Potentially even more exciting is Joe Biden’s interest in replicating Darpa – the defence innovation agency that famously invented the entire internet ecosystem – in other sectors. It feels like a historic moment: in places like Dayton, Ohio, where a tight-knit group of early 20th-century inventors created an “idea factory” which gave rise to the modern ignition system, charismatic and energetic networks of talent are emerging once again. Not least because rust belt towns from Grand Rapids to South Bend have an impressive experience of what state intervention works (infrastructure projects, developing synergies between basic and applied research) and what flops (politicians trying to pick winners). But for now, the virtuous cycles emerging in the rust belt – with state money spurring entrepreneurialism and experimentation – are a heartening contrast to the vicious cycles of casino capitalism and big state meddling that plague this current economic juncture. On a recent visit, I encountered an engineer who is hoping to do to aviation what the internet did to communication, building a flight network of decentralised orbs. Once the graveyard of American automotive and steel, the Midwest is emerging, as a direct result of government vision, as a new El Dorado for the bold, the rich and the mad – not just big-hitters like Intel and Ford, but garage robotics startups and wacky inventors. The canary in the coal mine is the Midwestern rust belt, where government cash and incentives have resulted in the sprouting of multibillion-dollar semiconductor factories and electric vehicle clusters in places hitherto known only for depression. This is exactly what the US is attempting to do. But countries will only benefit if they are intentional about seizing the moment with national plans. Geopolitical and global instability could, ironically, help us out of our hole – opening up new frontiers in technology and science, as well as creating opportunities in advanced manufacturing as countries onshore strategic industries from the factories of Asia. And that demands more funding for science. And yet science breakthroughs in turn are becoming harder to achieve as it appears that we require more and more knowledge to make new discoveries of a given size. The amount of technological progress springing from spontaneous human inventiveness rather than more methodical scientific research and development seems to be slowing. But the old solutions are not going to be enough this time. I sympathise with free marketeers who balk at remedies that stray much beyond slashing taxes and red tape. Wages have flatlined, fuelling populism and emboldening far-Left militants. In the meantime, as we fail to innovate, we are also failing to boost productivity. Big leaps in AI and robotics may elude us until further breakthroughs are made in first principles and basic science. Despite the dawn of the computing age, we are stuck in the shadow of the “special century” which, from 1870 to 1970, heralded a wave of life-transforming breakthroughs, from antibiotics and plumbing to motor vehicles and the white goods. The truth, however, is that we have been languishing in a technological slowdown for the best part of 50 years. We are told that this is a golden age for technology and innovation. That is because the West faces a troubling predicament. But achieving this will be far from straightforward. Ultimately, the only thing that can break this cycle is cultivating dynamic economies that are not so toxically over-reliant on financial services or ultra-easy monetary policy for growth. In recent days, we have seen how disastrous state policy (like printing too much money) can create the need for a government-guided mega-bank merger, which creates a need for more state support. Instead, we have witnessed the strengthening of a powerful “market-industrial complex”, as big government and big banks continue to feed off each other. It is only now that the drug of cheap money – injected to ameliorate the symptoms of the banking collapse – is being withdrawn that we can see the scale of the dangers facing Western economies.Ĭontrary to the hopes of some on the Left, the revival of state interventionism since the crisis has neither stabilised nor boosted the economies of rich countries. But what followed has been little better. After the implosion of the banking sector in 2008, it was perhaps inevitable that the 30-year period of relatively laissez-faire economic management would come to an end. There is no doubt about it: the world is undergoing a seismic paradigm shift.
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