Okay, so anyone listening to this has probably been digging into some pretty intense topics,
like AI and US-China relations.
Yeah, definitely.
And we're really diving deep into all of that today.
Absolutely.
And to really kick things off, we're going to be focusing on this talk by Ben Norton.
Right.
That really kind of lays out this fascinating argument about how the US and China are approaching
technology and specifically AI.
And one of the things that Norton argues is that it boils down to this fundamental clash
between the US, which seems to be kind of obsessed with monopolies, and China, which
is much more focused on competition.
And what's really fascinating is that Norton uses this Chinese AI company called Deepseek
as a prime example.
Yeah, Deepseek is like this amazing case study.
They kind of came out of nowhere and totally shook Silicon Valley with this large language
model they developed.
Totally.
They did outperform models from big names like OpenAI.
I know.
But they did it with way fewer resources.
It's crazy, right?
It's wild.
And get this, they released it open source.
What?
Meaning anyone could use it.
Oh, wow.
Talk about a total power move.
Right.
It's like they flipped the script on how we think about innovation and competition and
tech.
Yeah, for sure.
And to make things even wilder, Deepseek's app became a huge hit in the US.
Yeah.
And it's surpassing chat GPT in popularity.
You could practically hear jaws hitting the floor in Silicon Valley.
It's so true.
It really challenged some deeply held assumptions.
For sure.
You know, we have to remember that the dominant mindset in Silicon Valley, especially among
the tech elite, has always been that monopolies are the key to success.
Yeah.
Norton really highlights this through Peter Thiel, who's like this major figure in Silicon
Valley.
Yeah, one of the big ones.
Who very famously said competition is for losers.
I remember that.
Thiel's whole perspective is that to truly succeed, you need to just dominate your market.
Right.
Become a monopoly.
Become the only game in town.
Yeah.
And he's connected to some pretty influential people too.
Oh, yeah.
Like Donald Trump and JD Vance, just to name a couple.
So this isn't just like some random idea.
It's like deeply ingrained in how a lot of these tech giants operate.
It seems like it.
Yeah.
Thiel's whole view is rooted in this concept of monopoly profits.
Okay.
When a company has a monopoly, they can basically control prices and make huge profits without
any pressure to compete.
They get to just call all the shots.
Exactly.
Wow.
And Thiel literally believes that monopoly is the condition of every successful business.
Wow.
So it makes sense that he sees competition as like this big threat.
Yeah.
I mean, it's interesting though, because this whole monopoly mindset, it isn't limited
to just Thiel.
Right.
And I've heard about that other tech giants like OpenAI, the company behind ChatGPT and
Anthropic, have also been pretty vocal about wanting to restrict Chinese competition.
So they also seem to be operating from a similar playbook.
Yeah.
Like they think maintaining their dominance means keeping potential rivals in check.
Exactly.
And this brings us to this like really fundamental question that runs throughout Norton's talk.
Can competition actually coexist with capitalism or is monopoly like the inevitable outcome?
It's a big one.
It is a big one, right?
It's a question that really gets to the heart of how we understand the relationship between
economic systems and innovation.
Right.
It makes you wonder, is the US system with its focus on private sector innovation?
Is it just inherently prone to creating these winner-take-all situations where monopolies
become like the norm?
It's a valid question.
And it becomes even more interesting when you compare it with China's approach.
Okay.
It highlights how China, with its socialist system, takes this more state-guided approach.
Interesting.
It's not about like stifling competition.
It's about fostering competition but within a framework set by the government.
So it's competition but with like some guardrails?
Exactly.
They see strategic industries like AI as crucial for national development and they're willing
to invest heavily to make sure they succeed.
So it's almost like they're playing a different game entirely.
Yeah.
It's a different set of rules.
So let's see how this could explain why the US reacted so strongly to DeepSeek's success.
It wasn't just about like another tech company entering the market.
Yeah.
It was about a company operating with a completely different set of principles.
And succeeding.
And being successful.
Which I'm guessing did not sit well with some folks in Silicon Valley?
Probably not.
And definitely not in Washington.
Yeah.
You're definitely picking up on a key point here.
Okay.
The US government's reaction to DeepSeek was swift and decisive.
Uh huh.
They basically labeled it a national security threat.
Wow.
And immediately started working to restrict its use and development.
So on the surface that might seem like a reasonable response.
Yeah.
To a potential competitor.
You'd think so but Norton kind of digs a little deeper.
Things get pretty interesting.
Okay.
He points out the irony of open AI accusing DeepSeek of using its models.
When open AI itself is known for basically scraping massive amounts of data from the
internet without much regard for copyright or intellectual property.
Oh wow.
It's like the pot calling the kettle black.
That's a perfect way to put it.
It really underscores a crucial point that Norton makes about hypocrisy in this whole
tech rivalry.
Yeah.
He also highlights how the revolving door between government positions and think tanks
Oh interesting.
Plays a role in shaping the narrative around China.
Okay.
He specifically mentions Melanie Hart from the Atlantic Council.
Uh huh.
And then there's also Mattis from the Jamestown Foundation.
Both former government officials who now advocate for tougher stances against China.
So it's almost like there's this whole ecosystem.
Yeah.
Built around maintaining US technological supremacy.
Right.
And they're not afraid to use any tool available.
Whether it's accusations of intellectual property theft or framing it as a national
security threat.
Exactly.
And it makes you wonder what's really driving the narrative.
Yeah.
Is it genuine concern about competition or something else entirely?
Because remember Deep Seek's model was open source.
Right.
It wasn't about like hoarding technology and squeezing out profits.
It was about making it freely available.
It really challenges the whole capitalist assumption that innovation requires monopoly
control.
Yeah.
It does.
So if China is embracing competition within its own system, how do they actually make
it work in practice?
That's where things get really interesting.
And where Norton brings in some economic theory to help us understand what's going on.
Okay.
So what's the work of Karl Marx?
Karl Marx, okay.
Specifically the idea that capitalism has this inherent tendency towards monopolies.
Okay.
I have to admit when I hear Karl Marx, my eyes start to glaze over a bit.
I get it.
It feels a little intimidating.
Like we're about to dive into a dense economics textbook.
Right.
Can you break it down for me and more importantly for our listener in a way that makes sense?
Absolutely.
Marx's ideas can seem daunting.
Yeah.
But in the core, they're about understanding the underlying dynamics of capitalism.
One of his key insights is that the rate of profit tends to fall over time in a capitalist
system.
Okay.
That sounds counterintuitive.
I know, right?
But bear with me.
Okay.
I'm all ears.
Help me understand this falling rate of profit thing.
Okay.
So imagine a bunch of companies all competing in the same market.
Okay.
To stay ahead, they constantly have to lower prices and cut costs.
Right?
Yeah.
That makes sense.
It's inevitable.
Exactly.
But as they do that, their profits start to get squeezed.
So they look for ways to produce things more efficiently.
Okay.
Often by investing more in capital, things like machines and automation.
Right.
And less in labor.
Marx called this the organic composition of capital.
Okay.
So they're basically replacing workers with machines to boost efficiency and keep those
profit margins up.
Precisely.
But here's the catch.
As more companies do this, the overall rate of profit across the entire system starts
to decline.
It becomes a race to the bottom.
Exactly.
So how does this connect back to monopolies?
Well, according to Marx, this falling rate of profit creates a powerful incentive for
companies to seek ways to escape the pressures of competition.
Okay.
And what better way to do that than to become monopoly?
Become the only player in the game.
Right.
Once you dominate the market, you can control prices, dictate terms, and avoid the constant
pressure of having to undercut your rivals.
Wow.
That's fascinating.
Yeah.
It is.
So are you saying that Marx saw monopolies as like an inevitable outcome of capitalism?
He definitely saw them as a natural tendency within the system.
Okay.
He believed that capitalism's drive for profit would inevitably lead to the concentration
of capital in fewer and fewer hands, resulting in the emergence of monopolies.
This is giving me a whole new perspective on how the US and China are approaching this
tech race.
Right.
It's like two different economic philosophies colliding head on.
That's a great way to put it.
And Norton uses a real world example that's easy to grasp.
Okay.
The electric vehicle market.
Okay.
In China, you have a whole bunch of EV companies competing, which has driven down prices and
spurred rapid innovation.
So it's a dynamic, vibrant market.
Very much so.
And it's a stark contrast to the US, where Tesla has enjoyed a near monopoly for years.
Right.
Allowing them to charge premium prices while innovations, some would argue, hasn't been
as explosive.
Exactly.
It's a perfect illustration of how different approaches to competition can lead to vastly
different outcomes.
Yeah.
So in the US, we see this push towards consolidation with a few giant companies dominating key
industries.
Right.
And that brings us back to deep seek.
Yeah.
By releasing their model open source, they were essentially rejecting that entire model.
Right.
It's like they were saying, we don't need a monopoly to innovate.
We can achieve breakthroughs by collaborating and sharing knowledge.
It was a radical move and one that clearly caught the US establishment off guard.
Yeah.
They weren't prepared for a competitor who wasn't playing by the same rules.
That's what makes it so intriguing.
It challenges the whole capitalist assumption that innovation requires monopoly control.
It really does.
So if China is embracing competition within its own system, how do they actually manage
to make it work?
That's a great question.
And it's something Norton dives into in detail.
Okay.
It explains that China's socialist system allows it to make massive investments in strategic
industries like AI while simultaneously encouraging internal competition.
So it's like this delicate balancing act.
Exactly.
And they seem to be making it work.
Okay.
This is getting really interesting.
Yeah.
So how does this delicate balancing act actually play out?
What tools does China use to make this happen?
That's a great question.
And I think that's where we should pick up next time.
I think so too.
This is fascinating.
Yeah.
This is just the tip of the iceberg.
There's so much more to unpack in terms of how China's approach to tech development
differs from the US model.
Absolutely.
And perhaps even more importantly, what it means for the future of innovation and global
power.
Right.
So stay tuned.
We'll be right back.
All right.
So last time we were talking about China's approach to tech, this whole idea of fostering
competition within a state-guided framework.
Right.
It sounds kind of like a contradiction.
It does a bit.
How do they actually make that work?
Well, it really comes down to a few key things that the Chinese government can do.
First they have these things called five-year plans.
Five-year plans?
Yeah.
They're basically blueprints for economic and technological development.
Okay.
And these plans set very specific goals for industries like AI, outlining where they want
to see growth and innovation.
So it's not just like throwing money at the problem.
No, not at all.
There's a strategic vision behind it?
Like a roadmap for where they want their tech sector to go.
Okay.
And then what?
And then they use state-owned banks.
State-owned banks.
Yeah.
To provide cheap loans to companies that are aligned with these plans.
Interesting.
So it's like a government-backed venture capital fund, but on a massive scale.
That's a great way to put it.
But how does that encourage competition, though?
Wouldn't that just lead to a few companies dominating?
That's where the competition part comes in.
So while the government provides support and guidance, they also encourage running.
So there's rivalry among companies within those strategic sectors.
Okay.
They create incentives for innovation, pushing companies to outperform each other.
So it's like a pressure cooker, but the government's acting as a referee.
Yeah.
To make sure things don't get too out of hand.
That's a great analogy.
It's a very different model from the US system, right?
Yeah, definitely.
Where we often see a more hands-off approach, letting the market sort things out on its
own.
So we've seen that can lead to those giant monopolies, that can stifle competition.
And Norton argues that this difference in approach is having a real impact on AI.
Oh, absolutely.
He says that China's focus on competition is driving faster innovation and lower prices
while the US risks falling behind.
He uses the example of facial recognition technology.
Facial recognition.
Yeah, China's become a world leader in this field, with companies constantly pushing
the boundaries.
Okay.
And bringing it in everything from security systems to retail stores to even public restrooms.
Wow.
I've read about that.
It sounds like something out of a sci-fi movie.
It does, bit, right?
But also kind of unsettling from a privacy perspective.
Yeah.
There are definitely ethical concerns to consider.
For sure.
And Norton acknowledges that.
But his point is that China's competitive environment has driven rapid progress.
Okay.
And he contrasts that with the US.
Where companies like Google and Amazon have faced a lot of pushback over facial recognition
tech.
Right.
Partly due to concerns about its potential for misuse.
Yeah.
Makes sense.
And while those concerns are valid, it's also worth noting that the pace of development
in the US seems to have slowed down as a result.
So we've got these two very different models.
The US clinging to an approach that encourages monopolies versus China, which seems to be
leveraging competition within its socialist framework to drive innovation.
Yeah.
It's almost like we're seeing the early stages of a new kind of tech cold war.
That's a term we hear a lot these days.
And Norton argues that it's more than just rhetoric.
He does.
He believes that this rivalry between the US and China over technology is part of a bigger
struggle for global influence.
And dominance.
Exactly.
And remember Dario M. O'Day, the CEO of Ampropic.
He explicitly called for maintaining a unipolar world.
A unipolar world.
Located by the US and its allies.
He really said.
He basically said the US must dominate AI to preserve national security.
That's a pretty bold statement.
It paints this picture of a world where technological leadership is the key to everything.
Right.
And it's a view that's shared by many in Washington.
And it's driving a lot of the policy decisions we're seeing, like attempts to restrict Chinese
access to advanced technologies.
And in investments.
Exactly.
And that points out the hypocrisy of US accusations of Chinese aggression.
Right.
Especially given the huge difference in their military interventions around the world.
Yeah.
The US has a long history of military involvement globally.
A long history.
While China has maintained a relatively peaceful foreign policy for decades.
It makes you wonder if it's really about national security.
Right.
Or something else.
Exactly.
This all raises a crucial question.
Yeah.
The rivalry between the US and China really mean for the future of technology.
And the global balance of power.
That's the big question.
Right.
If China's model proves more effective at fostering innovation and driving down costs,
could we see a shift in global leadership in tech?
And what would that mean for the US?
Right.
Which has long enjoyed a position of dominance.
It's a lot to consider.
And as Norton points out, the choices made by governments and tech companies in the coming
years will likely determine which path we end up on.
He reminded us that this isn't a new phenomenon.
Oh really?
Remember the robber barons of the late 19th and early 20th centuries?
Oh yeah.
Figures like John D. Rockefeller and Cornelius Vanderbilt, they built vast empires by controlling
key industries.
I remember learning about them in history class.
They were the original monopolists.
Exactly.
And eventually the US government had to step in with antitrust laws.
Antitrust laws.
They break up those monopolies and restore some semblance of competition.
So are you suggesting that we might be heading toward a similar situation today?
Possibly.
With these tech giants?
It's definitely being debated more and more.
Will we see a new era of antitrust action?
Maybe.
Amed at companies like Google, Amazon and Facebook?
The question is, will governments have the political will to take on these powerful companies?
That's a good question.
And if they do, what form would that action take?
Would they try to break them up, regulate them more heavily or find some other solution?
Those are some big questions and I have a feeling the answers will have a huge impact
on all of us.
Yeah, for sure.
But before we get too lost in the future, I think it's worth circling back to what Norton
sees as the core issue here, this tension between competition and capitalism.
Right.
He makes a really thought provoking point.
He uses Peter Thiel's own words.
Over capitalism and competition are opposites.
Oh yeah.
It's a provocative statement.
But it makes you think about what's really motivating these tech giants.
If the goal is to just maximize profits, then eliminating competition makes perfect sense.
But where does that leave consumers?
And what does it mean for innovation in the long run?
Those are questions we all need to be asking ourselves as we navigate this rapidly evolving
tech landscape.
This has been an incredible deep dive.
I feel like we've only scratched the surface.
There's so much more to explore.
My brain is fried trying to wrap my head around all of this.
That's a lot to take in, right?
Yeah.
So maybe we can just try to break it down.
For sure.
Distill it down into some key takeaways.
Where do we even start?
Well I think Norton's main point is that this whole US approach, this favoring monopolies
thing, it's just not going to work in the long run.
He's saying that sticking with this model might actually be holding back innovation.
Some could even lead to the US falling behind in the global tech race.
Any contrast to that with China, which seems to be using competition within its socialist
system.
Right.
As a way to speed up its technological development.
Exactly.
And he keeps coming back to DeepSeek.
Yeah.
DeepSeek is like the poster child for this whole argument.
Right.
It's a perfect example of how a different approach can disrupt everything.
And challenge those deeply held assumptions about capitalism and innovation.
Yeah, that whole monopolies are the only path to innovation thing.
Right.
DeepSeek's open source model just throws that out the window.
It's like they're saying, hey, what if we just shared knowledge?
Yeah.
What if we collaborated instead of trying to hoard everything for ourselves?
That's a really different way of thinking.
And it's interesting because the US government's reaction was to label them a national security
threat.
Even though some US tech giants are being accused of doing similar stuff, like using
tons of data without even thinking about copyright.
It's pretty ironic.
It is, right?
It's like the US is trying to protect its dominance by using the same tactics it criticizes
others for.
Exactly.
And it speaks to this deeper anxiety.
Like are we losing our grip?
Yeah.
The US has always been the leader in tech.
For so long.
But now that position is being challenged.
And not just by China's tech, but by its whole economic model.
Yeah.
One that seems to be working pretty well in some areas.
He's not saying that China's model is perfect.
Right.
No system is.
There are definitely drawbacks.
Like what?
Well, you know, concerns about the government having too much control.
Yeah.
And maybe limiting individual freedom.
Right.
It's not a simple good versus bad situation.
No, but that's what makes Norton's talk so valuable.
It forces us to really look at our own assumptions.
It makes you think about how our own economic system is shaping the future of technology.
And whether there might be other approaches worth trying.
Exactly.
He's asking the right questions.
So for someone listening who's trying to make sense of all this, what's the one thing
you really want them to remember?
Hmm.
I think the biggest takeaway is that the future of technology and how power is distributed
globally, it's not set in stone.
Okay.
There are different paths we can choose different models to explore.
And the choices we make now will have a huge impact on the world we create.
That's a powerful message.
It's like a challenge and an opportunity all at once.
Yeah.
A challenge to question everything we think we know.
Right.
And an opportunity to imagine a different future.
One where technology benefits everyone.
Not just to select few.
Right.
And if you're interested in learning more, I'd recommend looking into the history of
US antitrust laws.
Yeah, antitrust laws.
Okay.
Yeah, it's a fascinating look at how governments have tried to regulate monopolies and promote
competition.
And those lessons are probably more relevant now than ever.
Absolutely.
And everyone listening, we want to hear what you think about all of this.
Yeah.
Are we moving towards a world where power is more evenly distributed?
A multipolar world.
Yeah.
Will the US stay on top?
Or is China's approach the way forward?
Share your thoughts because this conversation is just getting started.
It's definitely not over.
Thanks for joining us on this deep dive.