How bad would it be to lose the AI race?
The AI boom is continuing at pace in spite of the fact that AI as a product does not seem to be making money. A lot of the investment in the US and Europe seems motivated by a top-down, imposed belief that AI will become not just another useful productivity boost but a qualitatively different technology which will determine a state’s power and prestige. As such Eurocrats, American security types, and the Silicon Valley tech types have formed an unholy alliance dedicated to making sure the West does not fall behind in the “AI race”. But how bad would it really be to fall behind?
First, we need to ask whether AI will be a useful technology or it will turn out to be a parlour trick? Obviously, the more useful AI turns out to be, the worse it is to fall behind. But usefulness is not a binary. And useful technologies come in two types: wide and narrow. For example, electricity, the internet, and the internal combustion engine have turned out to be incredibly impactful technologies without which the modern world would be unimaginable. These technologies have turned out to be widely applicable, which would mean that failing to adopt them have wide ranging consequences, and there is a chance that AI will be a similarly broad technology.
There are also narrow technologies which have had major impact even though most people never need to use them. For example, quinine enabled European colonisation of many tropic and subtropic regions where malaria had previously been a major obstacle. Despite the fact that most Europeans then, and most people today will never need quinine for medical reasons it has unquestionably changed the world. Another example of a narrow but hugely impactful technology is the marine chronometer which enabled sailors to figure out their longitude while at sea so as to be able to navigate across major oceans. Again, not an invention which ever became widely used, but impactful nonetheless.
If we assume AI turns out to be an impactful technology, whether widely or narrowly applicable, then there is unquestionably some cost to falling behind. But there might also be some powerful benefits to not being on the bleeding edge. For one, it is expensive to build AI data centres and to train models. And there is always a risk that a promising model for AI usage becomes suboptimal after new discoveries are made, which would render investment in the previous model a sunk cost. To give a concrete example, since 2022 the dominant idea about AI deployment has been that it should be for consumers. The idea is that the way you make money through AI is investing in data centres which a regular person would reach out to for their AI needs. In essence, it has been assumed to be a wide technology.
A recent The Economist article suggests that AI development is moving more and more towards a centralised model where instead of every person using AI for simple everyday things like web search and booking hotels, perhaps every major company will have their own AI mainframe to use for complex tasks. If that scenario comes to pass, American tech companies will have wasted billions on preparing for a use model which will never materialise. Perhaps being behind isn’t so bad.
Furthermore, as history has shown, places which were economic backwaters less than a hundred years ago like South Korea and China have been able to catch up to the West even though they were nowhere near the technological cutting edge, and have in some industries overtaken their old rivals. So it is by no means certain that being “behind” now will translate to the US and China having an unsurmountable lead in the future.
I would argue that not rushing in to a new and untested technology is the optimal strategy, especially when there are others who are eager to risk their time and money on this AI experiment. Slow and steady wins the race, even the AI race.
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I've always been interested in politics, economics, and the interplay between. The blog is a place for me to explore different ideas and concepts relating to economics or politics, be that national or international. The goal for the blog is to make you think; to provide new perspectives.
Written by Karl Johansson
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Cover photo by Nishant Aneja from Pexels, edited by Karl Johansson
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