Moderate Democrats don’t have the guts to do what it takes to beat China in a tech war

Reuters

Moderate Democrats talked a lot about competing with China at Tuesday’s Democratic debate, but none of them seemed willing to spend the money to do so.
None of them seemed to have an ambitious or detailed enough technological development enough plan to do so either.
China has spent billions on its ‘Made in China 2025’ plan to dominate the technology space. It’s a country-wide effort that has led to a great many failures, but also some great successes.
Unless the US is willing to match that scale and state input — as it has done with adversaries in the past — it will be outgunned. Moderates seem too scared of being labeled "crazy socialists" to understand that.
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Democrats (and even Republicans) can all agree that the US and China are locked in a race — a race for technology and influence and economic dominance. It is a rivalry that will likely dominate the politics of this generation.

All the more reason why it is disappointing that — at Tuesday’s debate — it became clear that the party’s moderates lack the ambition to fight it. All of the moderate candidates onstage, especially Ohio Rep. Tim Ryan and former Maryland Rep. John Delaney, failed to put forth any realistic plan for meeting China head on despite recognizing the rising economic threat from Beijing.

"My plan is to create a chief manufacturing officer so we could actually start making things in the United States again, that would pull the government, the Department of Energy, Department of Transportation, work with the private sector, work with investors, emerging tech companies, to dominate the electric vehicle market," Ryan said.

The congressman mentioned this position three more times in the debate, as if the title in and of itself were some kind of plan. It’s not. It’s the same kind of pithy so-called solution that got us into this mess. Form a commission. Hire someone with a private-sector sounding title. How about a working group? Let’s call some CEOs to the White House and have some ribbon cuttings!

Here’s why all of that sounds so silly at this point in the history of US-China relations. China is outspending the US $3 to $1 on renewable energy investment. It has a "Made in China 2025" plan that is which, among other things, steers the investment of 800 state and local level funds valued at almost $320 billion, according to the US Chamber of Commerce. It has whole towns dedicated to making electric vehicles.

Sure, the electric vehicle industry is about to be completely upended as subsidies dry up. And yes, that means there will be winners and many more losers — but no matter. China got what it wanted, which was the development of a high tech industry it can now unleash on the world.

And that’s the key. If any of these moderates want to go toe-to-toe with China they need to put money where their mouths are. They need to pay a great deal of money for it. And so far none of their plans outline the will or the way to do that (especially not Ryan’s anemic plan).

Getting in the game

The last time the US was locked in technological competition with a rival — the USSR — it did not hesitate to spend. Historians argue about how much this race contributed to the USSR’s collapse, but it is certain by the 1970s Soviet officials were warning General Secretary Leonid Brezhnev that aggressive spending on defense and technology development was consuming way too much capital.

It was the United States government’s intention to exhaust Russian resources, and in the process outflank them in the technological sphere. To do that required some ambitious planning. Back during the Reagan administration part of that was a Department of Defense project called Project Socrates. It was directed by a then 30-something physicist named Michael Sekora and its aim was to track advances in the evolving technologies of the time including superconductors and high performance computers.

Business Insider caught up with Sekora last year, and he explained how he thought (and the US should think) about technological competition on the world stage.

"We have cell phones, laptop computers, smart watches, etc. as individual products," Sekora explained to Business Insider over email. "And people think in terms of the impact of these individual products. [They think] if the Chinese gain a technology the impact is they can produce these individual, separate products. MBAs are taught to put products in small little silos which they can then address as neat little packages."

"They don’t think of technologies as nodes in the technology space, which is the foundation of all competitive advantage… The nodes give the Chinese more ability to maneuver in tech space to increase and maintain the competitive advantage via excelling at satisfying various customer needs through a variety of various products and services (interconnected in tech space) that will come and go over time."

In other words, China isn’t thinking about developing the next cool tech product. The country’s leader’s are thinking about dominating certain foundational technologies that will form the basis of those products. This is a huge investment, and American leaders need to commit to the same type of investment if the US is going to compete.

Ready to take an L

Say what you want about the Green New Deal championed by Democrats like Rep. Alexandra Ocasio-Cortez and candidates like Sen. Elizabeth Warren, but at least it addresses the scale of the problem we’re talking about here. We’re not talking about re-opening a few factories and starting to make some products that China is making here in America.

We’re talking about reframing the way the US thinks about technological competition. We’re talking about the state leading its own strategy, not throwing some money at the private sector and letting it take the reins.

That means the government needs to have oversight and influence over outcomes — including failures. During the Obama administration the government handed $535 million to solar company Solyndra and let the company do its thing – that backfired spectacularly when it went bankrupt in 2011. Republicans turned this failure into a talking point, rubbing in the company’s failure as a failure for liberals.

If anything, though, Solyndra showed the government should have a bigger role in securing that companies spend its money on efficiently developing technology that will be useful to the US.

The wonder that was Silicon Valley’s capital allocation system has started funding juice makers and glorified vending machines, but won’t be enough to truly compete on China’s level. There needs to be a concerted, government effort to develop core technology that will beat China because venture capital and Wall Street aren’t cutting it.

As we take on this expensive and arduous task there will be failures. There will be dead ends. China has had a whole lot of them. Are the ideas needed to keep up, like the Green New Deal, ambitious? You bet. Does it spend a lot of money? Sure as shooting. But don’t be naive: We’re not going to beat China on the cheap. We’re not going to beat China by abdicating responsibility to the private sector — a sector whose mission is profit, not patriotism. This is a race between countries not corporates.

The private sector can help, but realistically it’s job is not to rack up wins for America. That’s the government’s job and the government should have the stones to spend enough money to do it right.

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