Sovereign

The keyword in politics these days is ‘sovereign’.

What few will admit is that it is effectively the adoption of the American strategy: Make America Great Again. In other words, reindustrialization of key sectors of the economy. The UK used to be a computing champion. Our chip designs (ARM) originated from the UK. Canada had BlackBerry, everyone was using Canadian phones.

Like Canada, many countries have progressively slid into financialization. Huge banks and bank-related businesses, surrounded by emptied factories.

Part of it was the doing of economists who promoted globalization. We are going to make our best CPUs in Taiwan, because they have a comparative advantage (whatever that means).

Another part is the rise of the managerial class, or our version of the technocracy: the summum of the status game is to make PowerPoint presentations in a nice office. Everyone has 2 or 3 university degrees. And if you don’t have many degrees, what is wrong with you?

I think that this is breaking apart for a few reasons.

One of them is Trump. And I don’t mean bombastic statements, bad hair color or overly long ties… But rather the realization that globalization might leave your people economically better off for a time because they have cheap stuff… But it also leaves your people with few skills. You can fund a robotics factory near Montreal, and you’ll find 2000 people with robotics PhDs, but nobody actually knows how to build robots. The analogy is thus: salary is not everything (to the great chagrin of economists). I have left a much better paying job. My previous job meant that I had to sit in an office and do little concrete. I would have had a great and early retirement… but I would never have developed my skills nor would I have built anything. And that’s what we did at the country level. Great total compensation, but a dead-end skill-wise.

Another factor, I believe, is the COVID era (2020-2023) and its final outcome: empty offices, closed coffee shops. What happened at work was illegible. Lots of people in offices. Certainly, something important was happening. Entire businesses and government organizations have now migrated partially or entirely to a pajama party of some kind. Netflix in the middle of the workday is no longer a dream, but a reality.

Another element is educational misalignment. A country like Canada has the most schooled population in history. You cannot throw a rock without hitting someone with a PhD. Meanwhile, we are not making robots or microchips. You can’t even pay with your phone in the Montreal subway. It is a project for another decade, maybe. We are using a push strategy: push more people with degrees into the economy and you are going to get a fancier economy. Won’t work.

Finally, the AI breakthrough of 2022 is the final nail in the proverbial coffin. My country (Canada) claimed for decades that we were the AI powerhouse. All these PDFs online can’t lie, can they? Canada basically invited modern AI, didn’t it? We did. On paper. On paper we did a great many things. In practice? Few know how to build anything.

In a country like Canada, the population has not yet caught up. They blame the orange man for whatever trouble they see. And the politicians promise to do what they must: shower money to build tech sovereignty. It won’t work. They will try again. It won’t work again. The cycle makes things worse because it sustains a managerial class that is great at politics but terrible at building.

Meanwhile, you can’t escape preference falsification. People will use ChatGPT, Claude, Grok, Gemini. And if Elon produces robots, they’ll want them.

Trump will leave office in two years… Canada and the UK will still be flat-lined economically. The USA will still surge ahead.

Countries like Canada and the UK will have to realize that it is industry and know-how first. Build stuff and the wealth will follow. Stop the virtue signaling. Stop the credentialism. Build.

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