In the last several months, the Chinese government has moved swiftly to manage and shape self-driving cars, genetics data and cryptocurrencies in their country—arguably the three most promising technologies of the immediate future.
The Chinese are very good at this managed-closed strategy. Their top-down approach has some clear benefits over more open models for innovation and technology. And it poses a clear choice for a comparatively small country like the United States.
We can choose to go toward a more closed model, or we can go in the completely opposite direction and open up everything. Does the United States want to be a second-rate walled garden, or go open-source with all the messiness that will certainly follow? The question is a timely one given news reports over the weekend that the Trump administration has considered nationalizing the 5G network.
The Option to Close Up
China’s approach means it will have:
- The largest genetics and health data sets in the world with which to push forward innovation, and they will keep it for themselves.
- Faster paths for domestic automakers to release self-driving cars and harvest the efficiencies from increased logistical capabilities.
- Firm control over domestic economic policy and how assets are owned and transferred, by controlling how blockchain technologies are used.
We could have the same. In theory, we could choose to adopt the same top-down closed model that the Chinese have chosen for the next generation of technology. We could attempt to weaken the states and strengthen national technology oversight and control.
But the reality is that this strategy is likely to fail us on a global scale even if it were politically viable, which it clearly isn’t in our democracy.
We are entering an era of return on scale, and we just don’t have the scale.
In the case of genetics, the value of incremental data probably peaks at some point once you have enough data. But that number is pretty clearly not 300 million people.
The same goes with transportation infrastructure. Setting aside the fact that our infrastructure is far older and less standardized, our market is big—but not big enough. The one billion-plus number of Chinese people looking to move around efficiently in scores of megalopolises are going to drive innovation far faster with red-tape cleared, than our small and less dense population will.
So, we could choose the same model as the Chinese, and move toward a more closed version of innovation. But we will not be as competitive as they are.
The Completely Open Path
What if we aggressively took the opposite approach, and decided to become very, very open as a country? This would mean opening borders and data sets fully, deregulating and even encouraging genetics experimentation and letting anything on the road that anyone wants to drive. It would mean sharing openly all the data we have and allowing an open flourishing of crypto-assets, tokenizations and offerings. It would mean letting new local communities and small governments form within the country with little or no oversight of the state.
The rose-tinted picture of this would be some sort of return to the glorified West of the 1800s. Lots of opportunity, almost no rules or oversight, innovators and inventors having free reign to develop and collaborate and test as they see fit. And by collaborating with the entire world, it would also mean opportunities for generating more scale than we have as a nation alone.
The less optimistic reality of such a move would probably also have a lot in common with the deregulated “free zones” of science fiction. It would be dangerous, unsupported, polluted, extremely unequal and, at times, very scary.
Open borders—which would undoubtedly allow for an influx of talent and opportunity— would almost certainly mean massively curtailed social services.
Open finance and securitization would mean far easier access to capital, but also scams and volatility galore.
Light or no regulation of data policies and genetics would lead to some seriously unequal and unfair outcomes—and in the case of genetics some very dangerous ones.
Open or Closed
So, assuming we had the political will to choose, what would you choose?
All open or all closed is probably a big mistake. In an era of super-empowered individuals and technology, the all open model is too unstable and dangerous. But, simultaneously, being a small closed kingdom in the era of extreme and immediate return on scale is a poor position to be in.
The solution in my mind should be picking a few key verticals or places where you want to be aggressively open, and then a few key places where taking a closed stance is the best. But don’t confuse the two.
That would mean, for instance, centralizing the DMV and giving control over deployment of self-driving technology to one entity as a closed choice. But it would also mean dramatically simplifying the rules around capital raising and tokenization as an open choice in another space.
I don’t think any society can function at any scale with a fully open strategy, as much as many West Coast technologists would like to believe it possible.
But I do think that the most important choice we can make right now is clarity on what our strategy is and then logically following through, versus the patchwork of open and closed sub-scale strategies we currently use.