the AI arms race. Washington’s response so far has mostly been defensive, with the aforementioned chip restrictions, the on-again, off-again crackdown on TikTok, and the CHIPs Act, a 2022 law that seeks on-shore the manufacture of advanced semiconductors. DeepSeek is pretty strong evidence that stopping China may be impossible. Instead, it will have to be beaten. Doing that will present some painful conundrums for America, still in the throes of an age of populist outrage that has been burning since the financial panic of 2008.  Project Stargate seems out of place for a MAGA movement that prides itself on representing the the working class and manufacturing brawn. Yet it was the leaders of Apple, Meta, Google, Amazon and, of course, Mr. X, Elon Musk, who stood like groomsmen at the inauguration instead of the CEOs of Ford, Exxon and Boeing. Some of Trump’s supporters have worked to build an ideological scaffolding around the MAGA movement. Best personified by Vice President Vance, this worldview holds that big tech companies constitute an existential threat to the American way of life and must be regulated, broken into smaller pieces and generally brought to heel. Then what’s with the leader of the movement yukking it up with Mark Zuckerberg and Jeff Bezos or launching a $500 billion moonshot program for AI with other techlords? Trump fans may not care too much, since it’s the CEOs bending the knee to Trump, not the other way around. But it certainly points to trouble for the work of building a lasting version of Trumpism without Trump. In the fight with China, Trump’s preeminent objective, the fact that America is home to the biggest tech companies in the world is a huge asset, one he seems right now very much inclined to make use of. But to beat China in the AI race, Trump will need his new friends to be unbound, not hemmed in or broken up. Will, like the Heritage Foundation’s ill-fated Project 2025, the right-wing proponents of a federal crackdown on big tech find themselves disregarded by Trump, who has never been much for ideological consistency himself? ...read more read less
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