Post 16: Follow Up on Creative Insecurity Questions

This post follows up on two questions that I previously raised about creative insecurity. The first is whether DeepSeek and other technological developments in China are a Sputnik moment for the United States (based on post 9). That is, whether China’s new generative AI model is a wake up call to the United States that it needs to up its technological game to avoid being overtaken by China. The second is whether President Trump’s threats to stop supporting Ukraine or removing Europe’s security guarantee put Europe in a creative insecurity situation (based on post 12). In the original posts, I said that it was too early to tell. Now, over a month has gone by and I think the answers are clearer.

So is DeepSeek providing a Sputnik moment for the United States? In fact it is not just DeepSeek, since Alibaba recently released its generative AI Manus. I think it is safe to say ‘no.’ Manus’s release received little press coverage in the United States, despite it being another generative AI that is also comparable to those produced by US companies. If you listen to debates about science, technology and research in the United States, they are focused on issues like antisemitism on college campuses and diversity, equity and inclusion. Neither major American political party seems focused on how to maintain technological superiority over China. There may be a time where Chinese technological advancements push the United States into a creative insecurity situation, but this is not it.

I think one reason why China’s advancements in generative AI have not been as threatening to China’s rivals as they could be is that the companies that developed the models have been very open about their technology. DeepSeek’s model open source and they have published their technical results so anyone can see. Meanwhile, Manus is releasing an open source version.

Our second question is whether the Trump Administration’s threats to remove Europe’s security guarantee puts Europe in a creative insecurity situation. So far, the only country that has reacted in a material way is Germany. Germany recently amended its constitution to alow unlimited spending on military expenditures and military aid to an ally who has been attacked. There are estimates that Germany could increase its military spending to around three and a half percent of GDP, which would put it in line with the United States. This abrupt change in German policy suggests that it takes a threat from Russia to itself and its allies seriously, and is indicative of a creative insecurity situation. Meanwhile, other major powers in Europe like France and the UK have limited their response to rhetoric and incremental changes. As a result, I would consider betting on a return of German ingenuity. However I would be cautious about a ramp up in technological innovation elsewhere in Western Europe.

I’d like to conclude with one more news item that I think is relevant from the perspective of creative insecurity. Google recently announced that it will pay thirty-two billion dollars for the Israeli cloud security company Wiz. If the deal closes then it will be the largest purchase of a recent start up ever recorded. Wiz was founded by four Israeli start up veterans in 2020, making the sale all the more extraordinary, since the company did not exist a little over five years ago. While the deal is extraordinary for Wiz and its employees, it is something that creative insecurity theory would have predicted. Israel’s creative insecurity situation forces a lot of innovation for a small country, while the United States’ lack of external threats reduces innovation. This will force America’s major technology companies pay to a premium for innovation. Meanwhile Israel benefits from the United States scale, markets and capital. I would expect more headline grabbing purchases like this from large American technology companies in the not-so-distant future.