The current US technology investment strategy is failing miserably: the US ranks 25th in the world in R&D tax credits, has fallen out of the top ten in global innovation, is losing the AI arms race, is experiencing falling rankings in computer science and engineering, is #11 in the world in “technological readiness” and – incredibly (according to Microsoft) – 162,000,000 Americans are without high speed Internet service (while 33,000,000 Americans don’t use the Internet at all).
Nothing new here. What’s new is an opportunity to invest in digital technology in ways that make sense. I’ve ranted about this before here and elsewhere. But back then there wasn’t an alternative path. Perhaps now there is.
Major technology investment and regulatory changes are necessary. If Joe Biden is elected President of the United States in November, here’s an eleven part technology plan he might consider.
Regulators need to address the growing surveillance culture which includes the rapid deployment of facial recognition and other invasive technologies. This is easily a privacy tipping point. Or at least it should be. The Surveillance Economy is now in full swing. Assuming that you live online and therefore provide your personal, professional, location and behavioral data, there is literally nothing that’s free from vendors – or is protected by regulators (with the notable exception of HIPAA).
This need for regulation here is screaming from every broadcast tower in the country. The problem of course – again – are the business models that depend upon misinformation, such as public and private media that wins by attracting as many participants as possible – even if the participants are loathsome. The regulatory agenda here is complex to put it mildly, since it involves the First Amendment to the US Constitution. That said, there’s a floor upon which “free speech” builds. Hate web sites, or web sites that allow bullying, weaken the foundation. The exploitation of media access and the manipulation of content for political advantage require regulation. The dissemination of false content over public networks requires regulation. Re-categorizing technology companies to what are clearly media companies is way overdue.
The US ranks 25th in the world in R&D tax credits. The federal government needs to dramatically increase R&D tax credits to get the country to at least in the top #10. Ernst and Young and Joe Kennedy tell us that “Germany, the UK and China are sweetening the pot, while the US slides.” “The United States needs to follow the international trend. The Information Technology and Innovation Foundation has called for increasing the tax credit’s Alternative Simplified Credit to at least 20 percent from its current rate of 14 percent.” Or 25%. While the dual-use technology investment model has worked to some significant extent in the past, it’s past time for new, single use investment strategies which bypass the government directly to commercialization and goes directly to incentivized industries.
There are other steps the US should take as outlined by Robert Atkinson who writes “How the US Government Falters on Support for Innovation”:
“The last time the federal government had anything resembling a national innova-tion strategy was almost 40 years ago … the federal government takes an ad hoc approach to innovation policy, rather than approach it in a strategic way … as a result, it misses significant opportunities.
“There’s also a lack of institutionalization in U.S. innovation policy making; Congress doesn’t require any federal agency to be accountable for innovation policymaking, so an administration only produces an innovation strategy if it’s inclined to do so.”
“Thanks to their onboard cameras that transmit a visual feed to a pilot’s smartphone or tablet, drones can be flown miles from their starting point, making it hard to find a pilot even if their drone is caught in a restricted area. And the FAA itself has ‘limited boots on the ground,’ as a spokesperson put it, often leaving it up to local law enforcement groups to deal with out-of-bounds flyers.”
Drones are the least of our problems with (broadly defined) “robotics.” Where are the regulations around manufacturing robotics? Farm robotics? Autonomous vehicles? Robotic concierges? What’s going on?
“Currently, any regulations of robotics and AI are spread out across many organizations. The Federal Aviation Administration, Securities and Exchange Commission, and the National Highway Traffic Safety Administration have some of the responsibility when it comes to robotics regulations. However, this arrangement doesn’t allow for full coverage or expertise in this highly technical and rapidly changing field … while the U.S. federal government is lagging behind technological advances, many states are struggling to come up with their own solutions. Legislation on autonomous vehicles has been passed Alabama, California, Florida, Louisiana, Michigan, Nevada, North Dakota, Pennsylvania, Tennessee, Utah, and Virginia, as well as in Washington D.C. , since 2012. However, when you compare the body of legislation to that of the airline industry, it doesn’t even come close. If every department takes on only the robotics issues that affect it directly, there’s no across-the-board policy, which can lead to confusion.”
I cannot think of a more important foundational step the US can take to improve the technology infrastructure of the US, which is why the “U.S. Department of Education Fulfills Administration Promise to Invest $200 Million in STEM Education.” Sounds good, right? But it’s sadly laughable – if not insulting to those who believe wider and deeper STEM education helps everyone. Remember that one B-2 Spirit aircraft costs US taxpayers $737 million and one aircraft carrier (without the planes), the USS Gerald R. Ford, cost $13 billion, or 65 times the government’s investment in STEM. The US recently christened the USS John F. Kennedy which will eventually cost $11.5 billion. Federal STEM funding should be increased by at least fiftyfold. Federal STEM educational guidelines should include funding for state-run STEM educational and training programs. Matching federal funding of state-funded programs should also be widely available – and permanent.
“Using executive orders, the president has made it more difficult — and expensive — to hire high-skilled tech workers from other countries. The administration has throttled a program that encouraged entrepreneurs to come to the US. It’s also ending work permits for spouses of H-1B holders, who are often highly skilled professionals themselves, among other measures to stop immigration. One result has been a net decline in high-skilled visas, known as H-1Bs, which has been bad for tech companies in the US (but good for Canada).”
Sane technology policy (and resultant regulations) should incentivize the best and brightest around the world to seek the US as their professional destination. A recent headline summarizes things horribly: The Trump Administration Is Denying H-1B Visas at a Dizzying Rate. This is a dangerous, bizarre strategy whose consequences will be felt for decades. These policies must be reversed; policy must reflect the desire to attract the best and brightest if technological competitiveness is the objective.
In 2018, the five largest companies in the world (by valuation) were Apple, Google, Microsoft, Amazon and Facebook, followed closely by Alibaba, Berkshire Hathaway, Tencent Holdings, JPMorgan Chase, ExxonMobil, Johnson & Johnson and Samsung Electronics. Amazon owns around 50% of the e-commerce market followed by eBay (6.6%), Apple (3.9%), Walmart (3.7%) and Home Depot (1.5%). Four vendors own close to 75% of the cloud infrastructure market (Amazon Web Services,33%, Microsoft 13%, IBM 8%, Google 6% and Alibaba 4%, as of Q1 2018). Three providers – Amazon Web Services, Microsoft and Google – own 55% of the overall cloud market. Google owns over 90% of the Internet search market. Facebook continues to dominate social media, followed by YouTube (Google), WhatsApp (Facebook), Facebook Messenger (Facebook), WeChat (Tencent) and Instagram (Facebook). Microsoft owns 36% of the worldwide operating system market, behind Android at 42% (Google and the Open Handset Alliance). The same market trends are seen in other industries, like ridesharing, where Uber and Lyft own over 70% of the market.
Policies that reflect a commitment to competition and innovation should yield regulations about what’s acceptable and what’s not, since it’s impossible to compete with oligarchies with decades-long leads. David Wessel writing in the Harvard Business Review is straightforward:
“Despite their undeniable popularity, Apple, Amazon, Google, and Facebook are drawing increasing scrutiny from economists, legal scholars, politicians, and policy wonks, who accuse these firms of using their size and strength to crush potential competitors. Technology giants pose unique challenges, but they also represent just one piece of a broader story: a troubling phenomenon of too little competition throughout the U.S. economy.”
The US digital infrastructure is leaky, to put it mildly. Just as dangerous, the digital infrastructure and the most popular applications – like social media – are vulnerable to manipulation by terrorists, hackers, adversaries and human and software bots. According to the US Department of Homeland Security, threats are everywhere and growing. DHS believes that the US should:
“Reduce threats from cyber criminals. In partnership with other law enforcement agencies, DHS must prevent cyber crime and disrupt criminals and criminal organ-izations who use cyberspace to carry out their illicit activities and leverage identified threat activity and trends to inform national risk management efforts.”
In fact, there are lots of plans, objectives, “sub-objectives” and goals:
“DHS must continue to strengthen our efforts as part of the law enforcement com-munity to pursue, counter, reduce, and disrupt illicit cyber activity by leveraging, in particular, our specialized expertise and capabilities to target financial and trans-border cyber crimes … the transnational and cross-jurisdictional nature of cyber-space, as well as the sheer size of the challenge, requires closer collaboration with other federal, state, local, and international law enforcement partners.”
The problem is enormous and growing faster than anyone can measure. The proposed 2020 federal budget for cyber security, which includes funding for the Defense and State Departments (among other agencies) is up a paltry 4.7%. Note that the “budget proposal asks for more than $9.6 billion for Defense Department cyber operations and just over $1 billion for civilian cybersecurity efforts.” $1B for civilian cybersecurity efforts, and a 4.7% overall increase in the cyber security budget. One doesn’t have to be an expert to conclude that the funding solution is dwarfed by the problem. The federal cyber security budget should be increased by 100% across the board every year until the threat is manageable – noting that the problem will never disappear. But it can, with proper funding, become manageable.
10. Artificial Intelligence
The Trump Executive Order on Maintaining American Leadership in Artificial Intelligence issued on February 11, 2019 is a weak early shot in the AI war, an implementation war the US is already losing, especially in areas like robotics. As described by Will Knight in the MIT Technology Review:
“The initiative is designed to boost America’s AI industry by reallocating funding, creating new resources, and devising ways for the country to shape the technology even as it becomes increasingly global … however, while the goals are lofty, the details are vague. And it will not include a big lump sum of funding for AI research.”
As Knight points out, “other nations, including China, Canada, and France, have made bigger moves to back and benefit from the technology in recent years.”
Kaveh Waddell further reports that “so far, U.S. funding for AI has been anemic … an analysis from Bloomberg Government found that the Pentagon’s R&D spending on AI has increased from $1.4 billion to about $1.9 billion between 2017 and 2019. More recently, the proposed 2020 budget sees more increases in AI R&D – but it’s not nearly enough.
The Chinese are outspending the US by leaps and bounds. Where’s the federal government? Where are the policies and regulations that would encourage and incentivize investments in AI?
“In a 21st century economy, Americans need broadband. Without it, students face substantial barriers to doing their homework and the sick and elderly can’t access remote health care. Broadband is a prerequisite for starting a business, working remotely, accessing government resources, and engaging in public debate … Biden will … direct the federal government – especially the U.S. National Telecommunications and Information Administration and the U.S. Department of Agriculture – to support cities and towns that want to build municipally-owned broadband networks … to encourage those providers to invest in further extending service to rural communities and tribal areas, Biden will make available key federally-controlled telecom resources, like towers, poles, and rights-of-way. Biden will also work with the FCC to reform its Lifeline program, increasing the number of participating broadband providers, reducing fraud and abuse, and ultimately offering more low-income Americans the subsidies needed to access high-speed internet. Finally, Biden will work with Congress to pass the Digital Equity Act, to help communities tackle the digital divide.”
The Internet is a public utility, no different from water, electricity or natural gas. It should be subsidized and managed accordingly.
So that’s the plan, Mr. Vice President. There’s a lot more, but I hit most of the highlights. Yes, there’s a lot to do.