Author Archive
“It’s the economy, stupid”*…
Many Americans take pride in having the largest economy in the world… which, per the chart above, by one measure we do.
But then, if we adjust for population– calculate per capita– the picture changes…
And we note both that, on a PP basis, the U.S. would be lower and, more fundamentally, that the standing of the U.S. is slipping over time.
If we dive more deeply still, the picture complicates further…
This last chart illustrates the wealth inequality in the U.S., which drops from 2nd to 28th when wealth is measured by the median instead of the average… a wealth gap that has been growing since 1985 (and that is combined with an income gap that has been growing since 1980). For more, see World Inequality Database.
* James Carville
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As we search for the source of that smell, we might recall that it was on this date in 1549 that Robert Kett agreed to head a group of rebels in the English county of Norfolk during the reign of Tudor king Edward VI. The rebels were incensed by enclosure (the fencing off of common lands by wealthy landlords, as a product of which many peasants lost access to grazing, fuel, and small plots they had long used), along with rising rents, inflation, unemployment, and declining wages; as a response, they began destroying fences. One of their early targets was yeoman Robert Kett who, instead of resisting the rebels, agreed to their demands and offered to lead them.
Kett and his forces, joined by recruits from the city of Norwich and the surrounding countryside and numbering some 16,000, stormed Norwich and took the city at the end of July. They were besieged by, then routed, a Royal Army detachment led by the Marquess of Northampton who had been sent by the government to suppress the uprising.
But what became known as “Kett’s Rebellion” ended on August 27, when the rebels were defeated by an army under the leadership of the Earl of Warwick at the Battle of Dussindale. Kett was captured, held in the Tower of London, tried for treason, and hanged from the walls of Norwich Castle on December 7.

“Technology doesn’t force us… it merely opens the door”*…
The estimable Tim O’Reilly reminds us to think deeply about how AI could and should turn out. He suggests that Jeff Ding‘s diffusion theory of the role of technology in great-power competition also applies to AI adoption– and that it suggests that companies obsessed with the frontier might be optimizing for the wrong thing…
In the 1980s, Japan led the world in semiconductors, consumer electronics, and computer hardware, the industries everyone assumed would decide the next phase of economic power. Japan won them and still did not overtake the United States in the information revolution that followed. Jeff Ding, a political scientist at George Washington University, opens his book Technology and the Rise of Great Powers with the history of the first and second industrial revolutions and the third, the information revolution. The explanation he gives for who wins and who loses applies to companies as well as it does to nations, and very much to the current trajectory of AI.
Ding contrasts two theories of how technological revolutions reshape economic power. The conventional one he calls the leading sector model, or LS theory. It goes like this: New technologies create fast-growing new industries like steel and railroads and automobiles and semiconductors, and the country that dominates invention in those sectors captures the monopoly profits and the upstream and downstream economic linkages that come with them. As the story goes, if you win the leading sector, you win the era. Britain won in the first industrial revolution through its mastery of steam power, and then was surpassed by the US in the second through its leadership in electrification, the internal combustion engine, and mass manufacturing. The US kept its lead over Japan in the information systems revolution not by competing in the “leading sector” of electronic hardware but by diffusing “up the stack” via software that took the power of computing into every sector of the economy. (OK, that last bit is my explanation of what happened rather than Ding’s, but it’s consistent with his theory.)
Leading Sector theory is pretty clearly the working hypothesis of today’s AI industry and the national strategy that is forming around that industry. The company and the country with the biggest and best models wins. Everyone else is an also-ran.
Ding offers another explanation, which he calls diffusion theory. He points out that general-purpose technologies, foundational ones like the steam engine, electricity, and the computer, don’t just create massive profits and productivity gains in a single industry but instead spread across the whole economy. National economic leadership comes not from inventing the new sector but from diffusing the general-purpose technology more quickly and more broadly than your rivals. This happens over decades. The win goes to whoever most successfully embeds the technology into a wide range of ordinary productive work. This is how the US kept its lead over Japan rather than being surpassed by it.
This is obviously aligned with the thinking of Arvind Narayanan and Sayash Kapoor in “AI as Normal Technology,” which Ding cites in his book.
A big part of what enables diffusion is what Ding calls skill infrastructure, the education and training systems that widen the pool of people who can actually work with the technology. When the priority is widespread adoption rather than invention, he argues, the institutions that matter are the ones that build engineering skill at scale, standardize good practice, and tie research to industry. He writes:
GPT diffusion theory highlights the importance of GPT [General Purpose Technology] skill infrastructure. Education and training systems that widen the pool of engineering skills and knowledge linked to a GPT. When widespread adoption of GPTs is the priority, it is ordinary engineers, not heroic inventors, who matter.
Music to my ears, as it should be to yours: “It is ordinary engineers, not heroic inventors, who matter.”
That is not how the current AI narrative goes. Everyone is fixated on the labs, the frontier models, and the most famous researchers. And that fixation shapes enterprise strategy. Inside many companies AI strategy is a procurement decision: Which model and which vendor and which flagship tool should we choose? Or it’s a moonshot to stand up a lab and build an impressive demo and hire your own famous developer. Both approaches treat AI as a sector to be won. Ding’s argument is that the breakthrough sector itself is not where the long-term value for national power lives. And I believe that the same applies to corporate success. The value is in how widely and how well the technology gets embedded into the work of the people you already employ. The company that puts AI to work in finance and support and legal and sales and operations, across every unglamorous process, as well as in product and engineering, outperforms its competitors and drives its industry forward.
The reason diffusion takes a long time is that it is an organizational problem and not a technical one…
[Tim elaborates, and specifies the requirements for successful management of what is an “enterprise transformation problem”; he then unpacks the geopolitics of AI. He concludes…]
… Sovereign AI is not just a matter of national power. It is a predictable consequence of diffusion. A technology that diffuses widely will be adapted by different societies, firms, and institutions to suit their own needs, values, and constraints. Sovereign AI is AI designed for diffusion, not just raw increases in capability.
This is one reason the arms-race framing is unhelpful. It encourages us to treat AI as if it were a weapons system or a scarce strategic asset. But if AI is closer to electrification, computing, or the written word, the important thing is how the technology is embedded into the ordinary life of economies and institutions, and whether that embedding happens in ways that increase agency broadly rather than concentrating it in a few hyperpowerful companies.
There are a few additional lessons we can take from the history of electrification. While motors became decentralized, factories stopped generating their own power and bought it from a centralized grid. The unit-drive revolution decentralized application, not generation. This limitation, which we are now working to overcome to some extent with decentralized solar generation, is perhaps ironically showing up most strongly in the strain that AI data centers are placing on the grid. Let’s learn from that misstep. You can diffuse AI into every workflow via API calls to a big centralized model, or it can be diffused by a network of smaller models that turbocharge every part of the economy.
We should design for a future of multiple AIs, not a single universal system. Different countries will want systems shaped by different legal regimes, languages, histories, and cultural assumptions. So will companies. So will professions and communities of practice. The instinct of some frontier labs is to imagine that the right answer is to homogenize the technology, purge it of bias, and offer a single sanitized intelligence layer for the world. But AI is a social and cultural technology. The differences are not a defect to be smoothed away.
We do need to think about standards and interoperability. The historical analogy that comes to mind is railroad gauge. When real world systems are built to incompatible standards, the result is not healthy diversity but decades of friction, kludges, and retrofitting. The same may prove true for AI. If we force the future into a choice between one universal model and a patchwork of disconnected sovereign systems, we will get the worst of both worlds. We need a layer between uniformity and fragmentation, which can come from standardized protocols that allow different models, tools, and institutions to interoperate without requiring them to become identical.
This is also why open source matters, but only if it is properly understood. Open source is not just about licenses. My earliest introduction to the shared development of software that now goes by that name came from the research community that grew up around Bell Labs’ Unix operating system despite AT&T’s proprietary (albeit permissive) licensing. Because of that experience, I became convinced that it was the modular, protocol-centric architecture of Unix that was a key driver of collaborative, internet-enabled software development.
Open source AI depends on far more than open models. It depends on the architecture of participation built into the systems above and around them: the protocols, servers, interfaces, and shared technical conventions that let many different actors build on common foundations. The Open Source AI Gap Map shows just how rich that open source AI ecosystem is becoming. But open source can also coexist with proprietary, de facto standards like the OpenAI and Anthropic APIs. Like the electric grid we are now beginning to rebuild, the AI future will be a mix of centralized and decentralized systems. Cooperation and competition can coexist. Different actors can build different systems, for different purposes, under different forms of governance, while still participating in a shared technical and economic order.
This is how the future can belong not just to the inventors of AI but to the people who make it usable, adaptable, interoperable, and worth adopting.
Eminently worth reading in full. AI for all of us: “Ordinary Engineers, Not Heroic Inventors,” from @timoreilly.bsky.social
Apposite: “How to talk about “AI” without adding to the anthropomorphization“
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As we amplify access, we might we might spare a thought for someone who launched more than one central technology into braod diffusion: the Serbian-American electrical engineer and inventor Nikola Tesla; he died on this date in 1943. Tesla is probably best remembered for his rivalry with Thomas Edison: Tesla invented and patented the first AC motor and generator (c.f.: Niagara Falls); Edison promoted DC power… and went to great lengths to discredit Tesla and his approach. In the end, of course, Tesla was right.
Tesla patented over 300 inventions worldwide, though he kept many of his creations out of the patent system to protect their confidentiality. His work ranged widely, from technology critical to the development of radio to the first remote control. At the turn of the century, Tesla designed and began planning a “worldwide wireless communications system” that was backed by J.P. Morgan… until Morgan lost confidence and pulled out. “Cyberspace,” as described by the likes of William Gibson and Neal Stephenson, is largely prefigured in Tesla’s plan. On Tesla’s 75th birthday in 1931, Time put him on its cover, captioned “All the world’s his power house.” He received congratulatory letters from Albert Einstein and more than 70 other pioneers in science and engineering. But Tesla’s talent ran far, far ahead of his luck. He died penniless in Room 3327 of the New Yorker Hotel.
“If you optimize everything, you will always be unhappy.”*…
Phil Tinline on the history and consequences of the impulse to optimize businesses, markets, and governments…
Optimization means achieving a measurable objective—that is, maximizing or minimizing a given number. It requires controlling the inputs and processes that affect the objective, in order to find the most efficient way to achieve it. It draws on centuries of mathematical discovery, but it emerged in its modern form under the pressure of World War II and the need to manage the byzantine complexity of US military logistics.
In the summer of 1947, a Stanford-trained mathematical scientist named George Dantzig sat in his office at the Pentagon, laboring over US Air Force planning issues with a desk calculator. The problems he had dealt with during the war and since involved “an astronomical number of feasible solutions to choose from,” making it impossible to calculate which was the best. As he recalled, “Those in charge often do a hand-wave and say, ‘I’ve considered all the alternatives,’ but this is so much garbage.” All those leaders had to offer was that their “‘experience’ and ‘mature judgment’ would guide the way” by laying down rules that would limit the options.
The problem, Dantzig realized, was that “you could never find any direct relationship between the stated goal and the actions to achieve the goal.” The solution, he believed, was to formulate a complex real-world problem as a mathematical model. This could then be solved by what became Dantzig’s “simplex algorithm” (or “simplex method”), provided a precise goal was set as its “objective function.”
The simplex algorithm radically reduced the number of feasible solutions. It soon became clear that it could be brought to bear far beyond the military: “All one had to do,” Dantzig remembered, “was change the names of the columns and the rows, and it was applicable to an economic planning problem or to an industrial planning problem.”
In engineering, optimization was put to use in designing rockets and aircraft, and the shape of cars, wind turbines, and hydrofoils. It redefined manufacturing, circuit design, and the management of supply chains. Its impact is still visible in measures of the occurrence of the word “optimization” itself. Before 1950, the term was barely in use at all; thereafter, its frequency soared.
Economists embraced optimization too. An early application was in the development of “portfolio theory,” which, as the aerospace engineer Joaquim R. R. A. Martins and the computer scientist Andrew Ning put it, “formalized the idea of investment diversification, marking the birth of modern financial economics.”7 One important element of optimization in economics is the inclusion of constraining factors: Given a set level of income or cost, how can we maximize utility? But economics is not quite as scientifically determinable as engineering—it’s more exposed to messy, contradictory fellow humans. Here, optimization starts to look rather suboptimal…
… As computers have become ubiquitous, optimization has spread ever deeper into human life. In 2021, a trio of Stanford academics published a book titled System Error: Where Big Tech Went Wrong and How We Can Reboot. They observed: “What begins as a professional mind-set for the technologist easily becomes a more general orientation to life. … The paramount goal becomes removing friction from everyday activities, automating repetitive tasks, and finding ways to save time while improving outcomes.” US tech companies, for instance, are often led by software engineers, who manage their staff accordingly, measuring results against precisely set objectives. An over-dominant engineering mindset, System Error argued, is extending optimization beyond the areas where it can be effective.
This might surprise the tech analyst Dan Wang, whose 2025 bestseller Breakneck: China’s Quest to Engineer the Future argued that “an American elite, made up mostly of lawyers, excelling at obstruction” had much to learn from China’s “technocratic class, made up of mostly engineers, that excels at construction.” But even Wang admitted that engineering logic can be taken too far. “Sometimes, it feels like China’s leadership is made up entirely of hydraulic engineers,” he wrote, “who view the economy and society as liquid flows, as if all human activity—from mass production to reproduction—can be directed, restricted, increased, or blocked with the same ease as turning a series of valves.”
Given its mathematical foundations, optimization depends on having numerical data that can be adjusted to achieve the numerically expressed objective. As the American historian of science Theodore Porter showed in his 1995 study Trust in Numbers: The Pursuit of Objectivity in Science and Public Life, governments began to gather data at scale and to rely on it for decision-making for reasons similar to those set out by Dantzig—to get away from the subjective judgment of leaders.
However, Porter warned that while using numbers to exercise power objectively might be an attractive idea, it is also impossible to do. Even governments can’t count everything, and choosing what to leave out is an intensely political decision. Worse, Porter wrote, “numbers have often been an agency for acting on people, exercising power over them,” even turning people “into objects to be manipulated.” As Wang noted, in China the drive to meet numerical targets has sometimes taken a crushingly simple form, as with the government’s “one child” or “zero Covid” policies.
Even when optimizers aren’t sealing sick people in their homes, as the Chinese state did during the pandemic, they are often so focused on their objective that they don’t notice the damage they’re doing. Whatever is not relevant to the objective can be shrugged off as a so-called externality. Witness corporations optimizing their operations to maximize profits or the price of their shares. Some squeeze pay or working conditions; others pollute with abandon, or exploit their dominant market position to force down their suppliers’ prices, regardless of the impact.
And the problem with optimization is not just a matter of unfortunate side-effects. We are seeing the emergence of what we might call “social optimization”—the belief that this idea offers a way to transform society as a whole. But as Porter’s work suggests, this is not a matter of neutrally making things better. Optimization privileges the measurable over the unmeasurable. And it places the onus for improving society on the ever-striving individual rather than asking more fundamental, structural questions about why systems work as they do and whom they empower and disempower.
This is not an explicit ideology. No doubt, businesses and governments often are simply following the logic and opportunities implicit in new digital technology, from smartphones to the cameras and sensors that can now cheaply and efficiently monitor a wide range of activities. Nonetheless, as new technology has made it possible to gather ever more numerical data, optimization has begun to embed its implicit values into our lives.
In the workplace, this can swiftly make people’s lives worse. Particularly in sectors such as logistics, new technology allows employers to optimize more and more rigorously for maximum productivity and minimum cost. It has become commonplace to give employees an ongoing score, with the aim of incentivizing them to compete continually. This goes beyond even the monitoring of worker efficiency that the management consultant Frederick Taylor pioneered in the early twentieth century and the numerical key performance indicators that his successors promoted. The intensive quantification of employees’ performance has come to be known as “digital Taylorism.”
Optimization has refocused the media around the measurable preferences of the individual, as tallied in clicks, page views, unique browses, and similar metrics. This erodes the shared moments that build a culture and the shared truths that underpin democracy. Social media takes this even further: Algorithms are optimized to maximize attention, incentivizing people to respond to political issues not with thought but vivid expressions of feeling, rewarding users numerically in follows, likes, and shares. Meanwhile, tracking apps increasingly normalize the optimization of health metrics.
Yet technologists are keen to go much further. Off the back of their successes producing software, they are raising their sights to the horizon, optimizing for a few grand objectives at all costs, in pursuit of an ever more perfect world. They have formed an alliance with philosophers and philanthropists in the Effective Altruism movement, which aims to purge generosity of the influence of feeling in favor of calculable reason—even as it confidently prophesies the far future. Other tech leaders support the principles of the “network state.” According to the journalist Gil Duran, this concept proposes to create “private, corporate-controlled cities” that will liberate innovators from the constraints of the democratic state and its messy, unmeasurable trade-offs.13
And most of all, the dream of social optimization reverberates through promises of an AI-transformed future, in which once unthinkably efficient tech will supposedly liberate individual human potential. In “The Techno-Optimist Manifesto” (2023), the venture capitalist Marc Andreessen proposed using technology and the free market to maximize abundance to the point of infinity. Though Andreessen insists he does not believe in “the Unconstrained Vision of Utopia,” he dismisses the “Precautionary Principle” as an “enemy.”
The problem here is obvious to anyone not immersed in the culture of Silicon Valley. Not every worthwhile objective can be measured. How do we quantify social peace, for instance, or the health of our arts and culture, or the concentration of power? Or the worth of work itself, or a truly enriching education, or kindness? We might hope the realization that not everything can be measured would prompt the promoters of social optimization to accept its limitations and appreciate the qualities of more deeply rooted systems, such as democracy. Alas, they tend to conclude that if a goal or a problem has no measure, it is not worth bothering with. Kevin Kelly, a technology journalist and an apostle of the Quantified Self movement, has faced criticism, as he puts it, that “only intangibles like meaningful happiness count.” His response: “Meaningfulness is very hard to measure, which makes it very hard to optimize.” Similarly, in a critique of the US anti-monopoly movement, the journalist Matthew Yglesias has protested that “‘corporate power’ doesn’t mean anything” on the grounds that it “doesn’t add up to anything measurable or actionable.”
But this is not the first time similar-sounding criticisms have been raised against attempts to perfect society. Where they chose to focus their fire, and where they didn’t, reveals what’s distinctive about the phenomenon of social optimization…
[Tinline reaches back to the early 19th century (and the earliest known use of the word “optimize”) then follows the development of what has become a powerful mindset– in effect, a movement. He concludes…]
Governments today do have something to learn from Dantzig’s insistence on the importance of having a clear objective. But his overly dim view of leadership needs to be constrained. It is increasingly clear that, in the less calculable areas of life, a leader exercising human judgment is preferable to an implacable optimization algorithm. Without such human-centered constraints in place, social optimization won’t make things better—only more extreme.
On not letting the perfect be the enemy of the possible– and often the preferable: “The Cult of Optimization,” from @philtinline.bsky.social in The Ideas Letter.
We should note that the optimization craze has taken hold at the personal level as well, with similar results. See. e.g., “Optimising is just perfectionism in disguise. Here’s why that’s a problem” and “Optimization Culture Is Making Us Miserable.”
* Donald Knuth (the godfather of computer programming)
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As we celebrate slack and internalize externalities, we might spare a thought for a man who looked beyond the metrics od his day, Clifford W. Beers; he died on this date in 1943. An author and psychiatric patient, he is best known as the founder of the American mental hygiene movement.
Clifford Whittingham Beers was an American author and social reformer who wrote an autobiography documenting appalling conditions and maltreatment by staff of mental patients. His classic book, A Mind That Found Itself (1908) raised public consciousness of the need for reform. He had already himself experienced treatment as a mental patient, first in 1900, diagnosed with depression and paranoia. His four siblings also suffered mental health problems and died in mental hospitals, as he also did. In 1909, Beers founded the National Committee for Mental Hygiene (since renamed as Mental Health America) with the mission to improve the treatment in mental health institutions. By 1913, he was able to establish the Clifford Beers Clinic in New Haven, an outpatient mental health clinic, the first of its kind in the U.S., which continues his legacy to the present. – source











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