{"id":287054,"date":"2025-02-03T12:00:43","date_gmt":"2025-02-03T12:00:43","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=287054"},"modified":"2025-01-29T02:56:15","modified_gmt":"2025-01-29T02:56:15","slug":"us-capitalism-just-got-a-black-eye","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2025\/02\/us-capitalism-just-got-a-black-eye\/","title":{"rendered":"US Capitalism just Got a Black Eye"},"content":{"rendered":"

\"\"<\/a>27 Jan 2025 – The Story behind Today\u2019s Stock Market Tank<\/em><\/p><\/blockquote>\n

I thought you\u2019d like to know why the stock market tanked this morning.<\/p>\n

Late last week, a little-known Chinese artificial intelligence start-up called DeepSeek revealed that it had come up with more advanced AI than America\u2019s Big Tech companies, and<\/em> at a tiny fraction of the cost \u2014 even without access to America\u2019s advanced chip technology.<\/p>\n

To add insult to injury, DeepSeek has made its technology \u201copen source\u201d \u2014 that is, available to everyone.<\/p>\n

The lesson here is that Microsoft, Amazon, Meta, and Google became too big, fat, and musclebound to remain sufficiently innovative. Instead of out-of-the-box invention, they specialized in marginal improvements.<\/p>\n

By contrast, Chinese tech corporations compete fiercely with each other. This has put them on the cutting edge \u2014 and is why China has been able to come up with startling innovations (not only in AI but in electric vehicles, batteries, even TikTok, and much more).<\/p>\n

China\u2019s secret sauce hasn\u2019t been big subsidies from the Chinese government creating giant \u201cnational champions.\u201d It\u2019s been intense competition.<\/p>\n

Lina Khan, Biden\u2019s chair of the Federal Trade Commission \u2014 who sued Big Tech for monopolizing the market \u2014 correctly pointed<\/a> out last March that the United States could not stay on the cutting edge by relying on giant \u201cnational champions.\u201d<\/p>\n

These days, the \u201cnational champions\u201d argument often gets made in the context of our dominant tech firms. We often hear that pursuing antitrust cases against or regulating these firms will weaken American innovation and cede the global stage to China. These conversations often assume a Cold War-like arms race, with each country\u2019s firms in a zero-sum quest for dominance\u2026<\/p>\n

History and experience show that lumbering monopolies mired in red tape and bureaucratic inertia cannot deliver the breakthrough technological advancements that hungry startups tend to create. It is precisely these breakthroughs that have allowed America to harness cutting-edge technologies and have made our economy the envy of the world. To stay ahead globally, we don\u2019t need to protect our monopolies from innovation\u2014we need to protect innovation from our monopolies. We need to choose competition over national champions.<\/p><\/blockquote>\n

So what happened to the stock market this morning?<\/p>\n

Much of its recent valuation has been based on gigantic bets on artificial intelligence \u2014 in which big tech has been investing hundreds of billions of dollars in data centers and energy capacity it assumed it needed to get to the next generation of AI.<\/p>\n

Wrong.<\/p>\n

The US is going to have to rethink our entire approach to technology. We may also have to rethink our approach to capitalism.<\/p>\n

_______________________________________________<\/em><\/p>\n

\"\"<\/a> Robert Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center. He served as Secretary of Labor in the Clinton administration, for which<\/em> Time Magazine named him one of the 10 most effective cabinet secretaries of the twentieth century. He has written 17 other books, including the best sellers<\/em> Aftershock, The Work of Nations, Beyond Outrage, Saving Capitalism: For the Many, Not the Few<\/a> and <\/em>The Common Good<\/a>. His new book<\/em>, The System: Who Rigged It, How We Fix It<\/a>, is out now<\/em>.\u00a0 He is a founding editor of the<\/em> American Prospect magazine, founder of<\/em> Inequality Media, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentaries<\/em> Inequality for All, streaming on YouTube, and<\/em> Saving Capitalism, now streaming on Netflix. <\/em>robertreich.substack.com<\/em><\/a><\/p>\n

Go to Original \u2013 robertreich.substack.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

27 Jan 2025 – The Story behind Today\u2019s Stock Market Tank – Microsoft, Amazon, Meta, and Google became too big, fat, and musclebound for innovation. Instead of invention, they specialized in marginal improvements. China’s DeepSeek came up with more advanced AI than all US Big Tech companies.<\/p>\n","protected":false},"author":4,"featured_media":129398,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3078],"tags":[1733,1009,244,803,1010,339,70,1557],"class_list":["post-287054","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-artificial-intelligence-ai","tag-artificial-intelligence-ai","tag-big-tech","tag-china","tag-competition","tag-silicon-valley","tag-trade","tag-usa","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/287054","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=287054"}],"version-history":[{"count":2,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/287054\/revisions"}],"predecessor-version":[{"id":287058,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/287054\/revisions\/287058"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media\/129398"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=287054"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=287054"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=287054"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}