Sometimes the real action is in the dog that didn’t bark. What is striking about the European Union’s pending regulations on artificial intelligence is what’s missing: There is no ban on open-source AI.
Part of the reason may be that the French government realizes it has a winner in its highly regarded AI firm Mistral AI. Recent results have shown Mistral making significant progress catching up to industry leaders, and the estimated value of Mistral AI has risen sevenfold in the last six months. Meanwhile, Germany and Italy have their own AI aspirations. Why let EU regulation ruin that possibility?
One lesson here is that when France has serious commercial interests at stake, it is capable of getting its way in the EU. And the implications of that lesson are to be more bullish on France.
France, and Paris in particular, now has a fairly dynamic startup scene. Good companies and projects don’t come out of nowhere. The city’s startup ecosystem, especially in fintech, is booming. If you think technology and AI are the keys to the economic future, France is the major European nation making forward progress. Other promising startups may be on the way.
Americans like to jest that there is no French word for “entrepreneur” — but the joke may be on them. Some of the important people behind Mistral AI had been working for Meta and Google in France, but now they have struck out on their own.
The strengths of the French economy run much deeper than a burgeoning tech scene. France, along with Sweden, was the major European country that made a big bet on nuclear power half a century ago. Now those investments are looking prescient. About 70% of French electricity comes from nuclear power, and France recently signed a pledge to expand nuclear capabilities, which will become more important as Europe moves to electric vehicles. And with French President Emmanuel Macron’s recent praise for small modular nuclear reactors, it’s clear that France — unlike Germany — is not pulling the plug on its nuclear sector.
The French economy still has plenty of problems: an aging population, excessive government spending and regulation, and difficulty assimilating immigrants, to name a few. But France has what at first may seem an odd choice for a libertarian-leaning economist to cite as an virtue: a long tradition of civil service.
Since the West European economic boom ended in the 1970s, the French civil service has been at best a mixed blessing. French administrators have gotten a lot done, reflecting their impeccable education and internal culture. But they have also helped to make the French economy overly static and too reliant on bureaucracy. A lazier, less activist civil service might have been better.
Fast forward to 2023. War and conflict are now more common on the global scene, a trend that shows no signs of abating. Populist governments are on the rise, and China and Russia are active and restless. None of those problems is easy to solve, and they all require greater involvement from the public sector. Nations with high-quality leadership and civil-service traditions will stand a better chance of navigating the turmoil.
So the bureaucracy that was once a hindrance to France may now turn out to be a comparative advantage. And at a time when governance seems to be deteriorating around the world, Macron continues to have a reputation as a relatively responsible leader.
This year has shown how this advantage plays out. Post-pandemic France has been a bit of a mix, with soaring energy prices, inflation, rising interest rates, continuation of the Ukraine war, labor strikes and protests, and a variety of European migration crises. Yet France avoided a credit downgrade and the French economy continued to create more jobs. Performance has hardly been perfect and the risk of recession remains, but France has done better than might have been expected 18 months ago.
I’m not going to argue that the French underrate France. But the Anglosphere does, and I hope we will all end up delighted, rather than scornful, if and when we are proved wrong.
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