Technological Democracy
Globalization and the end of history didn’t work the way we thought they would.
China’s ascent to an autocratic economic and military superpower shows no sign of slowing down. The United States is threatening to pull back its stabilizing influence from other parts of the world just to be able to compete with China. It’s not at all obvious how it all plays out — The US is resorting to tariffs to frantically reshore it’s lost manufacturing capacity, potentially pushing the global economy into a recession with it.
The world has become a more dangerous place with China on the rise and hot wars raging in Ukraine and Gaza with no end in sight. Russia’s aggression is fueled by a strong China and a chaotic US. North Korea has sent the first foreign troops to Ukraine making the hot war a global one, and Israel has escalated its attacks from Gaza to Lebanon, Syria and Iran. President Trump has reminded the world that national security is an economic issue democracies need to be able to pay for.
European democracies must balance their budgets while making large investments to support aging populations, digitalization, climate transition and the national security. Draghi’s report alone called for raising investments by €800 billion a year. This is not counting the approximately €300 billion a year for Europe to replicate the U.S. military umbrella which shielded Europe but is no longer given — a cumulative investment of three trillion euro over 10 years. The US is not much better off with a debt-to-GDP ratio of 124% that will become unsustainable without strong economic growth.
In 2024, the incumbent party in all 12 developed Western countries that held national elections experienced a loss in vote share, marking the first time this has occurred in nearly 120 years of modern democratic history. U.S. Democrats, the UK’s Conservatives, France’s Ensemble coalition, Japan’s Liberal Democratic Party (LDP), India’s Bharatiya Janata Party (BJP). The same trend seems to continue in 2025 starting with the governing coalition led by Chancellor Olaf Scholz in Germany.
People are not happy with the deal they are getting. The model for classical liberal democracy seems to be breaking down.
Downstream of technology
The current geopolitics make painfully clear that for any country to prosper and to lead, it needs strong economic growth, a powerful military and a strong civic culture to uphold our values and institutions. All of these are downstream of technology.
Europe has gradually made winning in technology ever more difficult by aiming to become a regulatory superpower. This is well intentioned, but its proponents are unlikely to fully consider at what cost. Liberal democracy might not survive without technology driven economic growth.
Technology drives economic growth, which pays for the strong military deterrence. A great power won’t be one for long if they miss one or the other. Post WWII Pax Americana has shielded Europe and let us forget this reality. We’re now in for unpleased awakening as the US support is no longer given.
What’s more, as I argued earlier, our democratic institutions stop functioning without economic growth and politics becomes a zero-sum game. Lack of growth combined with low birth rates and mass immigration cripples democratic societies.
Apart from technology driven productivity increases (and pure financial aid like the Marshall Plan), only significant economic growth we’ve see in the post WWII democratic West has occurred during the Reagan-Thatcher deregulation in the 1980s and the globalization in the 1990s. Both of which were one-off and did’t last.
For all these reason, we should think twice when we prioritize other factors over achieving technology leadership. I understand why many want to hold onto the policies, politics and institutions that have served our democratic experiment since the WWII, but they might not matter going forward if we don’t win in technology. Totalitarian rhetoric starts to look promising as soon as people feel democracy can’t give them a fair deal — an opportunity to make a decent living, to get paid for the work they do, and a freedom to make choices about their own lives. We can see the shadows growing taller in the US and in Europe as I write this. Technology might be the only way to preserve not only what’s left of the welfare state but liberal democracy as we know it.
Only technological progress can create the economic surplus to escape the zero-sum misery.
Europe’s opportunity
There might be a silver lining like there many times are in a crisis. The crisis can help accelerate change to something that better meets the demands of today.
The geopolitical turmoil has presented Europe with an unexpected opportunity to reinvent itself as the leader of the free world by prioritizing technology progress. At the same time, it’s not much of a choice — We might not have an option if we want to keep our freedom. Given the rapid march of Artificial Intelligence, we should not waste time. It’s hard to predict how AI will develop, but it’s guaranteed that it’s coming and will further divide the fortunes for those who lead and those who follow.
It takes courage to embrace the change, but embrace we must. I’m rooting for you, free world!