Noah Smith delivers a sharp, contrarian takedown of two dominant progressive narratives: the feasibility of global degrowth and the efficacy of current Western military strategy. In a landscape often dominated by ideological echo chambers, Smith cuts through to ask whether these popular movements are grounded in economic reality or political fantasy. For busy readers tracking the intersection of climate policy, defense procurement, and global trade, this piece offers a necessary reality check on where the left's most ambitious proposals may be colliding with hard constraints.
The Perils of Global Central Planning
Smith turns his critical eye toward Thomas Piketty's latest proposal, arguing that the renowned economist has pivoted from serious inequality research to what Smith calls "total nonsense." He notes that while Piketty's earlier work on wealth taxation sparked a healthy debate, this new plan relies on outdated climate models and proposes a level of central control that borders on the absurd. Smith writes, "Piketty describes the new plan in a thread on X. Its main focus, perhaps surprisingly, is not inequality — it's climate change!" This pivot strikes Smith as suspicious, suggesting an attempt to justify maximal intervention rather than address scientific consensus.
The core of Smith's objection lies in the proposal's reliance on "degrowth," which he characterizes as a mandate for deliberate impoverishment. He argues that implementing such a scheme would require a global bureaucracy so powerful it dwarfs historical precedents. As Smith puts it, "implementing the kind of reallocation schemes that degrowthers throw around with abandon would require global economic planning that would put Gosplan to shame." The reference to Gosplan—the Soviet Union's State Planning Committee—serves as a potent historical anchor; just as the planned economy failed to account for local realities in the 20th century, Smith suggests this new global fiscal authority ignores the incentives of sovereign nations. He notes that even the European Union struggles with fiscal union, making the idea of India or China submitting to taxation by Tanzania seem "rather insane."
Critics might argue that the climate crisis demands radical, unprecedented solutions that traditional economics cannot provide. However, Smith counters that the proposal ignores the fundamental "free rider problem" inherent in global public goods. He asserts, "There's a clear incentive for any country to simply drop out of the fund and let other countries fix climate change for them." By framing the plan as an opportunistic move by the World Inequality Lab rather than a viable policy, Smith suggests the authors are prioritizing ideology over workable mechanics.
Piketty et al. simply make themselves look less like serious economists and more like opportunistic activists on the fringe of a "green" movement that's already in steep decline.
The AI Productivity Illusion
Shifting to technology, Smith challenges the prevailing optimism around generative artificial intelligence. He observes a phenomenon he calls "tokenmaxxing," where developers churn out massive volumes of code and content without regard for utility or demand. Citing data from John Burn-Murdoch and the Demirer et al. paper, Smith highlights a counterintuitive trend: while app creation has exploded, the number of apps with significant usage is actually declining.
Smith writes, "The things we really want a lot more of may not actually be the things that generative AI is yet equipped to provide." This observation cuts through the hype cycle, suggesting that supply does not automatically create demand in the digital economy. He points out that despite a rapid acceleration in text output, the broader economy has not seen a corresponding surge in productivity. The argument implies that we are facing a saturation point where quantity no longer translates to value.
The author notes that even industry insiders like Sam Altman are warning of a spending pullback, signaling a potential correction. This section serves as a cautionary tale for investors and policymakers alike: just because technology can produce more doesn't mean the market needs it. Smith's analysis suggests we may be in a bubble where the metrics of success—lines of code, number of e-books—are decoupled from actual economic utility.
Obsolescence and Geopolitical Blind Spots
Perhaps the most urgent section concerns Western military readiness. Smith argues that traditional platforms like aircraft carriers and fighter jets are becoming obsolete in the face of cheap, mass-produced drones. He cites a Lowy Institute report to support this claim, noting that Western institutions have failed to learn from four years of conflict in Ukraine. The report states, "Western military institutions...are failing to energetically learn from modern wars," citing rigidity and a "humility deficit" as key failures.
Smith contends that the U.S. military is uniquely positioned to benefit from Ukrainian expertise but is being held back by political ideology. He writes, "The unrelenting hostility and disdain toward Ukraine from Donald Trump and the MAGA movement has prevented America from taking advantage of Ukraine's expertise." Here, Smith reframes the issue not as a partisan squabble but as a strategic blunder with life-or-death consequences. He describes a "fantasy world" where Russia is viewed as a defender of Western values, arguing that this delusion cuts off access to crucial technology.
The human cost of such institutional inertia is implicit in Smith's warning: if the U.S. fails to adapt its doctrine and procurement priorities, it risks losing future conflicts against adversaries who have embraced drone warfare. He quotes Rebeccah Heinrichs, a senior fellow at the Hudson Institute, who asks, "I don't know what the hang-up would be in denying ourselves the ability to take advantage of that." Smith's argument is clear: political mythology is actively degrading national security.
By allowing themselves to believe their own anti-Ukraine mythology, Trump and his followers are cutting themselves — and the U.S. Military — off from access to crucial modern military technology.
The Unintended Benefits of Trade Barriers
Finally, Smith offers a nuanced take on trade policy, suggesting that tariffs on Chinese goods may inadvertently accelerate industrialization in developing nations. He references the "flying geese paradigm," an economic model where manufacturing shifts from advanced economies to emerging ones as costs rise. Smith argues that when Western barriers block final Chinese goods, China often moves its assembly operations to "third countries" like Mexico, Morocco, and Spain.
He notes, "Made in China is becoming 'made by China' — all over the world." This shift creates jobs and builds local supply chains in nations that desperately need them. Smith points out that Chinese investment in Mexico generated over 100,000 jobs recently, while Morocco has seen its growth accelerate to 5% due to similar inflows. He writes, "So even in the worst-case scenario where trade barriers don't reduce dependence on Chinese supply chains, they can help spread the blessings and bounty of industrialization to a bunch of poor countries who need the factories more than China does." This perspective challenges the zero-sum view of trade wars, suggesting a potential net positive for global development.
However, Smith acknowledges that this is not a guaranteed success story; it depends on whether these new manufacturing hubs can climb the value chain or remain stuck in low-margin assembly. The argument relies on the assumption that Chinese firms will continue to invest abroad despite political headwinds, which remains an open question.
Bottom Line
Noah Smith's strongest contribution here is his refusal to accept ideological comfort over empirical reality, whether attacking the impracticality of degrowth or exposing the strategic blindness of current military policy. His biggest vulnerability lies in assuming that political actors will rationally correct course once faced with data; history suggests that ideology often overrides pragmatism. Readers should watch closely for how Western defense procurement adapts to drone warfare and whether emerging markets can truly capitalize on the shifting supply chain dynamics he describes.
The deeper story here may be that demand for many of the things that generative AI produces might be a lot more inelastic than we thought.