The intersection of democracy, capitalism, and technology.
#1 // My brief introduction, and commentary on the intersection of democracy, capitalism, and technology.
Hi, I’m Alex. The intersection of democracy, capitalism, and technology has always fascinated me. This is now the focus of my education and career. Why? I’m a fan of the United States, where I live. I’m a fan of the freedom, liberties, and opportunity this country was built on. However I fear those values are under attack, both from the inside and the outside. I fear those values may not survive.
What keeps me up at night? Zooming out, our democracy and our capitalist economy have been an amazing, 245 year old experiment with an endless list of successes to be proud of. It’s not a perfect experiment, there’s lots I would want changed both now and in the past, but it’s an experiment I want to see continuing.
Capitalism is built on incentive alignment. How each of us decide to spend our money, time, and resources is rooted here. The freedom to decide is a result of our unique capitalistic democracy. And it’s a privilege to have this freedom, which not everyone on our planet has.
Modern day China and Russia do not share our freedoms. They are examples of direct control, with much weaker individual freedoms, if any. In the U.S. we’re taught this is a lesser type of society. We’re also taught that the U.S. is the #1 world superpower, and taught that our ranking isn’t in doubt. We’re taught this lesser type of society could never encroach on our strength and freedom.
This brings me back to the question I asked. What keeps me up at night? I catch myself with the nagging thought that our ranking as #1 on this planet is at risk. Perhaps even us as #1 may not even be the case anymore. Is our experiment failing? If so, how do we catch back up? That brings me to my focus, the intersection between democracy, capitalism, and technology.
China and Russia, with their direct control, can focus innovation in strategic technologies in ways the U.S. can’t. If the U.S. is to maintain strategic relevance, and defend our values, we need to have the same focus on strategic innovation. However, we don’t. We can’t directly control where innovation goes. We can’t directly control if innovation happens at all. We have to create individual and corporate desire to innovate through the power capitalism does have, incentive alignment. We have to incentivize this innovation past what is being done by our global competition through direct control, by China and Russia.
I would argue the U.S. is currently not positioned for this innovation to happen. Why? There’s three items on the top of my mind. We need advanced education, a desire for wealth and success, and economic incentives.
Education: Advanced education is under attack under the guise of equality. The already wealthy and affluent can afford tutors, can access schools with more advanced classes. This is true, the wealthy have privileged access to education. Policy makers in San Francisco and California, who are looked at nationwide as examples to follow, are taking away advanced classes in an attempt to flatten the distribution of outcomes in school, and remove the ability to pursue faster paced, high value courses in STEM, or AP courses in general. Wealthy students will still have tutors, private schooling, home schooling. Nothing changes for them having better access to high quality education.
Who loses? The smart, hard working students who do not come from wealthy backgrounds. The ones that could create socioeconomic mobility for them and their families if they had access to high quality education. Our policy makers should be putting effort into providing these students financial aid, free tutoring, extra classes, and anything else that lets them see the ideal outcomes of applying a high-quality education that can often be out of reach. These policies should specifically target these resources for students under-represented in top tier education outcomes.
Wealth and Success: There is an ongoing attack on wealth and success. We used to look up to success stories as something to want to replicate, something to strive for. Now you see entrepreneurs create world changing technology, create thousands to tens of thousands of jobs, and create wealth for every stockholder along the way. I want to be that entrepreneur. I want the opportunity to create all of that. But the rhetoric has changed.
Creating all of this is now viewed as an evil. Society rewards you with wealth for creating a world changing company? How dare you. Create both Tesla and SpaceX? The U.S. President will avoid saying your name while flaunting your failed competition. Why? Wealth creation is now evil. Success is now evil.
Economic Incentives: What is one of the greatest economic incentives we have? Taxes. What is one of the main tools capitalism has to incentivize innovation? Taxes. There’s tools like the tax code’s Section 1202, Qualified Small Business Stock (QSBS), to push capital into innovative startups. It’s an amazing example of tax law used to drive innovation. And it’s under attack, at risk of being retroactively revoked as part of Build Back Better.
We need tax incentives improved, not taken away, if we want innovation. If we are to “build back better”, Qualified Small Business Stock should not be touched. If anything, it should be expanded upon or made easier to qualify for. There are loopholes in the tax code. There are changes that should be made. However these can not be conflated with incentives. Tax loopholes need the focus of policy makers, tackling the unintended consequences of intended changes. Not attacking the tax incentives attempting to keep us innovative and competitive as a country.
If these three areas continue trending against our innovation potential, especially national security relevant innovation, I do not see our experiment of a country working out. It’s impossible to say if it will be a slow decline, or a rapid ending. The goal of my writing, starting with this piece, is to bring awareness to these issues, drive the necessary changes, and create security for the freedom, liberties, and opportunity this country was built on.
-A.Z.