Darwin’s Curse: evolve or perish

China rises. Trump protects Americans. And tech giants monopolize digital platforms.  Jeff Bezos, founder of Amazon, just eclipsed Bill Gates to become the world’s richest man. You don’t need a crystal ball to predict what lies ahead for Albertans.

Competition is not a level playing field.

Selling our beef, our oil and gas, and grain isn’t what it used to be. Even manufacturers of cutting-edge cell phones aren’t getting a fair shake in the digital market. Albertans can complain but what good will that do?

IMG_0218We live in the shadow of an elephant.  Wide-eyed, we watch the lopsided rehash of the North American Free Trade Agreement. Trump’s launch of a natural gas project in Alaska, with the Chinese. A shale revolution that has made America self-sufficient.  They don’t need us anymore.

We are in the fight of our lives.

Albertans can’t stop Trump, the Chinese, or giant tech moguls.

What will it take for our province to be competitive in the 21st century?

A crusade to shake up monopolies.

Harkening back to the days of Teddy Roosevelt and the antitrust era, The Economist magazine conjures up a power  shift. A decisive swing of power back to the state, away from markets.

Yes indeed, a crusade to slow down malevolent tech giants.  Google, Apple, Facebook. Free enterprise in the digital world has gone viral.  It’s time to contain it. Protect jobs and consumers.

IMG_0195Governments often design and pay for roads, railways, telephone and electricity transmission lines. Governments didn’t design or fund these tech platforms. Now, politicians are seeing the problem.

The tech surge has changed how we do business. Just a few tech giants control all online platforms. By controlling access to their platforms, a small number of companies are seriously advantaged.

Enter, the politicians.

The number one job of a politician is to protect the interests of citizens.

Protecting workers who lose out as the tech surge changes how we work. Taxi drivers who lose jobs to Uber. Bookstore owners who can’t compete with e-books.

Protecting consumers as technology changes how we buy goods and services.

This is where it gets tricky for politicians. Thus far, the tech surge has made all kinds of stuff cheaper for consumers, not more expensive.

Yet, we know things are out of whack. Why don’t politicians just fix this?

Who ya gonna call? Trust-busters.   

It’s tempting to slam down an iron fist. We’ve done it before. Big Tobacco, Big Oil, Big Pharma. Now, Big Tech. We need to stop this winner-takes-all approach!

In 1956, the U.S. government forced Bell Labs to license its path-breaking patents to all American companies. Royalty-free. Only by giving up its patents was Bell allowed to remain a monopoly.  Imagine Google coughing up its algorithms!

In 1998, Microsoft was sued by the U.S. government for tying its web browser to its Window operating system. Remember how Bill Gates evaded questions?  Played dumb.  The courts decided that Microsoft should be broken up. But it never happened.

Fast forward twenty years.

Anti-trust regulators are flexing their muscles. This June, the EU slapped a $2.7 billion fine against Google. Of course, this wasn’t a case of consumers paying more. Their goods are free! Google was preferring its own shopping service at the expense of competitors.

Truth is, most of our trust-busting rules were built for a different economy.

63C474F2-C925-4900-90B0-BB3E9B2FA3D9In this 2017 book, Andrew McAfee and Erik Brynjolfsson explain what competition looks like in a digital world:

“Uber, the world’s largest taxi company, owns no vehicles…Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”

Manufacturing competitively-priced products isn’t good enough.

“Excellent smartphones are no longer enough to ensure electronics manufacturers healthy profits in many markets; instead platform builders like Apple and Google capture the lion’s share of the value.”

If the old rules aren’t working, what else can politicians do to encourage competition?

Experimenting with ways to boost competitiveness in the tech sector.

  1. French President, Emmanuel Macron, wants to tax digital companies based on revenues generated in the EU, not profits. He’s also promoting a “name and shame” platform to whistle-blow on aggressive predators.

  2. German regulators are asking if citizens really understand the privacy rights they give up to social media companies. There’s a lot at stake, both ways. If you decline Facebook’s privacy conditions, you can find yourself friendless. Locked out of a 2-billion-person network.

  3. South Korea and Japan are focused on all that consumer data sponged-up by Facebook and Google as we surf the web and make online purchases. Data flows across borders. Trade deals are starting to think about putting up virtual walls.

Maybe we’re already addicted.

We’re figuring out how these online platforms really work. Not just the technology.  But how they get into our minds and purposely hook us. How they exploit vulnerability in human psychology.

Sean Parker, the founding president of Facebook, questions the unintended consequences “of a network when it grows to a billion or 2 billion people and … it literally changes your relationship with society, with each other … It probably interferes with productivity in weird ways. God only knows what it’s doing to our children’s brains.”

It reminds me of the questions we asked Big Tobacco.

Are you trying to get me addicted?

Yes, say Parker. The intention is to give you a little dopamine hit every once in a while, because someone liked or commented on a photo or a post or whatever. And that’s going to get you to contribute more content, and that’s going to get you … more likes and comments.”

I know. Please, do like this article, or comment!  

Back to Alberta.

To our marrow, Albertans believe in free enterprise and choice. Choice in our K-12 education. In where we buy liquor. In our electricity markets.

IMG_0313We also remember a time when monopolies weren’t uncommon, or necessarily evil. When I was younger, TransCanada Pipelines was the Canadian gas pipeline company. Canada Post was the only way to get a parcel delivered.

I don’t believe anyone is really suggesting we go back in time and turn online platforms into utilities (though China and India may be thinking about it). Some people are more comfortable taking risks. And, fair-is-fair. They should be fairly rewarded for that. But not unduly.

We didn’t need a crystal ball to know this day would come. 

In a 1963 CBC Massey Lecture, literary critic & philosopher Northrop Frye described the emerging tech world as a Tower of Babel story. Civilization was building a skyscraper almost high enough to reach the moon:

It looks like a single world-wide effort, but it’s really a deadlock of rivalries; it looks very impressive, except that it has no genuine human dignity…at any time [it] may crash around our ears.”

Carl Sagan saw this day, too. In his 1995 book, The Demon-Haunted World: Science as a Candle in the Dark, Sagan foresaw:

an America in my children’s or grandchildren’s time—when the United States is a service and information economy; when nearly all the manufacturing industries have slipped away to other countries; when awesome technological powers are in the hands of a few, and no one representing the public interest can even grasp the issues….” 

Something does need to happen, and now. We need to get clear on our expectations for a fairer sharing of the upside of our digital future. And, our ethical expectations of companies who cast virtual anchors into our minds.

In Calgary, we’ve laid out the red carpet for Amazon. We’re hoping to lure Silicon Valley types to our cooler stretch of the Rockies. I’m encouraged by this. Not just because we need their tax dollars and jobs. We recognize that we need a strong infusion of risk-taking DNA. Sometimes we get bound up in our peace, order & good government roots.

330px-John_William_Waterhouse_-_The_Crystal_BallIn my crystal ball, I see Albertans remembering how to strive together, take risks, compete.

Think of it:

Our natural gas molded into tiny plastic pellets, ordered on Amazon, and delivered by courier to toy manufacturers in China.

Our durum wheat processed into pasta and shipped to Europe.

Our beef, aged, roasted and plated alongside root vegetables in high-end convenience meals purchased by Japanese families via vending machines.

What do you see in your crystal ball?

Donna Kennedy-Glans, December 14, 2017

 


9 thoughts on “Darwin’s Curse: evolve or perish

  1. Donna:

    Lots of thinking going on here. You really need to sleep a full night once and a while.

    My comments. Government’s first job is to protect from war, not to protect from commerce. Government has taken over too much control and made it near impossible for small companies to survive. We have MiOsha in the shop now for a few weeks now. Safety is fine, but we do not need the same safety levels as someone that uses hundreds of gallons of bleach.
    What is going on now is not free enterprise nor is it capitalism. Decades of left wing over regulation has left only the biggest survive. If king, my first law (executive order) would be to outlaw buying anyone that could be considered a competitor. In Michigan we had Perry Drugs. The first drug store that bought up the neighbors. They used localized pricing like Standard Oil did to frighten small pharmacy owners to sell out. Perry was then bought up by an even larger national. Now the landscape is RiteAid and Walgreens. But wait! These huge chains have been ripping off the consumers. Fine when you have insurance but with Obama care no one has any insurance if you consider the minimums. So out of no where there are dozens of tiny pharmacies popping up. Three withing walking distance to my Mom’s house. So the evil monster capitalism is working. The is the key to Alberta. A strong localized economy. Do what you can to support small businesses. Establish buying clubs with paid memberships similar to Direct Buy. Allow businesses to hire part time and pay with cash. Allow businesses to lay off people part time so they work 24 hours a week and get paid the rest from the Providence. Re write the laws for banks to be more like US credit unions.
    On Amazon. Do not pay anything to buy their re location. This cost is simply added the existing businesses. Use the money to re train the population. As for the long term Amazon. Note Bezos has never donated a dime to anyone. He is terrified of Alibaba. As Sears was replaced by Kmart, and they again by WalMart, once again by Amazon someone will smote them. If the Federal government reestablishes true capitalism the Amazons will be replaced. On line is big because the government failed to force them to apply local state taxes. This alone devastated the brick and mortar stores. I suspect they bribed the politicians. The politicians also failed to establish rules for privacy. This gave them an unfair advantage. Once before I suggested we charge an excessive growth tax. So the Enrons and Amazons would be heavily taxed for success. Success is fine, but no one grows at +15% unless they are cheating. The government is too busy having sex to pick up on these fast moving targets so to establish a heavy tax will curb them until they figure out what they are cheating on.

    John
    Farmington Hills, Michigan

    1. My Great American Cousin, who has managed a family-owned tool & die shop in the heart of the auto sector for decades. You have ridden up and down this roller coaster a few times, and your suggestions for Alberta are welcome. It is painful transitioning. Your last sentence about government made me laugh out loud. Thanks for taking the time to share.

  2. Some great food for thought over the holidays here, Donna! But there’s one piece that I would add that makes our current situation rather different than in the past. In the prior examples you cite about ‘trustbusting’ and government intervention in the marketplace, citizens were fairly confident that governments were there to “look out for the little guy” and that the courts could be counted on to render impartial justice to level the playing field.

    I’d argue that in many peoples’ eyes, those institutions (courts and government) have taken multiple hits to their overall credibility. General confidence in their abilities is, if not at an all-time low, certainly lower than in Teddy (or Franklin) Roosevelt’s day, or the 1950s. In those days, the phrase “Hi, I’m from the government and I’m here to help you!” was sincerely made and (often) gratefully received – now it’s become the punchline of a cynical joke… The British vote for Brexit, the election of Trump in the US or even of Macron in France, are all examples of voters rejecting what they see as the ‘establishment’ that is more interested in pushing an unsatisfactory status quo on them while no longer listening to their issues.

    Did the EU fine Google out of genuine concern about its activities? Or was it grabbing for revenue to fund an ever-growing, increasingly expensive, and bureaucratized state? I’d bet a lot (perhaps even most) people would believe the latter over the former. So in my crustal ball, I see us embarking on a voyage where we have no clear map of our route, where there is even wide-spread disagreement about our destination, where confidence in the ship’s officers is at an all-time low and where passengers and crew are openly beginning to talk about mutiny… It all makes for an interesting voyage ahead! 😉

    Quynn

    1. Interesting points Quynn. Thanks for engaging here. So, it’s not whose trust are you gonna bust….but who ya gonna trust? Understanding what’s motivating ALL the players is important. Again, thanks.

  3. And, just out this morning, the Federal Communications Commission in the US is dismantling rules regulating businesses that connect consumers to the internet. The so-called net neutrality regulations have been scrapped.

    To paraphrase the NYT’s just released article – The rules prohibited broadband providers from blocking websites or charging for higher-quality service or certain content. The federal government will also no longer regulate high-speed internet delivery as if it were a utility, like phone service.

    This is a reversal of a 2015 decision. Litigation is expected.

    1. Being as I am from Alberta I appreciate the rigorous analysis you’ve made and provided for us here in your blog. I find your vision of “see(ing) Albertans remembering how to strive together, take risks, compete” interesting. Can you share a couple of examples of that? From my perspective the idea of competition hasn’t been part of Alberta’s ethos for quite some time, nor has ‘striving together or taking risks.’

      Why do I have this perspective – as you’ve noted this phase of evolution was discussed as far back as the 1960s in the United States of America. What did we do then? We kept our third world economy afloat – we’ve been a rip and ship economy with a colonial mindset ever since people other than First Nations migrated to Alberta. Tear up the land and boreal forests for massive mining operations, fell trees for the timber industry, grow wheat for foreign markets on land that has no capacity to grow wheat or any other grain postulated by early twentieth century decision makers…

      We participated in the economy beyond our borders as providers of commodities so yes, we’re now having to look at the world we’ve had no interest in being any part of – and we’re having to figure our way forward.

      Given we have one of the finest educated populations anywhere on the planet – what do we want to do with that investment?

      Given that quite a few companies on this new world stage have been birthed by Canadians: Airbnb, Vice, Reality Camera Systems…

      What do we want to do going forward in the 21st century?

      It will take us, as you see, striving together, taking risks, committing to going the distance and deciding what ‘success’ means… are we simply companies that maximize value for shareholders? Are we building companies that are public benefit corporations – like the post office was/is, as hospitals were/are…. are we standing for the possibility, with climate change, of doing things in a radically different way?

      these are questions that need to be asked, that need to be answered – government only addresses the objectives of those who elect them to power, each one of us who commits to going to making that vote happen.

      Thanks Donna.

      Sharon

  4. Applause to you both Donna & aSharon
    We have such an enormous need for sustained ethical leadership in all our political sciences but, above all critical analysis and Govenmental discernment

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