Artificial intelligence (AI) has become the next major geopolitical tech battleground with the United States, China and European Union (EU) adopting different policy approaches to “win the race.” Many in the United States are calling for new governance that mimics European and Chinese efforts, but American policymakers would be wise to instead build on the policy paradigm that allowed it to dominate the internet and digital economy for more than 30 years. U.S. innovators need the green light to produce exciting new technologies so that we can once again become global market leaders in AI, robotics and quantum computing.
Chinese and European policymakers are seeking to promote home-grown “national champions” to become global AI powerhouses. They are still grasping to overtake America’s domination of global internet sectors – software, storage, search, semiconductors, social media, cloud services and more – whereas U.S.-based firms continue to be household names across the globe.
It is worth asking how American technology firms became so successful and ubiquitous without top-down regulatory designs or grandiose industrial policy schemes. Plenty of brilliant minds and companies from China and Europe could have dominated, but it was mostly American firms that prevailed.
To the extent that there was a secret sauce that gave U.S. firms a leg up, it came down to three key ingredients:
First, the U.S. adopted light-touch regulation rooted in the concept of “permissionless innovation.” Creators were free to experiment and launch new ventures without cumbersome regulatory permission slips being required at every juncture.
Second, a general openness to immigration ensured a constant flow of the best and brightest minds to America to study and launch bold tech ventures.
Third, robust venture capital markets developed as investors noticed the importance of the previous two factors. Instead of relying on governments to back unproven technologies, markets did it without putting taxpayers at risk.
Think of it as “innovation arbitrage”: Talent and money will flow to whatever country gets the rules right and encourages the most vibrant culture of creativity. America won that race during the first round of the web wars because our culture let innovation arbitrage work in our favor. That same model can now help us win the AI race.
While the U.S. has so far adopted a fairly light-touch approach for AI for both regulation and industrial policy efforts, China has aggressively sought to promote specific sectors and firms. While those favored firms enjoy a fair degree of innovative freedom, they dare not cross the Communist Party leaders on state priorities, or trouble follows.
Meanwhile, the European approach is heavy-handed in both regulation and industrial policy. The EU regulatory stance is rooted in precaution. Policymakers there worry about unforeseen ramifications and demand they be addressed through complex permitting processes. Just last week, the EU dropped another major, 100-plus page blueprint for meticulous regulation of virtually every facet of AI, complete with a new Artificial Intelligence Board. Innovations are basically guilty until proven innocent.
Europe is also awash in industrial policy schemes for AI and other tech products (like search and cloud services) to try to make up for the lack of continental “national champions.” Instead of realizing how their previous heavy-handed policies created the problem, the Europeans have doubled down on them and hope their unique combination of preemptive precautions and industrial support mechanisms will magically bring about global AI supremacy. More likely, it will create technological stagnation and another lost generation of opportunity.
America must reject China’s techno-authoritarianism and the EU’s techno-paternalism. Freedom to innovate is still the best industrial policy a nation can adopt if it hopes to attract the talent, firms and money needed to build a successful and lasting technological base in AI and related sectors.
Will we stay the course? The Obama and Trump administrations mostly followed the light-touch approach for AI, but calls for more aggressive action at the federal level are increasing. At the state level, some governments are floating AI oversight efforts based on worries about the effect of automation on the workforce and the privacy concerns surrounding certain AI technologies.
It is understandable that policymakers worry about an uncertain technological future, but it would be misguided to preemptively constrain AI’s potential based on hypothetical fears. Technological development and economic progress are fundamentally linked to our willingness to embrace risk-taking, entrepreneurialism and innovation. Issues will arise, but they will likely differ from the problems people forecast today.
Policymakers should exercise some humility and restraint now, and respond as needed when problems develop. In the meantime, America must keep giving the green light to scrappy innovators, eager investors and talented immigrants to ensure we maintain our lead in the AI race.
Adam Thierer is a senior research fellow at the Mercatus Center at George Mason University.