In a technological race with China, Silicon Valley may be this country’s greatest asset.

When it comes to defense, American competition with, above all, China is already focused on the need to remain ahead technologically in areas that would once have been almost unimaginable. I wrote about this at some length back in 2021, arguing that something analogous to the “Sputnik moment” was again needed. Shocked by the early lead taken by the Soviets in space, the U.S. made a major effort to out-innovate the USSR, not least in a space race where borders between the “peaceful” and the military were far blurrier than all that happy talk about “for all mankind” was designed to imply.

The case for that Sputnik moment was strong in 2021. It’s even stronger now. China, the main adversary, benefiting from the fruits of its harnessed capitalism (and way too much access to Western technology), as well as decades of more generalized scientific progress, is likely to prove a far more formidable competitor than the Soviets, if it is not already doing so.

It was thus encouraging to read this report from the English-language version of Switzerland’s Neue Zürcher Zeitung.

A revolution is underway in the American defense industry. Military startups are promising to make procurement more efficient and cheaper, give the armed forces a battlefield advantage with new inventions, and equip democracies for the wars of the future.

This arms-race revolution is being funded by some of Silicon Valley’s most prominent investors. Over the past four years, they have channeled more than $130 billion into the defense-tech sector. Their hope is to make big profits in return. With this in mind, they are betting huge sums on military startups.

At the same time, some of these investors are interested in more than just money. They are driven both by patriotism and personal conviction. They want to see closer ties between tech companies and the defense sector. They want to help defend the United States’ status as the world’s top technology power. They want the U.S. to prevail in the great-power competition with China . . .

It’s worth taking a look at the whole article, which is focused on Eric Schmidt (the former CEO of Google), Marc Andreesen (Netscape, etc., etc.), and Peter Thiel (PayPal, Palantir, etc., etc.).

Is it somehow a negative that such investors’ motivation is financial as well as patriotic? No. The reverse. To quote (inevitably) Adam Smith:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

In a technological race with China, Silicon Valley may be this country’s greatest asset, in some ways a modern equivalent of the industrial might that made it possible for America to become the arsenal of democracy in the Second World War. That’s one reason why the administration should resist the temptation to use antitrust to take aim at some of America’s larger technology companies by taking a leaf out of the Biden-era dislike of some of these businesses for, in essence, being “too” big.

Not only is that antiquated economic nonsense with roots in both early twentieth century progressivism and the hubris of socialist central planners, but it also risks reducing both the flow of funds into-high tech R&D and the creative clustering of talent that exists within those firms. The main winners would be China and its pals, and, of course, the Washington swamp-dwellers who have more services to sell when government steps up its intervention in the economy (see also tariffs).