In this week’s edition, economists assess China’s strength, Ukraine’s allies propose plans to fund reconstruction, Russia struggles to resupply high-tech military components, tech regulation stalls before the midterms, the US and Japan agree that nuclear technology is important to meeting decarbonization goals, and OFAC sanctions Iran for malign cyber activities. Additionally, Rocket Lab and Sierra Space will develop space transportation tech for DoD terrestrial logistics, the outgoing White House AI director calls for investment in AI education to build an AI workforce for the future, and Facebook stops serving political ads in Washington state.
Industrial Policy & International Security
Will China’s economy ever overtake America’s? | The Economist
Some economists think China’s economy may not surpass America’s. Because China’s population is much larger, its GDP per person need only be a quarter of America’s to overtake US total GDP. However, COVID-19 lockdowns and new regulation of the tech and education sectors are slowing China’s growth. Furthermore, an aging population may shrink China’s workforce by 15% and disrupt long-term growth. At the same time, if the productivity gap between China and the US narrows, a boost in prices and stronger exchange rate could produce an economic lead as soon as 2031.
How Will Ukraine Rebuild (and Who Should Pay)? | The New York Times
While the war continues with no end in sight, Berlin will host an international conference next month to deliberate how to fund and implement a reconstruction plan in Ukraine. On behalf of the German government, the German Marshall Fund produced a report recommending that the G-7 appoint a coordinator to oversee the process and leverage existing international institutions (instead of establishing a new one) to carry out activities. The desired outcome is not only to rebuild Ukraine but also rapidly integrate it with Europe. Ukraine would need to comply with strict financial oversight and overhaul its institutions to meet the standards for EU membership. The IMF estimates that Ukraine needs roughly $5B to $6B per month to keep the government running. The long-term cost of reconstruction is estimated from $100B to $750B and uncertainty will persist until the war ends.
The chips are down: Putin scrambles for high-tech parts as his arsenal goes up in smoke | Politico
Russia has depleted its missile stockpiles faster than anticipated and has limited options to replenish high-tech components like microchips. An unverified Russian shopping list identifies mostly US-manufactured microchips as high priority items, which will be difficult to acquire not only because of sanctions but also global supply shortages. Medium priority items include casings and connectors manufactured in Germany. While experts say Russia is likely to have stockpiled Western technology for years, they could be running low. Ukraine reports indicate Russian forces are using older “dumb” munitions. However, technology control regimes are unlikely to prevent the Kremlin from procuring critical supplies from neighbors like China; the US doesn’t have the capacity to inspect technology transfer at that scale.
US Regulation
The outgoing White House AI director explains the policy challenges ahead | MIT Technology Review
Outgoing White House National Artificial Intelligence Initiative Office (NAIIO) director Lynne Parker says a lack of AI education, algorithmic bias, and a small AI workforce could be potential policy challenges for the US. At the helm of NAIIO, Parker supported the development of an AI R&D strategic plan, creation of a national research institute for AI, and an application portal for research funding requests. In an interview with MIT Technology Review, Parker says long-term investment in research and education is required to advance the field, increase the number of AI educators, and grow the overall talent base. Recognizing the volume of private sector investment in AI, Parker reiterates the importance of federal research and development to drive the field forward by focusing on pre-market, long-term efforts that are less appealing to investors looking for the next big product or service.
Big tech’s $95 million spending spree leaves antitrust bill on brink of defeat | Bloomberg
The clock is running out for the American Innovation and Choice Online Act. Since 2021, big tech companies and trade groups have spent nearly $95 million to derail the bill, which needs to be passed in the Senate before it can be sent to the House. Sponsors Amy Klobuchar and Chuck Grassley expect that Majority Leader Chuck Schumer will bring the bill to the floor for a vote before the midterm elections in November. However, a short October session and competing priorities may prevent a vote. Although the antitrust legislation has bipartisan support, it may not survive if Republicans win a majority of seats in either the House or Senate after the midterms. Some leading Republicans have publicly opposed the antitrust agenda and are likely to refocus tech regulation on how content moderation may be silencing conservative voices.
Innovation
EPA head: Advanced nuke tech key to mitigate climate change | AP News
At a joint news conference, US EPA Administrator Michael Regan and his Japanese counterpart Akihiro Nishimura agreed that advanced nuclear technology will be important to meeting decarbonization goals. Following the 2011 Fukushima nuclear meltdowns, anti-nuclear sentiments rose sharply in Japan and many nuclear plants were shut down. However, the government has pushed for a return to nuclear energy, including the construction of new reactors, especially with concerns about power shortages resulting from Russia’s invasion of Ukraine. Investment in nuclear and carbon capture technology will complement renewable energy sources in the global effort to reach zero emissions goals. Regan and Nishimura also pledged US-Japan cooperation on other environmental issues including ocean plastic pollution.
Rocket Lab, Sierra Space sign agreements under US military’s rocket cargo project | TechCrunch
Rocket Lab and Sierra Space signed separate Cooperative Research and Development Agreements (CRADA) with US Transportation Command to explore how their flight systems could assist with speedy cargo delivery on Earth. Faster point-to-point space transportation could revolutionize the way the DoD approaches logistics. Under their respective agreements, Sierra Space will develop its Dream Chaser plane while Rocket Lab will work on its Electron and Neutron launch vehicles. The CRADA agreements aren’t limited in scope to transportation vehicles; the DoD is also interested in the cargo capsules from both companies. This effort is a part of the Air Force’s Rocket Cargo project, which looks to use space industry tech for faster, cheaper military deliveries.
Cyber
Treasury sanctions Iranian Ministry of Intelligence and Minister for Malign Cyber Activities | US Department of the Treasury
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Iran’s Ministry of Intelligence and Security (MOIS) and its Minister of Intelligence for malign cyber activities. MOIS has conducted cyber operations against government and private-sector organizations globally since 2007 and, in 2022, actors associated with MOIS disrupted Albanian government computer systems, leaked government documents, and leaked personal information associated with Albanian residents. Two advanced persistent threat actors–MuddyWater and APT39–are identified as subordinates to MOIS. As a result of this designation, “all property and interests in property of the designated targets that are subject to US jurisdiction are blocked” unless exempted by OFAC.
State & Local Tech Ecosystems
Judge rejects Facebook’s attempt to declare Washington state campaign ad law unconstitutional | GeekWire
King County Superior Court Judge Douglass A. North ruled this week that Facebook violated Washington state law, which requires detailed disclosures about political ads. The company settled a similar lawsuit with Washington state in 2018 and agreed to pay a $238,000 fine. However, the current lawsuit, filed in 2020, alleges that Facebook continued to serve political ads in Washington after agreeing to stop. Meta called the disclosure requirements unreasonable in court filings and determined that it is unable to reasonably comply with state law; Facebook has now stopped showing political ads in Washington. Last year, Google settled a similar lawsuit for a $423,000 fine.
Democracy Online
An ex-professor spreads election myths across the US, one town at a time | The Washington Post
After the 2020 general election, David Clements started to post videos to YouTube about alleged election fraud and started to attract a large following online. Clements taught law at New Mexico State University until he was fired last year for violating the university’s COVID-19 mask and vaccination policy. He has traveled extensively within his home state attempting to persuade local leaders not to certify election results and is beginning to take his message to small towns nationwide. Clements has no experience running elections, no education in voting machine systems, and two independent election security experts who have reviewed Clements’ work called his claims “baseless and misleading.” He encourages his followers to use social media to increase pressure on local officials. New Mexico Secretary of State Maggie Toulouse Oliver is worried that the spread of false information may lead to violence at the next general election.
