Technology Fears and Scapegoats

The technologies of the first half of the twentieth century transformed society far more than the many changes of the digital era. It’s not even close. The belief that our own times are special seems to be human nature, but today it is creating unnecessary fears and anxieties.

Politicians and the media constantly warn us about the privacy risks that come with modern digital technologies, but they completely ignore the many ways that the Internet and smartphones have built unprecedented privacy into our everyday lives. This extreme imbalance damages perceptions and leads to unnecessary fears and resentments. The reality is that technology has created far more privacy than it has destroyed. The challenge is to keep it that way.

Compared to the many issues dividing America today, social mediasocial media is a relatively minor factor; it can amplify divisions, but it rarely causes them. In responding to polarizationpolarization, policymakerspolicymakers should focus on the underlying non-technology factors. They should also focus less on “extremist” online language and more on clarifying what on- and offline behavior is legal, and what is not.

Technology is way down the list of the forces undermining societal trustsocietal trust. But because the next phase of digital innovationinnovation requires confidence in technologies that will operate mostly in the public sphere, America’s declining societal trust is harming its innovation ecosystem and overall competitiveness.

Recent high-profile statements warning of the existential risk of artificial intelligence are unconvincing. Other than deep fakes, most AI fears are still speculative, and many others seem manageable. Unless serious problems actually emerge, AI innovation should proceed and proliferate. Too much regulation too early will be harmful to American innovation and competitiveness.

There is now a great deal of misinformation about misinformation. The most widespread and divisive false information in recent years has been primarily spread by traditional media organizations. The Internet has been mostly an amplifier.

Claims that “your data” is a modern form of gold, and that Big Tech makes too much money off of it are wrong in two fundamental ways: The data about most individuals isn’t worth very much, and when consumers use a business service, the resulting data isn’t “theirs.” Claiming otherwise only builds up unnecessary resentments.

In today’s world, the intensive use of technology is often a practical requirement. For teenagers, it’s also much more like earlier enthusiasms for radio, movies, and television than drugs, alcohol, and tobacco. Describing it otherwise can lead to exaggerated fears, unnecessary policies, and frivolous lawsuits.

For many years, people have insisted that the Internet would lead to the overwhelming dominance of the English language. But this prediction is now proving more wrong than right. Shifts in economics, geopolitics, and culture, along with major improvements in machine translation are making local languages much more resilient than many expected.

That digital technologies are a “threat to democracy” is now the conventional wisdom. Democrats complained about technology abuses in the 2016 election, as Republicans did in 2020 and 2022. But non-technology factors have done much more to undermine America’s electoral confidence than anything digital. Perhaps even worse, today’s exaggerated electoral accusations have also given new life and power to the full range of dubious Big Tech critiques.

Comparisons with devices such as radio and television show that the rate of technology adoption is not increasing. Acceleration proponents often fail to acknowledge the differences between device and application adoption rates; the former have always taken much longer than the latter. Overestimating the speed of change leads to exaggerated fears and anxieties, and an anti-innovation mindset.

Human decisions are shaped by our values, beliefs, experiences, inclinations, prejudices, and blind spots. These “biases” can easily leak into information system design. But overall and over time, modern technology will lead to more fair and objective societal decision-making, as machines will prove to be less biased than most people. An exaggerated fear of technology bias can easily slow down important forms of societal innovation.

The dominance of today’s Big Tech leaders isn’t a permanent reality. It briefly appeared that way during the pandemic, but the market power of today’s major players is receding in the face of new geopolitical, technological and societal priorities. The case for aggressive antitrust and/or regulatory interventions is diminishing.

The white male stereotype of the hi-tech industry is badly out of date, and Silicon Valley’s overall diversity record is much better than typically described. As in just about every professional field, a strong flow of talent from leading universities remains the key to overcoming long-standing gender, racial and ethnic workplace imbalances.

In today’s digital economy, few technologies have generated as much opposition as facial recognition. Critics have labeled the technology as inherently sexist and racist—claims that the media have repeatedly amplified. Activists have called for, and in some cases achieved, complete bans on the technology. Yet the actual evidence tells a very different story. Independent testing shows that facial recognition technology can be highly accurate, including across different races and genders, while providing many benefits to individuals and society.

Since in many important areas, there is no consistently reliable source of truth, neither consumers nor policymakers should want Big Tech firms to enforce official claims of what is true or false. The events of recent years have shown that such efforts are often mistaken, and reduce trust more than increase it. Technology companies need to be humble about their ability to identify “misinformation,” and much more skeptical of both inside and outside information arbiters.

While artificial intelligence has great potential, predictions of ever-increasing digital disruption thus far have proven to be false. Looking ahead, the most significant societal shifts won’t be driven by digital technology; they will stem from the more pressing demands of the physical world.

It is often claimed that stronger privacy regulations increase consumer trust in digital technologies, and this increase leads to more technology adoption. However, the evidence shows that the relationship between privacy regulation and consumer trust is not linear, as more regulation doesn’t necessarily lead to more trust. Instead, policymakers should aim for regulations that balance privacy protections with the benefits of lower costs and more innovation.

If one accepts the premise that data is the “new oil,” then it follows that cross-border data flows are simply pipelines for “digital imperialism” or “digital colonialization” from the “global north,” chiefly U.S. tech firms, which operate like the digital descendants of the Dutch East India Company. But the reality is the opposite. Digital users in low-income nations benefit from free online services, and tech firms providing those services generate much less revenue than they do from high-income nations. Big Tech operations in less developed nations are not digital imperialism; they’re much more like digital aid.

Many privacy advocates claim that personal data cannot be used safely in Big Data Big Datasystems because, despite efforts to make it anonymous, data can be easily re-identified to a specific individual. But modern de-identificationdata de-identification methods can result in a very low risk of re-identification, enabling safe, data-driven societal innovationinnovation in a wide range of private and public sector fields. The West turns against the use of Big DataBig Data analytics at its peril.

The war in Ukraine and the return of persistent inflationinflation have made it clear that energy is still much more important to people’s lives than digital data. Given the challenges of climate changeclimate change, this is unlikely to change during the 2020s.

It’s now conventional wisdomconventional wisdom that labor productivitylabor productivity gains no longer benefit U.S. workers in the form of higher wageswages. If this is true, then economic policyeconomic policy should focus on redistributing wealth, not fostering it. But applying proper analytical methods shows that this claim is false; workers have always benefited from increased productivity, and they continue to today. Governments should make maximizing productivity a central economic policy goal.

In their quest to shrink the role of large corporations in the United StatesUnited States (USA), anticorporate activistsactivist(s) claim that corporate profitscorporate profits are an all-time highs. But a closer look shows that this is a myth; profits aren’t inexorably increasing. The current antitrust system is sufficient, especially as many proposed changes would do more harm than good.

We constantly hear that the American middle class is shrinking, and that technology, particularly automationautomation, is to blame. When this is the prevailing narrative, generating support for robust technology-based productivity becomes much more difficult. The reality is that the share of Americans in the middle class has declined, but mostly because of the expansion of the upper-middle class, the movement of manufacturing jobs offshore, increases in low-skilled immigrationimmigration, and the rise of single-adult households, not automation.

Artificial intelligenceend of work is so powerful that it can do virtually anything, including replacing most peoples’ jobs. Or at least that’s what many pundits and experts would have us believe. But by stoking unfounded fears about massive unemploymentunemployment, they are pushing policymakerspolicymakers and companies to slow the spread of technologies the West desperately needs to sustain competitiveness and raise productivity and wageswages.

Since the earliest days of the digital economy, many have claimed that making and sharing copies of books, music, movies, software, and other digital content is “fair usefair use” and all part of the new economy where “information wants to be free.” The reality is that violating copyrights is a form of theft that seriously harms the digital ecosystem.

As part of a long-standing crusade to establish government-managed broadband networks, or at least turn private providers into regulated utilities, anticorporate advocates have spread the view that, compared to other modern nations, America’s private-sector broadband networks are too slow, expensive, and/or scarce. The data shows that these claims are false.

The decline of many national, regional and local newspapers has led to predictable handwringing about the future of the news business. However, both history and recent events suggest that such fears will prove unwarranted. Like many other industries, the news business is being restructured as it becomes much more specialized.

A relatively new, but fast-growing narrative is that the economy is experiencing a “crisis of market concentration,” with dominant players stifling competition in industry after industry. That belief is the pretext for a push to radically restructure antitrust policy. But newly released Census data mostly contradicts this claim. Market concentration has generally fallen.

In recent years, there has been growing political pressure to transform the pharmaceutical industry by regulating drug prices and/or turning drug development into more of a government-run system. To build support for this cause, many advocates argue that U.S. drug profits are excessive, that drug prices are driving up healthcare costs, and that drug companies spend too little on developing new drugs. All three claims are wrong. Moreover, implementing advocates’ proposals would reduce the development of new treatments and cures, and thus weaken America’s current global leadership.

Since at least the 1970s, the conventional wisdom among policymakers across the ideological spectrum has been that small businesses are the main source of jobs and innovation in America. Ergo, it’s okay for policy to be indifferent to, or even harmful toward large businesses. But the reality is that large corporations play important roles in both innovation and job creation. While small businesses do create many new jobs, they eliminate nearly as many.

It’s often said the biggest climate change challenge is simply one of political will. The prevailing view in policymaking circles is that we have all the clean-energy technologies we need to replace fossil fuels at little or no additional cost. We just lack the political courage to accelerate the shift to today’s clean technology options. But the stark reality is that the world does not yet have all the capabilities it needs, and believing that we do diverts attention from the hard work and investments required to develop and commercialize more advanced and affordable energy technologies.

China’s economy is best viewed as a giant Asian Tiger. China’s great success stems mostly from its vast size and its adoption of the proven Asian development model. Claims that it’s mostly the result of unfair state-sponsored enterprises and human rights violations distort U.S. priorities and policies. A more liberal China might be an even more competitive economic, geopolitical and societal rival.

When it comes to restoring U.S. manufacturing, ambitious and supportive government action is constrained by the fact that many in Washington believe that U.S. manufacturing is both healthy and roaring back. This wrong and Pollyannish belief limits the industrial policy initiatives needed to compete in today’s multipolar global economy.

While the potential synergies between the U.S. and India are real, today’s talk of a close, long-term U.S./India alliance to outflank China is likely wishful thinking. IndiaIndia will pursue its own interests, and this means working with both the United StatesUnited States (USA) and ChinaChina. While there is now a great deal of focus on America’s dependence on China for physical goodsphysical goods, a similar dependence on India for software and services gets far less attention.

It’s becoming accepted wisdom in the West that the only way to safeguard citizens from the potential harms of artificial intelligence is to embrace a precautionary approach, and regulate AI now. As with digital privacy, European policymakerspolicymakers have been particularly active. But as we saw with privacyprivacy, overly strict regulations often do more to raise costs than protect consumers. America needs to adopt a more optimistic and pro-innovation approach.

Antitrustantitrust supporters often cite the precedents of IBMIBM, AT&TAT&T, MicrosoftMicrosoft and IntelIntel. But the history of these cases is complex and shows that targeted remedies are much more effective than sweeping antitrust interventions. The myth that strong antitrust actions have been a major part of technology industry progress could lead to larger interventions than necessary, with serious unintended consequences.

Many free-market conservativesconservative(s) believe there is only a fixed amount of scientific and engineering research that will be conducted, and thus efforts by government to fund more R&D just “crowds out” more efficient private-sector investments. That isn’t true. Both business history and multiple studies show that federal R&D is highly efficient and actually “crowds in” additional private R&D spending.

America’s economic strength and national securitynational security depend on leading the world in advanced technology industries. And in the fiercely competitive global markets of the 21st century, maintaining leadership requires a concerted effort on the part of government. But the need for strong national industrial policies is widely dismissed by many policymakerspolicymakers as not part of the American tradition. The reality is that for most of U.S. history, state and federal support has been central to America’s economic and technological leadership.

As political support grows for the U.S. government to assist strategically important industries, many free-market conservativesconservative(s) continue to attack the value of industrial policyindustrial policy, claiming that it usually fails. Such claims are lacking in evidence, and their proponents have mostly aimed their fire at straw men. The reality is that U.S. efforts to bolster industrial competitiveness have often been highly effective, and they are especially needed in advanced technology industries.

To reinvigorate American innovation and competitiveness, society’s belief in the essential role and value of advanced technology must be restored, and numerous economic, technology and policy misconceptions, fears, and scapegoats must be discarded. Faced with rising global competition, both technology companies and policymakerspolicymakers must take specific actions to reverse the inaccurate anti-tech and anti-business narratives of recent years.