Tag: TechCrunch Global Affairs Project

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Digital Diplomacy 4.0: Return of the Jedi?

Tom Fletcher Contributor
Tom Fletcher, CMG, is principal of Hertford College, Oxford. He is a former U.K. ambassador and 10 Downing Street foreign policy adviser to three prime ministers, and a visiting professor at NYU. He is the author of the bestselling "The Naked Diplomat: Power and Politics in the Digital Age" (2016) and the forthcoming "Ten Survival Skills for a World in Flux" (2022).

As British ambassador to Lebanon, Tom Fletcher was one of the first ambassadors to “go digital.” Ten years on, he reflects on what the first wave of “technodiplomats” got right and wrong, and where digital diplomacy goes next.

Like every industry or craft, diplomacy — a world once dominated by protocol and platitudes, maps and chaps — has already been hugely disrupted by digital technology.

Also like many professions, the most visible impact has been on the tools: better kit, better comms (internal and external), faster pace. Again like many, the real impact has been less visible and is about culture: the humility that comes from understanding how power has shifted, the agility that the new tools allow, the effectiveness that comes from being more inclusive and the transparency that comes from increased public understanding of what was once a closed world.

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Ten years ago this fall, I was posted as Her Majesty’s envoy to Lebanon. At 36, I was young for the role. The Arab Spring was firing up young people across the region and I wondered if technological change could transform the way statecraft engaged with people. I began experimenting with what we started to call (after a few clunky options like “Twiplomacy”) “digital diplomacy.” A decade on, digital diplomacy has already moved through several phases — three in fact — and stands on the threshold of a fourth. Much has been achieved. But if it is to succeed in putting more streetcraft into statecraft, we must take into account what we did right and wrong.

The first phase was a brave new world. With its 21st-century statecraft program under Secretary of State Hillary Clinton, the U.S. State Department led a period of excitement and optimism about the way that diplomats could use the new tools of communication and connection. For the ambassadors of that era who genuinely adopted and adapted, these were heady times. The rules from capitals were loose: One minister told me that he didn’t care what I tried as long as it stayed out of the U.K. media. Many of us were able to proceed until apprehended. There were plenty of mistakes. And risks: The smartphone I tweeted relentlessly from was also the device that terrorists used to track my movements.

But this was a period when we could surprise people with a desire to connect, engage and show some humility. It seemed possible to imagine that social media would open up societies and promote real agency and freedom. One British ambassador drank so much of the Kool-Aid that he even suggested that the most powerful weapon in the Middle East was the smartphone. I was wrong about that, so far.

The second phase was the institutionalization of digital diplomacy. We started to create structures around the wider dialogue between the old emperors and the new. Worried by the implications for geopolitics of the pace of technological change, I left the U.K. government to try to make the case for the urgency of this effort. After my 2017 report on the United Nations, the U.N. launched an effort for Big Tech and government to talk to rather than past each other. Both the U.N.’s High Level Panel and the Global Tech Panel were genuine and effective attempts to translate between those disrupting global politics, economics and society and those nominally still in charge, an alternative to trying to summon the Zuckerbergs before parliamentary or congressional committees. In “The Naked Diplomat,” I had proposed that countries should appoint “tech ambassadors.” The Danes went for it, with success, challenging the tech companies to engage with states in a veritable dialogue.

Meanwhile, foreign ministries adjusted to social media far more quickly than to any previous technology. Having been one of only four U.K. ambassadors on Twitter in 2011, within a few years all but four were, with some like John Casson in Egypt amassing over one million followers. For a profession without many ways to assess impact, there was real willingness to experiment with social media. I spoke at over 20 conferences of ambassadors, urging colleagues to give it a try, show the human behind the handle and engage (rather than transmit). I used to tell them it was like the largest diplomatic reception they could imagine: Don’t stand at the margins, say nothing or bellow across the room. Yes, there were risks. But the biggest risks were not to be in the conversation.

As more adopted this approach, foreign ministries faced new trade-offs over agility versus confidentiality of their communication. My 2016 review of the Foreign Office recommended a pivot toward the former: Perhaps Sir Kim Darroch, the outstanding U.K. ambassador driven out by former President Trump over his leaked cables, might subsequently have disagreed. But we are now reliant on that ability to communicate at speed.

Diplomacy over the last two years would have been unimaginable without Zoom and WhatsApp. For a profession that used to do everything to minimize direct contacts between leaders, diplomats were quick to embrace videoconferencing once the tech made it a serious option. The pandemic drove summits and conferences online, saving enormous amounts of carbon with little obvious negative impact on the outcomes.

The third phase overlapped with the second: the empire struck back. Authoritarian governments found new ways to use digital technology to suppress freedom. Trump exploited Twitter to fire up xenophobia, prejudice and insurrection. More creatively he also used it — as at home — to court potential allies and to pressure diplomatic opponents. Meanwhile, Russia’s Vladimir Putin weaponized the internet against democracy and built troll factories. Twitter mobs made it harder to share the nuance of complex diplomatic positions, let alone use social media to reach compromise and common ground. Polarization was clickbait and the center did not hold. Governments realized that cyber was the new battleground and started to think in terms of defense.

Meanwhile, Big Tech grew, morphing in some cases into entities more powerful and sometimes more reactionary than governments. Mischievously I had wondered aloud in 2013 whether we should ask Google to be on the U.N. Security Council. Google might now ask why it should bother. While Big Tech grew and flexed its muscles, it quietly recruited the talent, depriving governments of human capital as well as taxes. Symbolically, and perhaps inevitably, the (excellent) first Danish tech ambassador was poached by Microsoft and Britain’s Liberal Democrat leader was poached by Facebook. As the legal arms race intensified, the EU’s titanic clashes with Big Tech over data or incitement were a long way from the idealism of the brave new world phase, when we genuinely believed that we could solve more problems together.

Where does this leave us today? I am now more of a realist about technology and diplomacy, but I remain an optimistic one. We can still crack challenges together, including the Sustainable Development Goals. But to do so, governments must be more honest about what they can’t do alone. Tech needs more patience to stick with slower moving and often clumsy states, and more honesty about where it has become part of the problem.

Meanwhile, diplomats can continue to use technology to make them more effective: My research group at New York University worked on wearable technology to help a diplomat read a room; a Diplopedia to do a better job of conserving diplomatic records; and intelligent and transparent use of sentiment mining to better understand public opinion. I stand by the hypothesis that the more oversight the public has of issues of war, the more peaceful government policy will be. Perhaps one of the most exciting areas for diplomacy will be the potential to combine it with the latest advances in collective psychology and social media to make peace between societies rather than between states, and between nations and their histories.

The next phase of digital diplomacy should also see work on the next great peace processes: with the planet, with Big Tech, between young and old, between hosts and migrant communities, and ultimately maybe with technology itself. I think digital diplomacy can help us deliver better outcomes on each of those.

Finally, this next phase of digital diplomacy will see diplomats returning to the basics of the craft. We’ll need a more focused effort to develop citizen diplomats, equipped with vital diplomatic skills like empathy and emotional intelligence: Education is therefore upstream diplomacy. As I’ve proposed elsewhere, we’ll need an old school pen and paper effort to rewrite the global rules for protection of our freedoms in an online world. We’ll need embassies to escape from the confines of buildings and return to their original mission as groups of people sent to connect. And we’ll need diplomats who can still do what Edward Murrow called the “last three feet,” that crucial human connection that will be the last diplomatic skill to be automated.

That is an exciting and urgent agenda. If diplomacy did not exist we would need to invent it. But now we need to reinvent it. And that is too important to leave to diplomats.

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What I learned building a fact-checking startup

Dhruv Ghulati Contributor
Dhruv Ghulati founded one of the first global startups tackling online misinformation and is one of the first machine learning scientists to research automated fact-checking. He holds degrees in economics and computer science from the London School of Economics and University College London.

In the aftermath of the 2016 U.S. election, I set out to build a product that could tackle the scourge of fake news online. My initial hypothesis was simple: build a semi-automated fact-checking algorithm that could automatically highlight any false or dubious claim and suggest the best-quality contextual facts for it. Our thesis was clear, if perhaps utopian: If technology could drive people to seek truth, facts, statistics and data to make their decisions, we could build an online discourse of reason and rationality instead of hyperbole.

After five years of hard work, Factmata has had some successes. But for this space to truly thrive, there are a great deal of barriers, from economic to technological, that still must be overcome.

Key challenges

We quickly realized that automated fact-checking represents an extremely hard research problem. The first challenge was defining just what facts we were checking. Next, it was thinking about how we could build and maintain up-to-date databases of facts that would allow us to assess the accuracy of given claims. For example, the commonly-used Wikidata knowledge base was an obvious option, but it updates too slowly to check claims about rapidly changing events.
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We also discovered that being a for-profit fact-checking company was an obstacle. Most journalism and fact-checking networks are nonprofit, and social media platforms prefer working with nonprofits in order to avoid accusations of bias.

Beyond these factors, building a business that can rate what is “good” is inherently complex and nuanced. Definitions are endlessly debatable. For example, what people called “fake news” often turned out to be extreme hyperpartisanship, and what people proclaimed “misinformation” were really contrarian opinions.

Thus, we concluded that detecting what was “bad” (toxic, obscene, threatening or hateful) was a much easier route from a business standpoint. Specifically, we decided to detect “gray area” harmful text — content that a platform is not sure should be removed but needs additional context. To achieve this, we built an API that scores the harmfulness of comments, posts and news articles for their level of hyperpartisanship, controversiality, objectivity, hatefulness and 15 other signals.

We realized that there was value in tracking all the claims evolving online about relevant corporate issues. Thus, beyond our API we built a SaaS platform that tracks rumors and “narratives” evolving in any topic, whether it is about a brand’s products, a government policy or COVID-19 vaccines.

If this sounds complicated, that’s because it is. One of the biggest lessons we learned was just how little $1 million in seed funding goes in this space. Training data around validated hate speech and false claims is no ordinary labeling task — it requires subject-matter expertise and precise deliberations, neither of which comes cheaply.

In fact, building the tools we needed — including multiple browser extensions, website demos, a data labeling platform, a social news commenting platform and live real-time dashboards of our AI’s output — was akin to building several new startups all at the same time.

Complicating things further, finding product-market fit was a very hard journey. After many years of building, Factmata has shifted to brand safety and brand reputation. We sell our technology to online advertising platforms looking to clean up their ad inventory, brands looking for reputation management and optimization, and smaller scale platforms looking for content moderation. It took us a long time to reach this business model, but in the last year we have finally seen multiple customers sign up for trials and contracts every month, and we are on target for $1 million in recurring revenues by mid-2022.

What needs to be done

Our journey demonstrates the high number of barriers to building a socially impactful business in the media space. As long as virality and drawing eyeballs are the metrics for the online advertising, search engines and newsfeeds, change will be hard. And small firms can’t do it on their own; they will need both regulatory and financial support.

Regulators need to step up and start enacting strong laws. Facebook and Twitter have taken massive strides, but the online advertising systems are far behind and emerging platforms have no incentive to evolve differently. Right now, there is no incentive for companies to moderate their platforms of any speech that isn’t illegal — reputational damage or fear of user churn are not enough. Even the most ardent supporters of free speech, as I am, recognize the need to create financial incentives and bans so that platforms really take action and start spending money to reduce harmful content and promote ecosystem health.

What would an alternative look like? Bad content will always exist, but we can create a system that promotes better content.

As flawed as they may be, algorithms have a big role to play; they have the potential to automatically assess online content for its “goodness,” or quality. These “quality scores” could be the basis to create new social media platforms that aren’t ad based at all but used to promote (and pay for) content that is beneficial to society.

Given the scope of the problem, it will take immense resources to build these new scoring algorithms — even the most innovative startups will struggle without tens, if not hundreds, of millions of dollars in funding. It will require multiple companies and nonprofits, all providing different versions that can embed in people’s newsfeeds.

Government can help in several ways. First, it should define the rules around “quality”; firms trying to solve this problem shouldn’t be expected to make up their own policies.

Government should also provide funding. Government funding would allow these companies to avoid watering down their goals. It would also encourage firms to make their technologies open to public scrutiny and create transparency around flaws and biases. The technologies could even be encouraged to be released to the public for free and available use, and ultimately provided for public benefit.

Finally, we need to embrace emerging technologies. There have been positive strides by the platforms to invest seriously in the deep technology required to do content moderation effectively and sustainably. The ad industry, four years on, has also made progress adopting new brand safety algorithms such as Factmata’s, that of the Global Disinformation Index and Newsguard.

Although initially a skeptic, I am also optimistic about the potential of cryptocurrency and token economics to present a new way of funding and encouraging good quality, fact-checked media to prevail and distribute at scale. For example, “experts” in tokenized systems can be encouraged to fact-check claims and efficiently scale data labeling for AI content moderation systems without firms needing large upfront investments to pay for labeling.

I don’t know if the original vision I set out for Factmata, as the technological component of a fact-based world, will ever be realized. But I am proud that we gave it a shot and am hopeful that our experiences can help others chart a healthier direction in the ongoing battle against misinformation and disinformation.

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Rational regulation is key to US competitiveness in the fintech race

Anja Manuel Contributor
Anja Manuel is the co-founder of Rice, Hadley, Gates & Manuel LLC (RHGM), a strategic consulting firm, and the director of the Aspen Security Forum. She previously served as an American diplomat and is a board member of Ripple, a premier blockchain payments company.
Kevin Bassney Contributor
Kevin Bassney is a director at Rice, Hadley, Gates & Manuel LLC (RHGM) and previously worked as a portfolio manager at Morgan Stanley and was an Army officer. He was a Schwarzman Scholar at Tsinghua University in Beijing.

While Tesla invested $1.5 billion in bitcoin, Gary Gensler, the chairman of the U.S. Securities and Exchange Commission, called the cryptocurrency space the “Wild West.” Meanwhile, in China, the government created its own digital currency while abruptly canceling the IPO of its most well-known fintech firm, AliPay, for regulatory reasons. It’s enough to give the casual observer whiplash. What is happening here?

With all the focus on the great technology race between the U.S. and China, little attention has been paid to an area with enormous implications: Who will lead the innovation and, therefore, control the technology behind international payments systems?

This race matters for two reasons.

First, Western countries’ leadership in international payments allows them to enforce sanctions against bad actors like Iran and North Korea. If Chinese solutions gain the dominant foothold in the developing world, this will become much harder.
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Second, if the West leads in fintech, it can set reasonable world standards for this new field, such as protecting the environment, preventing illicit cross-border transactions and safeguarding consumer privacy. Reasonable and clear regulation is exactly what responsible U.S. companies — who don’t want to operate in a “Wild West” environment — have been asking for but not receiving.

In the meantime, China has taken the global lead in mobile payments, both in sophistication and scale. Ant Financial, AliPay, WeChat Pay and others comprise the world’s most advanced mobile payments market. For example, Alipay has over 1.3 billion users and more customers outside of China than all of PayPal’s user base. In aggregate, the $45 trillion in mobile transactions volume that Chinese merchants process annually is twice as large as what MasterCard, Visa and PayPal process each year combined.

In addition to these Chinese private sector innovations, the Chinese government has also developed the world’s most advanced central bank digital coin and has completed over 70 million transactions — totaling over $5 billion in revenue — since it was launched earlier this year. The digital yuan is a centralized currency supported by the full faith and credit of the Chinese government, versus traditional cryptocurrency, which is speculative. While the stated goal of the digital yuan is financial inclusion to help those Chinese without bank accounts, the currency’s centralized nature allows the Chinese government to monitor every transaction and restrict access if the Chinese citizen has a low score on the country’s social credit system.

If these Chinese leapfrog technologies gain an international following, they could make it very difficult for the West to enforce sanctions on bad actors, as former Treasury official Justin Muzinich and others have pointed out. Currently, the United States and its allies enforce international sanctions on Iran and North Korea, for example, by preventing Western companies from doing business there and halting banks from facilitating payments to these countries through the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system and correspondent banking relationships.

Responsible fintech companies in the U.S. (including those that service crypto), also fully comply with “know your customer” and anti-sanction regulations. Due to the size and scope of the American financial system, this has been an effective deterrent to illicit behavior.

With the advance of the digital yuan and Chinese payments platforms, companies wouldn’t need U.S. or other Western banks to facilitate these payments and so sanctions would become very difficult to enforce and illegal payments by terrorists and criminals easy to hide. A combination of AliPay, other advanced payments platforms and the Chinese digital yuan could begin to circumvent this system. Sigal Mandelker and others have pointed out that due to the onerous regulations Western governments have asked banks to follow to create “correspondent banking relationships,” 75% of big U.S. and European banks are reducing the number of these relationships. This erodes America’s ability to influence international banks and crack down on illegal behavior.

Beyond sanctions, Western governments have other reasons to shape the rules of the new digital financial system. Current banking practices have many safeguards in place to protect against abuse. The West can only set similar standards for these technologies if we are in the lead. For example, the West will want to prevent criminals and terrorists from transferring money anonymously through cryptocurrencies like Bitcoin and others. Western governments should also set up safeguards that protect small-time investors from getting scammed, such as what happened when the Ethereum network fueled the initial coin offering trend in 2017-2018.

Finally, environmental regulations are needed. Digital currencies based on “proof of work (PoW),” such as Bitcoin, use an enormous amount of computing power which requires electricity and thus, creates massive carbon emissions. Mining Bitcoin, for example, which still uses the PoW model, uses about as much electricity per year as the entire country of Norway. In fact, multiple reports have explained that Tesla’s purchase of $1.5 billion in bitcoin may have erased a significant portion of the carbon emissions gained from that year’s sales of electric vehicles.

These issues must be considered thoughtfully. But speed is of the essence. China understands the power in being the leading mover in key technologies and actively seeks to create world standards. For example, China has already contributed digital currency ideas to create global standards that would govern how data is transferred between financial institutions, such as for payments, credit cards and securities trading.

Unfortunately, the U.S. is falling behind since its own regulation of this space is a mess. An alphabet soup of regulatory agencies such as the CFTC, SEC and others have struggled to wrap their heads around regulating blockchain, cryptocurrencies and other fintech innovations.

The SEC has sued, or threatened to sue, two of the most responsible and innovative companies in the space — Coinbase and Ripple (on whose board one of us serves) — which along with some other responsible actors, have been asking for reasonable regulation for years. At the same time, the SEC seemingly, but not explicitly, gave the all-clear to Bitcoin and Ethereum in spite of the problems outlined earlier. Many other fintech companies in the international payments space and blockchain/cryptocurrencies are in “regulatory purgatory,” not knowing when or how the axe will fall. 

Let’s be clear: The “Wild West” Gensler was referring to is not in anyone’s interest. Fintech, especially international payments enabled through blockchain, can be enormously positive. They make remittance payments much faster, cheaper, and more accurate; help the 1.7 billion in the world who are unbanked obtain greater access to finance; and have myriad other benefits. However, an alphabet soup of conflicting regulators and ill-defined arbitrary rules only benefit those who would like to supplant the American financial system. By coordinating across agencies and setting a few clear, reasonable rules, the federal government can enable the next generation of fintech entrepreneurs and keep the U.S. in the lead in this critical area.
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Internet shutdowns are a political weapon. It’s time to disarm.

Scott Carpenter Contributor
Scott Carpenter is Jigsaw’s Director of Policy and International Engagement. Prior to Google, Carpenter served as the Keston Family Fellow at the Washington Institute for Near East Policy and as the U.S. Deputy Assistant Secretary of State in the Bureau of Democracy and Human Rights.

Authoritarian governments from twenty-one countries have deliberately shut down internet service at least fifty times this year, and the problem is only bound to get worse. As regimes such as Venezuela face elections and Cuba experience protests, they’re finding it easier to contain dissent by curtailing digital freedoms – and are becoming increasingly brazen in doing so.

Shutting down the internet can be as easy as flipping a switch. Hosni Mubarak’s Egypt took this approach in 2011, and ten years later, Myanmar’s daily shutdowns lasted months – depriving hundreds of thousands of people of the means to communicate and shrinking the country’s GDP by an estimated 2.5 percent. Just this week in Sudan, citizens are experiencing disruptions to internet access in the midst of an ongoing military coup.

Most governments are more nuanced, however.

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The Iranian government was among the first to block websites, as it did in 2009 during the Green Movement. Others, like Tunisia, blocked only certain websites amidst protests demanding greater accountability this year. Increasingly, governments use their control over internet service providers to ‘throttle’, or slow down, particular domains to an unusable speed. Russia, for instance, recently throttled Twitter for refusing to remove “objectionable” content about opposition figure Alexei Navalny.

Governments provide myriad reasons for restricting internet access. Officials often cite national security or a fear of violence during public demonstrations. But as people live more of their lives online, governments’ ability to restrict internet access represents a grave threat to safety, freedom and well-being.

After all, the internet’s growth as a global, borderless network of networks has been a boon to human freedom, providing new ways to discover information and new channels to organize. But growing opposition to a truly global open internet from a surprising number of governments risks a mounting erosion of freedoms as more aspects of our lives shift online.

The problem of deliberate shutdowns has escalated – and UN Special Rapporteur Clement Voule recently warned that shutdowns are getting worse and more widespread. Internet shutdowns are increasingly being used as the primary tool for governments to silence dissent and control their populations without attracting the ire of the international community.

Internet shutdowns affect people far beyond restricting communication: they immobilize economies by halting commerce and trade, keep people from attending school, and endanger lives. But as covert blocking techniques like throttling have become commonplace, detection of shutdowns has become more difficult. The increasing complexity of the internet makes it difficult to determine what is happening when a government limits its citizens’ access, though. And it’s impossible to condemn what you can’t see.

Documenting even partial internet shutdowns is a critical first step to addressing this issue globally. No government should be able to shut down the internet without the international community knowing about it. That’s why Jigsaw is working with leading researchers at Access Now, Censored Planet, Open Observatory of Network Interference (OONI), and others to make information available, build understanding, and mitigate the impact of shutdowns.

A number of resources can reduce the impact of internet shutdowns. Mesh networks, virtual private networks (VPNs), and shared proxy servers can provide the means to help people connect to the open web during shutdowns. Implementing internet-wide standards can make domain-level throttling more difficult.

But technology is only one part of the solution. Preventing future shutdowns requires political action: raising the cost of such action in the eyes of the international community.

Grassroots efforts to highlight internet shutdowns such as the #KeepItOn movement, a coalition of more than 240 organizations from 105 countries, provides a range of advocacy, technical support, and legal interventions to prevent future shutdowns.

Democratic governments, too, should unite in action.

As the world’s most technologically advanced democracies formalize their multilateral coordination on technology issues in groupings like the T-12 or the Quad, they should prioritize internet shutdowns as a key pillar of their agenda. Through the Organization for Economic Cooperation and Development, the United States and other like-minded states could build on the work of the Online Freedom Coalition, a grouping of thirty-five democracies committed to online freedom, to enhance funding efforts to understand the technical aspects of the threat and develop technical and policy responses. They could ensure concerted condemnation accompanies future shutdowns and articulate ‘red lines’ to trigger sanctions on countries violating their commitments under international human rights law.

Despite the challenges, it is up to democracies to take up the rallying cry for a free and open internet. Only then might the promise of a universally accessible internet be fulfilled.

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I founded Nest. Here’s how startups can help solve climate change

Matt Rogers Contributor
Matt Rogers built the first machine-learning thermostat as the co-founder of Nest. He was previously an engineer at Apple, where he helped build ten generations of the iPhone and the first iPad. He currently splits his time between Incite.org and a new company that he is developing.

The best way to drive lasting change is to create opportunities where the right thing to do is also the easy thing to do. The upcoming COP26 climate conference has the unique opportunity to incentivize new talent to innovate and deploy the widest variety of solutions possible to make this happen.

When it comes down to a split-second decision or a force of habit, the average consumer will always choose the more convenient path, even if that path is the “wrong thing to do.” Technology, coupled with deep empathy for the user experience, has the opportunity to meet consumers where they are – to offer solutions that not only meet the bare minimum of conveniently solving a problem, but also do so in a way that is better for more people.

All too often, I see companies – tech and otherwise – lose sight of this principle.

Let’s take a long-institutionalized example: recycling. Everyone knows that recycling is key to reducing waste and, in turn, mitigating climate change. We simply cannot keep making waste at the same rate that we are currently. Recycling is an attempt to alleviate the waste burden on the planet. The concept of recycling is simple: reuse old things in new ways. However, when the average consumer is faced with a split second decision between the blue bin or black bin, it’s much easier to toss an item into the black bin rather than take the necessary step(s) to investigate the exact recyclability of that item.

On the other hand, at Nest, we knew that average households wasted a huge chunk of energy when the thermostats were left set at the same temperature all day. We also knew that the last thing busy people (and everyone is a busy person) needs is to remember to set or reset their thermostat based on weather patterns, time of day or energy consumption spikes.

It’s one thing to tell someone to turn their thermostat off, because it’s good for the planet. It’s another thing to simply turn off their thermostat for them, automagically. When we added automation, energy usage data, app controls and a design that makes temperature regulation feel cutting edge, we had a product that we knew would drive lasting change. On average, the Nest Learning Thermostat saved 10-12% energy on heating and 15% energy on cooling per household (more stats here).

At Nest, we made energy saving in the home the cool thing to do, sure. But that’s not all. We educated our customers to see their personal cost benefit as well as the planet’s. Nest made it easier and more convenient for the average consumer to do the right thing.

But let’s zoom out from Nest.

This is a pivotal moment for technology to solve big problems. The biggest and most time-crucial of these problems being climate change. We have the opportunity to use the advancements we’ve achieved over the last few decades to make it easier for everyone — yes, everyone — to get involved with saving the planet. We need to create, fund, and champion technology that actually does good in tandem with doing well.

As an investor, I see tech companies either embracing or ignoring this principle every day. A few years ago, I met Arch Rao, founder of Span, and was immediately struck with how his idea makes a cumbersome task easier and, in so doing, causes positive change. Today, it’s really hard to electrify your home. Sure, you could install a solar panel or a battery in your basement, but it’s challenging for home owners to know if these instruments are actually helping them to save energy. Span is an electric panel that lets the homeowner control every circuit in the home right remotely through a phone app. Span introduced user-centered design to an unsexy category: home electricity.

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This begs the question: if we can apply human-centered design, technology, great UX and end-to-end product thinking to more areas (no matter how “boring”), what kind of solutions can we build? What kind of big problems could we solve?

We’ve made great progress in moving towards solar and renewables, but it’s not enough. We must plan and dedicate resources towards solutions across all industries. This call to action may start at tech, but it needs support from investors, non-profit advocacy groups, and policymakers. And we need the leaders gathered in Glasgow later this month to set out a roadmap of incentives. There are no silver bullets to climate change and there is no one person, idea or company that will solve it. It takes all of us, it takes all our ideas.

Simply put: people are motivated to do the right thing, but only so far as it is more convenient. As we build, let us embrace human nature as our challenge. Technology that stands the test of convenience will ultimately stand the test of time to drive lasting change. How can we make doing the right thing easier than doing the wrong thing? Figure that out, teach others how to do the same, and we will put ourselves a position to save the world.

Decoupling tech supply chains would do more harm than good

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Decoupling tech supply chains would do more harm than good

Phil Levy Contributor
Dr. Phil Levy is Chief Economist for Flexport. Earlier in his career, he held international economic policy positions at the White House and the Department of State.

For a technology sector that would much prefer to focus on growth over geopolitics, the push for U.S.-China “decoupling” poses an inescapable threat. The fuzziness of the concept only increases the danger.

U.S. distrust of China, particularly in technology, is nothing new. Indeed, Congress took action to keep Huawei and ZTE out of U.S. telecommunications almost a decade ago, during the Obama administration.

But during the administrations of both George W. Bush and Barack Obama, there was a broad push to engage in dialogue and find common ground between the world’s two biggest economies. As China emerged as a leading global economy and became an increasingly important trading partner to the U.S., (accounting for 2.5% of U.S. imports in 1989 and rising to a peak of 21.6% in 2017), there were moves to incorporate it into the U.S.-led global trading system. In 2005, Deputy Secretary of State Robert Zoellick put forward the idea of China as a “Responsible Stakeholder,” under the assumption that embracing China’s entry into the global trading system would ensure that it helped that system continue to function.

Not long before that, the U.S. had agreed to China’s 2001 accession to the World Trade Organization. But while it was seen by many as a turning point, it was really just a waypoint. That year, China’s share of U.S. imports was already 9.0%. Growth in Chinese imports, moreover, reflected a rebalancing of Asian trade more than anything else; from 1989 to 2017, Asia’s share (including China) of U.S. imports grew from 42.3% to just 45.2%. China’s relative growth instead ate into the share of countries like Japan and Malaysia, reflecting a reordering within Asia. The standard system of trade accounting overplayed this shift, as a good that was finished in China and had 10% Chinese value added would count as 100% Chinese for trade statistics.

Regardless of what was labeled as produced where, the bottom line was that a well-developed Asian supply chain incorporated China as a major player. With increased engagement, however, and very different economic systems, the points of economic disagreement between China and the United States accumulated. During the Trump administration, dialogue took a back seat to new trade barriers. The United States applied tariffs on hundreds of billions of dollars of Chinese imports and China responded with barriers of its own. Although the Trump tariffs were initially cast as temporary measures meant to achieve finite policy objectives, some key policymakers within the Trump administration saw value in diminished interaction between the two countries.

Matthew Pottinger, who served as Deputy National Security Adviser under President Trump, subsequently wrote that “important U.S. institutions, especially in finance and technology, cling to self-destructive habits acquired through decades of ‘engagement,’ an approach to China that led Washington to prioritize economic cooperation and trade above all else.” His solution calls for bold steps “to frustrate Beijing’s aspiration for leadership in … high-tech industries.” The Biden administration recently announced, after a prolonged review, that it was maintaining the Trump tariffs and Congress has pushed to fund initiatives that would subsidize technological independence. These moves for lessening dependence, particularly in technology, have fallen under the broader rubric of “decoupling.”

Amidst all the newfound enthusiasm for U.S. decoupling from China, one might imagine that the term is well-defined. Yet it takes relatively little probing to discover a lack of clarity. Of course, the above-mentioned tariffs have served to discourage trade between the two countries, but how far is this policy meant to go?

Does decoupling mean the U.S. will turn away from inbound and outbound foreign direct investment? What about portfolio investment, such as the purchase of U.S. Treasuries? Does it mean that the U.S. should avoid importing final goods produced by Chinese firms? What about European firms producing in China? What about U.S. firms producing in China? Or European or U.S. firms producing outside China but incorporating Chinese parts? Or companies selling into the Chinese market and thus, presumably, subject to Chinese influence?

The sheer breadth of economic interactions between the two giant economies illustrates the implausibility of a clean divide between them. Instead, the most likely result of an attempt at exclusion would be another reordering, not China’s disappearance as a supply chain power. This is particularly true when other global economic powers, such as the European Union, do not share even the vague objective of decoupling.

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The nebulous nature of the decoupling push poses a particular threat to the tech sector. Over decades, the push to take advantage of scale economies and to drive down production costs has resulted in highly-integrated global tech production. Further, in subsectors that have recently emerged as particularly contentious, such as the production of semiconductors, investments have to be made at large scale and well in advance. That leaves the sector especially vulnerable to rapidly-shifting rule changes, as policymakers struggle to give substance to a problematic concept at a time of difficult supply chain disruptions. Policy responses that shower the sector with subsidies, as some bills in Congress have proposed, seem appealing, but lose their effectiveness when countries such as Japan move to match them.

A world in which the United States provides an extreme answer to the above questions and is absolutist in its separation from China is likely to be one in which the United States cripples itself technologically, denying itself access to globally-competitive sourcing and empowering competitors elsewhere. The only politically viable alternative at the moment, a world in which the United States takes a more moderate stance and struggles to find a middle ground, is likely to be an unpredictable one in which rules are constantly evolving.

In either case, proponents of U.S.-China decoupling will find such a move counterproductive. Far from resolving strategic policy concerns, its primary impact may be to challenge U.S. technology leadership instead.

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