Required for equitable growth: predictability—established rules of the game and due process of law, rather than random reality-TV policies by chaos monkeys. Also required: an activist government willing to create and support the communities of engineering practice and the essential services that underpin the highly-productive value chains of the future. Plus a willingness to enforce an equitable income distribution. Ricardo Hausmann fears that the United States—at least the Trump-dominated United States—has none of these: Ricardo Hausmann: Does the West Want What Technology Wants? : "To ascertain what technology wants requires understanding what it is and how it grows. Technology is really three forms of knowledge...
...embodied knowledge in tools and materials; codified knowledge in recipes, protocols, and how-to manuals; and tacit knowledge or knowhow in brains.... One trick that technology uses in order to grow is modularization.... Consider the following example: Chile is the world’s largest producer of lithium and Japan’s Panasonic is the largest manufacturer of lithium-ion batteries, but it is China’s BAIC that is the largest electric vehicle (EV) manufacturer. While America’s Tesla is an admirable company, by 2025 Europe and China are expected to have over ten times more EVs than the US, which also lags far behind in the number of charging stations to support them.... Each module in the value chain benefits from connecting to other modules in the world. Modularity creates a logic that is somewhat different from simple economies of scale. EVs benefit from innovations in mining and in battery manufacturing, wherever they occur. Whoever achieves those innovations will want to connect to the places that use them.... To exploit these possibilities, innovating companies need to be able to connect to manufacturers elsewhere in a secure manner. This is exactly the opposite of what a sunset clause in the North American Free Trade Agreement would accomplish....
Implementing many technologies also requires ingredients that can be provided only through non-market mechanisms, and here governments play a critical role. Consider high-speed rail. Without government authorization and cooperation, no private company can build a rail line. Western Europe has more than 14,000 kilometers (8,700 miles) of high-speed rail, and China has over 25,000. The United States claims to have 56 kilometers, in a short stretch that covers less than 8% of the distance between Boston and Washington, DC. The reason is obvious: this is a technology that, like the electric car, requires a social decision and a government that enables that choice. In short, technology requires a society that connects to the world, both through trade and openness to talent, in order to exploit the gains from modularization....
The Spanish Empire made the choice to expel the Jews and the Moors from its realm in the late fifteenth century. It tried and failed to impose its intolerance on its dominions in the Low Countries in the sixteenth century. But after an 80-year bloody war of independence, the Netherlands emerged as a beacon of tolerance and attracted some of Europe’s greatest talent, from Descartes to Spinoza. Not surprisingly, it became the world’s richest country during the seventeenth and eighteenth centuries. Today’s populist forces may disregard what technology wants and impose their vision on the world. But they will inadvertently leave their societies, just like the US rail system, on a very slow track.
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