Economics

Technology and Innovation

  • United States
    The National and Economic Security Imperative of Helping More Americans Adapt and Thrive
    By Penny Pritzker, chairman and founder of PSP Partners; and Edward Alden, Bernard L. Schwartz senior fellow at the Council on Foreign Relations. (Note the following excerpt is from a chapter written for a new Aspen Strategy Group book called Technology and National Security: Maintaining America’s Edge. You can find the full chapter and the book here.) The United States today faces twin challenges — building its global leadership in the next generation of transformative technologies and rebuilding economic opportunities for more of its citizens. The first cannot be done successfully without also doing the second. Innovation and competition are the great drivers of prosperity, but they have also created a growing gap between the economic winners and those struggling to get by. Unemployment in the United States has fallen below 4 percent, and the well-being of Americans has been improving as the economy continues to grow at a strong pace. Yet four in ten US households still report that they are unable to cover an unexpected $400 expense without borrowing money or selling something they own. More than a decade after the last recession, economic insecurity remains widespread. This continued economic insecurity poses a growing and fundamental threat to America’s economic competitiveness and national security. While technology and global competition have helped raise incomes and living standards around the world, they have also created huge new challenges in the labor markets of many of the advanced economies, from the disappearance of once well-paying manufacturing jobs to the growth of the gig economy and other contingent work that comes without traditional employment benefits. Americans need far better access to the education and retraining opportunities required to prosper in this rapidly changing economy, and government support systems must be updated so that working Americans can again have greater confidence about their futures. The reality is that for more than thirty years we have failed as a nation in this regard. In the United States, where the social safety net is especially porous and support for job retraining is weaker than in any other wealthy country, labor market disruption has already contributed to social and political upheaval. Donald Trump was elected president in 2016 on a platform that promised greater restrictions on both international trade and immigration to the United States, blaming both for the economic challenges facing many Americans. Since taking office, the president has approved the largest increase in tariffs on imports since the 1930s, has slashed refugee admissions to their lowest levels since the refugee program was created in 1980, and has taken a series of steps to reduce the entry of highly skilled immigrants to the United States. Such restrictions on trade and immigration will erode America’s technological and economic leadership. Immigrants today — many of them initially attracted by the high quality of American universities — are more than twice as likely to start a business as native-born citizens; from 1996 to 2011, the business start-up rate for immigrants increased by more than half, while the native-born start-up rate fell by 10 percent, to a three-decade low. Of the eighty-seven start-up companies that had reached a value of more than $1 billion by 2016, immigrants founded more than half, and over 70 percent had immigrants as part of the top management and product development teams. On trade, internationally engaged American companies — those that both export and invest abroad — are America’s most innovative companies, accounting for nearly three-quarters of private sector research and development. The success of these firms depends on markets that are open to both trade and investment. And while the United States has imposed few restrictions on the deployment of new technologies, some 75 percent of Americans today are worried about a world in which computers and robots do more of the work, fearing for their job prospects, their family’s future, and that inequality will worsen. Polls indicate that the public does not favor tariffs on imports, sharp restrictions on immigration, or regulations that curb technological innovation. But the public is wary about what technology and global competition mean for their jobs and their future. Public support for economic openness can no longer be assumed; it must be rebuilt. That requires rebuilding the connection between economic openness, innovation, and better work and life opportunities for Americans. The US education system must do a better job of preparing Americans for the world of work by expanding career-related offerings; better support is needed to allow mid-career workers, or those displaced by technology or trade competition, to return to school and retrain for new careers; and the benefits that are now available to most full-time workers — health care, sick leave, vacation pay — need to be available to everyone with a job. Improving and rebuilding the links among education and workforce training, good jobs, and greater economic security is vital to our future security and economic competitiveness. As technological change is accelerating, the United States needs to show the same level of public and private commitment to meeting this challenge as it showed when the country transitioned from an agrarian to an industrial economy just over 100 years ago. Meeting the twin challenges of technological leadership and rebuilding opportunity must be the primary goals for US economic policy. Given the seismic forces of innovation, automation, and globalization, the nature of work is fundamentally changing; we must help more Americans adapt, adjust, and thrive. America needs a more forward-looking, comprehensive economic competitiveness strategy that includes an innovation leadership agenda, modernization of our workforce training and education systems, immigration reform, and expanded multilateral trade. If the United States fails to meet these challenges, it will have neither the resources nor the political support needed to play a large global role. The United States won the twentieth century because it finally got the big challenges right — education, scientific excellence, innovation, immigration, and trade. Yet, in recent decades we have not done all that we can as a nation to adapt government policies and approaches to the rapid pace of economic and technological change. Too many Americans have been left behind by the rapid changes in the economy, without the necessary tools and resources to prosper. The reality is we can do better. With diminishing opportunities, it is not surprising that Americans have been susceptible to populist promises. The United States has been here before and risen to such challenges in the past. We must do so again as our national and economic security depend on it. (For the full paper, go to https://www.asgbooks.org/technology-national-security/)
  • Technology and Innovation
    Transformative Technology, Transformative Governance: A New Blog Series on the Future
    A flood of technological innovation has left global governance floundering. A new blog series explores this inundation and how to strengthen the levees. 
  • Cybersecurity
    Mitigating Cybercrime Threats: Global Efforts to Clean Up the Internet
    Play
    Botnets are groups of computers infected with malicious software often used for crime. They can propagate spam, send phishing emails, impersonate users, among other things, and can cost the economy billions of dollars each year. In this meeting, panelists discuss how technology makers, internet service providers, cybersecurity companies, and law enforcement can work together across the globe to eliminate the existence of botnets.  
  • Disasters
    Averting Global Catastrophe: A New IIGG Blog Series
    Nature and technology pose a worrying array of threats to twenty-first century civilization. These global menaces and the catastrophic risks associated with them are the subject of a new International Institutions and Global Governance program blog series. 
  • Saudi Arabia
    OPEC’s Bigger Problems
    The Organization of Petroleum Exporting Countries (OPEC) decision to cut oil production by 1.2 million barrels a day (b/d), together with Russia and a few other non-OPEC producers, may have garnered the organization’s members a few extra dollars temporarily, but it belies larger problems ahead for the 57 year old cartel. OPEC has weathered many geopolitical and economic challenges in the past, not the least of which was surviving land wars between countries in its membership and multiple crashes of oil prices below $10 a barrel. But, like many things changing in the current world order, OPEC’s mission is starting to look increasingly anachronistic and events swirling around the meeting last week in Vienna foreshadow conditions that might require more introspection than the organization or its members will be able to muster. The United States’ response to OPEC may also seem effective in staving a rise in oil prices this autumn, but Washington also needs to give further examination to its long run strategy regarding the cartel. Two of the big side disruptions at OPEC’s latest December gathering was the appearance of Brian Hook, Special Representative for Iran and Senior Policy Advisor to the Secretary of State at the U.S. Department of State, at the sidelines of the meeting and Qatar’s surprise announcement it would be quitting the organization. Mr. Hook confirmed to reporters just ahead of the OPEC meeting that the U.S. had to grant waivers to Iranian oil sanctions “to ensure we did not increase the price of oil.” The envoy said ahead of the OPEC meeting that he expected a “much better-supplied oil market” in 2019, when he said the U.S. would be in a “better position to accelerate the path to zero [Iranian Oil Exports].” The role of the United States in choosing the pace at which to eliminate Iranian oil from the market explicitly based on oil prices raises all kinds of thorny problems both for OPEC and for U.S. policy makers.  U.S. sanctions on Iran and any waivers were clearly a factor OPEC has had to consider in forecasting global oil market supply, but the appearance of Mr. Hook at the sidelines of the OPEC meeting in Vienna last week was problematical because it implied, perhaps accidentally, a level of coordination that goes beyond just jawboning allied oil producers to put out more oil to replace Iranian barrels. The controversy surrounding Mr. Hook’s visit to Vienna calls attention to the age-old question that has plagued OPEC in recent years: what oil price should be considered too high or too low? One might have thought that issue would have been front and center in OPEC’s recent deliberations. As prices rose to $86 in October, the ramifications for emerging market economies looked dire. U.S. President Donald Trump took to twitter and both publicly and privately the U.S. made the point that oil prices above $65 would be problematic for the global economy. There seemed to be evidence to that view as economic growth and oil demand appeared to falter in the months when oil prices were climbing. Earlier this year, Saudi Arabia indicated that oil prices of $70 to $80 might be more to its liking, begging the question whether the kingdom’s own economic pressures would prompt it to view the world’s ability to absorb higher oil prices too optimistically. OPEC has used the vocabulary that it is just trying to “stabilize” oil prices or “balance” the market but those terms are meaningless without a reference to a price range at which that stability would be defined. Certainly, OPEC and Saudi Arabia specifically, can ill-afford pushing oil prices up to costs that would harm the health of the global economy and thereby crater oil demand more extensively. In that regard, the United States and Saudi Arabia should be seeing eye to eye. Moderate oil prices seem to be in OPEC’s long run interests, not only to avoid a massive drop in oil demand, like the one seen in 2009 during the world financial crisis, or like in 1998 from the Asian flu, but also to stave off the acceleration of competing technologies that might someday bring about a peak in global oil demand.  The higher the oil price now, the more unconventional oil and gas is likely to leave U.S. shores in the coming years, and the more large logistics companies and others will shift to optimization technologies that will limit oil use. There is also the bevy of alternative transport fuels waiting in the wings for the new oil price spike, including electric batteries, natural gas and hydrogen.   The very concept that these alternative technologies exist has changed the politics of U.S. oil-for-security alliances from within U.S. domestic political leadership circles. U.S. Democrats are far more vociferously questioning the usefulness of the U.S.-Saudi alliance these days. Importantly, Democrats are still highly committed to the clean energy transition so any arguments that Saudi Arabia is an important U.S. ally on oil prices falls on deaf ears. Oil price volatility is a defacto raison d’etre to support electric vehicles and the full left-wing agenda on clean tech. Thus, President Trump’s rhetorical comment that a failure to resolve U.S.-Saudi differences constructively could lead to $150 oil fails to stimulate concerns. High oil prices promoted by OPEC would undoubtedly hasten the clean tech revolution while at the same time stimulating U.S. jobs in the shale industry. If U.S. motorists don’t agree, the U.S. Congress has a piece of legislation to sell that would authorize the U.S. attorney to file anti-trust charges against OPEC for manipulating oil prices. That legislation weighed into OPEC’s deliberations in Vienna and might be one reason Qatar has chosen to quit the organization since passage of the legislation could affect U.S. infrastructure assets such as LNG export terminals and refineries owned by OPEC members. In early October, Qatar’s current energy minister told the press that peak oil demand was real and that the world was “pushing oil away as much as possible.” Other OPEC countries have expressed similar concerns privately, pitting them against fellow members who might favor policies that produce short term revenues. As Democratic leaders have been suggesting, there is a coming wave of energy innovation that could mean Saudi Arabia will play less of a role in changing global energy markets. The Saudi leadership is well aware of this existential problem and it is likely one of the reasons its role in global affairs has become more erratic. But while these technological gains are transforming global energy markets, they are not a spigot. Their exploitation requires the investment decisions of dozens of independent private companies who are following market signals and government incentives that have been unsteady of late. The gradual nature of the digital energy transformation means that temporary events, most recently the economic crisis in Venezuela and U.S. sanctions on Iranian oil, can give OPEC, and even Saudi Arabia on its own, substantial, albeit brief, market power. This proved an uncomfortable fact for U.S. President Donald Trump this fall and for the fragile global economy more generally. It is the reason the U.S. Congress is looking at legislation to defang OPEC. As the U.S. Congress debates various options, it should continue its policies supporting U.S. makers of electric cars especially because alternative engine technologies help wean the global economy off its reliance on OPEC oil more rapidly. As recent commodity price volatility and OPEC’s recent deliberations shows, that will take more than just exporting two or even three million barrels a day from U.S. shores given ongoing instability in many oil producing regions. In trade talks with China and European automakers, the Trump administration should shift to be a leading voice promoting advanced automotive technology, including for trucks, and adjust any proposed tariff rates accordingly to incentivize advance of new technologies. Congress should protect policies promoting advanced automobiles in the U.S. and consider stronger efficiency standards for delivery trucks and large freight vehicles. Congressional leaders should also press the Trump administration to quickly settle favorably with California on standards for diversified fueling options. The administration must give more weight to the fact that use of alternative fuels at home in cars and trucks (electricity, natural gas and biofuels) would free more U.S. oil for export to water down the importance of Saudi oil. It’s time to recognize that it is no longer wise to say the United States must back erratic actions of oil producing states because of their premiere role influencing global economic trends. More direct U.S. leadership to reduce the world’s vulnerability is needed, not only for one OPEC meeting, but for a more strategic future.
  • China
    The Trump Administration Is Wrong About Chinese International Students
    Once attracted to the many freedoms that American society offers, Chinese students and scholars are now struggling to find reasons to stay due to the Trump administration's new policies.
  • Women and Women's Rights
    Women Will be Left Behind by Mobile Education—Just Like Everything Else
    We’ve been told smartphones will save education—and even better, on the cheap. From hackathons for refugee students to helping women in developing countries earn university degrees, we’ve been sold the idea that technology is the key to making higher learning equitable and accessible to everyone. But is mobile education snake oil? Thanks to AI, big data, and automation, we’re on the edge of an education revolution. But due to gender barriers as old as time, it’s one that risks leaving the next generation of women behind. Mobile education holds tremendous promise for millions ready to learn—but only if we solve some social and infrastructure problems first.  Read the full article on Quartz.com >>
  • Digital Policy
    Recap of the 2018 ITU Plenipotentiary: From Connecting the World to Investigating Digital Applications and Services
    ITU’s role in internet-related activities have long been among the most divisive issues among its member states. But at this year's plenipotentiary a new area of intense debate emerged.
  • Economics
    The Digital Key to Inclusive Growth
    So far, it seems that the rise of the digital economy has already contributed to a broad pattern of income and job polarization in the developed world. Yet digital technology can play a powerful role in fostering inclusive growth patterns, especially in developing economies.
  • North Korea
    Council of Councils Eleventh Regional Conference
    Sessions were held on denuclearizing North Korea, addressing global health among the world's aging population, managing energy and the environment in Asia, and the intersection of technology and nationalism.
  • Kenya
    Kenya's Data Privacy Bill Could Harm the Economy
    Kenya's digital economy is booming, but proposed government legislation with data localization provisions could sap its growth. 
  • Technology and Innovation
    Gender Bias Inside the Digital Revolution: Digital Human Rights
    During a recent CFR roundtable, Professor Safiya Noble spoke about digital human rights – an issue on which she is advising the United Nations. Dr. Noble explores the biases against women and people of color that are embedded in search engine results and algorithms.