AI Helps Spread China's "Techno-Authoritarianism"

By Ed D'Agostino | January 12, 2024

Every new technology has its skeptics.

In 1911, just a few short years before World War I broke out, the head of the British Army, Sir William Gustavus Nicholson said, “Aviation is a useless and expensive fad advocated by a few individuals whose ideas are unworthy of our attention.”

Wow was he wrong.

By the end of the war, Britain had a new Royal Air Force with 22,000 aircraft. A century later, commercial aviation is an $800+ billion industry.

Today, artificial intelligence (AI) is the new technology on everyone’s mind. In my latest Global Macro Update interview, which you can view below, I speak with former US Army Ranger Paul Scharre about AI’s darker potential.

Paul is Executive Vice President at the Center for a New American Security. He’s authored two books, including Four Battlegrounds: Power in the Age of Artificial Intelligence. Prior to that, he completed multiple tours in Iraq and Afghanistan and led the Department of Defense group that wrote DoD policies on weapon systems autonomy.

Paul shares my concerns about AI in the hands of adversaries like China, who are already using AI-driven facial recognition to amplify widespread public surveillance. Most of you are aware of China’s modus operandi when it comes to domestic surveillance and censorship. Paul sees the Chinese Communist Party expanding the control it wields over China’s internet to its physical spaces. That’s only possible with AI.

The truly frightening part, which most Americans miss, is how China is exporting what Paul calls a new model of “techno-authoritarianism” to other countries like Tanzania and Uganda. And perhaps worse, China is exporting physical tech infrastructure to some of our allies.

We’re not in an outright war with China, and as Paul points out, we aren’t “technically” in an AI arms race… yet. The US Department of Defense devotes less than 1% of its $842 billion budget to AI.

I expect that to change.

The US government’s role in frontier technologies is something of a dichotomy. On one hand, government departments like the DoD are large, cumbersome, and resistant to change. Archaic regulations and formalities are no friend of innovation. And as Paul touches on in our interview, many military employees are just as afraid of losing their jobs to AI as private sector workers. (I can’t say this enough: All these job loss fears are overblown.)

On the other hand, the level of geopolitical conflict is higher than it’s been in recent memory. And war—or preparing for wars that hopefully never come—can accelerate technological change. Think back to the airplane in World War I… or the household microwave, which grew out of World War II advances in radar technology… or GPS, which we have thanks to enthusiastic Cold War government spending.

The DoD has a fat checkbook. If there’s any precedent for the US-China dynamic, it’s the US and Russia during the Cold War. Yes, there are differences. But in the years ahead, one common thread will be increased government spending on new tech, which now means AI. And much of that money will flow to private-sector government contractors.

Before I leave you to watch the interview, I want to underscore that I believe AI will be a net positive for humanity. It comes with risks and downsides, just like anything else. But ultimately, I’m focused on the business and investment opportunities it’s creating—and there are many.

I’m excited to share more about that with you next Wednesday in a special video briefing from me and the Macro Team. You’ll hear key details about the specific opportunities we’re tracking, as well as the new project we’ve been working on.

This project comes at a pivotal moment for Mauldin Economics and our readers. It’s the culmination of our work over the past decade, and I’m eager to bring you all into the fold. Look for more from me in your inbox on Wednesday, January 17.

For now, please click on the image below to watch my full interview with Paul Scharre. You’ll hear more about the rise of Chinese-style techno-authoritarianism in 80-plus countries, US vulnerabilities in places like the Panama Canal, AI’s role in combat, and the trouble with TikTok.

You can read the interview transcript by clicking here.

Best regards,

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