CHAPTER 5
NEW DEALS
Necessity is the mother of (re)invention.
—ADAPTED FROM PLATO
There is another way.
It’s inevitable that some governments will build walls. Others—those with the will, the means, and the inclination—will experiment with new ways of ensuring that the needs of the public are met, even if government itself is only part of the solution.
You’re a citizen who pays your taxes and abides by the law. What does your government owe you in return? Expectations of government vary enormously from one society to another. Some say the law’s primary purpose is to define the rights of the individual and to protect citizens from government overreach. Others insist that it’s the collective that matters most, and that government’s responsibility is to promote national values and a healthy society. Some say the state must safeguard the rights of citizens against the predations of profit-hungry corporations, while others assert that business drives prosperity for all and that government’s main responsibility is to stay out of the way.
Is the purpose of government to bring about change, to enable others to bring about change, or to protect society against the worst effects of change? Some will say there’s a place for all three of these roles. There are big differences of opinion on all these questions across countries, within communities, and even inside families, but given the irreversible changes under way in our world, it has never been more important to look closely at all our assumptions about the social contract: the agreement between the state and the individual that binds societies together.
There’s one value that virtually everyone shares: the belief that government has a duty to safeguard the personal security of each citizen—though “security” can be defined narrowly or broadly. You expect government to honor and protect the rights guaranteed to you by your nation’s constitution. If you’re accused of a crime, you expect to receive all the protections afforded you by law. If you’re a victim of crime, you expect justice. You expect safeguards against crime and corruption—and that government will protect you from threats from beyond the nation’s borders. These days, that’s often less about the invasion of a foreign army than about trade policies and intrusions of various kinds in cyberspace. Some expect their leaders to pursue a foreign policy that advances the national interest—and, by extension, their personal security and opportunity for prosperity.
What else do citizens expect? The U.S. Declaration of Independence offers this partial definition of the social contract:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.—That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,—That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.
God has given you life, freedom, and a chance to be happy. Government’s job is to ensure that no one takes these rights away from you, and if government fails in its responsibility—or if government itself denies you your rights—you have the God-given right to bring the government crashing down.
Thomas Jefferson used these ideas to justify, on behalf of American colonists, a declaration of formal separation from the British Empire. Yet the Fifth and Fourteenth Amendments to the U.S. Constitution protect the right to life, liberty, and “property,” a formulation inspired directly by the seventeenth-century political philosopher John Locke. Locke and Jefferson agreed that God was the source of these rights, and that government had no right to take them away. Today, even those who don’t believe in God, or who believe that God has no place in politics, can insist that some rights are “unalienable” and that government’s role is to protect them. But the Universal Declaration of Human Rights, adopted at the formation of the United Nations, insists on the right to life, liberty, and “security of person.” In other words, when it comes to the social contract, even the basics are up for debate.
It’s important to remember that the idea of a social contract is not the invention of Enlightenment-era European philosophers. The Arthashastra of ancient India, credited to the philosopher and economist Kautilya, though authored in Sanskrit by many people over the two centuries before and after Christ, offered early ideas on this subject. These writings assert that taxes are paid in exchange for services rendered by the king, and that the king’s duty, consistent with the Hindu scriptures, is to ensure the welfare and material well-being of his subjects. There are many other examples of this idea throughout history and across East and West that long predate Jean-Jacques Rousseau, Thomas Hobbes, Locke, and Jefferson.
What else do you expect from government? A job? An opportunity to provide for your children and to give them a better life than you’ve had? Does government owe you an education? A chance to use your mind after you’ve graduated? How about safe roads and bridges and ports and airports? Safe drinking water? Internet infrastructure that protects your property and privacy? At affordable prices? How about access to medical care? If your child will die without medical treatment, does government owe her access to a doctor? At a cost that’s within your means? How about care in old age?
Does government owe you a say in government? Elections that are conducted freely and fairly? Access to unbiased information? Freedom of speech? Does it have some responsibility to place limits on that freedom for the good of society? Freedom of assembly? What if some citizens use their freedom of assembly to organize protests that block your drive to work? Does government have an obligation to protect citizens whose gender, ethnicity, religion, or sexual orientation have opened them to past discrimination, whether by government or by other citizens? A nation’s constitution may answer many of these questions, but as times change, values evolve, and technology creates opportunities and problems that the document’s original authors could never have imagined, how are rights to be updated?
Whatever your answers to these questions, it’s clear that government’s obligations under the social contract extend well beyond national security and a shot at a better life. A government’s legitimacy rests on many things, and readers who are citizens of genuine democracies will surely answer these questions differently than citizens of China, Russia, or Saudi Arabia. But even autocrats must worry about public opinion—and about whether a significant number of citizens have come to believe that their government is unwilling or unable to meet their most basic needs.
Come back to the “pursuit of happiness.” What makes people happy, or at least boosts their sense of well-being? Since 2012, a United Nations agency has been trying to find out. The 2017 World Happiness Report offers some interesting answers.1 The study’s authors found seven factors that make people most happy: “caring, freedom, generosity, honesty, health, income and good governance.” Some of that sounds a little abstract, and only the last of these refers directly to political officials, but all seven tell us something about what people expect from government. They want leaders who care what happens to them, who treat them with dignity, and who don’t interfere in their lives or punish them arbitrarily. They want leaders who will help them when no one else can, who are honest, who can create and sustain a system that provides economic opportunities, and who know what they’re doing. Whether you’re a libertarian or a Marxist, that definition of government’s end of the social contract works pretty well.
Scandinavian countries continue to dominate the UN rankings. There are various theories about why that is, but these are countries in which citizens are burdened with relatively high taxes. Perhaps they’re more confident than people in other parts of the world that their tax money will be well spent, and that they’re investing in programs like free university education, free health care, and other social protections that provide a direct and immediate boost to personal security, quality of life, and the health of society as a whole. Whatever the case, the high taxes that come with their definition of the contract don’t appear to be weighing them down.
Then there’s what China’s President Xi Jinping calls “the Chinese Dream.” There’s no simple definition of this idea. Xi describes it differently to different audiences, but it’s mainly his personal vision of China’s revival and peaceful rise toward greatness. It’s a dream of strength, independence, modernity, creativity, self-reliance, and power. It’s rooted in history and tradition. And it’s a response to perceived national humiliations visited upon the country by outsiders from the mid-nineteenth century to the mid-twentieth. Xi’s Chinese Dream differs from the American Dream in one important, if entirely predictable, way: Its central actor is not the individual or the family but a strong and disciplined ruling party at the vanguard of the Chinese people. The American version of the social contract generally requires that government recognize the unalienable rights of the citizen. The Chinese Dream centers on the ability of the state to lift the Chinese people up and lead them forward.
That UN World Happiness Report ranks the United States at 14 in the world, while China comes in at 79, but that doesn’t necessarily tell us how Chinese people feel about their government. Per capita income and life expectancy in China are still much lower than in the United States, though China’s state-directed economic reform process has lifted hundreds of millions of people out of poverty over the past thirty years. And China’s ranking has held steady over time in the index. Much more to the point, there has been no recurrence of the 1989 Tiananmen Square mass demonstrations that might have split the ruling party in two and provoked nationwide upheaval. We’re not allowed to ask Chinese people how they feel about Communist Party rule, and they’re not allowed to tell us. But it matters whether the party delivers on its promises, because even an autocrat violates the social contract at his peril.
Is there a Russian Dream that might help us understand how today’s Russian understands the social contract? Historically, Russian/Soviet law existed to protect the state from the dangers posed by individuals who challenged its authority, not the other way around. On paper, that’s no longer the case. But the decisions of judges in today’s Russia are not always determined by the law, and corruption remains a serious problem in a country dominated by a very few wealthy and powerful people. In addition, Russia has been mired for the past several years in an economic slowdown, and polling suggests that most of its people don’t expect better economic times ahead.
So what gives the still popular Vladimir Putin and his government their legitimacy? Are the citizens of Russia and other countries willing to endure significant hardship without challenging their government’s right to rule? Public expectation of government changes over time, of course, especially in response to bouts of hardship. In a poll conducted in March 2017 by Moscow’s Levada Center, 31 percent of respondents agreed that “the state gives a lot, but we can demand more,” a 6 percent rise over the previous year. Another 31 percent, also up 6 percent, agreed with the statement that “the state gives so little that we owe it nothing.” Those who indicated a belief that the citizen has a responsibility to help the state, even if it requires personal sacrifice, also fell by 6 percent.* It’s said that Putin has restored the pride and dignity that Russians lost with the collapse of the Soviet empire and the frightening economic chaos that followed. Where do pride and dignity figure in the social contract? Despite recent hardships, Putin has maintained an approval rating above 80 percent over several years.
But in the United States, Scandinavia, China, and Russia, how long can today’s agreement between the state and the individual last?
REWRITING THE SOCIAL CONTRACT
Faced with the challenges to come, there are things that (some) governments can do to rebuild relationships with their citizens. In short, they can rewrite the social contract to provide for the needs of society in new ways. Inequality will become a prime target of these changes. There will always be rich and poor, but history has shown again and again that when the gap between them becomes too wide, and when there are too few people in the middle, trouble follows. That’s why the United States, like many other countries, has a “progressive” tax system, one in which wealthier people pay income tax at a higher rate than poor people, and why taxes paid at every income level go to provide services for those who can’t afford them, to limited-term insurance payments for the unemployed, and to pensions and health care for the elderly.
The United States existed for almost a century before the first large-scale effort was made to provide for people in their most vulnerable stages of life. The private sector, not government, led the way. The first pensions in America were provided by the American Express Company to its employees in 1875. By 1919, there were three hundred private pension plans, covering about 15 percent of wage and salary employees in the United States, but until the 1930s few Americans had any expectation that someone outside the family would help the elderly pay to live out their lives.
At the height of economic depression in 1935, the Roosevelt administration created the Social Security system, which Americans pay into during working years and draw from after they retire. The age of retirement was set at sixty-five at a time when life expectancy was about sixty.2 For years after, companies hoping to attract talented workers continued to offer “defined-benefit” pension plans that promised specific amounts of money for retirement, but a growing realization that companies would not be able to control the resulting costs led them to offer “defined-contribution” plans that allowed workers to invest more of their own money. In 1978, Congress allowed for the establishment of 401(k)s that enable employees to contribute pretax income to private pension plans. As life expectancy has increased, various forms of individual retirement accounts have developed with different sets of tax requirements.3 In short, as public expectation of government increased, U.S. political leaders understood the need to adapt, to find new ways to share burdens among the state, citizens, and the private sector. Solutions will take different forms in different times and places, but around the world, the need for these types of changes is about to rise with new urgency.
Rewriting the social contract to help people survive and thrive in dangerous times also means rethinking assumptions about the purpose and content of education—and how it’s provided. It means fundamental changes in the way that governments collect taxes. It means preparing people to compete and succeed in a fast-changing economy and providing for their most basic needs when they don’t or can’t. It means welcoming creative thinking on the broader challenge from those inside and outside government. And it requires that government work with private companies and institutions to meet the moment.
EDUCATION
Opportunity begins with education, which must now become a lifelong process. First, preparing people to succeed in a digital-age economy does not require abandonment of a traditional liberal arts education. In fact, given the ever growing importance of critical thinking, creativity, and the ability to communicate with a much more diverse range of people over the course of a working life, an education that includes history, philosophy, literature, art, and music as well as math, science, and digital skills will be more important than ever.
In addition, multiple studies in recent years have shown that access to early education is a critical component in battling income inequality and all sorts of other social problems.4 It will play a vital role in fostering the adaptability of human beings to a faster-changing world. For many, early childhood education will be a new expense, and government has finite resources, but this is a crucial area of investment in a nation’s ability to compete in a global knowledge economy. Where national governments fail, local governments can succeed. A state, province, city, or town that offers affordable early education can attract smart, talented parents who want to ensure their children have the best chance to succeed. New York City has invested in universal prekindergarten education that brings 70,000 children into the classroom at age four, giving them the opportunity to learn while relieving their working parents of the cost of private school or day care programs.5
But education must extend far beyond youth. The increasing speed of technological change ensures that workers must learn new skills quickly and often, and that workers will be asked to shift jobs, and even industries, much more often than ever before. By providing access, or incentivizing others to provide access, to training and retraining on an historically unprecedented scale, governments can help citizens make most of the opportunities that change creates. In Singapore, a government agency called Workforce Singapore works with businesses to retrain their employees by helping them develop the new skills needed to remain valuable.6
Whether for young children or mature adults, education can’t simply be about sitting in a classroom, important as that experience is. Distance learning will be a critical component of education at every age. The role of government here is to ensure that citizens can afford all these levels of education, and that the technology is available to them. In Singapore, government has created “individual learning accounts” to provide every citizen over twenty-five with money to spend on training in new technologies.7 There will be many more such experiments, large and small, in coming years around the world, and those who lead the way will reap the first benefits.
TAXES
Governments will also have to consider new ideas on taxes. As we’ve seen, the automated workplace of the future will have a lot fewer people in it, and the people who are there will have different skill sets. In an earlier chapter, I noted the unavoidable impact of the coming of automation. How can government use the large-scale advent of automation to bolster its end of the social contract bargain? Many on the European left have called for a tax on robots, but the idea gained a much wider audience when Microsoft cofounder Bill Gates endorsed the idea to pay for the retraining of workers who can be retrained and for the displacement costs of those who can’t. Employ more people and pay higher salaries for those who teach our children and care for the elderly, two jobs for which human beings, not robots, will be needed for years to come. In managing this process, there’s an important role for government, Gates has argued. “If you want to do [something about] inequity, a lot of the excess labor is going to need to go help the people who have lower incomes. And so it means that you can amp up social services for old people and handicapped people and you can take the education sector and put more labor in there. Yes, some of it will go to, ‘Hey, we’ll be richer and people will buy more things.’ But the inequity-solving part, absolutely government’s got a big role to play there.”8
Former U.S. Treasury Secretary Larry Summers has some good counterarguments. What’s special about robots? he has asked. If you’re going to tax their use, why not tax all the machines that industry uses for work that a person could perform? And why discourage useful innovations? In a world of driverless cars, for example, deadly accidents will be much less common, and robotics can help doctors perform life-saving operations that would be impossible without them. So why respond to the businesses who create these valuable tools by raising their taxes? And won’t taxes on technology push companies to move operations to places where governments don’t impose these sorts of penalties? That won’t create jobs at home. Finally, Summers asks, “Why tax in ways that reduce the size of the pie rather than ways that assure that the larger pie is well distributed? Imagine that 50 people can produce robots who will do the work of 100. A sufficiently high tax on robots would prevent them from being produced. Surely it would be better for society to instead enjoy the extra output and establish suitable taxes and transfers to protect displaced workers?”9 There are strong points on both sides, and this is a debate that government should be having in every country where automation of the economy will have a major political impact. That is, everywhere.
As this debate highlights, government must decide whether its tax policies should be designed to boost employment or standards of living for consumers. The two approaches are not at all mutually exclusive, but policy priorities must be coherent to accomplish either goal. To incentivize job creation, governments could tax corporations based on the revenue they earn rather than the number of workers they employ. Or, as Ruchir Sharma argues in his book The Rise and Fall of Nations, maybe government should base tax rates on the ways in which money is made rather than how much is made. To encourage innovations that raise standards of living for consumers, government could impose higher tax rates on income earned from rents than from those earned through innovations. Those who invent useful new things should be treated differently than those who earn money without adding to productivity. All these ideas and more should be part of the debate.
There is also the inconvenient problem of debt. Whether the question centers on indebted nations, like Greece, or indebted citizens, like students paying off the enormous loans they’ve taken out to earn a degree at a time of fast-rising tuition costs, debt has cast a long shadow over the future of national economies and global markets. Rewarding those who spend too much and save too little by writing down debt is a dangerous business. That has not changed. But, as Mohamed El-Erian has warned, “the alternatives are worse.”10 Default serves no one, and a carefully negotiated approach to debt can benefit both lenders and borrowers, ensuring that both have the means to fulfill their own social contracts.
THE GIG ECONOMY
Given the increasing speed of automation of the workplace and other trends, some governments will experiment with the creation of incentives for participation in the “gig economy,” one in which individuals accept a life of freelance work because they don’t want (or can’t find) full-time work for a single employer. This is not a fad: In Europe, half of all jobs created between 2010 and 2016 were based on temporary contracts.11 That’s in part a reflection of an economic slowdown across the EU that left employers wary about full-time hires, but the automation trend suggests there will be fewer new jobs created in the future, even when times are strong. Whether we view the gig economy as a solution or a coping mechanism, it’s here, and the people who participate in it have different needs than those with full-time work.
As people working in gig economy jobs—as Uber drivers, Airbnb hosts, or part-time workers in any field—struggle to build families, buy homes, educate their children, find affordable health insurance, care for aging parents, and save for their own futures, governments, citizens, and companies must find new ways to provide for the basic needs of the individual. In a digital-age economy, it’s not a matter of cutting better trade deals. A reorganization of the social safety net will be required whether we like it or not.
In Denmark, Prime Minister Løkke Rasmussen has created a state “Disruption Council,” which consists of the prime minister, a diverse group of government ministers, business leaders, and policy experts, to find new ways to ensure that as new technologies power the economy forward, the state can help workers adapt. “When some working tasks disappear, we need to find new ones,” said Rasmussen in 2017. In this case, “we” means Denmark’s government. “The community must give a helping hand to those left behind by the technological giant leaps. If not, our society will disintegrate,” added his employment minister.12
Another idea gaining ground in Europe is the concept of “guaranteed basic income.” The idea is simple: If you believe that the gig economy will be the future of work for huge numbers of people, government will have to find new ways to encourage people to accept this work by making it possible to build a life and a family on this foundation. Some unemployed people refuse to even look for part-time work because the salaries on offer aren’t much more appealing than the benefits they have to give up to take these jobs. They remain on the dole. They pay little or no taxes. Their services are provided almost entirely by the state. They have little sense of self-worth.
What if the state provides these people with a small amount of income? Not enough to live well, but enough to survive, and tells them that the checks will keep coming even if they take a job. In that way, people can afford to take part-time or freelance work to contribute their talents to society, generate economic growth, pay taxes, and provide for themselves and others. Or maybe the income allows them to care for their sick children or aging parents. That work has value for society as well.
Finland’s government has experimented with exactly this kind of guaranteed income plan. As part of a trial, it sent monthly tax-free payments of €560 (about $600) to 2,000 unemployed citizens chosen at random. The plan is also designed to cut bureaucracy, because guaranteed income doesn’t require state employees to build and maintain a complex database to track the continuing eligibility of participants. Variations on this idea have the attention of policymakers in many countries. Though Swiss citizens voted in a referendum in 2016 to reject a plan that would have provided a minimum income to every citizen, local governments in Canada, the Netherlands, Scotland, Brazil, and Oakland, California, have experimented with this idea for the unemployed.13 Also in 2016, French presidential candidate Benoît Hamon ran on promises to launch a similar plan in his country that would be financed by a tax on the use of robots in the workplace.14 Some have advanced the idea of universal basic income, cash payments designed to provide everyone in society a survival wage as people navigate all the coming changes in the workplace.
Let’s stop right here. If you’re an American, maybe you’re shocked by the idea that anyone would suggest that the state should pay people who don’t work to earn the money. But if the guaranteed income idea seems totally antithetical to an American work-ethic-driven culture, consider that founding father Thomas Paine proposed in 1797:
To create a national fund, out of which there shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property:
And also, the sum of ten pounds per annum, during life, to every person now living, of the age of fifty years, and to all others as they shall arrive at that age.15
Nor is this simply an eighteenth-century idea. President Richard Nixon first proposed a modest version of partial basic income in 1968, and his plan passed the House of Representatives before dying in the Senate, where Republicans opposed the plan’s cost and Democrats complained it wouldn’t help enough people.16 Friedrich Hayek, an economist revered by many American libertarians for his belief in individual freedom and minimal government, wrote, “I have always said that I am in favor of a minimum income for every person in the country.”17 Elsewhere, he described the idea as “a certain minimum income for everyone . . . a sort of floor below which nobody need fall even when he is unable to provide for himself.”18
In 1975, Congress created the Earned Income Tax Credit, an idea advanced by economist Milton Friedman, a hero to many American conservatives, to provide financial support in inverse proportion to a worker’s income.19 That kind of program would be a nonstarter in today’s Washington, but even this idea falls far short of the challenge of coping with the advent of the gig economy. The subsidies this tax credit provides can help lift people out of poverty—no small thing—but the benefit phases out as incomes rise, reducing a worker’s incentive to find a higher-wage job. Guaranteed basic income might help with this problem.
REINVENTION
There are other ideas that can help. In Singapore, many workers and their employers contribute a considerable percentage of their income to the so-called Central Provident Fund. This money creates accounts from which citizens can borrow to put down deposits on state-built apartments. Mortgages are then paid directly from their fund accounts, and apartments are heavily subsidized for first-time home buyers. In this way, the fund provides housing and savings for old age.20
There have been much more ambitious plans to reduce inequality and bring more people into the economy. In 2000, about one-third of Brazilians lived below the international poverty line. The Workers Party came to power in Brazil in 2003 on promises to lift large numbers of these people out of poverty and hunger while making productive citizens of those who had never participated in the economic life of their country. President Luiz Inácio Lula da Silva created a program called Fome Zero (Zero Hunger) to invest in providing poor people with affordable food, access to water, basic health information, access to small amounts of credit, and support for small-scale farming. It also included a program called Bolsa Familia (Family Grant), which consisted mainly of cash payments that poor people could receive only if they vaccinated their children against disease and sent them to school. By 2014, this relatively low-cost program had cut the number of Brazilians living in poverty by two-thirds and provided millions of young people with unprecedented opportunities to learn. Beyond these obvious benefits, many experts who have looked closely at its costs say the program overall is efficient, cost-effective, and generally free of corruption in a country that has spent the past several years mired in the worst corruption scandal in the country’s history.21
India has built on this model. Return to the country’s Aadhaar biometric identification system described in the last chapter. As part of a program called Jan Dhan, it has also been used to transfer cash directly into the bank accounts of people otherwise unable to afford banking fees or maintain minimum balances. Payments into the system are small, intended only to help people survive. Administering money transfers, tax returns, health insurance, and other benefits directly through this system cuts enormous amounts of waste from India’s notoriously complicated state bureaucracy and virtually eliminates opportunities for official corruption, an enormous burden in India as in most other developing countries. It also reduces fraud because its use of biometric identification helps prevent one person from stealing another’s benefits. The program is essentially intended to remove all middlemen in relations between the citizen and the state.
There are downsides, potential and actual, in all these ideas. Will a person who receives guaranteed income still look for work? Knowing that benefits won’t be lost can make a difference, in theory, but until variations of the basic income idea are tested, adapted, and tested again, we won’t know whether it can work on a large scale. Let’s also remember that the Saudi economy is, in a sense, nationwide guaranteed basic income. The government doesn’t tax citizens, and it provides large numbers of people with undemanding state-sector jobs to give them a stake in the stability of one of the world’s least innovative and dynamic economies. In 2015, state salaries and various allowances and other perks accounted for nearly half the kingdom’s state budget.22 In addition, the Saudi government treats this system as if its willingness to provide for citizens in this way relieves those in power of any obligation to give citizens a greater say in how they’re governed.
Singapore’s housing scheme is notoriously complicated and leaves a large percentage of people’s income tied up in their homes. Bolsa Familia can educate huge numbers of young people and bring them into the job market, but if there are no jobs for them, relations between citizens and the state will become much worse. And by creating a central database in India to connect people directly with government, Aadhaar planners have created one of the world’s largest targets of opportunity for disruptive hacking. Huge numbers of citizens could find themselves cut off from basic services if their personal data and identities are stolen. Programs like these in developing countries can lift people into middle classes, but it can’t necessarily keep them there. We’ll never learn what works, what doesn’t, and why until these ideas are tested in different societies with different needs.
There are also smaller steps that government can take to help citizens transition toward the demands of twenty-first-century life. For example, the growing number of women in the workforce demands more thought to maternity (and paternity) benefits. In addition, it should be clear by now that mass incarceration of drug users does little to help individuals and societies cope with the increasingly easy availability of narcotics and the tendency to use them by those struggling to cope with the quickening pace of change. What percentage of violent crime today is directly related to abuse of drugs and alcohol, and what’s the cost to society—material and in terms of social cohesion—of continuing to ignore the need for large-scale substance abuse treatment? All societies will also need more effective approaches to the treatment of mental illness.
Studies show that more than 2 million Americans are dependent on medication and street drugs known as opioids, painkillers that mimic the effects of opium. Of the more than 52,000 drug overdose deaths in the United States in 2015, more than 63 percent involved an opioid. In August 2017, the Trump administration pledged “to use all appropriate authority to respond to the opioid emergency.” In October 2017, Trump declared the opioid crisis a “public health emergency,” but by not formally declaring a “national emergency,” his announcement failed to make available federal funding to deal with the problem.23 Identifying problems is an important first step. Solving them takes a much more significant commitment.
There are broader questions for policymakers to consider. It’s human nature to gravitate toward other people who seem to share something in common with us. In school, we join subgroups of kids with whom we feel comfortable. As adults, we seek out places to live where we feel we’ll be welcomed by people who share our values. For news and information about the world, we turn to television channels, radio stations, and Internet sites that offer views that we expect will line up with our opinions. This is the “filter bubble” that has become a toxic habit of our daily lives.
For the sake of social cohesion, there is value in “nudging” people together. In countries around the world, political leaders try to bolster their popularity by playing one group of people off another. If your goal is to boost your popularity with a segment of the population, that’s a smart political tactic. But if your goal is to promote a stronger, healthier society that will make your country safer and more prosperous, it’s a cynical and dangerous habit. Governments around the world have a lousy track record in the field of “social engineering,” and their clumsiness often produces anger rather than unity. But given the ongoing political, technological, and social changes detailed in this book, the stoking of division is the shortcut to catastrophe. There are ways that government can create incentives that bring different types of people together—at school, in the workplace, and in public spaces.
BEYOND GOVERNMENT
Yet all these solutions, large and small, can only be implemented in societies that have a government willing and able to experiment, institutions capable of executing the best-laid plans, and a population of people who believe they share some basic values with their fellow citizens, even if it’s only a common patriotism.24 For these and other reasons, better government isn’t the only answer, or even necessarily the most important. There are things private organizations can do, and are doing, particularly if government can help.
In January 2018, Lany Fink, founder of investment firm BlackRock, made headlines with a public announcement that the private sector must do more to serve communities. In an open letter to the CEOs of companies in which his firm invests, he warned that “Society is demanding that companies, both public and private, serve a social purpose. . . . Companies must benefit all of their stakeholders, including shareholders, employees, customers, and all the communities in which they operate.”*
One of the most active participants in experiments with private-sector involvement in meeting the evolving needs of citizens is Facebook chairman Mark Zuckerberg. In February 2017, Zuckerberg outlined his ambitions in a blog post addressed to Facebook’s 1.7 billion users.25 The most succinct statement of his goal is to “develop the social infrastructure to give people the power to build a global community that works for all of us.” The longer version includes plans to:
help people build supportive communities that strengthen traditional institutions in a world where membership in these institutions is declining, . . . help people build a safe community that prevents harm, helps during crises and rebuilds afterwards in a world where anyone across the world can affect us, . . . help people build an informed community that exposes us to new ideas and builds common understanding in a world where every person has a voice, . . . help people build a civically-engaged community in a world where participation in voting sometimes includes less than half our population, . . . [and] help people build an inclusive community that reflects our collective values and common humanity from local to global levels, spanning cultures, nations and regions in a world with few examples of global communities.
His essay looked beyond national governments. Progress, he wrote, “now requires humanity coming together not just as cities or nations, but also as a global community.”26
These are grandiose aspirations. More specifically, Zuckerberg proposes to create stronger “safety infrastructure.” Facebook already offers Safety Check, which allows users to connect with one another after emergencies, when governments, local and national, are sometimes overwhelmed. He also says he wants to experiment with programs based on artificial intelligence that can expose both “fake news”—an obvious danger to democracy—and efforts to recruit terrorists across the network. Zuckerberg faced intense criticism throughout 2017 for his company’s failure to prevent Russians from using Facebook to disseminate phony information during their campaign to disrupt the 2016 U.S. election. But he is absolutely right about the private sector’s opportunity to provide services that government can’t or won’t.
In addition, in San Francisco, we’ve seen companies like Facebook, Airbnb, Salesforce, and others move into the business of providing affordable housing.27 Internet access is becoming an increasingly essential service, and companies like Google Fiber and Webpass, a wireless home broadband provider that Google has acquired, have provided infrastructure and access for cities across the United States. In parts of the world where access is a much bigger challenge, Facebook has partnered with Samsung, Nokia, Qualcomm, Ericsson, MediaTek, and Opera Software to form Internet.org, a project designed to provide low-cost Internet access to parts of the world plagued with poor infrastructure. According to Zuckerberg, the venture has used its carrier-subsidized Free Basics app and Express Wi-Fi hubs to expand from 3 million new Internet users in July 2014 to 40 million by November 2016, with hopes to use satellites and solar-powered drones to expand that number further.28
AOL cofounder Steve Case and J. D. Vance, author of Hillbilly Elegy, a bestselling book about lost jobs in middle America, have created an investment fund called “Rise of the Rest,” which will invest in American communities hard hit by globalization’s impact on U.S. industry. The fund includes some of the wealthiest and most influential men and women in American business among its partners and investors. Crucially, Case and Vance also say they want to create networks of entrepreneurship, a Silicon Valley–like ecosystem that will connect entrepreneurs in small towns with one another and with those who can finance their best ideas. AT&T has broken new ground in worker education and retraining, a crucial resource for both employers and employees in an increasingly automated world. Workers in the company have access to a database called “career intelligence,” which shows them where jobs are available in other parts of the company and what skills are required to fill them. The company then offers short courses that provide “nanodegrees,” certifications that they have developed for particular skill sets. Employees who demonstrate an interest in continued learning are provided with funding for university coursework relevant to their areas of interest. If employees do not show interest, this is noted on their employment records. Workers keep a career profile that tracks their training and accomplishments. Employees benefit by gaining access to exactly the skills they need to adapt and succeed in the workplace. Employers gain by simplifying their hiring needs.29
But what about a child’s education, particularly in places where governments don’t provide it. Canadian Tariq Fancy is founder of the Rumie Initiative, an ambitious nonprofit project designed to give children in developing countries a chance to learn.30 I met Tariq in February 2017, and he explained how Rumie provides children who live in areas with limited or no access to education, including refugee camps, with tablets preloaded with textbooks, interactive lessons, and other teaching tools. An article he wrote called “From Books to Bytes: A Learning Revolution for the Poor” explains how the smart use of crowdsourcing technology can help people in the Arctic Circle use their computers to help Syrian refugees living in camps in Turkey get an education.31 This is not a large corporation funding a social responsibility program—though some of those projects can be important and impactful as well. This is one nonprofit with a big idea to provide crucial services for people that government cannot or will not reach, and to provide them with access to knowledge and skills they would never get in any other way.
There are plenty of examples of innovation coming from the developing world. For example, M-Pesa, a mobile payment system based in Kenya, allows people to use their phones to move money. The program, created in 2007 by mobile giant Safaricom, is now used by more than half the country. Kenyans were using this mobile platform to withdraw and deposit money, send remittances, pay bills, and access credit for years before these services became common in wealthier countries. More than 100,000 Kenyans have since signed up for M-Tiba, a “health wallet” available on mobile devices that allows users to save for health care expenses.32 These kinds of services are especially important in developing countries, where governments can’t keep pace with the growing demands for basic services of fast-developing middle classes.
Then there’s the challenge of protecting democracy. If governments can’t do it, maybe the private sector can. Google and its sister company Jigsaw have offered free software designed to protect elections from malicious manipulation. In 2017, the two companies helped to defend a voter information website in the Netherlands against repeated cyberattacks ahead of Dutch national elections. Jigsaw then offered a “Protect Your Election” suite of products to help guard against attacks on elections in France, South Korea, and Germany.33
Universities are stepping into the breach as well, including by hiring workers in communities broken by poverty and violence. Following riots in the city of Baltimore in 2015, Johns Hopkins University and its health system hired hundreds of new workers from the worst affected neighborhoods through a $69 million job creation program called HopkinsLocal. The University of Chicago and University of Pennsylvania have experimented with similar initiatives in Chicago and Philadelphia, respectively.34
We can’t rely on companies and private institutions to do everything that governments can’t or won’t do. Private actors have private interests; they serve the needs of a limited number of citizens, and they don’t tend to last as long as institutions of government. Nor can local governments do it all. Many Americans have a “let the states decide” approach to a long list of issues, but for the most basic services, big differences in the ability and willingness of individual state governments to spend on education, public health, and public infrastructure exacerbate the problem of inequality of opportunity. This is true to varying degrees in every country. Yet private companies and institutions will be a crucial part of any serious effort to rewrite the social contract, because they can incubate ideas that governments won’t and experiment in ways that government can’t. This will make a difference. Companies can use the marketplace to find out what works and how people will respond to new ways of doing things.
These are a few examples of the thousands of ideas under development in companies around the world, ideas that can be adapted, reworked, scaled up, and reimagined. Individually, they can help limited numbers of people meet limited numbers of their needs. Collectively, they can encourage the innovations—whether created by policymakers, entrepreneurs, or activist visionaries—that can help limit the inevitable human damage inflicted as we advance nation by nation and community by community from the old world into the new.