(Roughly) Daily

Last year, in explaining the Biden Administration’s emerging new economic policy, National Security Advisor Jake Sullivan talked of a “small yard, high fence” approach to its trade with China. The idea: to place strict restrictions on a small number of technologies with significant military potential while maintaining normal economic exchange in other areas.

The estimable Henry Farrell argues that this approach to technology and China is working poorly (though, he suggests, it will work much worse if Trump wins and takes office in January). Self-reinforcing political feedback loops and self-reinforcing expectations are leading to breakdown.

The fundamental problem of managing geopolitics through manipulating technological trajectories is not readily solvable given existing means, Farrell suggests. We live in a much more complex world than existing state institutions are capable of handling. Therefore, he argues, we need to remake the state…

… Making the right choices in a complex policy environment requires an approach that is a world away from the application of brute force at scale. Your maps of the environment are going to be all wrong when you go in, and brute force is likely to have unexpected consequences. It isn’t just that you are going to make mistakes (you are), but your map of the actual problem you are trying to solve is likely to be utterly out of whack. As you try to catch up with China on EV, you discover that you don’t understand the market right. As you try to impose controls on military use of semiconductors, you find out that you don’t have the information you need to really actually understand how the semiconductor market works.

The problem – as Jen Pahlka’s book Recoding America explains at length – is that addressing such complex problems does not fit well with the way that the U.S. government works. When you are trying to impose order a vast sprawling bureaucracy, which is its own mid-sized global economy, and when your people don’t trust government much, you rely on rigid contracting systems, which define the problem in advance down to its finest details, even if that definition is out of whack with reality. You don’t build connections between the bureaucracy and outside actors, unless they run through cumbersome and rigidly pre-defined channels because it takes months or years to get approval for such connections. And you certainly don’t try to remake policy in realtime as your understanding of the situation changes. Pahlka’s book is cunningly disguised as an account of US software outsourcing practices. If it mentions either ‘national security’ or ‘economic security’ once, I don’t remember it. But it is arguably (along with Dan Davies’ similarly motivated The Unaccountability Machine) the most important book on these topics of the last twenty years. [Your correspondent heartily agrees.]…

… what do you do – is this. You start to think… about how to build economic security institutions that are designed from the ground up to manage complexity. If you want to take ‘small yard, high fence’ seriously as a policy approach, you need to build the apparatus to discover what lies inside, what lies outside, and what the barriers ought be. That apparatus – and its prescriptions – need to change over time both to match a better understanding of the policy environment, and changes in the environment itself.

And we don’t have the apparatus to actually implement small yard, high fence properly. Nor do we have it for pretty well every other plausible economic security policy you might imagine, short of a brute force decoupling of the U.S. and Chinese economies. And if you did that, you would need enormous capacity to manage the horrifically complex aftermath, if that aftermath could even be managed at all.

Clearly, it is far easier to make these arguments in the general than the particular. Saying that you need reforms is straightforward, but figuring out what they ought to be, let alone how to implement them in current political circumstances, is an altogether more difficult challenge. But it is where the debate needs to be going – and there is a role for technology in it. We are in a situation that rhymes in weird ways with the situation discovered by Vannevar Bush after World War II – recognizing that the needs of government had changed, that vastly better information and feedback systems were required to meet those needs, and that even if we didn’t exactly know what those systems were, we needed to start figuring them out, and quickly. That world had its pathologies. This one does too. But to prevent them becoming worse, we need better ways to manage them, and to ensure that the solutions are better than the problems that they are supposed to mitigate.

This is – obviously – a radical set of claims. But it’s one that is entailed by the diagnosis of the problem that I’ve presented. If we need to manage complex challenges – of which the U.S. China relationship is only one – we need a state that is capable of managing complexities. We don’t have one. And that remains a first order problem, regardless of however hawkish or dovish you are…

We need a new kind of state for the new geopolitics: “‘Small Yard, High Fence’: these four words conceal a mess,” from @himself.bsky.social (and @pahlkadot.bsky.social). Eminently worth reading in full.

* H.L. Mencken

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As we ruminate on restructuring, we might recall that it was on this date in 1954 (7 years after the transistor was developed at Bell Labs) that Texas Instruments introduced the Regency TR-1, the first commercially-manufactured transistor radio. Its performance was mediocre, but its small size and portability drove sales of over 150,000 units.

Further to Farrell’s and Pahlka’s points, it’s instructive to ponder what became of the transistor radio as a product category (and of the competitors in it) over the next few decades– and the altogether-unanticipated plethora of small, convenient, hand-held product categories it spawned: calculators, mobile phones, tablets… and whatever comes next…

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