Transcription
If you expand like the British people once did and you incorporate vast realms, in the end, the external proletariat becomes your internal proletariat, and your society will change for the good and for the ill. They don't want that.
Beijing, Shanghai, Guangzhou, they are not like London, New York, or Paris. They're homogeneous. And this homogeneity is both a strength and a weakness. So when the Chinese say that they have no wish to be a global hegemon, it is not a tactical statement. It is because they think it's foolish.
In Singapore, we allow our bases to be used by the Americans. I live not far from one of them. And my wife and I wonder if the Americans go to war with and decides to hit us the way Iran has hit bases in the Middle East, how far are we from the targets?
The result is a fundamental recalculation in people's minds about geopolitics in the world. Last year, the US issued the new strategic security national strategic security framework. In effect, calling for a retreat of the US back to its own hemisphere is an important shift of direction. It is a shift of direction made necessary because of finances. The US debt now approaches $40 trillion, and servicing that debt has already overtaken the entire defense budget, and that debt continues to grow. Something will happen, and Americans know it.
So in Europe, Trump insists that NATO countries spend 5% of their GDP on defense. In Asia, Secretary of War Hex, at the Shangri-La Dialogue recently, he said American allies in Asia must spend 3 and a half% of GDP. Why? Because the American empire has reached a point where further expansion is not worth the cost, and maybe even maintaining the current position is not worth the price. But once your allies begin to have their own military capabilities, they will think differently, and they will not follow you in everything that you want to do. Then a new dispensation changes. I don't think the direction will change, even if their policy changes by new America, by new American administrations, because the finances cannot support it.
Now, we don't know how much more America will have to decline, whether it can heal itself. It's often said, "Don't bet against America." Maybe. But not even Americans are sure. And maybe a retreat will save America. I mean, when Western Rome fell, Eastern Rome, Byzantium, consolidated and lasted another thousand years. And America, which has Canada, Greenland, the Gulf of America, the northern part of South America, with three oceans and abundant energy resources, that can be self-sustaining and powerful for a very, very long time.
But we're entering a multipolar configuration. For some Americans, it will not be multipolar. That if America declines, [someone else will] take over. And indeed, [China's] economy has already overtaken the American economy in PPP terms by a significant margin. But this misunderstands the nature of you know, when the Americans blastly talk about G2, the Chinese protest. They don't want it. Not because you're modest, but because it means trouble. If your aspirations to be a global hegemon, your problems are endless. And in their own history, because they are big enough and homogeneous enough, it's better to build walls and to keep trouble out. Every dynasty rebuilds walls. And in the People's Republic, there are new walls for Hollywood movies, for publications, for the internet, even for viruses. Why? Because to protect its own homogeneity, it needs to keep out and control foreign influence.
If you expand like the British people once did and you incorporate vast realms, in the end, the external proletariat becomes your internal proletariat, and your society will change for the good and for the ill. They don't want that.
Beijing, Shanghai, Guangzhou, they are not like London, New York, or Paris. They are homogeneous. And this homogeneity is both a strength and a weakness. So when the Chinese say that they have no wish to be a global hegemon, it is not a tactical statement. It is because they think it's foolish. It's unwise. Their own historical experiences teach them that it's better to kind of confine the development within the wall. And that is why they've always talk about the internal circulation which is protected and the external circulation which is subject to all kinds of turbulence because of global politics.
The question is, how enduring is this position? This position is enduring because of the nature of Chinese society and the fact that for a population twice that of Europe, they have one literature, one set of heroes, and a history which is marked by long amplitudes, long ascent, long declines. If you're born at the wrong time, it's just your bad luck. But if you're born at the right time, well, that's good fortune.
How did this come about? The homogeneity of the Chinese people. One, of course, is the fact that the written language is separated from its pronunciation. That gives it a fixed value, a digital quality. Today, primary school children in China can recite verses from Confucius, Mencius in the original. They can read the characters. The pronunciation is different from what it was 2,000 years ago. But it's the same content, and it's across a vast realm.
And the other accident in Chinese history is paper. Paper was invented 2,000 years ago. And it was a closely guarded secret, the technology to make paper, until the 8th century when, in the famous battle in Central Asia, the Chinese army lost during the Tang Dynasty. This dynasty, and the knowledge to make paper, leaked to the Islamic world, and paper transformed the Islamic world. Paper, 8th century. By the year 1000, it reached Cairo. By the year 1020, it reached Muslim Spain. The Islamic script, the Renaissance in Islam, was all made possible by paper.
Why is paper important? Paper is important for the storage and processing of information. You watch a Chinese artist with brush, ink, and paper. How many paintings can he draw in an hour? If you have to use a paintbrush and canvas, you could be at it for weeks. When you record on paper, an ink black which is consists of nanoparticles, the speed is orders of magnitude greater than writing with a quill and parchment. So the recording of Chinese history is voluminous.
Alan Turing, I think, whose ancestry was Scottish, had this insight that if you have an unlimited quantity of paper, you can do an unlimited quantity of algorithmic computation. Therefore, to codify knowledge. Therefore, to organize. Therefore, to organize more people across time and space. Irrigation works. Storage of grain. Political control. Communication. The recording of climatic change, of water levels. When COVID happened, the Chinese told their own people, "Do not worry. We have a complete record of every epidemic in China going back 2,500 years. Every epidemic." This data intensity of Chinese society makes it particularly conservative, predictable, because the legacy is too voluminous.
So when the Chinese say, "We prefer a multipolar world," even though they may be the biggest pole, they mean it in their own self-interest. But it'll be a better world if the US remains primus inter pares in that multipolar configuration. If the US retreats in a chaotic manner, can you imagine the destabilization in different parts of the world? Look at the retreat of Rome. I mean, Hadrian retreated from Euphrates in an orderly way, so that was okay. But the fall of Western Rome, what they did to Britain, to Germany, to France, to Africa – wars, revolutions. If the US must retreat, if the sun must set, let it be a long sunset, and let it quickly rise again, because it'll be a safer, a more comfortable world for all of us.
But I want to connect this idea of codification to energy. What makes Earth different from, say, another planet like Mars? Why do we have soil? Why do we have cladding of forest and grass? It's because of coding of life. All life is based upon these nucleic acids collected in the nucleotides ACGT, and from which in triplets and codons, you have the 2021 amino acids. All life on Earth is based on this coding. It reverses the error of entropy. In mass, everywhere in a closed system, there is a tendency towards degradation and randomization. But in life, in the phenomenon of life, there is a persistence towards organization.
So when Darwin, who was influenced by Adam Smith, had this insight on natural selection, all natural selection is driven by the pursuit of energy. "I eat you, so I acquire energy." And if I use the energy more efficiently, I will reproduce, and I will eat you, then I proliferate. So when we see the natural world, there's a constant struggle for energy, even within the human body, there's a constant struggle for energy by the different cells, but the different organs. And when it goes out of kilter, you get a cancer, which gobbles up energy, and all solution to cancer consists of denying that cancer energy. Same with human society.
If you are a tribe hunting, gathering, there's only so much energy you can acquire. So the first energy revolution in human society was agriculture, because with agriculture, you are producing energy from crops. And if you're able to organize the great deltas, drain the swamps, irrigation canals, flood control, seed selection, grain storage, distribution, then you create a surplus of administrators and soldiers to conquer. And the more you grow, the more energy you acquire, until you reach a point where the cost of expansion is greater than the benefit of expansion. Then the tide turns back.
The next energy revolution started here in Scotland when James Watt invented the steam engine to convert fuel, traditionally used only for heating, into mechanical power. There are steel markets, the iron markets in Singapore. They're all from Scottish cast iron. Entire bridges transported and reassembled in Singapore. One of the markets is still a tourism spot, La Pas in Singapore. Many of you would have seen it. All Scottish cast iron. How did the iron come about? Coal, which the British Isles had in plenty, conversion to steam, and that steamship, trains changed the economy, changed the military equation.
Then you had oil, and the power shifted to America. With oil, you have airplanes, you have motorcars, you have tanks. America's domination of the oil market, which peaked just after WWII, when Franklin Roosevelt, on his way back on board the USS cruiser Quincy, stopped in the Suez Canal and for 5 days conferred with King Abdulaziz. And out of that conference, a key agreement was made that in return for the US protecting Saudi Arabia, oil would be denominated in US dollars. That grip is loosening. Abdulaziz's grandson, Mohammed bin Salman, he's a clever man. He's diversifying, but slowly, because he sees a different future, as all of us see a different future.
And when it comes to AI, the limit to AI is not what clever people can do to invent algorithms. The ultimate limit to AI is energy. Because to compute, to codify, to reverse the error of entropy, you need energy. But happily, happily, that energy is now ubiquitously available in sun and wind and other alternative forms, including small reactors. It can no longer be easily controlled by any central power. The Magnificent 7 thought they had a luck, and American strategic thinkers felt that with AI now, the US can prolong its supremacy indefinitely. Then, [snorts] suddenly came up with DeepSeek and made it an open-source large language model. And since then, all the other Chinese large language models like ChatGLM, like Wu Dao, they're all open source. It's become state policy. Why is it open source? Because they wanted the knowledge of AI to be quickly diffused into all sectors, to reduce monopoly power. And in so doing, they benefited Singapore, they benefited the UK, if you want to use it, and others. It's open source. You adapt it with your own confidential information and apply it to your own specific circumstance.
Now, this is interesting, because the technology is available to everybody. Energy is available everywhere. What makes the difference between one country, one tribe, and another? It is the ability to organize and to ameliorate the negative side effects of technological change, to avert backlash, to make unnecessary counter-ideologies like Marxism. So the countries which are able to make use of the new technology and new forms of energy are those that can organize themselves socially. So we are talking about values, we're talking about politics, we're talking about social structures.
And in Smith, there's this duality in his thinking. There is the invisible hand of the market, which works its magic through individual self-interest, but which requires, at the same time, a visible hand, which is the subject of his Moral Sentiments book. What is a visible hand? It's how a society is organized. Its memories, its education, its laws, its ethical standards. It's within that framework that the invisible hand operates. But when the visible hand grows large and rigid, that visible hand curbs the freedom of the invisible hand. In some cases, when the hand dies, like a dead hand, it prevents change. And the result is, even though the technology and energy are available, there's little you can do about it. And this is the next phase of human history.
How do you create an optimal balance between the visible hand and the invisible hand? And it's not static. It's a dynamic balance between the two. The Chinese have a beautiful saying that when you hold a small bird, if you grip it too hard, it dies. If you grip it too lightly, it flies away. And what is in your grasp? Your grip must constantly change with the bird, and the bird reacts to you. This is the art of economic management. It is not something which AI has a solution to. It is not a challenge to which textbooks can furnish answers. It requires human beings' willpower to be modest, to forswear hubris, who are connected to [clears throat] ordinary people, who know that every action the visible hand has invisible results affecting the welfare of large numbers.
There's nothing new. This tension, this moral struggle, is as old as civilization. In the animal world, among social animals, the visible hand is hardwired. See, in the behavior of dogs or primates. But with human beings, it is reprogrammable in culture. And that's what makes us a different species. We're on a new threshold. There are new challenges. There are more questions. There are answers. And one can only hope that there are enough people, thoughtful worriers, who rise above the fray of daily stresses to look ahead and ponder the larger questions, as those from the Scottish Enlightenment once did. And I hope that Pameo House will again provide such a spark to a new enlightenment in the world. Thank you. [applause]