Ricardo Hausmann: “the West ignores what technological progress means”
Ricardo Hausmann, economy professor and Director of the International Center for Development at Harvard University (US), claims that the so-called free and developed West is having the wrong views on technological progress.
“Technology is often seen as the cause of social deterioration and the origin of anti-system parties”, says Hausmann, “but what about the causal arrow in the opposite direction?”
“In a world where technological progress has lots of advantages, the future of countries is determined by their wish/readiness to deliver what technology needs. The rest will end like the Spanish, Portuguese or Ottoman imperia of the past. The West has to be more concerned about this than China”, Hausmann says.
“You can define technology as 3 forms of knowledge: knowledge in and about materials, codified knowledge (recipes, protocols, manuals), and know-how (implicit knowledge). To be able to grow, technology has to store different knowledge in different brains.”
“One of the tricks of technology to grow is to go modular. All components that lead to a product can be divided into teams that have to know less while, all together, they know more.” Hausmann gives an example: “Chili has lithium, Japanese Panasonic produces batteries, the Chinese BAIC is the biggest producer of electric cars. Everybody may have admiration for Tesla, in 2025 there will be 10 times more electric cars in Europa and China than in the US.”
The importance of society
“A Jumbo airplane has thousands of parts, innovations in its components can create a huge increase in efficiency. But then innovating companies have to communicate. To battle free trade has the opposite effect. The modular system needs a permanent search for talent and innovation all over the world. If you close borders, innovation will go elsewhere.”
The importance of the society and its government can’t be overestimated, thinks Hausmann, and he gives the high-speed train as an example. To build it, you need the collaboration of authorities: “Western Europe has 14.000 km of high-speed lines, China some 25.000. The US have… 56. The reason for this: you need to make decisions on a societal level and to have a government that enables choices.”
Paying the price
“Technology needs free moving of trade and talent. For that you need common sense, common targets in a society that broadens the possibilities to be part of it and makes people proud being part of it. That’s not easy. You don’t need an ethnic feeling of nationality but a civil one.”
“Societies that don’t want or aren’t able to give technology what it needs, will pay a huge price. The Spanish Empire chose to chase Mores and Jews in the 15th Century and to impose this view on others. After a long and bloody war the Netherlands refused this attitude and attracted all the rejected people/intelligence. It’s not amazing that they were the richest country in the world in the 17th and 18th century.”
Hausmann concludes: “Populist forces ignore what technology asks for. You can’t do this without being punished for it. By doing so they push their societies on a very slow track. Like the American trains.”