How Much Government Is Enough For Business?


The NewCo Daily: Today’s Top Stories

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Economists divide the world they study into “private sector” and “public sector” for a reason: The government is huge, and the government works differently from business. You could argue that the economic history of the modern world is one long series of pendulum swings between government and business.

In fact, that’s exactly what Dutch economist Paul De Grauwe argues in a new book, The Limits of the Market (Quartz). De Grauwe says the most recent era of business domination failed to handle market failures in two important realms — climate change and inequality — and that failure has pushed the pendulum back in government’s direction.

That may be how it looks in Europe, but in the U.S. the business-uber-alles crowd still holds plenty of sway. De Grauwe interprets the rise of Trump-style authoritarianism as a symptom of what can go wrong when voters see market failures and look to government for change: They’re easily hornswoggled. In other words, the pendulum does need to swing — but watch out, because its arc can be dangerous.

As De Grauwe says to Quartz, “Market can’t create value if there are no public goods.” In The New York Times, Farhad Manjoo points out that the U.S. government’s failure to invest in R&D is ceding the future to the work of rich tech companies like Google, Amazon, Apple, and Facebook.

The machine-learning revolution is happening right now, and so far it’s happening with precious little in the way of public investment or involvement. If AI-based systems are going to be as transformative as it looks right now, Manjoo says, the government ought to be assuring its own seat at the future-shaping table.

The internet evolved more quickly and healthily because it was a hybrid offspring of both the public and private sectors. AI deserves to benefit from a similar inheritance. It will have to if it’s ever going to do more than deliver pizzas and rack up profits.

San Francisco Weighs Delivery Robot Ban

One way governments sometimes get involved in new tech that they haven’t had a role in shaping is to try to ban it. That could happen to delivery robots in San Francisco if one city supervisor has his way: Norman Yee has proposed barring the delivery bots from the city’s sidewalks for safety reasons (April Glaser in Recode).

Other states and communities, like Virginia and Idaho, have gotten busy passing laws and regulations that explicitly legalize delivery robots and establish rules around their use. But Yee sees things differently: “Our streets and our sidewalks are made for people, not robots,” he says, and raises questions about the safety of operating the autonomous couriers along human -filled thoroughfares.

Conflict over new technologies is inevitable, but it’s unusual to see the backlash taking place in the heart of the industry that’s developing the innovation. Three companies trying to bring the robots to market — Starship, Dispatch, and Marble — say that they’re just as committed to safety as local political leaders.

Once everyone gets past the safety question, there’s another issue that could be harder: traffic control. If these things get cheap enough, how do we keep city sidewalks from ending up like rush-hour freeways?

Can’t Afford a House? Blame Your Avocado

Have you heard about the avocado toast controversy? It seems that a wealthy Australian real estate tycoon told an interviewer that spoiled millennials could afford to buy homes if only they’d stop indulging in extravagant habits like “smashed avocado for $19 and four coffees at $4 each.” Tim Gurner’s advice to the young: Cut back on such luxuries, save up, and you too can become a homeowner (Time).

The social-media retorts came thick and fast, of course. They pointed out how many decades of such belt-tightening might be required to accumulate a mortgage down-payment. They suggested just how small the avocado line might be on the typical stretched young-adult budget.

But “save on the small things” is hardly new advice — didn’t Ben Franklin urge something similar? What has changed over time isn’t the general belief in the virtue of savings but the distance between what savings can accomplish and what homes actually cost. In the U.S., at least, housing’s inaccessibility to so many young people isn’t going to be remedied by thrift alone: We need systemic reforms, too, like different kinds of mortgages and ownership structures, co-housing, and experiments in government support aimed at helping first-time homeowners rather than developers.

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