 of the next years or decades and beyond, because I don't get to think very much about that. And I'm certain to introduce the panel, we have Bill Janeway, who's the Senior Advisor and Managing Director at Warburg Pincus. He's one of, on the Board of Governors of INET and the Social Science Research Council. Tim O'Reilly, the founder and CEO of O'Reilly Media. And Rob Johnson, the President of INET. So without further ado, Rob. Good morning. Today we have an interesting discussion. There was a lot of energy throughout the sessions about the ominous prospect of technological change. And so we've assembled two people who've both written books as well as explored that realm about as deeply as anyone I know. Tim lives in Northern California. Runzel O'Reilly Media has been immersed in that world for many, many years and has been a source of great insights. I know Bill, for as long as I've known you, you've been talking about food camps and the two of you are really very good friends in reading the prefaces of each of your books and so forth. I know how much you've reinforced each other. So I'm gonna try to step aside a little bit. We'll start with a discussion of Tim's book and then Bill will talk about your book, which is now on the cusp of being released as a second edition with some substantial changes in light of what you've learned since the first one and then we'll open things to the audience. Tim? Yeah, so on my way here, I spoke to a device in my kitchen. Costs roughly $100. And I asked it whether my flight was gonna be on time and then I asked it to call me a car. And a few minutes later a car showed up. Well, anybody hearing that or seeing that a decade ago would have said WTF. But a lot of people are hearing about technology and they're hearing that Oxford has done a study saying that 47% of human jobs could be automated in the next 20 years. They're hearing that we need universal basic income because they'll give me nothing left for people to do. And they're saying WTF in a very, very different tone of voice. And so that really encapsulates the reason why I wrote this book. Technology has enormous promise to make a better world. It also fills people with fear. And it seemed to me as someone who's been in Silicon Valley for approaching 40 years with a unique perspective on the rise and fall, on various technology platforms to sort of capture some of what I've learned about those platforms, how they work, what the dynamics are. And the reason I'm here is because in some ways technology platforms are micro economies and understanding how they work and how that is changing led me inevitably to economics. I'm not somebody who ever studied economics at all, even in college. I never took the acting class at Harvard from a lot of my classmates. See, that was a Classics major. So all this comes to me simply from observing technology. My company publishes books about technology. In fact, back in 2000 the cover of Publishers Weekly in the United States said the internet was built on O'Reilly books. And many internet billionaires started their company with what they learned from a book that I published. Just how-to programming books. And I started doing conferences. Now the heart of my business is a large online learning platform aimed mostly at technology but also business called Safari. We've managed to survive ourselves a great deal of technology change by growing and adapting. But the most important thing that I learned early on in my career was that people care about ideas. And so the thing that probably most distinguished me in my company is that we used storytelling very much in the way that George Aikuloff was describing. We used storytelling to shape the narrative about technology. So in 1993 my company, it's a very small company at the time, was the first company to create a commercial website. And I did it by telling a story about why advertising on the worldwide web where people come to you was very different than sending, you know, say email marketing out. Of course we later fell into the trap of using a broadcast marketing as well. In 1998 I organized the meeting where the term open source software was adopted and promulgated largely by telling a story, sort of reframing the story that a lot of people had at the time that free software was in opposition to proprietary software at Microsoft. And instead saying, no, no, no, actually there's this whole world of software that you're all using called the internet, which also is based on free software. And changed the way people thought about what free software was about. And then a few years later after the dot-com bust I promulgated this term web 2.0 to explain how we were moving from the world that was dominated by Microsoft, dominated by the PC to one that was effectively what we now call cloud computing, where the applications were basically on the internet, where they were of a very different character, and where big data and collective intelligence would be the core of company's competitive advantage. So out of all that I got a reputation as a futurist, but I don't think of myself as a futurist. I think of myself as somebody who describes the present in a way that we can see it more deeply. So the first part of the book, the book is divided into four parts. The first part describes the techniques that I use to see the world more clearly than other people around me and to be able to effectively see the future in the present. And this kind of reframing is something that I think we need in policy right now as well and in economics. How do we get new paradigms? It was actually, not by coincidence really, because Bill and I have been friends for a long time. It was in 2003 that I gave a talk called The Open Source Paradigm Shift, where I first sort of articulated this as a dinner talk at the World Bankist Technology Conference. And I remember asking everyone in the audience, how many of you use Linux? Let me ask those of you here, how many of you use Linux? Okay. Yeah, all of you raise your hand. How many of you use Google? How many of you use Google? All right. Okay, you use Linux, right? People just couldn't even see it. And we still see that. So 2005, we knew what a connected taxi cab looked like. Right? You put a screen in the back and you ran ads. You know, and only three years later, somebody said, oh, wait, no, no, no, no, no, no. We can actually connect passengers and drivers in real time. Not only that, somebody said a few years later, oh, and they don't even have to be licensed taxi drivers. And that's when we got to Uber. And so that's that kind of mental reframing. And technology always gives us these moments where we have to reinvent the world based on what is possible today, rather than on what was possible yesterday. And business models change as well. And you see very often companies, individuals, policymakers, not understanding the ways that the world has changed, and continuing to operate with the rules of yesterday. And so that's the first lesson that we get from technology. We have to make it new. The second lesson really has to do with the way that the technology landscape tends to be dominated and has been really for the last 30 years by winner takes all platforms, or winner takes most, at least. And so then the question is, well, what makes these platforms rise and fall? And this is probably the first place that I really start to intersect with the world of INET because what I discovered was what makes them rise is generosity and what makes them fall is greed. And so effectively, the first wave that I was associated with the personal computer happened when IBM, not really through intentional generosity, but through an unintentional act, basically released the specifications for the personal computer to the world so that anybody could make them. So Michael Dell started his eponymous company when he was a student at the University of Texas. He started it from his dorm room because anybody could, because IBM had published the specifications. Now, it was a short-sighted move from a point of view of a company that was dominating the industry, but it was good for everybody else. The next great wave was when Tim Berners-Lee put the web into the public domain. Again, huge explosion of creativity in a market that had come to be dominated by Microsoft and Intel, and they had effectively squeezed most of the life out of it. Microsoft was literally at that point holding meetings in what we now call Silicon Valley, telling venture capitalists what they could and could not invest in, because, hey, it's not worth investing here because we're gonna do that and we'll just put you out of business. So effectively, we went from a really open market with a lot of creativity to one without a lot, and all the developers went somewhere else to where it was freedom. So watching that pattern, you know, that started getting me thinking about economics again, and in particular, I was spending a lot of time looking at the crop of platforms where technology's meeting the real world, particularly Uber and Lyft, and I was meeting with the chief economist at Uber, and he said, this is my Bible, and he handed me Alvin Roth's book, Who Gets What and Why, which is about, you know, Roth got his Nobel Prize for improving matching and kidney transplant marketplaces, but it really is about this idea of distributional economics, and there's a better way to do it, that the obvious ways are not always the best. And it got me thinking a lot about the challenges of these platforms and how they are actually matching platforms, and that there are conclusions from that. And one of the conclusions that I came to, and actually Bill was sort of kept prodding me on this, is, you know, because Uber was not actually doing a good job by their drivers, that eventually this would lead to their downfall and that Lyft would gain share, and so on, so it's the generosity story again. But more than that, these platforms teach us a lot about the future, you know, for example, when you hear analysts or breathless business articles that say that Uber can bring in self-driving cars and, you know, they won't have to pay their drivers anymore, you really haven't understood their business model. Because what makes Uber and Lyft work is the fact that they have a swarming marketplace in which more people show up when there's more demand and fewer people show up when there's less demand. If they owned all the self-driving cars, they would have to have enough cars to meet peak demand. Right, so all of a sudden they have unused cars and a statement like the one in Fortune Magazine that they'll get rid of all the costs, plus they will, the driver costs, plus they will have the cars used all the time indicates that somebody has not been thinking very deeply. But more to the point, they'll also take on the risk, they'll take on the operational costs, they'll take on the capital costs. So that leads me down the path that says actually if there is a future for self-driving cars with Uber and Lyft, it will look a lot more like Airbnb, you know, that is somebody else will provide the cars and they will provide a logistics layer. So the point is understanding the economics of platforms also leads you to make predictions about what will happen in the business world. The third part of the book is really about the fact that these platforms are increasingly ruled by algorithms. And if you think about a company like Google or Amazon with a 20th century mindset, you might think that the programmers who are cranking out code or data models or even creating AI are a little bit like the workers in a 19th or 20th century factory, except they're producing software rather than hardware. But if you really understand these companies, you realize that the workers at these companies are programs and models, right? And those programmers are their managers. So we actually have a new world in which people are managing algorithms that do the bulk of the work. And now as we look at companies like Uber and Lyft, we're starting to see, oh, those algorithms are sometimes themselves middle managers managing humans. And so we have a very, very different landscape of labor and capital. Because of course, a huge number of the workers are actually capital costs rather than labor costs. And so again, it's just an inversion of the way we normally think about the world. And I don't really know all of the implications of that for your world, but it's so important that you start thinking about it because understanding the economics of how these companies are gonna be different really matters. And so there's also a thread that led me in the direction that we've heard from a number of people here about the financialization of the economy because I started thinking about the way that algorithmic systems always have an objective function. So Uber and Lyft are managing in such a way that they can pick up passengers within three to five minutes wherever they are. And a lot of what they have to do, of course, is to marshal the drivers as well as marshal the passengers. And the reason why these companies are losing a lot of money right now is because it's very hard to create a new marketplace. I think over time, as this becomes the new normal and they get to a stable equilibrium, it will actually change in established markets. So a lot of people who are eager to say they're unsustainable, I'm not sure are right. But more of the point is you understand that that algorithm has a goal and everything they do is in support of that goal. Now, they may have secondary goals like they wanna make money, but the primary goal of the algorithms is to make the match. And that leads to a couple of really interesting understandings because first of all, you understand why taxi drivers, taxi companies that say, oh, well, we don't like Uber and Lyft this, they have all these unlicensed drivers who are missing the point because they can't match drivers and passengers without that model. But continue down that path. Google, I spent a lot of time in one of the chapters explaining how Google search quality works just as a way of explaining how programmers manage these algorithms, how they make them better, how they use data to give them feedback about how they work. And then I talk about Facebook and fake news and you can understand that Facebook actually has a different set of algorithmic goals than Google. Google wants you to come to their sites and then go away, right? If you find what you want in Google search or if you find what you want in a Google ad, you go and you never come back, well, I never come back, you come back from the search, but you don't come back. One of their signals in fact is what they call the long click versus the short click. A long click is somebody clicks on something and then they go away, they were satisfied. A short click is they clicked, they went away, they came right back to the same search, clicked again, and so Google's always trying to get to the long click. Facebook on the other hand wants you to stay. They're trying to show you content that gives you more and more of what you ask for so that you'll spend time. So even though they're both advertising supported businesses, very, very different model. They don't always remember this. Google has tried to become more like Facebook in some ways and to their detriment, but think about that. Now, you saw how Facebook's algorithms had unintended consequences. They thought that they would create more community. People would find more of what they wanted from their friends. They didn't mean to increase hyper-partisanship. They didn't mean to create fertile ground for the US election to be hacked, but they did. So then I asked myself, well, what's the master objective function of our financial markets? Well, shareholder value. We literally tell all of our companies optimized for share price above all else. Treat humans as a cost to be eliminated. So in some sense, when everybody's worried about the rogue AI of the future, they imagine this machine that's been given an objective function that it pursues to the exclusion of all else. Nick Bostrom in Superintelligence has the idea of a paperclip making machine that becomes intelligent and all it wants to do is make paperclips. Elon Musk has described the strawberry-picking robot that wants to see strawberry fields forever. They go, we actually have built one of these machines. It's called the financial market. It says, I want to see shareholder price go up and up and up. Doesn't matter what happens to people. And this is the ultimate point of that section of the book, which is these things are under our control. And I actually borrow the title of one of Joe's, Joseph Stieglitz's books, we can rewrite the rules. And we have to rewrite the rules. And really, that's the fourth part of the book, a set of musings about how and why we should be rewriting the rules that we use to govern our technology, that we use to govern our markets, and how we need to actually think about the ways that the future is not inevitable that it's up to us. There's another board I sit on, which is Tim O'Reilly's board. And we met a long time ago when Tim had invented that. You gotta hold it closer. So I'm listening to, can you turn me on and strawberry fields forever? I know. I'm just wondering what I'm doing. Is this going to 67? No, we're just playing the year off. There you go. Now remember, old men should be explorers than we are. So in any case, when I sat down to write my book, it was to reflect on what was then, had come to an end, a 35-year sabbatical from academic economics, from Cambridge specifically, by way of getting to know Tim about halfway through that process. And realizing how I had understood the sources of the digital revolution that I had participated in and that was in the process of transforming the world. And I came up with this idea that first, innovation at the frontier takes place by trial and error and error. That the narrow-minded, simplistic, neoclassical presumption that investment will map to economic value as if we knew in advance what the economic value was going to be was profoundly mistaken. And you could actually track that all the way back to the first industrial revolution, the second industrial revolution, and very definitely in the third. What that said was, what that told me was, these kinds of technological revolutions depend on sources of funding that have another purpose other than generating economic value. One hand, a mission-driven state. The state that in the 19th century was largely focused on national development, whether it was the United States, France, or Germany. And on the other hand, financial speculation. Financial capitalists, who, as Tim says, are interested in making money. They care about making money, but they don't care whether they're trading tulip bulbs or the shares of the South Sea Company or Dotcoms or the businesses like Microsoft and then Google that wound up generating enormous economic value. So I thought of this kind of this three-player game informed by arguably the greatest historian of the 20th century, Fernand Brodell. And if you ever find yourself working in a job in which you have no intrinsic interest but you're contractually required to do so, as I was between 1985 and 1988, I urge you to read Brodell's Capitalism and Civilization, three volumes that explain before the First Industrial Revolution the role of capitalism in seeking super profits through incredible arbitrage opportunities, the result of which cannot be known in advance. He was talking about long-distance trade. He's talking about the world of the merchant of Venice, but it applied directly to thinking about how investments in fundamental transformational technology whose consequences could not be known in advance would play out. So the first edition of my book is a celebration of an extraordinarily constructive and positive configuration in post-war America of a mission-driven state driven by the Cold War to invest upstream in science and support the emergence of technologies from the science across all of the components of the digital revolution from silicon to software and to be the first early collaborative, supportive customer for the stuff that was coming out of that investment that was not yet ready for prime time. When the yield on a microprocessor was one out of 100 or one out of 500, but the Air Force bought them and put them into the guidance system of the Minuteman missile, pulled Texas instruments and then Intel down the learning curve to where a PC could happen. And then on the other hand, what the Defense Department did, not because it intended to, was build a platform for entrepreneurs and their venture capital backers to dance on. And in dancing on it, they attracted, we attracted the financial speculators, the bubbles, the productive bubble that accelerated the digital revolution by a generation, okay? And thereby transformed the market economy, the conventional economy of work and saving and investment and consumption through digitalization, even as the railways had done it at the end of the, in the middle of the 19th century and as electrification had done it in the early 20th century. That was about the first half of the book. I mean, the first edition of the book. And you know, it had some resonance and it seemed to play out and then we had the last five years. So the second, what I've been reflecting on, what I've written about and how I've rewritten the book is to recognize that the three player game never stops. It has an internal dynamic. While this was going on, even while the digital revolution was escaping from the need of state sponsorship and taking on a life of its own, as Tim has described, in the 80s and into the 90s with open source and the internet, the state was being delegitimized as an economic actor. I promise you that the founders of Intel when somebody from the government showed up and said, I'm here to help, did not think that was the most frightening words you could ever hear as Ronald Reagan suggested. On the contrary, they were there to help and they enabled Intel to exist. The delegitimization of the state, the triumph of the Mount Pellerin Society has crippled the entity on which we must rely to counterbalance and cushion and adjust in response to the consequences of the digital revolution, which by the way, include the second globalization. There's really one phenomenon that we've been living with over the last 20, 30 years. Automation, the digital communications, digital logistics, the digitalization of the physical economy is what enabled globalization, outsourcing fragmented supply chains, unthinkable without the digital revolution. But now, as we see the consequences, the blowback as we've been discussing for two days here, as we see the consequences, you turn around and the state is not there. Government is not available. Certainly in the United States, less available in the UK, maybe in Germany, to provide some of that necessary cushioning. And on the other hand, the state is also not there in the United States and it's abdicated from the next revolution, from the green tech, clean tech revolution. Now it is done so explicitly, even before, if you just look at the funding of ARPA-E, Advanced Research Project Agency Energy, it never reached $300 million. DARPA is still funded at $3 billion a year, even while only on the margin is it funding commercially relevant, usually around natural language understanding, which has, let's say, dual use between the military and the commercial sectors. So that's one aspect. The second, the market economy that's been transformed in the United States is now characterized by an extraordinarily frustrating kind of schizophrenia. On the one hand, we have the Bay Area, we have the new digital economy, but then we have the rest of the economy in which, for the last five years, we've had fewer companies started than have closed down. Since we've had data, we've never seen this before. We've seen the markup, this new paper, fascinating paper, uses a very imaginative approach methodology, which indicates that whereas 30 years ago, the average markup of price over cost by American business was on the order of 15 to 20%. It's now on the order of 65 to 70%. This is the mark of a stagnant economy lacking, we're rent-seeking, and now, of course, we have the third aspect, which is those in the legacy economy seeking to defend their rents through political action as well as through market force. So in the second edition, I start talking about how does a leader become a follower? And that's what's happening in the US, particularly with respect to the next green tech, clean tech revolution. And on the other hand, is it the case that China, which has certainly beaten all records for being an effective follower, will be able to make the necessary transitions to become a new leader, even while, of course, it's getting an enormous boost from the current American administration, whose lasting legacy I think will be its role at accelerating China's rise towards world leadership. But it is important to remember that the institutions that get you to the frontier, the national champions, the success in appropriating other people's intellectual property, whether it's the British taking textile technology from India or the US taking textile technology from Britain entirely against the law, or whether it's China following Korea and Japan appropriating the intellectual property that already existed. When you get to the frontier, those national champions are barriers. If we'd left the digital revolution to AT&T and IBM, Tim would not have written this book, and arguably a Riley media wouldn't exist. The Chinese are going to have that challenge. So this is a pretty dark picture. In fact, I am calling the conclusion of the book, the dark side of the three-player game. So the guy who hired me at Warburg Pincus when I was in the process of my 35-year sabbatical used to say you can't survive as a venture capitalist if you're a pessimist. And there is a bright side, and the bright side is right here. 2008, the global financial crisis and the Great Recession saw the world crash in on neoclassical economics. The economics that in 1971 I decided I could not teach. I could not pervert and pollute the brains of young students by teaching them about perfect competitive markets and perfect information and all that jazz. 2008 and the global Great Recession have been the gift that keeps on giving to the disciplines of economics and finance. First, they've smashed them together. The divorce between economics and finance with the finance guy saying well, we know that the markets are competitive and that therefore resources are being allocated efficiently and the economist saying yeah, we know that in the markets price equals the net present value of expected future cash flows so it's priced efficiently. We can each take each other for granted and pretend that there's no need to understand the dynamic relationship between the two. That blew up big time in just about nine years ago. And from that has come an enormous energy some of which has been amplified, some of which has been sponsored, some of which has been catalyzed by INAT and that's why I'm a co-founder of INAT because this became an essential, this was an opportunity that could not be missed and it's begun in its own turn in my view to take on a life of its own. You know INAT is not funding David Outor or Raj Chetty now. We did provide initial funding for the World Income Database and we have provided critical funding early on but it's taken on a life of its own. It's not going to change policy today or even tomorrow but it has the potential to transform the context in which policy is debated over the next generation and that's what gives me some hope beyond this state that we find ourselves in today frustrating and frustrated as it is. I'd love to pick up real quickly on just this last thought of bills of reasons for hope and one that strikes me as very, very aligned with this is the breaking of the old paradigm is messy but it is what makes possible the new one and one of the reasons why we see a new economics becoming established is because people are understanding the old system is breaking down. Now we do have a set of very dark possibilities ahead of us in the political realm. Things get a lot worse before they get better but a lot of the norm that's being broken that we see certainly in American politics and I think to some extent over here as well are I think an opportunity for us to look more deeply and say can we break some of the old alliances of ideas that don't actually belong together ideas that are a little bit like that screen in the back of the taxicab being accepted as the way that you have a connected taxicab. Can we in fact say oh wait the alignments that we have in politics are blocking us from seeing the possibilities of the future and might there be a completely different economic paradigm that we could begin to work towards. So I'm very hopeful on that front. The other thing that I think is a really opportune moment is that there is a lot of scrutiny on the great tech platforms and if we can actually think correctly about say the distributional consequences of the dominance of these global platforms because they really are global then it might actually be a laboratory for us to think about a distributional economics and how we measure the value of creation and the value flows within economic systems in ways that we can then generalize to the broader economy. I think we can even make that quite concrete. So there's this kind of it's almost a dialectic the same types of technologies that enable Uber and Airbnb these matching engines with incredible efficiency unimaginable efficiency are also usable to manage workers in the gig economy the zero hour contract but they're also available for those people whether it's Uber drivers or whether it's minimum wage workers at Walmart to organize. I'm old enough to remember when trade unions in the United States private sector were legitimate. And part of the counter rebellion that delegitimize the state delegitimize the trade union but now you can imagine and this may be a little romantic perhaps guilds of Uber drivers in a particular city say you know what? Your algorithm has to be tweaked or you're not gonna have us available when you need us. And that's where the reduction in friction which is what a lot of this technology is about is eliminating frictions could be put to a productive and distributionally more fair consequence. So the technology is not entirely neutral but it's accessible and that means that the future remains open it is not deterministic and that's why I entirely agree with Tim it is up to us and not just in our political lives. The other thing I just say about the US which is you know we saw from this election many people don't appreciate what an unbelievable clues the American constitution represents. I got a reading list for anybody who's interested I won't go through it right now but you can catch me afterwards if you wanna crash course in understanding the bizarre construction and evolution of the American polity. But one aspect of it is that you have these individual states each of which has their own constitution each of which actually has much more power over our lives than the federal government. They're the ones who tell us when we can drink, who we can marry, when we can drive. These states can be and the last time around at the time the start of the progressive era the great Louis Brandeis said they can be our laboratories of democracy. And one of the things we are seeing not just in California in response to a federal government that at best is incoherently incompetent that may be our defense against the Trump administration is at the state level experiments taking place. California of course is leading with respect to climate change just as it did with respect to pollution but that's another place where this kind of well, Tim's wife Jen Palka runs built an extraordinary organization called Code for America which is empowering state government somewhat in the model of the British government digital service to use these technologies to reduce the friction between citizens and their governments. And that's another dimension where things are open opportunity exists. Who have questions? Any questions from the audience? Mr. Elmer, we're here. Yeah, Muhammad is in University of Odin in Italy. Just curiosity when you say it when you say that it depends on us what do you intend by us? Is it U.S. or it is U.S. I mean United States and so on. And also another question. We passed from the globalization and this led us to globalization if I can say. Googleization, so Googling everything that you want to go and Google it and then you will find it. So people abandoned to put science in their mind and they rely too much on the availability of information in the platform. And so how do you see this is going to influence the future of the people? Are we going to be imprisoned in hashtags and influenced by that? Thank you. Yeah. There's two separate questions there but let me address the first one. Who do I mean by us? And I think the first thing that I really think very strongly what we believe collectively shapes what is possible. There was a time around the world when everybody believed in the divine right of kings. And certainly as an American we take great pride in the fact that the founders of our country said we don't believe that anymore. We believe something different. And I always loved the story that after the British gave up on trying to put down the American Revolution George III expected that George Washington would be crowned king of America. And when he heard that he had gone back to his farm and turned over power to this the first version of this American assembly he said if he has done that he is the greatest man the world has ever seen. This was unthinkable at the time. And so we're sitting here now living in a world where we accept the divine right of capital. Where we believe that the world works the way it works because that's the best of all possible worlds. In fact that of course businesses want to have the lowest cost as possible. Of course they wanna eliminate human labor. Of course they want because that's just the way it is. And so the first way that it's up to us is to stop believing that and to start searching out the possibilities of a different world, of a different kind of economics. And it's actually, the study of history is really important because there's that very large movement literally towards radical rethinking of the economy in a world of abundance where robots and AI could do so much more of the work we do today and we would say well how would we construct that world? How could that be a positive world? And there are science fiction writers who are thinking about this. I highly recommend a pair of books by Corey Doctorow who works for the Electronic Frontier Foundation. His first book was called Down and Out in the Magic Kingdom and it's basically about a far future of nanotechnology where everything can be made by machines and humans basically compete in a creative economy to entertain each other. But 20 years later he wrote a prequel to that book and it's called Walk Away. And it's basically about the way that people just decided to stop participating in the old economy. And the thing that's interesting is once I read Walk Away, I started meeting walkaways everywhere. You know there was a woman I met in Tulsa, Oklahoma and she was at a meeting of the Code for America local brigade which are these tech volunteers who help their cities and states work on improving their programs. And she's dressed kind of like a train conductor and I go this is a little odd. And it turns out well she says well he used to be a real estate agent and then I started volunteering at a food bank and it was so much more fulfilling. So what she does now is she has built a mobile grocery store that she takes around the food deserts to women's shelters or old folks homes to give them good food. She runs an organic farm and this is literally she has this horse drawn mobile store that she takes all around the Tulsa metropolitan area. She's a walk away. She said I don't like the existing paradigm. I am just gonna basically build this pro-social thing. It's a non-profit, it's not really a business but she's spending her life just like she could be taking that to Burning Man and instead she's taking it to women's shelters in Tulsa. And that's really, that's probably one of the most hopeful stories that I've encountered recently. And each of us has that choice within ourselves to just stop playing the game the way it's played and when enough people do that it will add up to something. The question of whether these systems like Google and Facebook shape what we think shape our minds. I just wanna give you a practical experiment that will remind you of really that Facebook and it's like our mirrors not actually masters. How many of you here use Facebook? Okay, not too many of you. So this won't be as meaningful to you. But all the people who have kind of say oh well I'm getting all this news that gets me riled up to hyper-partisanship is completely under your control. If you basically, you click on a news story or you respond to it or you share it, Facebook shows you more of that. So if you have that experience, go and seek out pictures of your friends, kids. Share those, click on those, like those. Look at your friends vacations. And before long, that's all the Facebook will show you. That we train it every day. And I think this is one of the really wonderful things that we're starting to see with these algorithmic systems is that they can help us see ourselves. When we have reports of algorithmic bias, when we say oh my gosh, they're doing these predictive policing algorithms and they're biased against people of color because wait, we loaded in 30, 40 years of actual policing data. That's not a biased algorithm, that's a biased data set which lets us understand the way that we have been acting. And so we can change. And so we have an opportunity with today's technology to see ourselves more deeply and to respond and to be better. And so I think that's another reason why the future is up to us because we have an opportunity to see ourselves and to change. Yeah. I've read actually both these books very carefully. I didn't read Tim's book while I was sitting here. He sent me advanced copy. And they're great books. I mean, I think this is representing I think what Inet needs people who have had, have been in practice, you know, you're 35 years sabbatical sharing those insights with us. It's very important. So I'd like to actually just ask a couple of things about and to say remarks about how these books differ and maybe get a bit of discussion of that. So Bill Janeway focuses particularly on the role of the state. And as a taxpayer in the United States, I want to return on that. And I'm not getting the return. Our people in general are not getting that return because of some of the things that Tim says that I don't think are as highlighted as much in Bill's book unless it's in the revision. And that is financialization, particularly financialization of the business enterprise, not just growth of finance in the economy. And in some ways Tim's book is really talking about a thing when I read Bill's book and I read it right after it came out that I found a little murky of what was meant by the market economy. I understood the other parts of the three player game, the role of the state and the speculative financial markets. And that's where I think we really need to come to some conclusions about what it is, because that's what economics is about or it's supposed to be about. Actually, I think last night, Joe Stiglitz's remarks, which I saw him going much further away from neoclassical economics than I had before to actually recognize that the family is an organization. The business enterprise is an organization. They're not black boxes and that's the important thing. As long as economists, as Joe Stiglitz said last night, the business enterprise of black box will how you can understand the economy. Okay, so the question, the way I'll pose the question is that it seems to me that the dot com boom, which led to some very important companies coming into existence is a question of whether it would have come into existence anyway. So that's one question. But it did inspire a lot of people to start companies. First of all, did they really start these companies because they wanted to make money? Actually, when I read Tim's book, it's much more that they wanted to start companies. And then some people said, hey, we can make a lot of money out of this. And that then turns the passion into a greed or however you put it. So that's the one thing. And so the other thing is that I think when that occurs, there tends to be a lot of collateral damage. That is that the companies are so committed to the stock market as a way of tracking labor and capital. I mean, that's what the new economy did with stock options or broad base of employees and capital from venture capital, that they never forget that. And so when they grow big, they start doing the things like that. I'd write about massive buybacks. Cisco has spent over 100% of its net income since 2002 on buying back its own stock. And I think stock being an innovative company because of that. So the state remains important. These business enterprises remain important. But how do they work together so that we, the people who work for them, the taxpayers don't lose out? So the second, the first edition of the book, as I say, was something of a celebration. While it did take account of how out in Silicon Valley in the 70s, we kind of invented what we call Silicon Valley socialism. So in order to attract people to the frontier to take the wild ass risk of joining a startup when they could have just kept working for digital equipment or Hewlett-Packard, we had to give them tickets to the lottery. If they won, like just like the national lottery in Britain, the vast majority of tickets expire unexercised and are worthless. Most startups fail, whether they're restaurants or software companies or anything in between. That invention got hijacked. It got hijacked by big companies that were already established where the risks were just orders of magnitude less. And then it got hijacked by the banks where the right-hand side of the balance sheet was guaranteed by the taxpayer. So that aspect of financialization is very much discussed in doing capitalism the first edition, which, by the way, is still available as I mentioned the other night at an Amazon outlet near you. The second aspect of this is you do have turnover. Companies do run out of steam. And at that point, one of the challenges is do they manage to perpetuate themselves as zombies? There's a lot of concern about the Japanese economy and the persistence of zombie companies. I think that's happening in the US. The third aspect, and this is, I think Bill has a very good point here, is that where and when the state, the government funded by taxpayers, makes investments that actually pay off, getting a return not just from a tax system which is incapable of capturing the taxes from those who have become extremely good at managing to earn their rents in Ireland, not in Britain, not in the US, there the notion of some kind of golden share, some kind of payback on that is an idea that we're not going to remotely address in this administration or maybe even the next administration, but it ought to be on the agenda. Definitely on the agenda. And I just said one last thing. And this has to do with the next revolution that the US is the outstanding laggard in. And I heard last night, yes, we talked a little bit about Canada and Australia as well. Huge per capita carbon admitters that are basically missing an action in the response to climate change. They're the driving force and this is very central into the second edition of Doing Capitalism and the negative, frustrated feeling that I am trying to communicate in a rigorous way. That really still needs investments that are not yet commercially or financially attractive. It needs the kind of cross the board, massive funding for purposes that transcend any cost benefit analysis, any narrow financial calculation of net present value. And it's happening in China. It's not happening in the US. Yeah, I think that's a really good point. I do wanna though address something else that Bill brought up, which is really the challenge of main street competing with Wall Street, so to speak. Although Wall Street is now largely residential. Most of it's moved elsewhere. The thing that, I have a private company and I have to compete with these companies that have what you could call super money. I think it was Bill who pointed me to the book of that name. But Google basically pays its employees with a currency that basically just conjures out of thin air. It basically draws it in from its shareholder simply by issuing new stock, $4 billion a year, which it can pay to its employees. I have to pay my employees out of my actual profits. A dollar of profit for me is worth a dollar. A dollar of profit for Google is worth roughly 30. A dollar of profit for Amazon is worth well over $100. And this is part of why these companies become what David Autor called superstar firms. Yes, they can pay people more because they are participating in this financialized market. And the question is, is that entirely a good thing? When Google is actually making, or Apple, whatever is actually making a huge sums of money in the real market of goods and services, they're doing quite well. They don't actually need this additional boost that we have in the rules of the system that favor capital formation, that favor with better tax rates, with various kinds of incentives. And so the real question is, if we really want to have a more equitable economy, we actually have to think differently rather than simply saying, oh, there's these superstar firms and they pay people better. Go, well, what are the drivers? What are the inputs to that? Because some of the inputs are the same inputs as the real economy, and others are not. And it's really interesting. I have not actually done the math in detail, but I did a back of the napkin. And I said, look, actually, if Google were a private company, Larry Page and Sergey Brin would be roughly as wealthy as they are with Google as a public company. Just because just keeping their share as owners of its retained earnings, it's that profitable. They'd still be worth $40 billion a piece. On the other hand, Jeff Bezos would be worth 10%, 5% of what he's worth. And so you clearly see that there's very, very different outcomes based on this betting market, which is what financial markets are. Now, the betting market supporting Jeff Bezos and Elon Musk is actually working like capital markets are supposed to. But I know a lot of Silicon Valley billionaires who created no value at all. They just won the bet. And I think we actually need to understand more deeply. And I would love to see more economists sort of studying these effects and asking, is this really the best of all possible worlds? Is this the best of all possible systems? Because of course, people are able to make enormous sums of money. And Bill has sort of documented this. But we use the wrong names. We have the wrong map. When Carl Icahn buys shares of Apple, he is not investing in Apple. Apple does not need his money. He's placing a bet that he can manipulate the stock. And he's earning money by manipulating the stock. And so again, how would we start to understand when, what is a true capital investment versus what is simply a bet in this betting economy that sort of has overlaid our real economy? And then what would be the policies that we would use to rein that in? That's a fertile subject for economic analysis. Thank you. So when you spoke about the fact that Uber doesn't have really an interest to buy self-driving cars, what I really heard is that their business model is to externalize the purchase of fixed capital and transfer the risk into workers. And because one of the topics on which I'm working is household debt, I saw on figures that auto loans and loans to buy cars in general are a count for a very large share of household debt. And at first I didn't know how to interpret that. And then I figured out that they need that to get to work or just to work plainly. And perhaps, and I would like to comment on this, you to comment on this, this is one other way to look at how policies could stop encouraging or even forcing people to get into debt. Also because that really locks in people into their working situation and prevents them to walk away, as you were saying. And one idea perhaps that I would like to ask you what you think about this is whether basic income could help people walk away from these situations. And after all, this would be very coherent with the initial philosophy of the first coders in California. And one last thing if I have time is that the topic of open source rather than just free software is very dear to me. And sometimes we forget the role that people and researchers at CERN had in developing internet at first, but they use that knowledge to really push the boundaries of our knowledge further. But the point is that I'm not really up to date to the weight in salaries of engineers in Silicon Valley, but I think that researchers, physicists, and engineers at CERN are paid less than people in Silicon Valley. So perhaps that's another way to look at how to use public funding in a good way, and also knowledge. I totally agree that debt is, again, one of these ways that we've kept this unsustainable system going. And it is, in fact, a way that companies have externalized their costs. They haven't really eliminated them. They've simply pushed them onto someone else. And again, I don't think our policies and our economic understanding has kept up with that. I loved your presentation the other day because it does seem to me that I haven't given as much thought at all to debt other than to just kind of say it was a way that we kicked an unsustainable economy, we kicked the can of an unsustainable economy down the road, and at some point it's gonna come back and bite us. Tim, this is where our two books and our two ways of thinking are so complimentary because one of the things that we've witnessed, first in the United States beginning about 40 years ago, in Britain beginning about 20 years ago, is the privatization more or less by stealth of what was one of the great central goods that our societies had sponsored. The US invented the public university in the middle of the Civil War. And for 100 years, access to education was deemed to be a public good, access to higher education. It created the most educated and most skilled and most productive workforce in the world by the time of the post-World War, Golden Age. The biggest debt issue that bothers me and that I think is crippling the US-UK Anglo model is student debt. Student debt in the United States is now larger than credit card debt. It's three and a half trillion dollars, I believe, currently. In Britain now, even with student fees capped at 9,250 pounds per year, which includes nothing for actually feeding and housing students, students are now, even on a three-year course, graduating with order of magnitude 50,000 pounds worth of debt. And, of course, it's the least advantaged, the ones who can't look to the bank of mom and dad for help who are going to be carrying that burden. This is an enormously stupid, retrogressive, retroactive shift in public policy and what were the first two leading countries in creating, inventing and displaying the modern economy. We're gonna pay for this as societies for a long time. That would be a beautiful place to end, but I can't resist pointing out the interplay of technology and globalization in this book. It's the first edition of the book in the UK from Penguin Random House and it's a paperback. And I started asking myself, why would they put out a paperback as their first edition? And it's because of Amazon, because traditionally the paperback is followed by a year or 18 months, but they're sitting there going, well, anybody who can buy the hardback, he's gonna have bought it on Amazon, the US hardback. And so I think this is very directly a response to globalization, the fact that that window has changed for publishers and the subsidiary publisher of the secondary market says, well, we're gonna actually do a little bit of arbitrage here and go right to paperback. I found that a fascinating little side light on this discussion. I have a footnote to that because my old fashioned pre-commercial publisher, Cambridge University Press, approached me last spring because somewhat to their amazement, my book and hardback had still continued to sell on Amazon. And they said, we'd like to bring out a paperback edition. I said, wait a second. We've had five years, not just Trump and Brexit, but five years of transformation in the market economy, in the role of the state, in the dynamics of financial speculation. You can't just reprint what was published in 2012 and they spent about a month or two in conversation thinking about it and said, okay, we'll bring out a second edition in hard copy. So that's gonna be it. I'm gonna have to call this to a close so we can get to the rest of the day, but I want to thank you all for being here. I want to encourage you not to walk away, but to come pick up a copy of this book. Look forward to the second edition. Both of you might be singing the Beatles song, Paperback Writer, if you had this soundtrack behind you. Paperback Writer. And I think the most important thing is to delve into this realm, this challenging, mysterious area and find out for yourself whether in the long click we are all dead. Thank you. Thank you. Thank you. Thank you. Wonderful.