How Our Last Gilded Age Can Help Us Thrive Today
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How Our Last Gilded Age Can Help Us Thrive Today

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How Our Last Gilded Age Can Help Us Thrive Today

Tom Wheeler has spent the last four decades fulfilling leadership roles at the intersection of emerging tech and public policy. His contributions range from starting companies, to representing companies in the halls of Washington, to being a partner in a venture capital firm, and serving as the 31st Chairman of the Federal Communications Commission.

Below, Tom shares five key insights from his new book, Techlash: Who Makes the Rules in the Digital Gilded Age?. Listen to the audio version—read by Tom himself—in the Next Big Idea App.

Techlash: Who Makes the Rules in the Digital Gilded Age? By Tom Wheeler Next Big Idea Club

1. Big tech has won—what’s next?

In the original Gilded Age, a handful of industrial barons took advantage of new technology to dominate both commerce and culture. We see the reprise of that experience in today’s digital Gilded Age, in which the internet is controlled by a handful of new barons.

Digital technology has turned the world upside down: the internet is inescapable, social media gnaws at our sense of community and our children’s lives, and artificial intelligence promises great things while simultaneously threatening an apocalypse of machines taking over.

The internet is the American economy’s largest ungoverned space. That there is no meaningful oversight of the behavior of Big Tech companies suggests that Big Tech has won. What do we do about it?

Well, we’ve been here before during the Gilded Age of the late 19th and early 20th centuries. During that period wonderous new products were delivered at low prices, the pace of life accelerated, new big businesses destroyed small local businesses, and wealth disparity stood at an all-time high. It was a period of huge monopolies, overseen by industrial barons, that Imposed harm on consumers. It was even a period of rampant fake news. Sound familiar?

“The original Gilded Age ultimately resulted in guardrails for protecting the public interest.”

Ultimately, the power of the industrial barons was offset by a countervailing force to protect the public interest. Antitrust laws were passed, the power of big corporations was regulated by new government agencies, product safety requirements protected the food supply and other consumer goods, and worker safety laws protected employees of the big corporations.

The original Gilded Age ultimately resulted in guardrails for protecting the public interest. The industrial barons became responsible for the consequences of their actions. Our 21st century challenge is whether we will expect the same of the internet barons.

2. Innovators make the rules.

Because they see a future others cannot, innovators always end up making the rules for that future. The great advances in science, technology, business, and the arts were all the result of those who did not settle for the status quo but instead plowed new ground. We should applaud and encourage such exploration and innovative thinking.

At the same time, however, it is important to understand that existing right beside such vision is the basic human instinct to try and advantage oneself. In the 21st century, this has meant that a handful of companies exercise pseudo-government roles to unilaterally make policies that preference their corporate activities at the expense of the public interest.

When Mark Zuckerberg coined what became the mantra of Silicon Valley, “Move fast and break things,” it was a clever way of saying, “From now on, we make the rules.” The things being broken weren’t physical things, but the behavioral expectations that had provided stability for over a century. The reason to move fast was to get the new behaviors ingrained in daily life before anyone understood how their privacy was being compromised, competition was being destroyed, and truth and trust were being hammered.

“Thus far in the digital age, Congress and policymakers have chosen to allow digital innovators and their investors to be the rule makers.”

JP Morgan, the financier of the original Gilded Age, said the same thing as Zuckerberg, only in different words. Morgan’s mantra was, “A certain number of men who own property can do what they want with it.” It was JP Morgan’s way of saying, “We make the rules.”

That kind of self-interested self-preferencing ended up infringing on the rights of others and the public interest. It is at that point that We the People, acting through elected representatives, stepped in to create guardrails for unsupervised self-interest. Thus far in the digital age, Congress and policymakers have chosen to allow digital innovators and their investors to be the rule makers. The time is ripe to reassert the public interest.

3. This is not the “Fourth Industrial Revolution.”

To effectively oversee the new digital reality, we must depart from industrial-era thinking. Oversight of the digital Gilded Age cannot be the same as oversight of the industrial Gilded Age. Those who say we are in the “Fourth Industrial Revolution” mischaracterize today’s reality, and in the process start the discussion of what to do about digital behaviors off on the wrong foot.

To begin with, the assets of the digital age are different from those of the industrial era. Industrial assets were hard assets you could stub your toe on. Digital assets are the soft assets of computer code. Whereas industrial assets were exhaustible, digital assets are inexhaustible. Industrial assets were expensive—digital assets are inexpensive and the incremental cost of their use approaches zero. Digital assets are iterative as the use of data to create a product creates new data for new products. And whereas industrial assets were rivalrous (meaning that if I had that ton of coal, you did not), digital assets are non-rivalrous and capable of being shared.

As a result, digital capitalism behaves differently. Industrial activity was a pipeline production activity where hard assets moved through a step-by-step production process. Digital activity is a pairing platform where one set of digital information is paired with another to produce a new product. Importing the regulatory concepts and structures that worked in the industrial era to the digital era would not only miss the new challenge but also harm digital innovation.

The oversight of industrial activities followed the management practices of the companies themselves: top-down, rules-based, and slow-moving. Such sclerotic rigidity is anathema to the fast pace of digital technology. Oversight of the digital era must be agile to keep pace with change.

4. Economic activity has moved from the physical to the cognitive.

The industrial Gilded Age was all about replacing and/or augmenting human physical power. The intelligent Gilded Age is all about replacing and/or augmenting human cognitive power. That thus far we have not distinguished ourselves in handling the new digital reality should be cause for concern.

“Truth and trust are under siege as digital platform companies curate content for engagement rather than veracity.”

Privacy has been violated as personal information is collected (often without permission) to become a corporate asset. Competition has diminished as control of the information asset allows market dominance and monopolistic behavior. Also, truth and trust are under siege as digital platform companies curate content for engagement rather than veracity. These issues only become worse with the introduction of artificial intelligence.

We may have been naïve in our understanding of the power of platforms to manipulate digital information (and thus to manipulate us), but having seen that experience we can be naïve no more. The failure to deal with society’s first contact with digital intelligence is a clarion call to establish public interest ground rules for a world increasingly defined by AI.

5. Oversight must be as innovative as the technology itself.

New digital technology challenges us to become policy entrepreneurs. Industrial oversight took the form of micromanagement. This so-called “utility regulation” sought to control the operations of companies through explicit rules-based micromanagement. However, applying such rigid micromanagement in today’s fast-paced technology-driven economy can cut the incentive to innovate and invest.

In place of micromanagement, 21st-century oversight requires risk management that is focused on mitigating the effects of an activity rather than dictating the operation of that activity. In so doing, this new approach can combine both the protection of consumers and competition with the encouragement of innovation and investment.

Such an approach cannot be achieved by bolting on new authority to an existing industrial-era agency of government. The new oversight requires its own focused digital agency populated by experts with digital DNA and operating under a statute drafted in the intelligence era to reflect the new digital realities.

In the original Gilded Age, society confronted never-before-seen industrial challenges, and in response created never-before-seen oversight solutions. It is the same challenge that confronts us in the digital Gilded Age. Like the citizens of a century past, it is our time to make history by being equally creative and bold.

To listen to the audio version read by author Tom Wheeler, download the Next Big Idea App today:

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