Fourteen years ago this week, George Mason University economist Tyler Cowen released a provocative book with a heterodox idea that gradually became more orthodox. The Great Stagnation contended that notwithstanding narrow progress in software and internet technology, the contemporary era—starting in the mid-1970s—was marked by an overall slowing of innovation and technological progress relative to the previous 100 years or so.
The book’s thesis was widely scrutinized and yet only grew in its influence and stature. Exponents such as Silicon Valley investor Peter Thiel and New York Times columnist Ross Douthat subsequently drew on Cowen’s claims to advance their own arguments about the interrelationship between economic stagnation and the broader culture and political malaise that has subsumed Western societies like the United States.
Even then though Cowen wasn’t fatalistic. If the great stagnation was caused by the depletion of “low-hanging fruit” forms of technological progress, then the solution was to conceive of and deploy new ones. As he wrote: “I believe that new low-hanging fruit will grow again, and possibly sooner than we expect. The key is not to despair, but to understand why we are suffering now, and to keep investing in the future.”
In recent years, Cowen has been inclined to declare an end to the great stagnation due to exciting progress with the mRNA vaccines and other bio-medical innovations. The only question in his mind was whether we could keep it going elsewhere in the economy.
One gets the sense that we’ve answered him over the past several months with the striking progress with respect to the rise of artificial intelligence technology. The development of ChatGPT and other AI models, including the recently-released Chinese platform, DeepSeek, increasingly seems like a book-end to the great stagnation. As a general-purpose technology, it holds out the potential for “zero-to-one” growth as it rapidly improves and its deployment and uses expand.
The opportunity here must be clearly understood. AI technology can provide a much-needed injection into global growth and productivity and push the frontier of human capacity and knowledge. As Cowen himself wrote in March 2023: “AI represents a truly major, transformational technological advance.”
Yet one wouldn’t know it from much of the contemporary commentary about AI technology and its short- and long-term applications. It’s overwhelmingly presented in negative terms. We constantly hear about how AI is going to eliminate all of our jobs or turn on us like the Terminator or contribute to an apocalyptic world war.
These worst-case scenarios require attention or care but they don’t quite justify the pessimism—or worse, fatalism—that marks the AI narrative on both the Left and the Right. Much of it reads like old-world reactionary thinking. It’s the modern equivalent of 20th-century conservative intellectual Russell Kirk’s description of automobiles as “mechanical Jacobins.”
Writing more than six decades ago, Kirk’s aversion to technological progress clearly caused him to underestimate the benefits that automobiles would have on modern society. Yes, there were risks and trade-offs involved. But we weren’t just passive observers. We adapted. We established laws, regulations, and norms. We continue to improve the technology. And we’ve harnessed it to meet our economic and social needs ever since.
The same must go for artificial intelligence, including notably here in Canada. We haven’t been immune to the secular stagnation that Cowen documented a decade-and-a-half ago—in fact, we’ve arguably been a poster child. Not only has our GDP per capita declined in the past several years, but the OECD projects that among its nearly 40 members, Canada will experience the slowest real GDP per capita growth out to 2060. We’re living in a “growth crisis” as Globe and Mail columnist Andrew Coyne has put it.
AI technology can pull us out of stagnation. And as a general-purpose technology, AI’s benefits can extend across the entire economy. In health care, for instance, AI can assist doctors in diagnosing illnesses with greater accuracy and efficiency. In agriculture, it can improve crop yields through advanced data analysis. In manufacturing, it can streamline production processes. The list goes on. These gains aren’t merely incremental either. They represent the type of transformative technological progress that has historically led to step changes in growth, productivity, and living standards.
AI technology also has the potential to spur entirely new industries. Just as the advent of electricity and the internet created unforeseen economic opportunities, AI can enable innovations that we cannot yet fully imagine. Canadian companies, particularly in hubs like Toronto and Montreal, are already at the forefront of AI research and development. With the right policies, it’s not hyperbole to say that Canada can position itself as a key player in global supply chains.
Future articles in the series will consider and debate the proper policy mix for Canadian policymakers. But let me wrap up here by reflecting on how the rise of the Chinese-led DeepSeek platform may reshape the conversation about artificial intelligence technology in a positive direction.
After months of U.S. dominance, the Chinese have produced a model that’s superior according to different analysts. The net effect, as David Sacks and Sam Altman have noted in recent days, is that the future supremacy in AI is going to be “very competitive.”
This may prove to counterintuitively be a positive development. It can create a competitive pressure on the West in general and the U.S. in particular that has parallels to the Soviet’s launch of Sputnik in 1957. In that case, a temporary setback actually renewed America’s sense of agency and urgency that in no small part caused it to ultimately win the space race. One hopes that similarly the impressive launch of DeepSeek shakes up those in Canada, the U.S., and elsewhere who are looking to stay ahead of the AI curve.
This matters of course because AI’s potential means that technological supremacy has huge economic and security upsides. It’s self-evidently in the interest of the West that we collectively stay ahead of Chinese AI technology. That undoubtedly requires changes in public policy. But as importantly it requires a change in our mindset.
If the prevailing narrative is about mitigating risk—managing the downside of AI—we’re setting ourselves up to lose. We didn’t win the space race by adopting a defensive posture.
One should look a the potential here with the same sense of both agency and excitement. We’re living in a history-shaping moment. It’s up to us to seize it.
The choices that we collectively make won’t just shape how the technology progresses and grows and contributes to our economic and civic lives. But they’ll ultimately determine whether when it comes to the next great general-purpose technology, the West maintains its technological supremacy.
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