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The US Economy is on the Verge of Being Outperformed

I was passing through O’Hare during my recent flight to Beijing to keynote and kowtow at the three-day T-Edge tech conference. I jerked around as I passed a Hudson’s News and grabbed a copy of the New Yorker to read during my flight. Piquing my eye was the cover splash on “A Silicon Valley Power Broker Calls Out Big Tech.”

The article turned out to be a celebration of my old friend and inspiration Roger McNamee of the regnant banking family in Albany, NY. Down the turnpike from my home in Massachusetts, Roger in his youth was an upper-class rebel and all-round charming rake.

Graduating from Yale and doing business school at Dartmouth, he grew his hair long and mixed an avid avocation on the rock guitar, stage name “Chubby Wombat,” with a career as a leading Venture Capitalist. From Kleiner-Perkins to Silver Lake to Elevation Partners, he invested early in Amazon and heavily in Facebook and made billions.

I admired the guy as a shrewd observer on technology with a flair for interesting commentary and an admiration for Jerry Garcia. He was an engaging presence at my Telecosm conferences.

Now he is a symptom of the self-hating culture of American elites, embracing climate change angst and turning against the technologies that have enriched them. Suffering billionaire’s remorse and chagrin over the discovery that “these guys all wanted to be monopolists,” he is back on the Chubby Wombat circuit touting his book, Zucked: Waking up to the Facebook Catastrophe.

“I have a hippie value system,” he explained to New Yorker writer Brian Barth, “I’m always going to speak truth to power.” The truth is that the revulsion against Facebook and its ilk is the real catastrophe, turning the social network into a manipulative maze of “groups,” and rules and fences and divisions. Increasingly eclipsing the America’s high-tech empires are more advanced and integrated Chinese companies. Companies such as Ping An, Tencent, and Alibaba.

China Keeps Pushing Ahead

The truth is that rich hippies, resentful at the success of new generations, anxious over their own wealth, are in the process of enthroning Xi Jinping and his followers as the rulers of the world economy.

During a rousing trip to China — where for what it’s worth I was named one of the world’s “50 leading tech thinkers” — I visited a new Chinese “free zone” emerging on Hainan Island in the south. Hainan has been promised “free-flows of people” [no visas], “data” [free internet, perhaps even Google!], and trade [no tariffs].

During a six-mile run around part of the huge Island, I discovered many empty buildings and aborted projects that suggested to me the motivation for the free zone was to revive growth on the well-tested pattern of the special economic zones of the north. Free zones mimicking Hong Kong, had made Shenzhen and Shanghai the world’s leading cities.

Unlike most American and European politicians, who want to smother high tech in McNamee’s new regulations, the Chinese communists amazingly are smart enough to know that the best way to attract immigration and growth is to cut back on government. Unlike American university students, the Chinese Communists know socialism doesn’t work.

When I returned to the United States, my colleague Habi Zhang alerted me to a further symptom of American decline, a massive PBS Frontline documentary on the “threat” of artificial intelligence (AI).

Although the show made gestural references to the promise of the technology, it was too gullible and sentimental to see through the Luddite fears of lost jobs, state surveillance, and trans-human singularities.

AI is simply the next generation of computer technology. People are not employed because they are unproductive. By making people more productive, AI both renders them more employable and generates the capital to endow new work. Repeatedly quoting stupid observations about 50% of all jobs being in jeopardy, the film mostly ignores the fact that 80-90% of jobs are always in jeopardy.

To treat technology chiefly as a threat to employment shows a degree of economic obtuseness that would embarrass a Chinese communist. Yet, these much-laureled American documentary journalists, resourceful in using web technology themselves, choose this moment in our history to produce a down-beat screed full of images of dolorous unionists and bleak midwestern factory sites.

And people wonder why the US economy is on the verge of being massively outperformed by China at the same time that we connive with Communists closing off Chinese markets to our technology.

I discuss this idea in great depth in my flagship newsletter, The George Gilder Report.

I’m running a special deal that ends tonight for my Daily Prophecy readers.

Regards,

 

George Gilder
Editor, Gilder’s Daily Prophecy

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George Gilder

George Gilder is the most knowledgeable man in America when it comes to the future of technology — and its impact on our lives.

He’s an established investor, writer, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance.

And he’s certainly no stranger to the financial newsletter...

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