We’re Ignoring the Innovation Crash
We should worry less about the dollars chasing AI and more about the mindset chasing innovators out of the arena.
We keep hearing that artificial intelligence (AI) is a bubble.
Maybe it is.
The money flooding into AI right now could sustain several countries with American firms on pace to spend $400 billion on AI infrastructure by the end of the year. Investment rounds seem to close faster than a ChatGPT prompt. Startups with no revenue are growing like they discovered fire. We’ve seen this sort of speculation and hype before, and it’s possible some AI companies and investments won’t pan out. When the dust settles, some companies will disappear, while others will survive and pivot.
Yet, assuming markets correct, that kind of bubble will cause significant, albeit short-term economic pain. New innovators will emerge, and new opportunities will arise.
We might, however, be living through a different kind of bubble with more severe long-term consequences that has already burst: a collapse in our cultural willingness to celebrate innovation at all.
Call it the innovation crash.
Unlike the AI bubble, this one won’t clear in a quarter. And, if it is sustained for too long, it will choke off our future before it’s even built.
A recent Pew survey found that, compared with other nations, Americans are more concerned than excited about the rise of AI systems. A similar Edelman survey, found “[t]hree times as many Americans reject the growing use of AI (49 percent) as embrace it (17 percent) while the Chinese are the mirror image, with almost five and a half times as many embracing AI (54 percent) as rejecting the technology (10 percent).”
This is a troubling turn. For decades, America treated innovators like civic assets. Founders were scrappy heroes. Garage startups were underdog stories. Bold ideas were national fuel. Even when the culture mocked Silicon Valley, it did so with a kind of affectionate disbelief, as when people initially reacted with skepticism that people would be willing to rent out their guest rooms to strangers or let strangers take rides in the back of their cars. Others laughed when Steve Jobs and Apple launched a supercomputing smartphone for everyone’s pocket.
But very real, very problematic scandals have subsequently tainted the very idea of being pro-innovation. The country that once spotlighted founders on magazine covers now circulates memes caricaturing them as grifters, narcissists, or cartoon villains in Patagonia vests. We went from celebrating ambition to suspecting it wherever it appears. Rather than admire risk-takers (which may make you the subject of scorn), we’ve started to pay more attention to the loudest anti-innovation critics.
Want to be a dreamer and start something big? That’s not admirable—that’s problematic.
Want to build a technology that might scale? That’s not visionary—that’s extractive.
Want to earn real money doing it? That’s not success—that’s moral failure.
This cultural mood isn’t abstract. It’s measurable. Trust in tech has cratered. Teens—digital natives—say they assume platforms will manipulate them for profit. Adults assume founders are gaming democracy. Legislators assume anything new will be harmful until proven otherwise. And regulators? They’ve started treating innovation like a public hazard.
This is where the innovation crash becomes dangerous. Public cynicism becomes political reflex. Political reflex becomes legislative muscle memory. And legislative muscle memory produces laws written not for tomorrow’s problems but yesterday’s grievances.
Consider what’s happened over the past three years. Federal and state lawmakers, fueled by public outrage at social media and the attention economy, have begun passing rules that read less like guardrails and more like lockboxes. Over 1,100 AI-related bills are now pending across the U.S., and a great many of them are rooted in a fear-based, regulate-first mindset that prioritizes permission slips over the freedom to innovate. Age-verification laws that require intrusive surveillance by the government to fix the harms of intrusive surveillance by tech. “Duty of care” mandates for digital systems so broad they would smother any small startup trying to serve the vulnerable communities most in need of new tools and support. AI regulations proposing licensing structures that sound more compatible with nuclear facilities than software labs.
These are not the laws you write when you believe innovation is a public good. These are the laws you write when you believe innovation is a public threat.
And here’s the real twist: these rules won’t restrain the companies they were written to rein in. Big incumbents can comply. They can afford the compliance teams. They can weather the risk. They can even use the rules as moats to protect them from smaller innovators.
The only entities that can’t survive this climate are the ones we need most: the first-time founders with unpolished ideas; the scrappy teams building alternatives to the very platforms we’re fed up with; the innovators working to give us a world of exciting new life-enriching choices.
That’s the danger of an innovation crash: the collapse of the ecosystem that makes the next American technological renaissance possible.
Meanwhile, to the extent AI becomes a financial bubble, it will almost certainly be short-lived. It didn’t take long for new startups to emerge from the dot-com bubble, for instance, and many of the incumbent tech firms that took substantial hits have re-emerged even stronger today.
An innovation crash is different.
When a society stops treating innovators as partners in progress—when it replaces curiosity with suspicion and replaces humility with hostility—the future doesn’t just slow down.
It shrinks.
We become a nation of takers, not makers.
The harm isn’t measured in stock charts. It’s measured in the number of products never built, the number of problems never solved, the number of founders who never start because the culture treats ambition like an indictment.
We should worry less about the dollars chasing AI and more about the mindset chasing innovators out of the arena. This is the hard lesson the European Union learned over the past quarter century as a combination of anti-innovation attitudes and repressive public policies decimated continental creativity and drove Europe’s best innovators and investors to America’s shores, where they were more welcome. Now it appears many American policymakers are ready to follow Europe’s dismal example.
Reversing the innovation crash doesn’t require blind faith in tech or indifference to harm. It requires remembering the bargain that built every wave of American progress: a society that gives innovators room to try, room to err, and room to build things we don’t yet fully understand.
That means making transparency the default, not suspicion. It means empowering independent researchers instead of intimidating founders. It means focusing law on actual deception and documented harm rather than sweeping mandates that freeze the technologists we haven’t met yet. It means building digital literacy so the public can be wiser users—not helpless subjects.
We will survive an AI bubble. We will not thrive through an innovation crash.
If we want a future full of better tools, better platforms, and better choices, we have to rebuild something more fragile than capital: our belief that building is worthwhile. That belief made America a magnet for innovation. Losing that optimism is the only bubble we truly can’t afford.