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Anti-China hawks in the US are eager for a New Cold War that would disentangle the two mega-economies, especially their technology sectors. They see the inevitable economic disruption as a necessary evil to bolster US national security. And there might be even a partially beneficial economic offset if a slice of Asian manufacturing returns to American shores.
But some nationalists are more optimistic about the potential economic gains from escalating the current trade conflict into something broader. According to this view, the New Cold War would pit the two economies in a high-stakes competition for technological supremacy — and thus geopolitical dominance — in the 21st century. The sense of urgency would force each side to marshal all of their resources and talent in pursuit of victory. Space Race, meet the AI race. The resulting scientific advances and tech innovation would boost both economies. And with prosperity rising, neither side would risk the cold war turning into a hot one.
The seeds of this hot-take argument might be found in the 2014 book War! What Is It Good For?: Conflict and the Progress of Civilization from Primates to Robots. In it, archaeologist Ian Morris argues that war, over the long run, “has made humanity safer and richer,” in part because of the military-driven investment in scientific and technological research. Or maybe the inspiration was the 1998 film Armageddon which has a scene where the American president tells a global audience that “all of our combined modern technologies and imaginations, even the wars that we’ve fought, have provided us the tools … to prevent our own extinction’’ from an approaching planet-killer asteroid.
The stirring music of composer Trevor Rabin beneath that speech almost wins the argument. But I have a few notes. First, I might be more open to the idea that closed-off tech ecosystems are good for growth if I wasn’t in the middle of rereading A Culture of Growth: The Origins of the Modern Economy, where economic historian Joel Mokyr argues that scientific openness and collaboration across a fractured Europe between 1500 and 1700 — a transglobal marketplace of ideas — was pivotal in laying the ground for the Industrial Revolution. A reminder: there might be costs in trying to keep apart American and Chinese AI researchers or making America otherwise less hospitable to high-skill immigration.
Second, is war really necessary to drive and diffuse technological progress? Or is it the opposite? In A Great Leap Forward: 1930s Depression and US Economic Growth, economist Alexander Field documents US productivity gains during the Great Depression, finding World War Two “disruptive of the forward pace of technological progress made in the private sector.” And it was the “expansion of potential output during the Depression … that laid the foundation” for the postwar economic boom. While the Cold War-driven Space Race between American and the Soviet Union certainly generated economically valuable spinoffs, it is interesting to note that both of the leading books on the history of American economic and productivity growth — A Great Leap Forward and The Rise and Fall of American Growth by Robert Gordon — ignore the Space Race.
Third, there are other ways to drive technological progress other than the threat of losing a war — hot or cold — especially if that threat prompts self-defeating policies. How about the positive pursuit of audacious tech goals, such as seriously advancing clean energy, genetic editing, transportation, and space commerce? Americans seem ready for it. Or maybe the reality of America’s long economic stagnation will provide a catalyst for action. It’s been a decade after the end of the Financial Crisis and even big tax cuts don’t seem to have shaken the economy out of its 2 percent growth torpor. Higher living standards seems like a goal most politicians should be able to get behind.