December 9, 2013
Full transcript of the panel "Global Strategists: How Prepared Are We for the Future?" at the 2013 Strategic Foresight Forum. Entitled Harnessing Disruption, the Forum highlighed ways the technology revolution is shaping government, business, and civil society. Many panelists focused on the effects of technology on individual empowerment and globalization, and the need by both public and private sectors to better adapt to coming change.

Welcome and Moderator:
Frederick Kempe,
President and CEO,
Atlantic Council

Espen Barth Eide,
Former Minister of Foreign Affairs,
Government of Norway

David Tennenhouse,
Corporate Vice President, Technology Policy Group,

Location: Atlantic Council, Washington, D.C.

Transcript by
Federal News Service
Washington, D.C.
FREDERICK KEMPE: Welcome back. This panel is entitled "Global Strategists: How Prepared Are We for the Future?" I'm Fred Kempe. I'm president and CEO of the Atlantic Council.

In our Strategic Foresight report, which you all have in your conference bags – it has been referred to a lot in the first panel already – we make the point that the U.S and its partners are not prepared for the coming technological revolution. We concluded that we haven't thought through the negative consequences of the many new technologies. But we also haven't talked through and thought through enough and positioned ourselves well enough to take full advantage of the benefits, potential benefits.

Couple of examples: In the report, one of them is that we call for a security strategy involving biotech, one that is not too heavy-handed to discourage innovations that bubble up from the bottom but one that prevents biotech from being used from the wrong purpose; that's a tricky line to walk. In the document, we express a fear that Matt Burrows talked about the in first panel of the shale revolution preventing us from moving quickly enough to a post-hydrocarbon future. We call for a big investment in U.S. smart grid, and there are incredible advantages to be gained from the smart grids, but both governments and private sector haven't made the necessary improvements to make it a reality.

We talk about the risk of not identifying, adapting and scaling the most promising technologies for use in the world's rapidly growing urban spaces. We just heard from Mariana Mazzucato that the U.S. government support for basic research is being cut, even though all the technologies which make the iPhone smart had been state-funded. And of course, my biggest horror story from the first panel was when Anne-Marie Slaughter talked about a miniature spider-like drone landing in my bathtub, either taking pictures of me or electrocuting me. (Laughter.) So that's my own individual nightmare from the first panel. But at any rate, we know that throughout history, the payoff of U.S. investment in technology has been an immense and, to our mind, an essential source of our global influence.

So I've two global strategists sitting to my right, two panelists extremely well-positioned to answer these questions and many more. I'll briefly highlight their bios, but it's the kind of mixture we try to bring in for this kind of meeting – a European, an American and people from quite different walks of life but dealing with many of the same issues.

Espen Barth Eide, in my view, is one of the Europe's most talented strategic thinkers. He was Norway's minister of foreign affairs until October 2013 during the second Stoltenberg government. He also held the positions of minister of defense, state secretary in the Ministry of Foreign Affairs and state secretary in the Ministry of Defense. And in the first Stoltenberg government, he was state secretary for foreign affairs.

He's been centrally involved in numerous U.N. reform processes and the development of NATO's new strategic concept – and we're already thinking that it may need a renewal again of strategic concept – and setting a new international agenda for the Arctic, fostering Nordic cooperation, building relations with emerging regions and a variety of peace processes. But he's a rare thing, in my view, which is a strategic thinker in Europe who thinks about the globe all the time, and he's taking on a new job as managing director of the World Economic Forum – congratulations on that position – where that really is going to be a lot of the work that you're doing.

David Tennenhouse is corporate vice president responsible for technology policy at Microsoft Corporation. And in that capacity, he and his team identify disruptive technologies and business models. They assess their implications for Microsoft and drive focused policy engagements with governments and global institutions. But David obviously can go way beyond the work of Microsoft as he was DARPA's chief scientist and director of its information technology office, and I think he can address a lot of the things also that came up in the first panel with Mariana and Anne-Marie and Matt talking about the role of government, the worries about the continued role of government, what's the role of the private sector and government in getting things together and also public-private partnerships, which is going to be a big part of this panel. At DARPA, he was involved in strategic planning and execution of programs related to a wide range of technologies.

So we're going to dig right in. This is billed as a conversation. It is going to be a conversation among the three of us here on stage but then going to all of you global strategists in the audience as well for your comments and also for your questions.

So we were talking in the speakers' room coming out here, and we decided we really wanted to focus – and David, when he comments this first time around, will talk about why we want to focus on this to start with – on the positive side of the technological changes that are coming. And maybe start with Espen and then go to David to talk about if you're looking forward, what are the big technology innovations that excite you the most on the positive side? And how – and why is that? What big challenge might they help us deal with?

ESPEN BARTH EIDE: Well, I think there is fundamental positive potential in the – all the technologies that are so well described in your excellent report if they are harnessed in a – in a positive fashion. I mean, we have the opportunity of empowering a lot of people who have not had the chance before. There is the access to information, which his now becoming worldwide, and everybody's access to all kind of information all the time, which is quite unique; enormous advances in medicine, which we already have seen, which has some – and by the way, and many of whom are private-public – strategic private-public partnerships, like the GAVI Alliance and so on, has actually yielded remarkable results.

And there is a potential, actually, for solving a high – large number of problems that we've been struggling with for generations. But of course, this is not going to happen by itself. It's only going to happen if there are some strategic thinking, some prioritization, some political decisions being made, and if you really understand how to – and here I'd very much like to pick up on Anne-Marie Slaughter's point that this is not – should not only be a debate about what America should do; that is an important debate for all of us. As a European, I fully agree with what Mariana was saying in the previous panel of all the achievements that we only have in this world because of long-term access to public funding of research. And I very much agree that, you know, if that is cut off through sequestration, it's a problem not only for America, for the world.

But fundamentally, these are genuine global challenges. And the whole issue of getting the private-public relationship right is not only a national issue but really is something that we need to address as a global challenge because they're – I think the report says in one of its opening lines or concluding lines that, you know, there is a – the world is increasingly interconnected and extraordinarily turbulent. And I think what that catches is that, you know, there are enormous – there is enormous (speed of ?) change, there is enormous opportunities, but the question is, are we as societies really prepared for catching up with the technological opportunities in such a way that we steer this in the right direction? And who are we, who are the people who are going to do that? And those are the issues I'd like – that we could discuss in the continuation.

MR. KEMPE: And in – if you are looking at the innovation that's exciting you the most, then, you're pointing to health care. And if so, what is it, and what does it help us with?

MR. EIDE: Well, I mean, we are – we have seen that we are now able to significantly reduce the – so the most common killers. I mean – through vaccines, for instance, and through a globalized access to certain very – actually very basic health achievements, we've been able to reduce the number of child deaths, and we've been able to not reach the Millennium Development Goals, but we got much closer than maybe the pessimists thought we would ever do. But also the high end of that means that, you know, in aging populations, we can provide both for better quality of life but also, you know, make it possible for people to work longer. And, I mean, some countries, there is a struggle to reduce the, you know, pension age. I think actually as we have done in many of the Nordic country, we should have increased it, but we also see it as a public role to try to make sure that you can have a better life while you keep working. So I think that's remarkable. And I think we should add to the list the opportunities that we're seeing for green energy technologies but with the – with the same concern that you point out in the report that maybe we are not investing enough in time to get that right.

MR. KEMPE: Thank you, Espen.

David Tennenhouse, maybe you can address the same question. And then also, whenever the two of you want to interrupt each other, I don't always have to be between the two of you.

DAVID TENNENHOUSE: (We can ?) do that.

MR. KEMPE: So as you want to comment on each other, please go ahead and do that. Talk about also the concern that you had why we should start this panel on the positive side.

MR. TENNENHOUSE: Well, first off, I want to say, actually, there – I found a lot to like in the report in general, so I was, you know, very positive on a lot of the items. I shared sort of if anything to sort of – your concern around the shale in terms of will it – you know, it's great to have energy independence; will it slow us down in terms of the transition? So I just want to (relative to report ?) put that up there.

I think that if I look at the sort of scale of impact that different things can have – and it's not going to be surprising, I'll say this, I come from the information technology crowd, right? In the near term, it's the one that's sort of moving and got kind of the biggest head of steam. If you look at things like 3-D printing – which, by the way, you know, Microsoft has now launched to make 3-D printers native to Windows 8.1, so, you know, we've embraced 3-D printing, we have apps launched, et cetera, so we're a fan of 3-D printing. But if you look at the scale of these things, you know, they're just going to take time.

When I look at, though, the things we can do in health care, the things we can do in environment, many of these things are actually being powered by information technology – and particularly with respect to, say, health care or education, the democratization that we're seeing. And I think that this came up – I mean, I really wish I could have been at the earlier panel, but I got a few tweets about it, and I understand the role of the individual and the degree to which technologies are really empowering individuals came up.

And I wanted to stop for a moment and talk a little about, you know, sort of, OK, I'm a technologist; I've got to talk a little about, well, technically why. And I think it's, you know, we are shifting from sort of PC plus Internet to mobile Internet plus cloud computing. And what that really means in terms of that shift is that those – you've got sort of, you know, more mobile and cheaper and cheaper, less expensive and more accessible devices being powered by more and more computing from the cloud.

So in effect, there's been a shift – I call this a capital light environment. The capital required to tap into enormous amounts of computing and data and enormous amounts of capability has been dramatically decreased. So basically, you know, people talk about big data; we've had big data sets for years, OK? What's new is everybody can use big data, OK? Essentially, you can tap into cloud-based, you know, hundreds and thousands of servers to process your data set. Everybody can get access to machine learning, so everybody can do the pattern, you know, recognition that machine-learning does. Everybody can get the inference capabilities. And perhaps even, you know, one of the things I'm fondest about is potential to predict the future and start anticipating things. And I don't mean the long-term future in this case but near-term: Can I start anticipating? Can I have software that anticipates our needs and starts taking action on our behalf?

So you asked, you know, what are we excited about on the positive? I'm excited about that. I'm excited, though, particularly about this – as I say, this capital light shift that shifts the balance. It's strange to me because many pundits talk about the shift from, you know, sort of labor towards capital from an economist perspective, and I think that's because they're looking at what's going on in the large companies and what's going sort of at the big. But if you take a look at what's going on at the level of, you know, SMEs, self-employed people, et cetera, what's happening is you're having a shift where they don't need capital anywhere near as much. Now, they will need capital to grow; they don't need the capital to get started. So we have – you know, we can come back to that in the problems category.

So I'm – you know, I'm just very optimistic about the things that we currently can do when we switch that environment, the empowerment we've given those individuals and the shift to small businesses. And it's not just small businesses but smaller organizations. So cities are empowered. You asked about our cities, you know, are we doing enough relative to cities. And we'd like to do a lot more. And the good news is, we can. I think we have the opportunity, and the cities are interested. We at Microsoft are very engaged through our CityNext initiative. But we're not the only ones, right? Pretty much the whole industry is out there engaging with cities. And in fact, I think we all now see cities taking a much bigger role when you look at the sort the of total picture than, you know, regional and national governments in many of these issues. So, you know, I'm very optimistic about that.

And one of my biggest areas of concern is that when you look at the sort of press and the pundits, boy, there's a lot of pessimism out there. And, you know, we actually – there is a sort of one study, and I don't remember the exact numbers, but I think it was over 75 percent of the media articles related to technology were negative, OK? Another study that was done in the U.K. of what did the public think. Well, the people, actually, sort of 86 percent of them thought that this tech stuff was good. So what worries me here is if we continue on this sort of media casting stones path, we run the risk of a really big tech backlash at particular – you know, specifically at a time when I think we have this opportunity to unleash a huge wave of, again, sort of self-employed, small business-driven innovation, the sort of thing that we know can work really quickly and can really help us with our economic challenges. And, you know, that to me is sort of one of my biggest, scariest concerns.

MR. EIDE: Can I?

MR. KEMPE: Yes. Please.

MR. EIDE: Just one point on our ability to predict the future. I – first, I would like to say that I think that cloud – now the advent of the cloud has really changed almost everything because it's the connection between the cloud and everything else, you know – and medicine, for instance.

MR. TENNENHOUSE: And understand – and the everything else – I'm sorry to interrupt you, but it's that – it's that connection then from the virtual world to the physical world, right?

MR. EIDE: Exactly my point.

MR. TENNENHOUSE: All these sensors, all the information, all of our ability to instrument the physical world. And I'm sorry, I've just got to go back to this because you asked about the role of governments, right: very deliberate work by, you know, DARPA, other agencies around the world to facilitate that capability to connect the physical – (inaudible).

MR. EIDE: I completely agree with that. My point was that if you look back 25 or 30 years and look at how people thought about our time, they were right on some – first, they thought we had done better on energy. They thought we were more advanced than we are today when it comes to the use of, you know, more cleaner energy. They did – I mean, they did envisage Tesla. It wasn't called Tesla, but, you know, electric cars and so on. Nobody thought about the cloud, or very few people actually envisaged that, the transformative nature of cloud computing. So, I mean, it suggests that we're not really that good at imagining what's going to happen in 25 years because – (inaudible).

MR. TENNENHOUSE: Yeah. I was looking at the – I'm looking at the very short term; can we, you know, help you avoid that traffic jam? (Laughter.)

MR. KEMPE: Let's stick with the role of government because it was a key subject in the first panel. There is some debate, you know, that you can't get to the quote-unquote next big thing, whether it's a cloud or big data or anything else, unless you have the kind of role of government that you've had before, that all the smart stuff and the iPhone wasn't really Steve Jobs, but it was government. And A, do you both agree with that? And second of all, what you're talking about, which is the smaller entities being able to do more good – does that change that? Can smaller entities, can private companies pave the way to the next big thing? Or do you still need the role of big government that you've needed thus far? Maybe first you, David, and then Espen.

MR. TENNENHOUSE: (Inaudible.)

MR. EIDE: I mean, I fully agree that we need – I man, there is still and will still be a significant need for governments making long-term funding, simply for the reason that we just heard, that it's not very likely that corporations, even the biggest one, would really take the risk of doing the very, very long-term investments that can lead both to success or failure. I mean, that will remain a public role. And then we have to become much better at seeing how the – we share the responsibilities between the private and the public. But I believe that that kind of mission-oriented government is a good thing and was a good thing when we had it before and I think something we should keep up. And it doesn't only have to be one government; it should also when possible be international cooperation.

MR. TENNENHOUSE: And, you know, again, I come from that DARPA background, so my answer is kind of prejudgable. The – you know, long-term research I think is a fundamental role of government. Companies will do – and in fact, if you take a look, you know, IBM, Microsoft – many of us have long-term research programs that reach – you know, if you take a look and you said, well, when is that really going to be useful – it's pretty far out there.

We will do long-term research. The thing is we won't enough. And the reality is we can only do, you know, sort of a certain amount because ultimately, we have to understand how our shareholders are going to benefit. And, you know, realistically, if it's really long-term research, nobody really knows how the value is going to be extracted. And so it really has to be done as a public function. So that does suggest, you know, public-private partnership, where the companies do some, but the government has to be anchor tenant on this, and the government both fundingwise but also convener.

I think it's – you know, it requires a range of mechanisms. So, for example, the NSF research and a large chunk of the NIH research provides it here in the U.S., and the equivalent bodies in Europe provides a lot of the very long-term what I think of as bottoms-up work.

What people often don't realize is what DARPA was great at was not actually having the original idea, right? What DARPA was really great at and what I love about it is spotting the person that's got a really good idea and saying, that's great, and particularly if you could actually find the combination of the person with a great idea and the person with a problem that they had a passion to solve. And you put those together, and you shine a really bright light, and you provided the funding, et cetera, that basically, everybody else rallied around that. That's what DARPA did well. But it can only do that well if, in fact, you actually have other people like NSF, et cetera, (seeding ?) them. So it's a complete ecosystem that's required.

Your question about smaller entities, I do have concerns that we're sort of with the best of intentions drifting towards an environment where in some sense, you have to be big, and even as a non-for-profit, as a charity, you have to have a big endowment to play because increasingly, where the government is funding, it's not picking up all the costs. And that was sort of well-intentioned by government folks thinking, well, gee, maybe we could get more research done if we don't pick up all the costs, and we get these charities to pay more of the cost.

Well, the problem is, you know, effectively, it means the rich get richer, right? The institutions that have a large endowment, right, are the ones that can basically do the work, and others are over time going to drop by the wayside. And unfortunately, the good ideas are not necessarily distributed that way. So that's – you know, there is various ways – and particularly when it comes to small – we were seeing this now, right? Small research institutions, you know, basically dropping like flies.

MR. KEMPE: Well, with that and sequestration, budget difficulties elsewhere in the world, Europe, are you concerned at this moment of technological promise that the big engine of government in the way that it's been there is not going to be there? And why don't I start with you first, Espen, with, has it ever been there in Europe? And if so, in what way, and are you worried about the future? And perhaps you can also touch about – upon China, and can it become a trendsetter and an innovation society and a trendsetter without becoming a more democratic state? Are we seeing a new model?

MR. EIDE: Yeah. Well, I think we've had elements of this in Europe and European countries where we have had the good strategically thinking governments, particularly in the past, who wanted to, you know, help the development of a certain sector. Of course, I come from a (small and advanced ?) country, Norway, which has a big oil and gas sector, and we wouldn't have had that if we hadn't had, you know, strong government regulation, strong government investment in research and developments and also national and international companies coming in and working with us for the last 40 years. And that has been strategic. And the closest we got to a kind of mission was that we had been working now very hard to invest in CCS, carbon, capture and storage, and we're describing that as, you know, one of Norway's missions to get right. We haven't landed on the Moon yet, but we're working on – working on this thanks to, you know, a strategic vision.

But then, of course, you are perfectly right in asking whether we are going to be good at it – good enough for that – you know, from now on because I think there is a danger in many countries, not only in America that, you know, budget cut setbacks are – cutbacks are affecting this sort of ability to do long-term strategic investments in the next thing.

And the question on China is something – probably one of the biggest questions in the world, you know, how is China – is China going to be able to become a really innovative – I mean, it is today, but is it going to, you know, take – be cutting-edge, innovatively leading, while remaining an authoritarian society? Is that possible? We don't –

MR. KEMPE: We know that by 2018 it could surpass U.S. GDP. But when would it surpass U.S. innovativeness?

MR. EIDE: Later. I mean, much later, first, because there are – there are certain in-built advantages to Western and maybe particular American society which provides room for innovation that may not always be there in other type societies. But it's a – it's a big experiment because we have – it hasn't – it hasn't worked yet, you know. In – of the – in – historically, no nondemocratic society has been very successful for such a long time, at least in our last 200 years, right? So whether China is going to be democratic before it becomes, you know, the leading innovator, I don't know, but I think it's a question they're struggling a lot with themselves. I don't know the answer, but it's a very important question.

MR. KEMPE: Yeah. And maybe as you pick this one up, David, also, are there areas where you're seeing China not only catching up but taking some leads?

MR. TENNENHOUSE: Well, so I guess a couple of things. One is, you know, again, definitely a fan of seeing, you know, the government funding being sustained and increased in these areas, particularly the long-term, mission-driven funding. So I think that's clear.

The thing is, that's not enough, right? We need a couple other things. For one thing, we need sort of, I'm going to say, you know, optimistic leadership from the government. I mean, if you take a look – and I think, from our political leadership, I think if we look at periods in time and, you know, past presidencies, et cetera, what we find is essentially we've done better economically, we've done better innovationwise, and we've done better as a world leader when we've sort of essentially, you know, managed to rise beyond the – as they say, whatever was going on immediately and be optimistic about the future, whether it was setting our sights on a national information infrastructure in the Clinton era, or, you know, you can go further back in time, Kennedy, et cetera. So I think that that's important.

I think our – actually, our – what I'll call – I want to be a little careful – our moral leadership, which is making sure we can restore trust and, in fact, you know, build further trust in the Internet and its infrastructure is really very, very important because otherwise, we're going to see fragmentation of the Internet, and then a lot of this ability goes away. So this is – you know, this is a – it's – as I say, it's not just about the research funding; it's about a sort of very positive view and deep understanding of what drives innovation and, you know, providing all the pieces.

I think, coming back a little to the research funding, we have to stop kidding ourselves a little about the importance of technology policy and technology strategy. And what I mean by that – and this is – actually, I do give the Europeans a lot of credit. You know, they've worked over decades now to build up the ability to collaborate across countries and to form agendas, et cetera. And people in the U.S. often look at this, and they look at the overhead of all that collaboration – too many meetings, too many reports, et cetera. But they've learned how to do it. And things like for example, GSM – you know, GPS, sorry – GSM is an example, and a lot of their work on 3G and 4G, not so much the deployment but the actual technology. So, you know, they've learned how to do that.

We in the states have this problem that we sort of – we have an ideological thing where for – you know, some of our politicians don't want government to do technology policy and technology strategy, so we just pretend we don't. So we do things like say, well, we'll build the interstate highways for defense purposes, right? Or we'll do – I mean, that's not a joke; that's what happened, right? And we go on in many different ways instead of getting our act together on having technology strategy and policies. I'm encouraged that in – we're seeing sort of the DARPAs for the different parts of the government, not just the DOD now be created over the past few years, and I think that's a good step forward.

But I just think it – you know, an important thing, particularly again if I look at information technology, is we have now – with this capital light thing, we're now able to basically touch and change all the different facets of the economy. (Inaudible) – you know, cut education. Boy, was – that been a hard one. Health care, that's been a hard one. We're now really making progress on all these different facets, many of which are key government functions, all right? And so it's important not to just think about DARPA for the DOD; it's important to think about the DARPAs and the essentially technology strategies across the whole government function.

MR. EIDE: I agree. But there is – there is also a completely different reason why government matters. It's not only the government as a partner for innovation as such, but also in the – providing the broader society around it. I mean, the importance of having not only top-notch university but good basic education for everyone so that people actually can go to university if they have a proven talent, you know, to keep people healthy is good investment, you know. It makes that you have a better society in all aspects; also good for innovation and technology and so on. So you can't – you can't – you can't just look at government as a funder of research but government as keeping thing together.

And while we agree that we should start with the positive, I mean, there are a number of negatives. And one of the things – I mean, when we come to nightmares, if you want a concrete nightmare – we can go back to the positive, but a very concrete nightmare with is worse than the microdrone in bathroom is I think manipulation of biotechnology. You know, if you combine cloud, access to information, even bad information, with, you know, biological printing and the possibility to sit somewhere else and actually introduce through some kind of printer a future kind of a bioprinter or something that can make, you know, vast destruction, viruses and so on, is – that's really a nightmare.

But another sort of a more societal nightmare is that we are moving into a time where we will see increasing inequalities to the amount that we will not be able to bear with them. And the problem with inequalities – I happen to think, since I come from a social-democratic background, that is morally wrong. But even if you don't agree with that, it's bad for the economy; extreme differences are actually proven to be rather bad for the economy. There is something about consumption and saving and so on that – which is not very well-balanced.

And it's really dangerous – I mean, extreme difference – not more difference, extreme difference – is difficult for politics, both in democratic and nondemocratic societies. I mean, it's clearly driving many of the revolts in nondemocratic societies that we're seeing, but it's potentially also undermining the social cohesion of well-established democratic societies. And we're seeing some of these signs in Europe, particularly southern Europe, that the trust – you know, trust between the governed – the governors and the governed, between employers and employees, you know, the basic trust in society is withering away. And that's dangerous because trust is capital and trust is – you know, the fact that I believe you even if I haven't met you before is extremely important in order to make things go around. And again, government has a role in this – (inaudible).

MR. TENNENHOUSE: You know, it's as if you were reading my cheat sheet here because this is to me – you know, I will come back to the biotech issue, but this is to me the bigger concern, right? When you have 50 percent-plus youth unemployment – now, fortunately, the long-term youth unemployment number is lower, but it's still scary, scary high. And that's, you know, sort of what's going on in some of these southern European countries. Well, you know, we know how that story ends, right?

And, you know, I particularly worry that when you combine this, in fact, with the sort of media abilities that the Internet provides – and I love – you know, I love that the Internet gives everybody a voice, but it can also give demagogues a voice. So, again, I sort of worry less about cases of the individual bad actors – and, you know, that would be the biotech scenario where yes, they can do a lot of damage, but we can sort of go and, you know, watch bad actors and find them and deal with them. But we, I mean governments around the world. When you start having sort of essentially this kind of large-scale breakdown of the compact in society, that's a problem.

Now, it turns out, you know, I grew up in Canada, so I actually share a little bit of your background and so have views about, you know, moral right or wrong of these inequities. But the reality is everybody should care, right? It – because this basically I think puts our entire sort of existing socioeconomic fabric at risk. So to me, that's actually – you know, I was a little surprised in terms of the report. It came out a little. But to me, that's the really big thing that's scary. And again, it's why a tech backlash worries me because the thing that's going to get us out of this mess is going to be technology and enabling these folks. And what's really – you know –

MR. KEMPE: And that's a – that's a question for me for both of you. To what extent is technology at the root of some of the problems we're talking about, including the gap in earnings? Because technology in some ways empowers people just to earn more, whether it's the football star who just gets known more broadly or if it's a product that you can distribute more easily. And to what – and where is this – the technological solution to this? And then let me go to the audience after that. Got a lot – list of questions here, but I'd rather get out to the audience after you answer that question, both of you.

MR. EIDE: You know, I think it's difficult to blame technology because, I mean, throughout the Industrial Revolution, you have, you know – you saw where you had mass labor, you got automation – (inaudible) – not new things, but you (shall ?) politics if it doesn't work because you need to do something about, you know, how we collectively manage our society so that the have-nots are included in one way or the other, you know. And the – and the – and the extreme is not only income difference, but also differences in knowledge and access and so on between the haves and the have-nots is maybe one of our bigger challenges.

Interestingly, the countries that used to be rich and are now in trouble, they see income disparities grow because some people are getting poorer much faster than the rich. But the countries that are growing fast have exactly the same phenomenon the other way around, that some people get rich very fast, and the others stay poor. So the – so the discontent that comes with the difference itself rises. Look at Brazil, was mentioned in the last panel. I've been going a lot to Brazil. Everybody has been to Brazil over the last 10 years, knows that they're much better off than they were 10 years ago. But they expected better. So, you know, there are big generations who wanted to – really, who expected to be at the different place and to be more included, and they are not so. Despite, though, the fact that they've done a lot of things right, they – there is more discontent in society. And this is something I think we're going to see in all kinds of societies in the future.

MR. KEMPE: Right.

MR. TENNENHOUSE: And, you know, I think, as you say, it is more political and leadership-based – again, let me go back to the southern European thing just as an example where, you know, if you looked a few years ago when everybody was really concerned about its demographics, all right, which is essentially that they were – you know, you roll the clock forward 15, 20 – well, 20 years, and you find that, you know, there is an immense shortage of workers relative to the number of people that are, you know, no longer working because they're either in retirement or they're in the youth category – that problem hasn't gone away. So exactly these same people that are unemployed today are the people that need – you know, these countries need to shoulder the burden going forward. So it's absolutely critical that the investments be made to make sure these folks get the right skills, et cetera.

And what's actually interesting is it shouldn't be about find a job, any job because actually, it's really, really important to have thoughtful conversations about what are the most important jobs for humans to do? I mean, we actually, you know, in the developed world have long-term for demographics reasons a shortage of labor. And what we need to be really thinking about is what's the right sort of distribution between what the computers do, what are the really important things for humans to do, how do we guide people into that and make sure that we, you know, end up with the right balance there, or we're all going to regret it, particularly, you know, those of us that are starting to have gray hair?

MR. EIDE: And then you need government – (inaudible).

MR. TENNENHOUSE: And – absolutely. We need to – we all – actually, we need the discussion, you know, and it sort of needs to be a little about, again, like, what are the important things for people to do, and how are we going to invest to make sure that this available – and think of – you know, a positive way of viewing this – (inaudible) – hugely unusual case where you have liquidity in the labor force, and you actually try to steer that labor force into the areas that will be really, really important. And if we don't do it, we're not going to have that chance again for generations.

MR. EIDE: Can I – can I just –

MR. KEMPE: Absolutely.

MR. EIDE: Let me just illustrate this very point I understand we agree on, maybe (to your ?) Canadian upbringing –

MR. TENNENHOUSE: (Chuckles.)

MR. EIDE: – but, I mean, in Europe, the Nordic countries are systematically doing better than most of the others on some key statistics. We have lower unemployment, high competitiveness, high ability to transform and innovate and actually slightly higher taxes, also, than the average – big government, as the Americans (within ?), you know, shout about. But the whole idea is that we've developed a kind of culture in the labor market where we change together. I mean, there is a kind of high-trust society where, when an industry – you know, when you – when you need to innovate an industry through automation, some people will be out of their old work. But the employers think that it is actually our job to make sure that they can be with us, even if it's another function. And hence the trade unions support change and support the introduction of more automation and so on. And then we have a big public sector; we can pick up a lot of other people to do the kind of human touch that you need anyway, like health care and child care and so on, that you can sort of – even Microsoft cannot, you know – (chuckles) – take over – (inaudible) – machines.

MR. KEMPE: Not to editorialize at this point, but this is part of the problem in Europe is you have high trust in the north and not so much in the south or between north and south.

And then – and so let me turn to – let me turn to the audience. Questions. Please. Please identify yourself and end your comment with a question mark.

Q: Thanks. I'm Tom Campbell with Virginia Tech and also a senior fellow here at the council. So on the question of inequality, one of the things that we see in the academic world is exponential change. And so I'm not a social economist or anything, but just from the technology sector, I would posit that perhaps inequality is now more prominent than ever before because of this exponential change. Governments, policymakers don't have enough time to react to the technological changes and that coupled with poor educational support by the government and so forth. So my question is, how can we as academicians, as think tank folks, as policymakers work to embed and encourage more embedding of tech experts within the government to be more proactive than reactive and hopefully then disperse some of this inequality?

MR. KEMPE: Let me pile on that. There was one question we were tasked to take on that we didn't in the first rounds, and that was public-private partnerships. So to his question, is there a public-private partnership aspect to this, or do you see, without going – part of the reason I avoided this is you can just get really vague and wishy-washy on public-private partners. Is there something specific that you can point to that really takes on some of the issues that you've been talking about? So quite specific on public partner and dealing with in particular, if you can, the inequality question that was just raised.

MR. EIDE: One very – if I may, one very obvious answer to that is the agenda-setting, you know, that you – any kind of – this forum, Atlantic Council, having this conference is one example of putting very important issues on the agenda, and hopefully, somebody close to government will pick it up and do something about it. The organization I'm about to join, World Economic Forum – deals with that all the time, you know, trying to forecast, what is the next big issue? What are the new challenges by bringing people from the academic world, from business, from governments, from, you know, social entrepreneurs into the same room and say, what do you, collectively come up with as the – you know, the new opportunities and the new challenges that should be dealt with?

So there's clearly something there on the agenda-setting side. You don't have to expect the government to see all the good ideas, but they have to – there is certain – some of the answers which really require a kind of government response. That's one.

MR. TENNENHOUSE: I'm not sure I can link this to the inequality thing. In order words, I think there's maybe too many things getting connected. But what I will say is, if you look at – sort of – if you – like, what's the – you know, the – kind of the key to DARPA's success, it's been the rotation people. So the way – I don't know if everybody realizes it – a key aspect to how DARPA works is, people come from my – you know, academia and industry. They come for two to four years – so typically, three years; they do their thing, they run quickly, they move back up.

And that rotation is very key in a number of ways. One you mentioned is agenda setting, which means that – you know, I used to say to people, look, the agendas – they come from the research and industrial base. They don't – it's not like people sit in D.C. and make up the agenda at DARPA, because the people that are at DARPA are people that came from that base and that are rotating through that base. And by the way, they know they've got to back to that base. So, you know, that's sort of their – where their long-term, you know, benefits are and their long-term career is. So I think that that rotation of people – you made the point about getting more, sort of – essentially, technologists into government – I think that is a really big issue. I look at certain agencies – some of which I really like a lot – and, you know, essentially, they're filled with lawyers.

And it's not that there isn't a place for lawyers, but the reality is, it's scary how some very technical agencies here basically do not have technologists at the table, or they maybe just one or two – like, a CTO and that's it. Similarly, by the way – you know, I get visited – folks at the European Commission, and, you know, very much the same story, right? The people dealing with a lot of the most important technical issues. And so I think that rotation pattern is important, because just – if you just bring the technologists in, you know, they'll lose their technical skills over time. So to me, that's a key aspect, and, you know, that promotes –

MR. EIDE: You need the interaction all the time.

MR. TENNENHOUSE: Right. And these things happen. So that way, that agenda setting – it's happening, sort of, both because of the physically moving people up and back and then, kind of collectively forming communities and working out, OK, what direction is that community going to go in?

MR. EIDE: But I think we're not – we're not really answering the equality – (inaudible) –

MR. TENNENHOUSE: No that – I can't quite make that link.

MR. EIDE: I mean, there is sort of – we have identified that some technological change can and actually does drive increasing inequalities. There is also an opportunity for – you know, which we've – the access to mobile banking means that people in Africa who would have to wait many years before they saw – got hold of a bank actually now can have some kind of banking services and so on. So it does go both ways.

But again, it has – how do we organize society? So technology is an – and technology is basically tools that can be used for any purpose, good or bad, and the speed of change means that the amount of tools and the ability of individuals and small groups to do dramatic things – good things or bad things are increasing very fast, and hence we need even more sophisticated societal responses to this.

MR. TENNENHOUSE: And I don't think we've necessarily, really, established this link, that technology is driving the inequality. I want to, you know, just question that, not because I – just don't think the data is there. I mean, on a lot of these things – I've gone and looked, and, you know, with my team, we've been trying to find the data, and I'm open to finding it. It's clear that a few people get fabulously wealthy, right? But that's not driving, you know, the broad inequality, right? So, you know, whether it's our founder or the founders of some other well-known companies, OK, that's fine.

And that's kind of the way the U.S. system is set up. We have – a few people get the big prize, and then everybody else strives for it, and that's what makes our incentives system work. But that's not driving the broader inequality. You know, that broader inequality – the question of, sort of, how much are the bankers getting paid? What's the multiple of, you know, what people are getting paid over what the average worker is getting paid? I don't think that's being driven, strictly speaking, by technology; maybe it is, but I haven't really seen clear data showing that. What I do think is that, clearly, people that seize and run with the technical tools have had the ability to upgrade themselves; people that have not seized the tools, you know, are – you know, potentially at risk of falling behind.

One of the great things that I'm thrilled about is that we are – you know, I've been so pessimistic and negative – and I'm an optimist, as you can tell here, folks, but I've been so pessimistic about our ability to attack education until recently, and both with thinks like the MOOCS and Khan Academy et cetera. So now, pretty much anybody can go upgrade themselves and upraise themselves in ways that you just couldn't imagine before. And it was really interesting to hear Khan talking about, you know, some of the reasons he think it works well.

And one of the reasons is that you can do it without embarrassment, right? If anybody is concerned about, gee, they're really not comfortable you know, with their math skills or their skills in some area, you know, he goes into a closet to record the lesson; you can go into a closet to watch the lesson. You can fill those gaps in your knowledge, you know, without any embarrassment. And that works for kids, and that works even better for adults. So I'm really, for the first time, optimistic about our ability to really help people sort of get on, you know, the train.

MR. KEMPE: Yeah, Anne Marie-Slaughter talked about her teenage boys learning more, you know, on the Internet than they do in school. I have a five-and-three-quarters year-old daughter who said to me, over the weekend, I have a question for you, daddy, and if you don't know the answer, I know Google will. (Laughter.) She literally put it that way, but I – and I've got a couple of questions lined up, so we'll try to discipline ourselves. If you say to whom you want to pose a question, we'll keep answers short.

Q: Great. I'm Hans Christian Hagman director of strategic analysis in Swedish government offices. We're talking about choosing and technology – how about choosing our partners? Should we be looking more at technology – who we cooperate with or who we look at as competition? And we're here at the Atlantic Council. And is there a trans-Atlantic dimension to this, whether it be with TTIP, with commonalities, standards, norms or be it with the huge flows of investments and co-ownership? Should government be in this and try to direct technology and cooperation, or should we choose the private sector – go where the money is? How involved should we be from government?

MR. KEMPE: I think it'd be great to get both of you answer, yeah. Please. Do you want to start?

MR. EIDE: Well, as a former defense minister, of course – at least in the defense sectors, I think we do well in choosing our partners, also when it comes to technological innovation. That – I mean, that should be a market that is – you know, not the global market, but you work with the people you trust, because you're developing technologies that are so important that it actually – potential disadvantage.

On the other hand, if you talk about green – you know, how to – how to have economy of scale in green technologies, I'd be happy to work with authoritarian governments to do that, because it's a good thing for all of us, and it's particularly needed in some of the countries which are emerging fastest, because if they don't get it green, it will be black and coal-based, and that's everybody's problem. So it depends a little bit on which sector you're talking about.
When it comes to – I think one of the really big debates that we will be – we are having already but will – I mean, really a major theme in the couple of years ahead of us will be Internet governance. Not e-governance, but how we govern the Internet. So the e-governance of Internet. And I think there will be a lot of challengers; I mean, it was already referred to in the previous panel – the desires to have, you know, BrazilNet or ChinaNet or IndiaNet and then some kind of connections, but with the border control things, that's really bad.

But also, the current model, you know, is under strain, and I think, you know, to have a sound public-private international global debate about how we want to see the Internet, I don't think it can be concluded in the U.N. That's probably not going to provide any good result on this one – I am very much pro-U.N., but not on this one – but it has to be something different. And the other thing – the kind of type of society will actually matter – how you think about the governance of Internet.

MR. TENNENHOUSE: And – you know, I'm glad you brought that up. I was trying to allude to that when I talked earlier about the issue of, you know, sort of our moral authority in rebuilding trust. We need – you know, part of the trust of the Internet is trust in its governance, and, you know, if we undermine trust in the Internet, we also undermine trust in its governance.

For those in the audience – probably most people in this audience do realize, you know, we grew the Internet over a period of years, and the – first off, the governance model is very light. I mean, that's the first thing people don't realize is, actually, there – you know, it was, you know, essentially designed in the – and – I mean, the social design of, kind of, the different organizations involved was to require very little governance, right? It's – there's a set of standards, and that's the major part, and there's a fairly small number of decisions that need to be made beyond that. And those decisions are made on a multistakeholder basis right now, where we're able to bring together folks from many different countries – folks from academia, from industry, from civil society and government, you know, to these bodies to, you know, consider those decisions – and to be honest, very few such decisions have actually had to be made.

In other words, if you actually looked and said, how many decisions have actually been made by the Internet governance process, it's surprisingly little, and that's by design. So – you know, I think there is a – you know, a big concern about the potential for fragmentation, and also the potential for the Internet to be, sort of, moved into a sort of multilateral as opposed to multistakeholder, you know, governance model where, then, it – the whole thing becomes very geopolitical, and you see that, you know, for different geopolitical reasons, people want to start making different changes or, you know, make decisions that really ought to be grounded in, technically, what's the right thing?

MR. EIDE: The problem here is – I mean, it's a beautiful model, and I mean, the politician in me tells me, this shouldn't work, because it wasn't decide by people like me. (Laughter.) But it does work – it does work, and we all – and so that's proof that, you know, governance can happen without government. I mean, there was a U.S. government role in it, but it's basically, sort of governed by itself.

But my point is that that's a beautiful model as long as it works. Now it's being challenged, and I think the fact that it has been accepted by everyone is also because nobody really wanted to challenge it. Now there are strong actors out there who will challenge it. So Internet governance will also be an issue of defending the things we like about it – the openness and the freedom and so on.

MR. TENNENHOUSE: I think that's absolutely right, and we should be looking at, sort of, what's being challenged, right? Is it that something – you know, is it that some decision that was needed wasn't made? Is it – you know, it seems like the challenges are more having to do with challenges to the openness, et cetera – people wanting to be able to have more control within their country over what happens.

And of course, ultimately, they have control anyways, right? Sovereigns are sovereigns, right, and, you know, as China has shown and some other countries have shown, if they want to limit access to content and they're able to, you know, remain as the governing, you know, body in their country, they'll be able to do that. So sovereigns will be sovereigns. So what these countries are really looking for, in many ways, is to get some, you know, kind of international air cover for the actions that they're taking.

MR. KEMPE: So all – I know you were going at a little different part of this too – I don't know if you – whether you have, being from the government of Sweden, an answer to your own question in terms of partners. Do you want to give your point –

Q: I asked the question – (inaudible) –

MR. : OK. That's fine. Are you sure? All right.

MR. TENNENHOUSE: And I think the right answer here was, it's going to vary a lot by the topic.

MR. KEMPE: OK, the gentleman in back of – yeah – and then in front, thank you.

Q: Thank you very much. I'm Andrew Reynolds from the Department of State. And first, a point about public-private partnerships before you lose that thread. And then, I'm very glad to say, you actually anticipated my question on Internet governance. But I do have an additional question.

One of the great experimental spaces for the U.S. government in the last 10 years has been to increase the number of fellowships – Ph.D. engineers, scientists serving in the federal government, and that is across the board – and Capitol Hill as well, and the AAAS program, for example – American Association for the Advancement of Science – has brought a rich cohort of people who have been actually hired in many cases. So hundreds have now come into the service – public serve on the Hill and in the executive branch.

The second thing is that we've used other public-private partnerships to engage our universities at the State Department and USAID – something called the Jefferson science fellows, which engages tenured professors to work with us for a year, and in so doing, increase the networking we do on university campuses with them as subject matter experts, and also as recruiters for the next generation of young people.

On the Internet, I wondered if you might go one step further, because you really filled in, already, the most important part of the question I was going to pose. And that would be, in the Internet governance conundrum, we have now – it comes because, as with all technological revolutions, often, the technology gets way out in front of the social, political and cultural institutions. So we're playing catch-up as never before, because the rapidity of change is so enormous.

I'm wondering if you gentlemen can perhaps cite for us any international experience in the international governance space that might be utilized to look into this phenomenology as the Internet continues to grow robustly. What do we have, since World War II, in your mind, that maybe served as a model or at least an example for the way the evolution of Internet governance might take place – institutionally, governmentally, multistakeholder? Thank you.

MR. TENNENHOUSE: Yeah, I'm not really the expert in other models. It's a good question, because I have looked for some, but generally, what I've looked for is other examples of sort of multistakeholder that's operated internationally, and there haven't been very many out there, so I can take the to-do to go back and look at the space situation, because I don't really think I have enough knowledge.

What I will say is that – you know, I was at the WCIT meeting in Dubai last year. It was a – it was a very interesting education. I learned a lot. It really was, and it was fascinating to be involved talking to people from different countries. And the thing that I saw most frequently was, they had a long of angst. So these were, you know, different delegations from different countries, and, you know, when you broke it down and you started teasing it apart, each country had, sort of, a couple of different concerns, and they – and they were different.

So there was – you know, in other words – you know, there was probably a list of maybe 10 to 20 topics that covered pretty much everything, but any one delegation probably just had a couple that were their real hot buttons, and in general, they were not actually the topics related to Internet governance. So let's say you're – you know, you're concerned about cyber crime. Well, the reality is, Internet governance is not the way to address crime, right? We have international treaties related to crime, and we have mechanisms for cooperation. We need – those are the right forums, right? I mean – you know, I'm the first one to argue for taking technologists to all these things, right? But if you want to discuss crime, let's bring in, you know, the experts from, you know, Justice et cetera to work that problem, and in fact, not bring them in but take the problem to that forum.

So I think some of this is that there are international forums for many of these issues, and what you really need to do is, I think, work with these countries and try to help them tease apart the issues and get the issues to the right place, right? If they're, you know, concerned about privacy-type issues – like here, it tends to be the FTC that takes that lead. Sometimes, they didn't even necessarily know in their own country what the right connection was. They weren't very well-connected to the people actually running the Internet day-to-day in their country, right?

They often – you know, in some cases, I'd say some of the concerns were internal, you know, issues. To be honest, you know, their operators maybe were ripping people off and then pointing the finger at other folks as being the cause. So I'm not sure that's what was going on, but it certainly looked like it.

So what I'm trying to say is, there's a need to sort of help these folks tease it apart. Now, to be fair to them, their regulators – you know, for their individual countries – that's who goes to conferences like the WCIT one – and all their – you know, they're just hearing a lot of pressure. They're hearing a lot – you know, unhappiness over various things, right, whether it's, you know, sort of protecting children or cyber crime, et cetera, you know, or the – you know, the – you know, pricing, you know, because of – or spam need to just divide these up and get them to the right forums, because I have a feeling that if you get things to the – you know, the ones that aren't really Internet governance issues to the right forums, you know, we'll have a smaller, more tractable problem.

MR. EIDE: Absolutely. And I agree, and I think, you know, the multistakeholder keyword is so important here, that the Internet has to remain multistakeholder, and the governance model must be inspired by what we have, even if we have to adapt to some of the challenges that are out there, and I couldn't agree more with your point. I mean, there is – there is every reason in the world to fight child pornography, for instance, and all the bad things out there, but it must be understood as what it is. You know, it's an expression of international crime as other – you know, at other elements of crime, and a lot of people who keep refer – I mean, in Russia, you'll find a lot of people speaking of control of the Internet as if this was their purpose – you know, they want to protect the children and so on. That's, of course, obviously not the main purpose, but it's become sort of a disguised way of, you know – (inaudible) – control.

MR. TENNENHOUSE: And they have to flush these things out.

MR. EIDE: And that must be out in the open if we're going to get anywhere.

MR. TENNENHOUSE: And to be fair, these things like – you know, the criminal-type issues – that is a multilateral as opposed to multistakeholder issue, right? It's just – it shouldn't be part of Internet governance.

MR. EIDE: Yeah, because that's – (inaudible) –

MR. TENNENHOUSE: And it's – and it's not like – to be honest, even if you did multilateral and you – you know, you moved that to a – say a U.N. sort of forum, it wouldn't solve the problem, right? It's got to be solved in the right international forum.

MR. KEMPE: Yep, please.

Q: Yes. Dick Van Atta from IDA again. I like the anticipatory focus here, because this is the global strategic focus of the – of the panel here. But I think one way to look at it is, we're anticipatory here of things that aren't really so bad. This is not a very bad world compared to where we've been before. And I think we have to understand that.

The second this, from a – (inaudible) – strategic perspective, we have to realize what makes things go bad, and we're talking about inequality. It's fundamental – talk about the fundamentals of social economic processes. Those social economic processes are driven by people who see status inconsistency. They see the interrelationship between the haves and the have-notes, and then they're mobilized by factors like information that create the understanding of those discrepancies.

So now we have a problem of how to manage those discrepancies in a way they weren't before World War II where we had fundamental divisions based around ideology because of those discrepancies. So we have to anticipate what those kinds of discrepancies will be and how those will evolve in terms of things like what we're seeing in the Middle East, where we see religion being substituted for a basis for dealing with social economic and political discrepancies, and I think what this leads to, in my view, is a concept of the role of information and how information is used to promote values. And those values, to me, rest on democracy and individual freedoms and how we can build those as the basis of a – what I would call a consensus – a strategic consensus for the value that technology provides to enhance those.

So the question is, how do we do that? (Laughter.)

MR. KEMPE: Yeah, you can do that, but as we're doing this, let's help – let's help the questioner out to paint a little bit of a worse world for him, too, if we could, because I think – I think the one thing the 2030 report did at the NIC is, it had a fusion world, which is a best of all possible outcomes if we get a lot of this right. But I think it is worth talking a little about some of the surprises that could come along in a nightmare scenario. I mean, you touched on this a little bit, but to answer the questioners' question but perhaps offer one or two dark side surprises that need to be avoided.

MR. TENNENHOUSE: Well, again, I – you know, I tend to worry about the sort of bigger surprises than the titillating bathtub surprise, right? (Inaudible.)

MR. KEMPE: I don't know – so that captured my imagination. (Laughter.)

MR. TENNENHOUSE: It does. And those things capture peoples' imagination, et cetera. And, you know – I'll go back to – I think, if we look at the inequality thing, the good news is, for many parts of the world, by, I think, making a lot of – you know, information available and a lot of capabilities available, and through networking our economies, we're helping, you know, sort of large chunks of the world sort of move up.

So that sort of inequality from, you know, sort of on a geo basis is actually not everywhere. I mean, you've mentioned the Middle East. There's sort of – you know, sort of a bit of a chaotic system going there. But if you look at sort of, you know, India, China – if you look at – I just returned from Africa. Phenomenal to see what's starting to happen there.

And look, you know, there's going to be – it's going to move – you know, it'll be steps forward, you know, steps back, but it's definitely at least two steps forward for each back, and –

MR. KEMPE: So inequalities within countries are growing, but inequalities – yeah – among countries –

MR. TENNENHOUSE: So it's, inequalities within countries are growing – and so here's the unexpected – to me, the unanticipated consequence, right? A lot of us anticipated how the internet was going to give folks voice and give individuals voice. We sort of – that was seen pretty early. The thing that I think I certainly missed was the consequence, which is, we're sort of now hitting the end game for mass media, right? And that doesn't mean it's going to go away completely, but what I mean is, what's been really important, to my mind about, say, broadcast media is, it's given nations, and particularly ours, but other nations the ability to forge consensus.

You know – in some ways – remember that old phrase " the silent majority?" Well, it's been the way that the silent majority – it's the way the consensus got formed, and we understood, sort of, where we were all trying to go. The side effect now is, it's really easy to sort of fragment within each country, and even – and I'll even extend this in a moment – but within each country, you sort of fragment, and it's able – you can sort of easily gather together a collection of people to think just like you, right?

And within that collection, you get sort of – you know, you just kind of get narrow and more and more sharply focused, and we see, sort of, more and more divergence, right? And we've got more and more special interest groups – you know, eventually you have more parties than you have people, but we see this in the U.S. , arguably, with the Tea Party. I think we're going to see more and more of this, and so the question is, with the end of sort of broadcast as we know it, I don't think we anticipated that we were going to potentially – and I only want to say potentially – lose that ability to establish the broad consensus of, here's where we're going, and let's go there and get behind that.
And to me, that's scary because that means, in all sorts of countries – you know, it makes it difficult for us to form collective will, and within other countries, it actually makes it easier for people to sort of actually undermine things in pretty serious ways. So I don't think we anticipated that; it's easy to anticipate the positive effect of the openness – the loss of that tool that we've relied on.

Now, I'm an optimist. We've got to go find other tools that we're going to develop to form that sort of collective will. I think it's really, really important. And one of my colleagues did point out to me that the counterside of the ability to sort of collect up fragments can actually extend across borders, too. So people can sort of go and sort of, you know, essentially collect, you know, whacky party X that, you know, gets represented in many countries even though, in any one country, it's a tiny, tiny fraction of the population. I'm sorry to go on about it.

MR. KEMPE: No, that's a good answer. I mean, Kennedy was above a 70 percent approval ratings throughout his presidency partly because he was the first television-age president, and he had a very good way of creating consensus, but – yeah –

MR. TENNENHOUSE: You know, even since newspapers, we've had some ability to – right? So this is really the whole broadcast thing. (Inaudible.)

MR. EIDE: This is an important point, and also, I think the – three important statistics has been referred to. One is that there is less – there will be less inequality between countries, but more inequality in countries. At the same time, the amount of, you know, absolute poverty is going down. So there are less and less, you know, absolutely poor people, but you will see enormous disparities. Now, that's a problem in itself, even if people are less poor, because the – until we have something better, you know, the state is at least a democratic state and even sort of semi-authoritarian states need some kind of sense of common purpose – you know, what Benedict Anderson called an imagined community, which means that people here and people in Wisconsin who maybe you never met, they still think they're all Americans and part of, you know, a club which distinguishes them from others.

MR. TENNENHOUSE: And mankind should be that. That's how we're going to go on and do bigger better things, right?

MR. EIDE: And of course, we need it at the mankind level, but the political unit we have, you know, will be torn apart by this extreme inequality. And you have the kind of social uproars against difference, but you can also see, as we see in some countries, the beginning of a kind of return to Nazi or fascist ideology, which is the kind of cry for, let's go back to basics; let's go back to the pure – we're all equal and all share the same culture, and against this sort of multicultural, which is, of course, impossible and even a bad idea, but still a danger. So you have these rather dangerous social movements, which are actually not embracing, you know, globality but actually trying to get back to something that I feel that I have missed in this world.

And again, the report talks about megacities. I think it's a very important theme to understand the role of cities. But if we look at many of the megacities, well, what – they're not actually megacities. They are quite successful centers with sort of a big ring of favelas and poverty around them – people trying to get into the metaphorical center – not the physical center; the metaphorical center of the city with – you know, with – maybe some of the most extreme differences that there – exist anywhere – much more and in the countryside of the same countries.

MR. : Thank you.

MR. TENNENHOUSE: They at least have football teams.

MR. KEMPE: Yeah, some of them have – some of them –

MR. TENNENHOUSE: You know, whether it's American or football or soccer – they have something that people can get proud of.

MR.KEMPE: Sometimes they have several. But the – Peter (sp), we're down to the last two minutes – quick question? No? Oh, good heavens – I've got, actually, three hands. I didn't even see who got up first.

(Off-mic exchange.)

MR. KEMPE: So we've got to make this the last question; I apologize to the –

MR. TENNENHOUSE: We're fixing the inequalities for five persons back.

MR. KEMPE: Who says the U.S. doesn't listen to its allies?

Q: My name is Rob Magley (sp); I'm from Wanetta Technologies (ph) in Berkeley.

My question – or comment is that when we look at the phenomenal power of the Internet to educate certification lags, and when we look at economic cycles of boom and bust – layoffs – inevitably, layoff workers are the most difficult to re-educate for the new technology. Technology cycles have the same phenomenon, where a new technology comes along, displacing workers. Well, those displaced workers are more difficult to educate than the next generation coming up.

I think this is feeding into the problem, and I don't see the Internet addressing the efficiency of educating a displaced worker. And I think this is part of the problem that we're having trouble addressing, and I'd like to hear some commentary on that.

MR. EIDE: I mean, with the danger of repeating myself – I mean, I think that there were some – and I'm not – I'm not here to say that everything we did in the Nordic countries works well, you know, for everyone, but there is something here in our experience, which is that we have done – I mean, we're high-tech, and the only way we could survive is by becoming high-tech and become innovative and bring all-new technologies, and we do e-governance and we do a lot of automation and industry and so on, and we don't get a lot of unemployment on the other side of that

That is because we have both a strong state, which is dedicated not to – not like in Southern Europe, to keep people working even if the workplace is useless, but to try to say, let's have a – you know, a cultural re-education, and maybe they cannot be re-educated into the same field, so do something else and try to make that – you know, make that a partnership where people accept to be laid off, in a sense, knowing that there is a social security net that not only takes care of their – the education of their children and their health, but actually helps them into something – some other kind of business. And that has worked so far.

Now, our existential fear is that we will not be able to continue to do that, because we know that our system, you know, actually presupposes that everybody works. So because we need – we need more people actually putting money into the system than taking money out. So if unemployment really captured even the Nordic states, this model would collapse, and we'd have a very – so we actually have seen this major purpose in the government I was a part of that, you know, make sure that we keep people working so that they are able to be productive and bring in – that means, also, make sure that women work and have babies at the same time, which we succeeded in; we have one of the highest fertility rates and one of the highest levels of female participation in the workforce at the same time, and it's thanks to an active government.

MR. KEMPE: So next year's FSI form is going to be the Norwegian model and – but if that – you're absolutely right.

MR. TENNENHOUSE: No, I think we'll each develop our own model. I think that in the U.S., what we're seeing – and I think we'll see it in a lot of the world is the, you know, increased levels of small business creation, increased levels of self-employed type businesses. As I said, I would – I've been trying to sort of bone up on this – learn more about this as I've gotten worried about this economic issue – I'm not an economist – start learning about what's been going on.

And, you know, you see things related to the sharing economy – so it's not just about the app economy creating jobs – you know, which is creating jobs for people that learn how to write apps, all right? And that's actually been phenomenal growth, but things like the sharing economy – it's pretty interesting, right? Because this is people basically learning, you know, they can take their car and start offering people rides and charging for that. They can offer people rooms in their houses.

What's kind of interesting about that is, I talked about platforms being capital lite. So they offer those through a capital-lite Internet platform, right? So they don't need any capital to do that, but what's really cool is, the things that they're using – the car, the room and the house, et cetera – that's stuff that they already have. So it's sort of capital lite in many different ways, right? They're able to basically offer people use of a capital asset that they've already got that is sitting idle, and it's actually, you know, both good for them – and it's environmentally good, right? These are hotels we didn't have to build, right? And by the way, the hotel occupancy rates are pretty high. So they really are – like, you know, new rooms being made. It suggests, you know, essentially, people going and traveling and staying that wouldn't otherwise have been traveling and staying.

So, you know, I see ways that, you know, different – different societies will make these adjustments. I have been going back to your question, because you made the point about, we've seen this before, and I've sort of been trying to understand the history of – and there was a good paper published recently on, kind of, auto production and the impact it had – and cotton production, and it looked at those. And – you know, as is the case with many papers, you end up actually not focusing on the conclusion the authors wanted you to focus on, but you look at the data, and you go, whoa, that's really interesting. And what you see is these 1 over x curves, right, which are, kind of, basically variations on demand curves, and it's pretty clear, right? Henry Ford comes in, and the first thing that happens is, the price of cars drops.

OK. Well – so all the people that used to pay a lot of a car now pay a little, and the people that used to make cars the old way are unemployed, but we haven't created the new jobs yet until people start figuring out what they can do with the stuff, right? They suddenly realize, oh, there's a lot more things I can do with a car. So the price has to get down to an affordability point, and the understanding of how to use it has to get to a certain point. And then the demand really kicks in. And when the demand kicks in, interestingly enough, of course, the price stops going down, because now you've got supply and demand sort of racing against each other. And so the jobs kick in later.
And even more interesting – that seems to keep getting forgotten is, the productivity gains actually only really kick in – the big productivity gains only really kick in after you're short of labor, right? That's – it's only after the jobs have been created, and now labor's in short supply and people are really trying to figure out how to take advantage of this for productivity.

So, you know, I think we're seeing those cycles. What's really interesting here is the opportunity to see that across the whole economy in all sorts of different areas – you know, whether it's a sharing economy or any of these other economies that we're seeing. And the reason I'm going on at this about length is, what I think we need to do is get much smarter about what's working. If you're asking me, like, what can we do to most help people? It's to get better at exchanging knowledge about what's working and do that quickly.

When I was a graduate student, I sort of had the opportunity to hear John Kenneth Galbraith answer a question about why was he successful? And he stopped – and it was kind of an interesting – he said, you know what? All my peers were studying what wasn't working, and I was the one that was studying what was. And that was really the secret. And I think now, what – you know, we need to be looking and very quickly disseminating – when we see the things that are crossing that curve and the jobs that are being created, get that information out there so people know to go there, and then we can make that happen even faster. I'm sorry that's such a long answer.

MR. KEMPE: No, no, that's great. We are at the end – I think, though, that I see many more questions; I'm sorry I didn't get to them all. What I suggest is, the question here was, how prepared we are for the future. Let's continue that conversation on the tweetosphere. I'm pretty interested that we've spent as much time on social inequality as we did. That certainly wouldn't have been my prediction going into this, and the ending advice on, study what is working, is probably a pretty good piece of advice. Do you have a final word?

MR. EIDE: Just one final point. Somebody said earlier – I mean, if you want to choose whether you want to live today or in 1913 or 1933, I think most of us would choose today, you know? So I mean, we got it right before. So I mean, that's a reason for optimism, that we have –

MR. TENNENHOUSE: I know where my ancestors were then.

MR. EIDE: (Laughs.) Exactly. We – I mean, there is a strong argument that humankind has been able to, you know, take new technologies and make them into something that makes life better for many. So that's the reason for optimism. But at the same time, I think that we need both the optimistic and the negative scenarios in order to wake up the people who will make these key decisions, because they're – you know, the wrong decisions can lead us in either direction, and we need to be aware of it.

MR. KEMPE: And how do you augment the positive that has got us here – yet?

MR. TENNENHOUSE: And interestingly, I think – you know, particularly for this inequality thing, I really think optimism is actually part of the key to getting out of it, because what we see is, it's only the optimistic cycles – and it's not about just the economic cycle, but optimistic political leadership that we actually see the economy get to that point where the folks that are – sort of have fallen behind now find the chance to get on the train.

MR. KEMPE: OK. So we will harness disruption. Barry, I guess – let people know about tomorrow morning, right?

So the breakfast is at 8:30. Come here and network with other people here – a lot of fascinating people attending, and then, 9:00, challenges and opportunities of the third industrial revolution with a giant sucking sound of new manufacturing to the United States – (inaudible) – but anyway, thank you very much for coming. (Applause.)