Delete This Chapter, Steve Case

Don’t be seduced into thinking that that which does not make a profit is without value.
— Arthur Miller, playwright and essayist (17 Oct 1915-2005)

Steve Case has proven me correct again: the tech community shouldn’t write about government until they actually understand it.

You remember Steve Case, right? He was the guy we used to get mad at when AOL would change their Terms of Service to prevent cussing or stating it would own everything you posted (or something) back when dial-up internet and charge-by-the-hour internet service was the norm. In the new book he’s writing, he claims this is part of the “First Wave” of the internet (“the foundation for people to connect”). Or maybe he’s talking about late-20th century technological innovations. Hard to tell.

He posted a chapter on Medium, asking for edits. I can’t believe I read the whole thing. But I didn’t leave any comments. I figured I’d save them for here (plus, I was reading on my phone). My one edit is: Delete the chapter.

Since he’s not going to, let’s continue.

I would argue the “First Wave” was back in the ’80s when the only person I knew who had online access was my uncle (and, apparently, Misty, though I didn’t know her then). The “Second Wave,” according to Case, is search engines and social media (“search and social capabilities”).  Now, we’re entering into the “Third Wave,” which is where tech and government begin to interact (finally). (Note that he uses private corporations to describe the first and second waves.)

I want to start by pointing out the Case is really late getting to the game on this one. People have written about the intersection of technology, design and government, and I’ve responded to such pieces, for a years. In fact, back in 2014, Dominic Campbell, who does have some experience in government, wrote:

A purposeful design-led approach is fundamental to re-thinking the role of government in the 21st Century, creating the conditions for innovation and change in a world of embedded power structures, vested interests and powerful organisational immune systems programmed to snuff out any threats to the status quo.

. . .

We must bring together the politics of change management, the thoughtful human centricity of design and the power of tech to hardwire change and scale impact.

And I responded to it at the time.

The idea that technology can solve all our problems is a blinkered worldview techno-libertarians completely buy into. Not that Case is self-aware enough to know that such a worldview and its assumptions about government are, well, false[1].

Let’s look at some of what he has to say. He begins by positing some “Third Wave” of the internet that will bring together the tech community and government. Believing such will happen is rather deterministic in and of itself. What he’s really saying is that if the U.S. state, local and national governments don’t roll over for the tech community, the country will be “disrupted” by other countries. As an example, he uses the movement of manufacturing overseas:

This may sound overblown. But it wouldn’t be the first time other countries challenged American dominance. There have been numerous occasions in our history when a great industry, born in the United States, ended up relocated elsewhere. In 2015, none of the top five automakers were American companies, and not a single American company manufactured television screens in the United States. These are industries that were born in America. We have a way, it seems, of ceding opportunities rather than seizing them. If the same holds true during the Third Wave, the most significant economic transformation of the next two decades could be the great achievement of others.

He does know, of course, that such manufacturing moved not because of the U.S. government but because corporate owners decided it would be more profitable for themselves to build cars and TVs in countries cheap labor and lower human rights standards (see: Apple and Foxconn), right?

Indeed, “ceding opportunities rather than seizing them” in the manufacturing field is little different from Case’s argument that Americans should be happy to have uber-ized gigs[2] while tech companies bring Indians over on H1B visas, which allow them to be paid less than an American worker doing the same job, to work in our “knowledge” fields[3]. There are many unemployed engineers, developers and others who are American citizens yet, contra Case, find themselves driving for Uber and Lyft right now because the wealthy tech owners want cheap over American-skilled[4]. Manufacturers beat Case to the punch in taking advantage of the, in Case’s words, “global talent market.”

But they’re still doing a good job. As John Miano, an attorney, former computer programmer and co-author of a book about the H-1B visa, testified before Congress:

“In 1998, Congress made it explicitly legal to replace Americans with H-1B workers,” he said. Then, “in 2004, Congress changed the H-1B prevailing wage system to allow employers to pay these workers extremely low wages. Normally, the prevailing wage is the median wage, the 50th percentile,” but for the H-1B program, “the normal prevailing wage is the 17th percentile.” In normal-wage areas, this creates a wage differential with domestic workers of about $20,000 per worker, and in high-wage areas like Silicon Valley, it creates a differential of about $40,000, with “predictable result[s],” he said.

Case gives as an example the growth of the financial technology (fintech) market in London. He blames it on the U.S. government. He does know that London is the world financial center, though, doesn’t he? It only makes sense startups focused on fintech would locate in the capital of capital (that is, financial services).

When it comes to taxes, Case repeats the familiar neoliberal trickle-down policies. Cut taxes on the rich so they’ll create startups and, thus, jobs (that I assume will end up staffed by low-paid temporary workers from India). Our current economic situation proves his proposal completely false. Indeed, what if we provided a universal basic income to all Americans? That would allow many of those currently unemployed to create their own businesses. Or we could make healthcare universal, so potential entrepreneurs can leave their jobs and start a business while remaining covered should they have to go to the hospital. These initiatives, however, would not give clear direct subsidies to the tech community, though, so they aren’t mentioned.

But while he wants us to cut taxes, he also wants the U.S. government to increase spending on research and development (R&D). He admits that the government (which, remember, isn’t innovative) has created many world-changing “products.” He also admits that the government usually hands over those research findings to private companies, which then make massive profits off selling products to taxpayers. So, he wants the government to increase its subsidies to businesses (or, more specifically, startups).

Why can’t companies invest in their own R&D? Given Case’s belief in startups’ and technology’s ability to disrupt and improve government, why should the young, speedy, flexible upstarts rely on taxpayer funds to build their companies?

Despite his and other techno-libertarians’ perspective of government as merely a lumbering beast that only slowly reacts to innovations in the market, in reality, local governments have responded quite quickly to the emergence of Uber and Airbnb within their city limits. Were Airbnb and Uber actually interested in taking part in the policymaking process, things would move even faster. Instead, such corporations would rather file suit, stonewall and spend hundreds of thousands of dollars (or more) shaming local government officials and breaking the law. Clearly, the issue here isn’t with government – it’s with self-righteous business owners who believe they’re above the law.

In other areas of his chapter, Case fails to note – or likely doesn’t know about – important government initiatives like the United States Digital Service and 18F. They are tasked not only with improving government’s use of technology but also improving the effectiveness and efficiency of the hiring, contracting, planning and other processes. Moreover, they are meant to have the authority to make rapid and creative changes to what, admittedly, can be stagnant and slow-moving government agencies. The USDS is currently located within the Executive Office of the President – giving its head great access to the president.[5]

He warns that countries, including Nigeria, are catching up with us. Really, Steve? Really? Nigeria?

Finally, Case has a fundamental misunderstanding of what government is and does. It isn’t there to just promote business interests (believe it or not). It’s there to protect citizens – be that from foreign adversaries or uncaring and unscrupulous corporate executives. While it hasn’t been doing a good job of it lately, the government is ultimately there for the people (in fact, it is the people), and its organization is meant to reflect its citizens’ generally agreed-upon values and norms. If government moves slowly, it’s because ensuring such protections and equity takes time and negotiation. There are more nuances to policy than Case and company seem to know about, which is a good reason to delete this chapter of his book. Startup founders don’t worry about the larger implications and spillover effects of their creations, and they have no time for nuance and negotiation. Money must be made now – damn the polity.

Again, that isn’t how government works, nor do its citizens want it to operate in such a way.

I will give Steve Case one thing, though: He sold AOL to a slow-moving conglomerate; he definitely knows about change.

[1] Or maybe he does and he’s just being disingenuous. Maybe he’s making these recommendations because he will profit from them.

[2] You know, ‘cause they’re so flexible. Pay your rent? Unlikely. But they’re flexible!

[3] This is a case where immigration limits are important and should be made even more strict.

[4] The argument that we don’t have enough STEM graduates has been proven false. It’s a cover for “we want cheap labor” but we don’t want to move overseas.

[5] I have to wonder if its appropriations will be renewed if a conservative politician takes office.

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