 This is Think Tech Hawaii. Community matters here. Okay, we're back real live. I'm Jay Fidel here at the 3 o'clock block in Honolulu on Think Tech Hawaii. And as usual, on given Tuesdays, make that Wednesdays, we have Energy in America with Lou Putirisi of E-Princk in Washington, D.C., who joins us customarily by Skype. This time, he's going further. He's going to do something different. He's going to talk about actually a very similar topic to the discussion that we had just last hour with Peter Adler and Greg Chun over public participation in a polarized era. And he's going to talk about exactly what effect do all of these social media organizations have on our society where everyone can effectively talk to everyone else. Where does that put government? How does that change decision-making? How does that change relationships of a country with 300 plus million people? So, very interesting topic. And here's Lou Putirisi to tell us about it. Lou, welcome back to the show. Great to be here, Jay. So before we get started, what I want to do is talk a little bit about this week in Washington, why this is a timely topic. The CEOs of Google, Facebook, Twitter, and various other technology companies, which have really had a kind of, I don't say a free ride, but a kind of golden ride. Everyone loves them. They have been in the box in Washington under testimony for the way they handle their advertising, whether they're really good American companies. How do they operate? A lot of the sort of glitter off of these companies is starting to wear off. And so one of the things I want to talk about tonight is whether we are experiencing all this populism and division in our society, an era that wasn't that much different than we've experienced, but some time ago. So let's go to the first slide. Now, you see this slide is called Are We Experienced Another Golden Age Shift? I think what's interesting about this is if you look at the so-called Gilded Age, they appeared between 1870 to 1920, 1930. We had this massive shift. Everybody moved off the agricultural land and began to congregate in cities. We started factories. The structure of our society changed dramatically. And if you look at what's happening since the 1960s, 70s to today, we have this massive shift from services and a decline in manufacturing. So both societies experienced fears from recent financial crises. The global trade powers were... We had a lot of growth in global trade during both periods, and it generated lots of winners and losers. And the laws and regulations that were good in the sort of pre-industrial age were not very good for the industrial age. And many people now feel that actually the laws we have on the books now really are not appropriate for the kind of society that's emerging. So that's the kind of basic theme that's going on out there. So let's go to the second slide. So the next question is, you know, people forget in the Gilded Age we had these robber bearer and the Rockefellers. And if you look at these hearings on Capitol Hill, you can see that these high-tech companies are starting to take on this patina of the new robber bearer. So if you go to the Gilded Age, we had vast fortunes amassed by these robber bearers, right? And they had electricity and transformative technologies at times, reshaped the whole economy. And now what's happening today? We have these dominant firms that are emerging. Google, Amazon, Facebook, you know, and they seem to have enormous power. It was a fascinating editorial columnist in the Wall Street Journal today about how not only do they have a lot of power, but their platforms are very anti-competitive. It's hard for other people to come up with websites and approaches that don't rest on these platforms. Next slide. And at the same time, we have what's called an intensely divided blue and red states, right? Traditionally, we consider red to be the conservative Republicans and the blue, let's say, the Democrats. And if you look at the 1888 election and the 2016 election, you can see the same thing happen. We had the Electoral College winner, lost the popular vote, right? There was a rising share of the election that was dominated by fat cats. You know, people with lots of money. And the new communications technologies created a lot of sensationalism. We had the Telegraph, you finally see later in the 20s the emergence of radio. Okay, next slide. The other interesting thing about this gilded age is you had a lot of income inequality and you had scapegoats. So if you look at the gilded age and you go back to this period of time, inequality was peaking, income inequality, right? Immigration was also peaking. Oddly enough, if you go out to 2013 or 2014, you see the same data trend, right? You see inequality peaking, also high immigrant. And immigrants make a very, you know, easy scapegoat. In both cases, we saw that. So many in the bottom 90% blame the rapid rise of immigrants who no longer look like them. Actually, what's driving these things, these new technologies are causing vast sums of wealth to be amassed among a few people. This actually happened before. If there's any consolation on it, that's because at least we know that it happened before and maybe we can learn from that. Okay, let's go to the next slide. So as I said, this is not the first populist backlash, right? If you go back to the gilded age, we blamed immigrants. We had protective tariffs, right? Down people are complaining about NAFTA. The globalists were at fault. And there was a big attack on the parties. Actually, the interesting thing about this, people look at the uproar within the Republican Party, but look at the uproar in the Democratic Party. You know, people are calling for, you should see the attacks on Dianne Feinstein from the Senator, the 84-year-old Senator from California, who's actually quite able. They are, the Democrats are coming after full board. They say, what is this old woman running for who needs to get out of here there? She's part of the, you know, she's part of the problem. The attacks on Nancy Pelosi. So both parties are undergoing this massive turmoil. Yes. Okay. Next slide. The other question is, and one of this popular, which is driving this populism, is whether the winner circle is what we say is too small. And if you look at this data here, you can see that on the left side, geography, right? You can see the distressed communities index. So there's an index of stressed communities, right? So if you take a look at this slide, this picture of the U.S., and you can see that the distressed communities occur largely in the southeast, right? And somewhat in the, you know, always moving towards the southwest. I'll be enough, there's a, if you really expand it up, you can see another distressed communities in the Hawaiian Islands. It's pretty small. Yeah. Well, actually it looks like the big island. That may actually describe the fact that your politics are pretty tame. I mean, you don't really have people with the fisticuffs on the floor of the Hawaiian legislature. And if you look at the game in the S&P 500, right? 27% of the game in the 2017 so far is either Apple, Facebook, Amazon, Google, and Microsoft, right? It's really concentrated among a few players. And then finally, you can see here, if you look at this data on education, we're just getting killed if we don't have a bachelor's degree. You can't seem to find a place in society that makes sense for us, for those of us. And so all of these friends in society are extremely disruptive, and they create a lot of anger, a lot of fear. And this is what drives populism, because populism is really about the energy of the candidate, the concern. You're not about good public policy, right? All right, let's go to the next slide. So the other thing is that politics now has become a two-front war. Think about it, right? So we have social issues, and we have economic issues. So if you think about insiders, right, Goldman Sachs is good, right? Globalization works and lead the world. So that's a kind of Republican country club, old line Democrats, you know, that this is the good government people, the people that have a sort of the post-World War II consensus. That's where they stand, right? But then you have these outside characters, like Trump and Bernie Sanders, which is, tax the rich, trade is bad, punish Wall Street, and stop nation-building. But we also have right, we also have kind of left-right on culture war going on at the same time, right? So the left, we have white identity, white non-white identity politics, more immigration, you know, those are LGBTQ and race or gun control. And then on the right, we have this white identity politics, right? Less immigration, second amendment. So we have society being torn apart, not just the traditional kind of inside-outside kind of history, the post-World War II consensus and the old one, but this left and right. So these forces are creating all this turmoil you see in the electorate. And then finally, my last slide is that the tech sector really is under pressure. And I think they're shocked by it. I think these guys, when they were up on Capitol Hill this week, they couldn't believe these senators were beating them up. They were just, you know, you could just sell, they were stunned. Hey, we're the good guy. No, you're not. And you can see, though, you have this rising population, which is questioning size, fairness, consumer welfare. You also have this rising need-itism, right? Limiting access to talent, right? Oh, I don't know what the H-2BVs are to bring an Indian engineer over. You know, we don't need those guys. We can do it here. We have this rising nationalism, right? Challenging security and local contributions. You know, say, America first. We don't need the allies. We don't need these people. And rising protectionism, which is quite serious. So I think limiting access, you know, taxing locally, all these things. If you look at these broad themes, and you say, gee, what's, you know, is the country going crazy, or can we kind of grab an anchor here on these big trends and maybe take some solace that we got through the last major, major shift in society and came out the other end pretty well. And so we need kind of really good leadership now to do that again. So that is exactly where I wanted to start the conversation tonight. Well, it's interesting because, you know, my reaction when you began presenting is that would we be having this conversation? Were it not for, you know, the remarkable issues around the Russians trying to, and effectively, you know, controlling or manipulating the vote in the United States using social media? You know, I think it was happening, mind you, but it wasn't coming to the attention of the press or the public that this sort of thing was possible that you can have a foreign country, a foreign power who can somehow manipulate American voting patterns. But it's interesting about that cold debate. Yeah. Is that the Russians spent like, I don't know, $150,000 much that after the election. The actual content analysis suggests before the election they were stirring the pot in Hillary and after the election they were stirring the pot on, you know, Trump. But I don't quite understand. You're telling me for $150,000 they completely disrupted the U.S. election when both candidates spent hundreds of millions of dollars, a lot of it on social media, before during the election. So are the Russians that much better than the two candidates? I mean, that's the real shocker to me. Yeah, it sounds like a low number. We don't have confirmation of exactly what the number was. We may not have confirmation, but they clearly did not have outspent Clinton Trump campaign. I can assure you that. But it all suggests that you can use social media in a very highly leveraged way. If you're smart about it, you spend less. And so, I mean, you know, of course it comes up in a political context when you're talking about the Russians trying to, you know, rearrange the vote. But that's only part of the story. In fact, our communications among ourselves, I mean, as citizens of the country and the world are different now all in the last 10 years, if that, that you, Lou, you can reach the world. I mean, it was a dream come true when this first emerged in social media. If you say the right thing and put it out in the right way, you can be heard around the world and immediately, too. This changes the whole paradigm. It changes the way... It's unthinkable 15 years ago, probably 10 years ago, someone in Washington could broadcast in Hawaii in real time on a very low-cost platform. Yeah, you're talking about think-tech, right? Yes. But think about, you know, I mean, I remember when Barack Obama was first elected, first term, he wrote a little piece which I saw in the European-Paris-Herald Tribunal which struck me as memorable. I said, query, do we need the Electoral College anymore because you can have people voting and get a faithful, assuming there's no hacking, a faithful vote of everyone in the country and you don't need to have an intermediary step like the Electoral College. Now, you can debate that one way or the other, but the fact is that the way people express themselves has changed and anybody can express himself about anything to everybody and it marginalizes governance. Let me just make one comment about the Electoral College. It's true that if we went to full representative voting, nobody, nobody would campaign in the middle of the country. All the votes are on the coast. Yeah. Is that a good or a bad thing? I don't know. That was one of the ideas of the founding fathers. You're supposed to see everybody. Yeah. The founding fathers, as you pointed out, is old. It's past and basic fundamental principles of human interactivity have changed and all dramatically so in the last few years and so have we really kept up with that and our form of government, I hate to use a term like that because we're all trained and raised around the U.S. Constitution as the best in the world ever. But the reality is that it's different now and it's been eroded in the last few months anyway, maybe longer and this new way of communication has changed the country so as to change, as you said, the method of laws and the substance of laws more quickly than ever before and have we kept up with that? In fact, let me ask you this. Can we keep up with it? Is there anything we can do? I think, you know, I'm pretty sure our electoral or our elected leaders our communities, our thought leaders had many of these same views in the Gilded Age. I'm sure they did if you look at the readings. Actually, at the turn of the century, most analysts thought that the U.S. had reached a technological level that would be the only surprise to ever. You know, you have the emergence of these industrial facilities of power, ships I think finally the telegraph many, many very intelligent people in society said, look, this is it. We are never going to surpass this level again. We have now reached the pinnacle. So these things are this isn't the first time and it was extremely disruptive to society. And this, I believe, is extremely disruptive. I just was shocked that the Congress brought these CEOs here and they, I mean, they really beat them up over the last day or so. What was, well, what was their response? Yesterday and the day before, there were two sets of hearings. I'll go check. I can send you the links to them. But you know what, the thing is that they're young, they're vital, they're energetic, they're wealthy, they're leveraged, technology has been just huge. They are, as you say, they're the leaders economically. They form a good part of the wealth in the stock market. They have potentially and really, they have huge power. Do they deserve that power? Do they know about human affairs to the point where they should be entrusted with that power? You know, they originally thought that they didn't even have to deal with government. Now they've all hired very large lobbying staff and government communications people. It's quite interesting. They're learning very quickly that they're in a very precarious position vis-a-vis their role as a government and the government's interest in looking at new ways to regulate them, new legal structures in which they will interact with other companies and the public. Well, is that going to be a statement going back? I mean, regulate them, limit them, contain them, you know, clip their wings? I don't know, you know, what the new I think there probably is a common sense of legal, you know, frameworks that we need to think about particularly, you know, do people have to disclose who they are when they advertise, particularly political advertising? Could there be some reporting when foreign governments are advertising or providing you know, content that's directly related to U.S. elections? Should there at least be disclosure? I think they're real issues. I don't know what the answer is. But I do think we ought to have this conversation. Yeah, and you know, it's interesting that you know, they do control the Internet in other countries too, I suppose and we laughed at that. We said, gee, that's not first amendment. You have to allow the free flow, I said it, the free flow of information on the Internet it's all about the freedom of the Internet and yet, you know, we have come into a time when maybe that freedom can be destructive and maybe it does have to be regulated by somebody. But query is government able to regulate? Does government understand? I think it's an excellent question and maybe, you know, the intelligent way to think about this is to have more disclosure of who placed the ads. I mean, I think there has to be or maybe, you know, you could have you know, community groups or other outside groups provide information on what's happening. It'd be very interesting for these guys to you know, publish their revenue and the country of sources. I think what they're going to be seeing is a lot more disclosure and, which is very important I think, a framework to allow more competitors in the system. Because there is a view that Google and Facebook they kind of control these platforms and they've set up a system that makes it very difficult for new competitors to enter. Yes. You know what it sounds like? It sounds like the antitrust movement in the United States at the beginning of the 20th century. Exactly. I'm telling you, the parallels are all there. We you know, we have to control these big capital concentrations and discuss what's happening because they're too powerful and it's not just that they might try to affect our thinking but they can affect our thinking without even trying. Exactly. I mean, it's very scary and the other thing is, let me ask you this this is a very provocative thought too is, look, maybe the genie is out of the bottle you know, you could stop Google you could regulate Amazon you know, you could pull a rug out from under what's the third one you mentioned Facebook. And maybe that will happen. But can you stop them? Because the internet still essentially is free. So if you limit them, are you going to be able to limit the whole thing? I think it's a mistake to limit anybody as long as they're not burning down buildings or something. I mean, I think to limit to tail speech and the flow of ideas is probably always a bad idea. But the question is, and so as an economist, I say a real problem here is not trying to limit someone, but to make sure the system is opened up for more competitors more disclosure, more transparency not less. The government is likely to be very ham-handed I agree with you. Let me take the other side of that for a minute you know, terrorists use the internet and people who violate the law in general use the internet it's a great tool for them you know, in the old days a spy would leave a little folded piece of paper in a park bench in the shadow of the Washington monument and that's how he communicated to another spy now, you know, no such problem I mean you can communicate all day long and all night long with encrypted messages on the internet the world is completely strapped together and one of the aspects of that is that it's you know, it's all incognito you can go on a handle you don't have to identify yourself in any way except to the people who you're communicating with and in fact, you don't have to identify yourself to them either it's totally anonymous and I'm wondering in this new 1984 world that you're talking about where the government starts to regulate these things which I think I agree with you will happen in this new world maybe one element is you can't use it unless you identify yourself you can't go that's a very interesting idea I kind of like that maybe every time someone posts something there has to be a picture of them when it talks about it's a national identity card or an international identity card and if my number is 6 SJ7 then I have to use that or it's a felony and they'll come and get me everyone should be issued their email address at birth it's almost like that now I think what's happened in the Russian thing has sort of opened our eyes to this and I don't think we can close them anymore and Congress has really found something that's worth talking about so what's your advice how do we fix this Lou have any ideas early on about the first thing we need to do is these guys have to sort of come forward and be exposed to the light of day and they can no longer have a privileged position different from other companies and other main influential thought leaders in our society they don't get a pass anymore I think that's the first step and that's what happened this week in Washington I don't think the rest of the country really understands this to haul these big guys up in front of Congress and really sort of pistol with them for a whole day that's a big deal because they're not used to that they've been getting away with it for years that's what it feels like to be an oil company but not Facebook that's what it is, it's the new oil exactly that's what you have to see changing our society and the question I'm left with to give you my last thought about it is that okay good, Congress can do this but it has to be done in a way that's for the common good it might be political and Congress right now is not in a Congress is very political and so if Congress is going to do this right and regulate them and put limits on them Congress really cannot do it I do think we need a kind of new way of maybe not necessarily a think tank but we need a group of really thoughtful people to start talking about this talking about it offering common sense strategies going forward because the internet and the progress of technology is potentially a huge, it is a huge boom to society, it hasn't reached everybody but it can and it will eventually benefit not just people who went to college but everybody in the society it already benefits lots of people but so I think one thing it just needs to be exposed you get a big light and people need to start talking about it doing research on it here's what the problem is here's some ideas going forward and this is the conversation society needs to start including what government should do including what government should do and what government should not do because most of the time when government does something it doesn't come out too good but one thing is clear Lou it's the end of innocence the end of the age of innocence about the internet you couldn't agree more we have crossed the Rubicon thank you for this very special and important and provocative discussion really wonderful to open these issues up and I hope the conversation can continue with you and me and everyone around us great, thank you Jake talk to you in two weeks, thank you absolutely