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A Framework for Understanding Our New Economy Stephen Cohen Brad DeLong John Zysman A fifteen-minute presentation... Politicians come to Silicon Valley these days much as their predecessors came to Manchester, England to ooh and ahh over the industrial revolution a century and a half ago, or to Detroit before the Great Depression to ooh and ahh over the mass-production assembly-line. Yet when they leave do they understand the nature and significance of the technological and economic transformation through which we are living? Do they understand the extent to which policies to nurture and support the high-tech information-based computer-and-communications sectors of the American economy are in all of our interest--and not just the redistribution from weak claimants to powerful special interests that is the meat and fish of American politics? (1 minute.) By and large they do not. And this is too bad. For we all believe that this is a genuine moment of transformation--one in which getting the foundations, the rules and resources to support a new kind of economic growth, right will pay enormous dividends. And getting the foundations wrong, failing to properly set the rules and provide the resources, will recoil badly. For in such transformative moments change comes so rapidly that politicians and their advisors trying to shape the future face an almost impossible task. How are they to understand the choices they have and the opportunities available before it is too late to make the right decisions? (2 minutes.) Few in Manchester during the industrial revolution, for example, noticed that the British government was not building schools for children of workers migrating in from the countryside to the jobs in the new factories. Yet it was clear to keen-eyed observers that industrial technology was rapidly becoming both closely linked with science and increasingly sophisticated. By the end of the nineteenth century the lack of a well-schooled workforce meant that the post-steam-engine technologies of electricity, metallurgy, and chemistry found themselves much more at home in late nineteenth century Germany--where investments in schools had been made. Thus Britain entered the twentieth century and its half-century death struggle with anti-democratic German regimes having squandered a large initial edge in technology and productivity, because its political leaders hadn't even realized that nurturing the next generation of industrial development required upgrading the literacy and technical skills of the workforce. (3 minutes.) But perhaps politicians and their staffs--elite journalists and those who rely on them for their opinions--policy-planners and think-tank experts who rarely venture beyond the Beltway--would have a chance of grasping the nature and significance of this age if we can communicate to them a framework for understanding our "new economy," a consistent thread on which the can hang anecdotes and experiences, and to which they can refer when they need to form opinions on issues of policy. That is what we are here to do--to try to lay out a framework for understanding our "new economy" in which we all believe. Ideally the framework should be simple enough to be easily incorporated as a five-minute motivating section in larger briefings, clear enough that a wet-behind-the-ears congressional staffer can gain enough from reading a thirty-five page document to sound sophisticated and knowledgeable, and bullet-proof enough that its hundred-page version can withstand serious critiques without suffering serious damage. (4 minutes.) So let's begin. First of all, it is important to note that all kinds of people have been using the phrase "new economy" in all kinds of ways to mean all kinds of things with which we would not agree. For example, the "new economy" is not going to give us permanently low unemployment without inflation. It is not going to give us a world without bear markets. It is not going to eliminate the business cycle. So it is important to reclaim the phrase "new economy" for what we do believe. The new economy is about a new source--with the potential to become the dominant source--of economic growth. Economic development has become less and less about accumulating more and more physical capital, and more and more about the creation and deployment of intellectual capital. It is science based. But it also includes innovations in business models--many of these innovations made possible by technology. It is about a new style of business entrepreneurship and risk taking that is exploding many of the organizational tactics of business--again a style made possible by new technologies. (5 minutes.) Now as this new source of economic growth expands throughout the economy, it is going to need foundations: rules of the marketplace that are consistent with its needs, and resources to fuel its development. Thus the right government policies become important--or at least the wrong government policies become significant obstacles--to the economic transformation. Recall that a little more than a century ago the railroad and the refrigerated boxcar made the Chicago stockyards possible: mass-slaughter the beef in Chicago, ship it dressed to Boston, and undercut local small-scale Boston-area slaughterhouses by a third at the butchershop. Or you could do so unless the Massachusetts legislature required--for "health" and "safety"--that all meat sold in Massachusetts be inspected live and on the hoof by a Massachusetts meat inspector in Massachusetts immediately before slaughter. (6 minutes.) Without the right rules--in this case federal preemption of state health and safety regulation affecting interstate commerce--you don't have America's highly efficient Chicago meatpacking industry. Without limited liability you don't get corporations with enough capital to take advantage of the economies of scale available in late nineteenth-century America. As it was then, so it is now. But what, exactly, is the nature of this techno-economic transformation? And what foundations--what rules and resources--are needed to support its full growth and development? (7 minutes.) You all have your favorite pieces of evidence of the speed and breadth of this transformation. Take your pick. Some are most impressed with the rapid take-up of the web. Others with the new forms of employment, new approaches to compensation, and new ways of launching enterprises many of which were developed right here. Others are impressed with Moore's Law and Metcalfe's Law--how this time it seems not to be the case that the highest-value uses of new technology are adopted first, or rather this time it seems that the continous explosion in the amount of processing power and the size of the network is constantly bringing new and even higher-value applications of technology within our reach. Still others focus on analogies--to the modern computer network as the equivalent of telephones, telegraphs, radios, televisions, and books all rolled into one, and even more. (8 minutes.) The emergence of an "information" economy, the successive clusters of innovation--semiconductors and computers, microprocessors, the net--the reconfiguration of existing economic activities from package delivery to customer support--it is clear that what we have here is not a garden-variety leading sector that greatly amplifies productivity in making some small slice of commodities, but instead a wave of innovation that is going to greatly amplify productivity practically everywhere. Think of Sam Walton as the first network billionaire: Walmart's cost advantage is supposed to have come from purchasing power and economies of distribution, but previous attempts with less sophisticated information technology to take advantage of such economies--think of Federated Department Stores--did not fare well. For me the most impressive statistics is the 20 percent fall in the manufacturing and trade inventory-to-sales ratio since this stage of the last business cycle: better information technology--and pressure from competitors with better information technology--seems to be making a difference everywhere. (8 minutes.) Let me highlight that for a moment. It is a commonplace that workers who use computers are more productive, that sites that computerize and network see boosts in productivity, that firms are eager to computerize and network--and yet that aggregate economy-wide productivity shows next to no sign of productivity gains from computerization and networking. And it is rapidly becoming a commonplace that the resolution to this "productivity paradox" lies in our inability to measure changes in the quality of shopping or in the degree of fit between the good bought and the consumer who bought it. Because of the automatic teller machine, people don't have to take sick time to make it to the bank. But that change the Bureau of Labor Statistics's statistical system does not catch. Thus it seems likely that the productivity benefits from computerization and networking are already being distributed extremely widely--that even people who wouldn't know an object method if it bit them are already the substantial beneficiaries of computers-and-networks through lower costs, better quality of service,and more choice. (9 minutes.) Let me also highlight that this techno-economic revolution has--so far--proven to be overwhelmingly an American one. The entrepreneurial, risk-loving, independence-rewarding culture of the Americas has proven vastly more effective at sparking innovation and driving through to success than the cultures--loyalty-rewarding, consensus-loving, organization-building--that a decade and a half ago many of us saw as mounting a serious and significant challenge to the United States's role as the leading edge of world technological development. But it will not stay all-American forever. Consider the success of Finnish wireless innovation. And consider how the European wireless standard offers potential competiive advantages to firms focused on that standard. We have to expect new and unexpected nodes of innovation to emerge from diverse locations--and we have to fear that foreign government decisions about rules and resources will play to foreign competitors' strengths and not to the strengths of America's entrepreneurial, free-wheeling, risk-loving pattern. (10 minutes.) So how can we as a nation sustain this transformation, and assure that broad national advantage flows from it? How can companies for which it is genuinely true that what is good for them is good for America educate our political masters to what is at stake? Through a policy debate. But what should it be about? Fifteen years ago the policy debate had to have a large "macro" component: high deficits that drained the pool of savings and led to high domestic interest rates and a high cost of capital; a high exchange rate generated by high domestic real interest rates that priced U.S. producers out of world markets and foreign producers into U.S. markets. Now--thanks to shrewd changes in congressional operating procedures pushed by George Bush and his team that changed the dynamics of congress, thanks to Bill Clinton's and Alan Greenspan's trade of deficit reduction for more expansionary monetary policy, and thanks to a good deal of luck--we don't have to worry about the macro picture. We don't have an extraordinarily high cost of capital and an extraordinarily overvalued real exchange rate. (11 minutes.) So, instead, the debate should be about resources and rules. Resources to sustain innovation and use of these revolutionary technologies. Rules to make sure that competition happens and that competition is constructive. Resources come in four overlapping categories--human, physical, financial, and intellectual. Human resources fall into three categories. Elite workers--how to make sure that the U.S. educational system produces the elite scientists and engineers that high-technology industries need (rather than producing hordes of lawyers and MBAs only), and how to make sure that U.S. businesses get the chance to draw on the elite scientists and engineers that our--very good--universities train. Skilled workers--how to reshape our educational systems so that a good chunk of young adults are able to use computers and their technologies as familiar tools. Mass--how to make sure that the skills and orientations necessary to make effective use of computer-driven systems are part of the basic stratum of literacy that everyone acquires. It would be extremely cruel if we developed technologies capable of greatly amplifying human powers of recall, association, calculation, and thought--and then created a large divide which many people could not cross by failing to give them basic experience with how computer systems work. (12 minutes.) Physical resources--who is going to build and maintain the network? AT&T has one view of the incentives it needs to provide high-speed service to the last mile. (And they did just install an extra repeater 2/10 of a mile up my private road to--as best as I can see--boost cable signal strength to acceptable levels for a cable modem for one house: mine.) So far this isn't a problem. May it not become one. Financial resources--cost of capital is not a problem now. Availability of financing for entreprenurial ventures is not a problem now. Financial institutions to properly support Silicon Valley systems of options-based compensation may become a problem. Intellectual resources--knowledge--investment in research and development--where will the next generation of advances in fundamental knowledge come from? These are very serious questions that are by and large not debated enough in Washington. (13 minutes.) In addition to resources there are rules: taxes, management of the network backbone, access to the "last mile," privacy, legal reform--modernizing adjudication--making sure that separate sets of rules made by nations jealous of their sovereignty do not hinder a globally interoperable network--making sure that rules abroad do not disadvantage American competitors. Last, but surely not least, every transformation has winners and losers. There are people whose lives are disrupted--whose economic niches disappear. Many times the winners do not realize that they are the winners from change. But the losers always realize that they are the losers. Government policies to create the right kind of resources and rules will be stable and sustainable only if politicians believe that they are genuinely acting in the public interest--rather than doing favors for a particular sector that is making life difficult for numbers of their constituents. So the debate must make sure that the winners know that they are winners--that their ATM cards would not work without fast routers--and must make sure that the losers are cushioned by what must be an inclusionary economy. (14 minutes.) B. The Policy Debate: What should it be about? There must be a debate-but a debate about the right things in the right framework. Ten or fifteen years ago the debate had to have a large "macro" component (to deal with the macro aspects of America's economic problems: overvalued exchange rates, excessive government deficits that led to low investment). Today the macro picture is much, much better. Instead of macro issues, the debate should be about: 1. Resources: Inputs Needed to Sustain Innovation and Use a) human ­ investment in education & training - elite - skilled - mass b) physical c) financial d) knowledge ­ investment in R & D 2. Rules at Home: some examples a) taxes b) management of the network backbone c) legal reform ­ modernizing adjudication d) privacy 3. Rules Abroad a) making sure that separate national rules permit a globally interoperable network economy b) making sure rules abroad do not disadvantage American companies. 4. Dealing with Disruption and Change*                                                                       A Framework for Analysis We need a framework for thinking about our new, knowledge economy We need a framework because we are living through a transformative moment Decisions made now shape the technological and economic future much more than in normal times The current technological and economic revolution is complicated--hence very hard to think about without an explicit framework Sketch of This Presentation Three parts This transformative moment The international context and American adaptation Corporate strategy and public policy in the new, knowledge economy Key assumptions The current wave of knowledge innovation is more than just a conventional "leading sector"--this is a transformative moment It is not just an increase in economic productivity driven by new technologies It is a change in the kinds of activities and products that are sources of value and utility Entrepreneurial markets need foundations--resources, rules, and institutions New kinds of entrepreneurial markets need new kinds of foundations Missed opportunities now will be painfully difficult to recoup later This Transformative Moment There are transformative moments, at which the kinds of activities and products that are sources of value and utility change Think of enclosures and the British agricultural revolution Or the creation of the large-scale publicly-traded manufacturing corporation in the late nineteenth-century United States     The International Context and American Adaptation     Corporate Strategy and Public Policy in the New, Knowledge Economy   We need a framework to help us think about the technological and economic revolution we are living through. --elevator speech to the academic... --ask Tom Kalil what things were most interesting.... Elevator speech Op-ed Briefing for special assistant Academic presentation Bullet proofing Figuring out what we all believe that needs to be said... The Knowledge Economy: Why It Matters A Sketch of a Framework The Need for a Framework Shown in the very large number of names for what is going on: New economy Innovation economy Information economy Network economy Globalized economy Et cetera But how are we to think about all this? Sketch of a Framework Four parts to this presentation This transformative moment The international context Supporting and speeding this technology-driven transformation Not recommended polices, but goals that successful policies must achieve This Transformative Moment Distinguish between "leading sectors" and "transformative moments" Many of the first, few of the second Not just a change in how much value is generated in a few industries But a change in what the source of value is And needed changes in the institutions that support a value-creating economy Past Transformative Moments The British enclosure movement Subsequent agricultural and industrial revolutions. Second industrial revolution in Europe Shifting technology demands not cheap but skilled labor Britain's relative decline The U.S. in the Gilded Age Incorporation and finance, nationwide regulation, and antitrust The U.S. in the Gilded Age Incorporation and economies of scale J.P. Morgan and investment banking Limited liability and savings mobilization National regulation and the national market Swift, Armour, and the FDA Malefactors of great wealth Antitrust policy Balancing competition and economies of scale Lessons from Past Transformative Moments New sources of value need new institutions There are big winners and big losers Thus new political configurations needed Transformation will not succeed without an inclusionary economy Moments of choice, opportunity, and danger How are politicians to make the right choices? Especially given their technical illiteracy? And given all of our sociological illiteracy? The Character of This Transformative Moment What it isn't: Not the goldilocks economy or ever-rising stock prices, or permanent low inflation, or permanent high employment What it is: A change in the kinds of activities that create wealth Transistors-ICs-microprocessors-networks Applications to communication and control Value in efficiently making the match between producer and user Tiny (relative) marginal costs Mammoth supply- and demand-side economies of scale Transistors-ICs-Microprocessors-Internet The sequence has an amplifying effect all its own Is this a bigger transformative moment than we have seen in the past? We don't know But in the past we didn't have Moore's law and Metcalf's law Dynamic process accelerated by ability to build out over the existing Bell-System infrastructure Enormous problems of measurement But these problems of measurement are the reverse side of benefits to users Hence benefits spread extraordinarily widely What Economic Institutions Are Needed? New institutions need to: take advantage of economies of scale preserve competition provide incentives to nurture the health of the network New institutions need to balance interests of innovators and of users Hard because of the changed nature of valued goods What role should the government play? Progressive-era regulated monopolies have no constituency But can the government hide and do nothing? No. Balancing Interests of Innovators and Users An increasing share of valued goods are non-rival Non-rival means that economies of scale in production are enormous Non-rival means that interest of users as a group is served by very low prices An increasing share of valued goods are non-excludible Should we shape laws and surveillance policies so as to try to create excludibility? Or should we be shifting to alternative business models with alternative revenue streams? Perhaps based on urgency? Making the Market Work Do these problems of appropriability and market organization cause carpal tunnel syndrome of the invisible hand? Can they be successfully resolved by a process of "enclosure" on the network-information frontier? How do we enable decentralized innovation? Enabling Innovation Cheapness for users necessary Bottom-up decentralized initiative necessary PCs waste extraordinary amounts of computing ability Xerox or Berkeley didn't invent the spreadsheet User-driven and venture-based culture Key requisites of innovation (this decade at least) Cheap goods from suppliers Skilled labor A market to mark to once an innovation is well-started High rewards to success Transformative Impact I Revolution in control--WalMart Revolution in communications--e-mail Revolution in information archiving Revolution in production From NC machine tools to catalog distribution From making change to making movies Transformative Impact II Analogies: The combined features of TV (broadcast) Telephones (narrowcast) Books (information cumulation storage and retrieval) New dynamics of learning New dynamics of innovation How Far Will It Go? Moore's law and Metcalf's law Self-renewing technological revolution Usually the most valuable uses are early uses But network + bandwidth mean that new--even more valuable--uses are continually being created and recreated Difference between illumination and information We never had a "lighting economy"; we will have a "knowledge economy" Indicators and measures Price of computing Other stuff The International Stakes U.S. lawyers earn eight times Argentinian salaries not because they are eight times better at shuffling paper The U.S. will lose control of rule making What international bodies can build good institutions? The world economy is becoming more "footloose" Firms can locate where they want. Firms find key elements of their value chains everywhere Hence increased importance of one set of rules for the whole world High national cost of getting institutions wrong The international dynamic Initially American initiatives, rooted in early network innovation coming from the US But it won't stay American for long Differences in governance and network structures will drive innovation from abroad The wireless story Each national e-conomy will be a little bit different Intellecual property, privacy, security, competition But all must inter-operate Spillover of rules: compatible standards, harmonization, market-driven economies Lessons from the 1980s U.S. used to be an island as far as microelectronics and the internet were concerned Japan in the 1980s taught us that we weren't an island as far as microelectronics were concerned What will it take to teach the U.S. government that we aren't an island as far as the internet is concerned? Remember: negative-sum games over industrial location are not worth playing Remember: U.S. state capacity is highly limited (much more limited than East Asian or Western European) Stoking This Technological Revolution Concern ourselves with ends, not means We don't know the best means (yet) Arguments over means tend to be... divisive Means are not important per se What are the desired ends? Desired Ends I Fundamental R&D Xerox PARC and Bell Labs DOD, DARPA, ONR Where will future fundamental R&D come from? Venture capital Certainly not a problem now But what if the stock market turns? Society will still need venture capital even if Wall Street becomes allergic to IPOs Desired Ends II Human capital Domestic education and immigration The role of the university Appropriability Producers and inventors need to be rewarded Users need access to the tools they want to use Bad patents create feasts only for lawyers Decentralization A key U.S. strength: "more like us" Key to the explosion of innovation Yet afterwards you need standards Policies: A stance. What needs to be accomplished? What debates need to be held? Principal federal-level policies   Brad/John Conversation July 14. The Technet Piece, we discussed, should have three parts. These notes are to be integrated into the existing Outline Part One. The Character of the Transformative Economy- Part Two. The International Context and American Adaptation Part Three. Corporate Strategy and Public Policy in the New Era.   Part One. I. The New Economy: Has Many Names: A. Each name implies a different notion of the process of development, and most are complementary. Global economyall interconnected, forces driven by innovation from outside national borders. Global as a word emerges with entrance of Japan(We probably want to set up the second section here but not develop it too far.) B. Second, Knowledge Economy depicts actual economic development Knowledge Economy and Innovation Economy both imply long evolution of firms rooted in Organized IP based on Scientific Principles and Know-How Requiring Formal Scientific Engineering Training Otherwise -- how do we distinguish know how in the textile age from know how now .. Innovation has always been a principle of capitalist development(the original Prometheus Unbound takes in essence that stance) Knowledge Economy is a linear developmentincreasing importance of RandD, scientific training and the like.but is it an automatic break? Knowledge/Innovation Economy implies investment in RandD, science, and training. C. Innovations have occurred in clusters and some are transformativeThe transformative clusters are often disjunctures, requiring distinctive adaptation by firms and countries. (define transformative as altering the industries that incorporate them as well as generating new firms that make them .. define disjuncture as meaning older solutions don't work, new lines of technical development) So clustering of transformative innovationswhich often implies locational proximitygenerates transformative moments. Hence Knowledge Economy implies liklihood of sequence of transformations Maybe several with biotech revolution following Current one is rooted in digital stuff. D. Digital disjuncture clearly has two parts. 1. Semiconductor rooted transformation through computers a. Move from electro mechanical to electronic b. Emergence of electronic products and their own evolution 2. Electronic network ­ Information allows recombination E. Speed and Power of second part of digital disjuncture rests on 1. Telecom infrastucture permitting quick launch even as it is altered 2. Internet foundation as new way of linking and structuring network 3. Web protocols as way of allowing engagement with the network 4. Corporate vertical distintegrationsee Borrus Zysman on Wintellism ,,, a. outsourcing story becomes notion of virtual company that sets the stage for 5. Information serving to recombine functions F. Measures and Explanations of Speed and PowerThis is key 1. Measures of speed such as take up rate. Speed of diffusion of networks etc. compared with earlier 2. Comparison to earlier eras important. 3. Explanation: $1,000 bills have been continuously redistributed. Key is new power in processors and meaning of the networksHow long will it endure 4. Key Issue, and distinction. The problem of Excludibility and Rivalry leads us to clear nature of the new economy 5. Key Issue: The User driven innovation base as distinct from the producerdrives different logic and speed G. Adaptation as the Key, The New Market Reality. 1. Analogy to enclosures 2. New Rules, New Institutionsneed to address this 3. New Business and Industry Models(Let us not lose this partimportant.   G. Extras 1: Macro Interlude. 1. Has the network digital transformation altered the macro parameters 2. Inflation and Productivity dynamics 3. Inflation: Pricing of electronic product is claimed by some to bound inflation 4. Productivity. Clearly many products now possible, such as insurance products, that were not possible before. Hence if the products are required to be in the market, they are adding value, and the actual counting of the productivity is misleadingeasy way of showing that.   H. Extras II: Notion of the Inclusionary Economy: We Threw This out but didn't develop it. 1. I. Extras III. Skill Structure. 1. Desperate need for skilled workersKnowledge Innovation economy imply weight on advanced education and research, the transformation and adaptation puts weight on whole population. 2. The debate over the impact of these technologies on skillsanswer usually is it depends on choices of policy and management 1. Laundry Lists II.D. Visible Evidence of This Transformation The extraordinary corporate enthusiasm for information technology investment. Coupled with little (if any) sign of effect in economy-wide measured productivity growth, suggests that this wave of innovation is primarily lowering real costs to users--and that our system of measurementis simply failing to pick up the benefits. Means that social benefits from this transformation are extraordinarily widely distributed. The cultural salience of the internet--nothing similar since the coming of network TV in the 1950s. The interesting fact that the first computer-communications billionaire was Sam Walton--someone who figured out how to use the technology to tie his organization together, not someone who made boxes or bits. The emergence of a gap between the wages of those who are computer-literate, and those who are not. But are they bubbles. High-tech stock values, and Silicon Valley land prices. Market penetration: home computer ownership. Market penetration: home internet access. Measures of business-to-business use of the internet. Measures of bits moved. Measures of the share of investment devoted to computers and communications (at current prices and at constant prices) Allowing users to access business databases: the FEDEX tracking database. IV.B.1. The Policy Debate: Resources Human resources Elite workers--with sophisticated scientific and technical knowledge Making sure that the U.S. gets its share of the brainpower it trains (engineer retention, et cetera) Making sure that the well-prepared have incentives and opportunity to go into technical fields--and not always law, business, medicine Making sure that U.S. institutions of higher education have the resources they need to give the best education they can. Skilled workers Wiring universities and high schools so people can learn how to use our modern technologies Foundation of not basic but advanced skills to prepare people for the workforce Mass computer literacy No one should be frozen out of the workforce for lack of computer skills Making computer software more user-friendly Making how computer software behaves part of the default set of knowledge about the world one gains in school Shared gains in income and productivity are very unlikely in the absence of a broadly-trained workforce: core of the inclusionary economy Capital Cost-of-capital worries of the 1980s largely gone as a result of successful deficit reduction programs (40% of the credit to Bush & co. [1990], 30% of the credit to Clinton and co. [1993], 30% of the credit to good luck). Cost of capital worries may return Sector-specific financing patterns Keeping venture capital healthy Keeping firms able to get workers now for entrepreneurial gambles by promising chunks of what is at the end of the rainbow Knowledge Where are the investments in the next generation of basic research going to come from? How are creators of intellectual property going to be rewarded for their success? How are users of intellectual property going to be enabled to draw on the universe of what is already known--without being held-up along the way? How do we keep the coming set of fights over intellectual property from enriching only the lawyers?   IV.B.2. The Policy Debate: Rules at Home Standards-setting Backbone maintenance and quality control Access rights to essential (and semi-essential) services Intellectual property Junk patents "Fair use" "Prior art" Support for academic research Appropriability of academic research Support for education and training of elite and skilled workers Broadening access to education and training in general Policy toward elite and skilled workers trained in the U.S. (but citizens of other countries). Incentives for investment-heavy firms. Incentives for research-heavy firms.   IV.B.3. The Policy Debate: Rules Abroad Trying to make sure that the U.S. government plays only positive-sum games Trying to induce foreign governments to play positive-sum games Dealing with first-mover advantages--what if they get their standard-setting process done first? National champions vs. international level playing fields Wireless: European standard vs. American chaos Interaction with security and police Databases Encryption Shared international resources--who pays for them?

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