Technology and Policy: The Dual-Edged Sword of Progress and Responsibility
By Nitin Pai
We are in an era where an individual can change the world. Once upon a time it took emperors, prophets, revolutionaries or magnates to bring about dramatic change in their societies. Today it is within the power of a single person. A startup can change the world. Indeed, the most successful ones began with this mission. For them, money is a consequence, not the primary motive.
Uncle Ben is right. With great power comes great responsibility. Done right, technology can improve the lives of billions of people. TCP/IP and WWW changed the planet for the better by connecting people in an open, transparent and egalitarian way. Done wrong, it can amplify evil. Nearly a century ago, enthusiastic computer industry executives sold equipment to the Nazi regime, facilitating genocide. More recently, social media platforms have employed algorithms that have damaged liberal democracy, social harmony and mental health. Yes, technology is only a tool, and whether it is used for good or for harm depends on the user. There are always unintended consequences. But technology -- especially information technology -- can be designed to amplify the good and reduce the risk of abuse. And many consequences can be anticipated, if you try.
I have come across cynics who confidently declare that societal concerns are merely window dressing, and the top line and bottom line are the only things that matter. This is a mistaken, short-sighted view. Quite often, such a mindset arises from ignorance of what "societal concerns" actually are. We are not taught this at home. Our schools and colleges do not tell us this. We did have subjects like moral science, civics, democratic politics and economics that sort of touched upon the issue, but those were the subjects we paid the least attention to. We do not have a clear understanding of our obligations to society, our role as citizens and our responsibilities as business owners and innovators. Beyond meeting regulatory compliance, paying our taxes and donating to charity most of us are clueless as to our relationship with our society, country and planet. The lack of understanding of the interplay between technology and policy makes it a daunting task.
Here's the thing: responsible strategy is possible. You can align technological, business & societal concerns. You should know what to do and desire to want to do it. For instance, over the past decade, I have seen startup founders become more sensitive to environmental issues and gender sensitivity. During the pandemic the tech industry got together and directed funds and talent into solving public health problems. There is now a surge in startups venturing into tackling climate change. Many people do the right thing once they know what the right thing is. And make good money in the process.
Unfortunately, the right thing is not always apparent. Society is a complex system and many of its workings are counter-intuitive. A lot of people are still surprised that the market price of goods occurs because of the interplay of demand and supply. If you want cheaper tomatoes, you need to increase the supply (or reduce the demand), not impose a price cap. Take another example. A lot of people believe that keeping foreign competition out is a good way to promote the domestic industry. India did this from the 1950s to the 1980s and found that our sheltered industries became less competitive and our consumers suffered expensive and shoddy products. An open economy creates greater wealth and globally competitive companies. Unless we understand how the economy, society, government and politics work, we will ask for the wrong boon, unaware of the opportunities we have missed.
That is where the study of technology and policy comes in.
So the first step is learning what those societal concerns are. Classical Indian political philosophy uses the term "yogakshema" to denote the ultimate goal of policy. Roughly translated into English, this means "well-being, prosperity and happiness" of the people. The Preamble of the Constitution of India gives us a set of objective functions and lays out a set of fundamental values for the Indian republic. Of course, these are very high-level goals and they do not immediately tell us how to design a product or construct a business strategy. Yet they gives us a very clear direction to point our social moral compass. We can, for instance, argue that the Chinese firms supplying advanced surveillance technology to their government for use in Xinjiang and Tibet are not promoting yogakshema.
How do these principles translate into strategy, design goals and KPIs? To derive these we need to understand how governments work, how markets function, the role of communities and the behaviour of individuals.
The economics of information goods differs significantly from that of traditional goods. These goods have minimal marginal production costs, implying that once the initial copy is created, the cost of making additional copies is negligible or nearly zero. Furthermore, information goods often exhibit network effects, increasing value as more users join the network. Therefore, when technology companies invest substantial resources in acquiring customers, one of their objectives is to attain the beneficial network effects of a large user base. These concepts apply to platforms ranging from a food delivery startup to population-scale digital public infrastructure.
The relationship between technology and national power is becoming more intertwined. In September 2022, Jake Sullivan, the US National Security Advisor, stated that certain fundamental technologies significantly impact a country's future capabilities. He emphasised that the US would not settle for merely staying ahead of China in these areas but would actively work to widen the gap between the two countries. It is increasingly clear that geopolitical considerations are likely to influence technology-related decisions.
There are three prominent economic narratives in the post-pandemic world order: strategic autonomy, supply chain resilience, and a shift towards protectionism and industrial policy. These narratives are expected to persist in the foreseeable future.
Technology companies often operate on a global scale due to network effects, and economies of scale will face these geopolitical realities. Private technology companies are increasingly viewed as instruments of national power, and it has become essential for technologists to anticipate and navigate the changing geopolitical landscape. The recently signed bilateral and multilateral technology partnerships between the EU, the US and India are a sign that geopolitical factors will shape technology.
At Takshashila Institution's Technology and Policy programme we study the linkages between various social actors, identify stakeholders, their interests and how a private company can manage them. We call it the Social Impact Analysis exercise. The theory might sound mystifying but it's really a practical subject, and the best way to learn is through discussions with a diverse bunch of smart people.
The next step is public persuasion. At one level this involves wrapping your business plan in the best narrative, one that is accurate and genuine. The message must reach all stakeholders and integrate into the stakeholder management plan. At a different level, it is also necessary to persuade the public about the policy changes that you seek, and how those changes are in the public interest. Since a lot of startup business models are disruptive, it is important to explain to the public why the disruption is desirable. Using lawyers and consultants to engage public officials is insufficient. Showing how your business solves public problems, creates jobs and improves economic growth is equally important. Doing this well requires resources, but pays off over the medium term. Indeed, a persistent weakness in Indian businesses is inadequate cooperation within an industry sector.
The more the industry comes together and makes a case for itself, the greater the chances of change. Lobbying is not a bad word if it is done scrupulously and transparently. Advocacy has an important role in a democracy. Without proactive advocacy startups will find themselves in reactive mode, surprised by developments and scrambling to adapt.
What does all this mean for startups, founders, and investors? The playbook must include how the company will manage the political economy, find its ethical orientation, and engage in public discourse. The people in the tech industry should learn to make good decisions that advance the public interest alongside the business interest. Understanding the intersection of technology and policy is a good starting point.