Tom Lenard: Hi and welcome back to TPI’s podcast Two Think Minimum. It’s Wednesday, February 19th, 2020 and I’m Tom Lenard, president emeritus and senior fellow at the Technology Policy Institute. Today we’re delighted to talk to Bruce Mehlman. Bruce is the founder of Mehlman, Castagnetti, Rosen and Thomas, a government relations firm here in DC. Prior to that he was assistant secretary of commerce for technology policy in the George W. Bush administration and he’s kind of an all around smart guy. He has very smart things to say about technology, technology trends, technology policy, the interplay with politics and a lot of it in a kind of a global context. A little, a little history. You were assistant secretary of commerce for technology policy in the George W. Bush administration and that’s, you know, in internet time. That’s a long time ago. Almost at the beginning. Two things. One, do you think that position should be reinstated, it doesn’t exist anymore. And second, what were the major issues that you dealt with then?
Bruce Mehlman: Well first, thanks for having me on. I love the title. Two Think Minimum. That’s clever. I’m not sure it’s prehistoric time. I think prehistoric would be before Netscape and before the mosaic browsers. So 94. Before then the internet was really researchers and a whole different world. But once the world wide web became searchable and e-commerce became a thing, maybe that’s the early dating. And before that I had been on the Hill and I feel like I really started working for the house Republican conference under J.C. Watts when there were no high tech task forces. And I reached out to my counterpart staffers, guys like Tim Kurth working for the then Speaker Hastert and a guy named Doug Farry working for Dick Armey and started putting together a group of staffers and reaching out to people both in town and on the other coast to say the time, I believe that the Republican party was, should be more welcoming to an entrepreneurial libertarian mindset that felt like the tech ethos. We needed to get smarter and try to lead in tech policy. What, of course, you found is economic tech policy has always been more libertarian, better fit for at least the old Republican party. The same folks who think government should be off your back tend to think government should be out of your bedroom. And so, on social policy, the Republicans were anathema to the Valley and Democrats were better. Part of that perhaps explains why no one party has ever sort of owned tech. Tech’s always straddled politically. When I joined the administration, it was after the tech bubble had collapsed and right before 9/11 so early on we were taking a look at some of the more generic policies such as, broadly, tax. E-commerce wasn’t so big yet that we were asking the questions about how do you pay your fair share. But there were questions about the old Quill test and whether or not you should tax transactions based upon where the buyer is, where the seller is, where the platform is, where the nearest server pop is and you know, they were always tough questions. I did find industry’s answer back when, you know they’re the smartest guys on the planet, they wouldn’t know how to figure out how to do the tax as if it was a technological problem, which I just never really believed it was. We had been debating online privacy since when I was on the Hill in ‘99 so it’s sort of the “next year in Jerusalem” of tech policy. It’s always, you know, here we go, this is going to be the year, 2020 this is going to be the year for federal privacy.
Tom: The federal trade commission did major reports at the end of the Clinton administration on privacy.
Bruce: We spent some time with the Commerce Department. I worked with a guy named Phil Bond, who was my boss, the undersecretary and we hadn’t penned the cool word disruptor, but we looked at the disruptive opportunities as technology would enter things such as education or healthcare to say nothing of how it was going to transform work. And if we had called it the future of work in 2002 that would mean today. And so many of the issues are similar to the ones we’re facing today, even if the technology has advanced. And even if we’re looking at second and third order area. You asked should the job be reinstated. So yes and no, I guess. On the one hand, technology is so ubiquitous that so many more jobs are focusing on tech policy that maybe you don’t need an office for technology policy, in the same way we don’t capitalize the word internet anymore where we used to. At the same time, it’s pretty important to have folks thinking about technology sector and there are tougher questions than there used to be. It’s no longer this fledgling, don’t squash them, they’re startups. They’re now the dominant players in the economy. The 230 hearing at the Department of Justice down the street right now as we speak, is no longer viewing the Googles of the world as these cute little startups.
Tom: Yeah, exactly, and obviously the general view, a feeling towards the tech sectors. It’s quite different now than it was then and I think it was obviously much more positive than now. Now it’s become literally a front page issue.
Bruce: Although I’d say it’s more balanced now. It was unbalanced back then.
Tom: I was looking at a couple of things on your uh, on your firm’s webpage and your advertise yourself as having a bipartisan team. And it seems to me that one of the few issues on which there’s some bipartisan agreement these days is to bash the tech sector. What’s your view of that? There’s very few defenders, among politicians, of the tech industry,
Bruce: So you’re right, the populist left has met the populist right at the intersection of dominant and consumer abusive, but they’re not in wholehearted agreement on everything. So for example, take privacy. Both Republicans and Democrats on the Hill agree we need to have more meaningful and robust privacy protections for consumers. Yet the ability to get federal law out would depend on whether Democrats are willing to some measure preemption, Republicans insist upon federal preemption. It seems like the Democrats are fine with California being a floor because it’s such a big and dominant state that that alone will be a, you know, the privacy advocates, self-appointed privacy advocates would say, let the States drive it. We’re satisfied with that. And so a lot on the left are there. That’s not where the right is. And likewise, questions of consumer right to sue, where a private right of action to something the Democrats, at least for openers, say they insist upon and that’s a nonstarter for Republicans. Same on section 230.
Tom: I mean given those two issues, do you think there will be privacy legislation if not before the election, sometime after?
Bruce: I do, but first you could also say, let’s roll back the tape and hear what Melvin thinks in 2001, 2002 and every year I’m convinced we’re going to have privacy legislation. At first, I believe the implementation of the EU’s GDPR would lead to the recognition that the U S needs its own standard. It didn’t quite happen. Now we’re facing California’s implemented on January 1 and it’s going to have enforcement teeth on July 1. There are, I think, 20 other States considering their own, some identical to California, some different from California. It feels to me that we will get to a point where the idea that your privacy protection could change as you drive across a state line, so if you were a Chiefs fan going back and forth between Kansas City, Kansas and Kansas City, Missouri, you know, that really shouldn’t determine what your privacy protections are. Post-election feels like we may now have enough of a patchwork quilt developing, cause we already have on data breach that folks worried about the economy, say let’s come up with a single standard
Tom: People are living with the patchwork on data breech.
Bruce: They are, which by the way, as you’ve seen Tom, I mean there are certain requirements in California. You need to include information in your notification of consumers that if you included in Massachusetts would be illegal. So sure you can build a Tech system that does it, but that’s pretty dumb.
Tom: I agree. It just seems to me that the fact that there is this California law and other laws like it is a disincentive for compromise.
Bruce: It is a disincentive for compromise. You know, politics plays a bit of a hand, but you also find that some laws recognize that you can’t have privacy without data security and they bake in necessary and valuable data security laws and others leave it alone. It feels like something that is among the principals, that Ranking Member Walden and some of the Republicans talk about, it’s not in all of the Democratic legislation that’s been proposed. If you have privacy without data security, it’s a fantasy.
Tom: This actually leads nicely into another question. as some of our listeners may know, you put out a rather detailed group of slides every quarter.
Bruce: It’s the world’s weirdest hobby.
Tom: They’re actually very interesting. I don’t know how long you’ve been doing it, but I’ve been getting them, I don’t know, for the last year or two and.
Bruce: They’re free to sign up. Just shoot me an email on your end. My Twitter handle where I keep the most recent slide deck pinned, as a pinned tweet, is @BPMEHLMAN.
Tom: The last side deck is titled “Knowns and Unknowns: Hunting Black Swans in the Age of Disruption”, the black Swan is defined as a – I was kind of amused when I read this- Black Swan is defined as an unpredictable or unforeseen event, typically with extreme consequences. And I looked at the top of the list and it says a productive Congress. As the unknown, as a black Swan, as an unforeseen and unpredictable event.
Bruce: Yeah. If Taleb, who’s the author of the book by the same name who kind of coined the term were here, if he went through my slides, he’d say about half of my so-called unknown, potential, black swans are not really black swans. They’re, they’re within the realm of, of reason or possibility.
Tom: So a productive Congress is within the realm of reason or possibility.
Bruce: It’s certainly within the realm of reason, although it’s also very contrarian. The conventional wisdom was, well after impeachment, they can’t negotiate anything together. And I pointed out that even though the fourth year for President Clinton, for President Bush, for President Obama, was always a reelect year. So you’d think there will be a challenge with a hostile Congress. The reality is the fourth year has always seen more legislation than the third. That just as the president wants to demonstrate, not merely through a healthy economy, but wants to demonstrate through things like USMCA that he’s doing the job and then he’s doing the job, well, Speaker Pelosi’s got 31 Democrats running for reelection in districts that voted in 2016 for Donald Trump. Impeachments not a huge win, big sell for those districts. So what do they got? And those members, her frontline, the folks that she needs to hold on to, if she wants to retain the majority, need to demonstrate they’re getting things done. And so that leads to me, not withstanding as hideous as our politics appear when you watch cable TV at night, that behind the scenes most members ran for the right reasons. Most members hate the you-know-what show that Congress on TV often is and they actually want to get things done, whether it’s on opioids or infrastructure or prescription medication. Even post the State of the Union address with the famous tearing up of the document. I think there’s grounds to get things done.
Tom: We’ve already talked a bit about privacy in terms of the unlikely things in the tech space that Congress might do. And I kind of cut you off. You were starting to talk about section 230. What do you think of the likelihood of something being done?
Bruce: Yeah, so you raised it in the context of it – it being tech bashing – being an area of bipartisan agreement and it is certainly something Democrats and Republicans are both doing, but they often do it for different reasons. That they agree that they’ve got problems with the big dominant tech players, but they don’t agree what they think the remedies necessarily should be. And in privacy, it’s a bit of a matter of policy nuance. In 230 it’s extraordinarily profound. In a nutshell. Democrats think the web platforms need to do more censorship to take off hate speech and fake news and misinformation. Republicans think the tech platforms should do less censorship because nobody elected these, typically Silicon Valley headquartered, private sector players to decide what’s right or wrong or true or not true or what people are allowed to say or not say. I can find an overlap in privacy. I actually find a lot of overlap, and we’ll probably get to antitrust, which is where I think the most rubber is gonna meet the road this year, but I find the least overlap in the remedies for section 230. Maybe Senator Hawley and Senator Sanders might want to both strip the 230 protection as a way to punish platforms, but the reason they want to and the outcome they’re seeking is pretty radically different.
Tom: Is part of this, that people on the right think that the content on the internet is politically biased against them and so they think the less censorship, the less bias there’ll be?
Bruce: No, I don’t think it’s that they think the content on the internet is biased. I think they’re worried about the potential guardians, gatekeepers, referees being potentially biased. So in their mind, let people speak. Nobody anointed Jeff Zuckerberg to be the guy who gets to say,
Bruce: Oh yeah, sorry, Mark.
Tom: Jeff Zucker, Mark Zuckerberg.
Bruce: I’m blending a bunch of tech titans, my bad. Nobody said Zuck gets to decide who gets the speak or who doesn’t get to speak or who gets to put up election ads.
Tom: And he seems to agree with that.
Bruce: To be fair to the tech guys, this is the hardest issue that’s out there. I mean, first of all, as Wyden would tell you it’s, is it the 23 words or maybe 230, maybe I have the number wrong perhaps, but if you make platforms liable for what users post, none of us can tweet real time cause you’re going to need some system that checks it. Now maybe you can say AI checks it, although then, okay, who’s programmed the algorithms? And if you’re trying to check for, you know, if I were to say a TPI is the greatest think tank in the history of the planet, I can think a lot of think tanks would say that’s a lie. Others would say, well that’s subjective. So it gets really hard. At the same time, we’d be lying if we were to suggest that there isn’t intentional misinformation, both foreign and domestic, that there isn’t intentional fake news. That there aren’t manipulated campaigns trying to confuse people, trying to undermine other businesses, or trying to mess with elections. It’s happening. It happened, it’s proven. It’s the two-edged sword of permissionless publishing, which is great cause voices like black lives matter and #metoo movement get to be heard and don’t have to hope that the gatekeeper of three main networks decide they’re worthy. But the flip side is that, you tell me, 0.1%, 0.5% of the world who are horrible human beings and who are abusing their ability to speak are kind of ruining it for the rest of us. But there’s just no way to know them in advance.
Tom: And of course, some of this stuff that people complain about terms of fake news and on the internet and everything, it’s not really new, right? I mean it happened in political campaigns even before the internet. People called it dirty tricks. A phrase that I haven’t really heard recently, and they kind of said, yeah, that’s not really very nice, but they kind of winked at it and went on.
Bruce: Well, it’s not only that Tom. I mean, I don’t know if you’ve ever either read Chernow’s book Hamilton or seen the Broadway show of the same name. Thomas Jefferson hired a libelist to take down Alexander Hamilton by publishing false things. Like founding father, author of the Declaration of Independence was all about having a partisan press malign his political opponents. It’s literally as old as the Republic.
Tom: Probably older than that.
Bruce: Yeah. Who knows. I don’t to go back, I can’t do Oliver Cromwell for you.
Tom: I mean a lot of this stuff in terms of tech, it place in, let’s talk a little bit about, it takes place in a global context and I think you emphasize that in some of your commentary, I mean obviously the two major global players that affect us are one, China, perhaps the most important and then Europe. Europe is now in the process of putting more restrictions on tech companies and China, China is a very competent, why don’t you talk a little bit about your view of China and what effect that’s going to have, I think you talk about it in the slides you say it’s one of the major factors in terms of political risks.
Bruce: The quarterly analysis I put out before the knowns and unknowns in the first quarter of this year was the fourth quarter of last year and I called it deglobal and what it was trying to take a look at is where I see globalization going and rarely is there an original thought in my analysis. I’m pretty good at absorbing ideas from all over the place and kind of flowing them in a narrative. But rarely are they original. And a lot of folks have similarly pointed out that America’s approach to trade was, trade policy was foreign policy throughout the cold war. When the cold war ended, suddenly it was a unipolar world. We had two decades of hyperglobalization but that didn’t deal everybody in. And we’ve begun, we’re now entering, I would argue a second decade, or maybe the last decade was the slowing down post great recession. But we’re now in an era where the pace of globalization has massively decelerated. More than any other sector tech is the tip of the spear. And some of that is the US versus China decoupling because both want to be the dominant economic engine in the 21st century. And the China 2025 plan makes it very clear that they intend to dominate 5G. They intend to dominate AI. The intended dominate a lot of areas. And their idea of dominating often is they do state sponsorship. They don’t always play by the global rules. And it disadvantages American companies. Hopefully, vis-a-vis China, we’re going to find ways to continue to, for example, have US companies sell commoditized, not cutting-edge, products to China and to have Chinese non-core network. So, you know, apps like TikTok able to be in the United States, which is different than say a Huawei server or a router that may be in the dead center of your network. There’s a distinction we’ll see if policymakers and national security experts are able to separate very high-end tech from very commoditized and apps from equipment. But it’s pretty hard when you look at the US, the EU, and China and you think about their approaches to internet policy. It’s pretty hard not to see regionalization replacing globalization because when all said and done, the EU, the US, and China approach internet policy making with core goals that are different. In the US our goal has been, we saw the internet as a way to empower people. So we’d said, let’s have very light regulation. Let’s allow these disruptors to dominate. So the Amazons or others, you know, we gave them a lot of room to take out existing sectors and existing industries. In media, because of some combination of 230 in the first amendment, the thought on media is we would rather let people choose their news. Contrast that with the EU, their core goal is to protect people. And if you want to protect people, you have heavy regulation, which they do. You protect your legacy industries, which means you have very few startups. You have more control over the news because there isn’t a first amendment over there. Then you go to China. Their goal is to control people, to protect and preserve the party. And so as a result the state sets the rules. They have these massive dominant state, national champions in certain sectors. And the news is whatever the state says it is, which is in part led to a truly tragic first misstep when it comes to the Coronavirus. But separate from the virus, more long-term, what’s really scary is that the scores, the social credit scores they’re talking about where they’re going to use everything that, right now, Google collects about you, they know where you go. I mean, I don’t know if you have the same thing when I get in my car, they know if it’s Saturday and I’m taking the dog for his long walk, where my wife and I take him for the long walk, or if it’s Friday and I’m going to work and they know if I’m stopping at Starbucks, I mean they’ve got, take that information but take it out of the hands of the private sector, which troubles a lot of people, and put it in the hands of the government. That’s their approach. There’s just no way to reconcile those three goals. The EU with news today is looking to, uh, come up with policies, whether it’s AI regulation or on trade to enable what they call technological sovereignty. I don’t know what that means. Nobody knows what that means. But Vestager is tough and smart and fearless. So, it sure feels to me that the global low regulatory environment in which I started in, you and I, we’ve known each other for 20 years and when we were talking tech policy 20 years that was the global consensus. That consensus is gone.
Tom: So this kind of whole de-globalization and everything you’re saying is kind of a pessimistic outlook. I don’t know if you view it that way, but it sounds pessimistic to me.
Bruce: So if you start with the traditional Washington consensus, the only thing better than globalization is more globalization, than de-globalization is pessimistic. It feels to me, and again, the de-global analysis went deep into this. It feels to me that we’re a little ahead of our skis and that the way the global economic system is working today reminds me a little bit of the economy in the era of the gilded age where you had these new players in areas such as oil and railroads and electricity and incredible innovation. But the preexisting regulatory structure and the preexisting policy approaches had been built upon an agrarian era. And so the second industrial age was leading to rampant inequality, was leading to insufficient competition among would be competitors in the marketplace, was leading to a small number of folks able to really dominate politics. You had Red States and Blue States. Things were stuck. Meanwhile, some were worried about the cultural changes by a historic amount of immigration and others felt like there was just too much change driven by all of these new techs. If that sounds familiar, that was both the gilded age and, of course, that’s today. I take comfort from the fact that you look at the reforms that got imposed, which freaked everybody out at the time. You know, people were like, Oh my God, you know, antitrust law that’s in 1890. That’s socialist. Well, what you found is 20th century was a hell of a time for the success of capitalism. It defeated communism in the global contest. Even though we created an income tax and we created regulations and other things. I am actually optimistic even though I think the hyperglobalization has slowed down. It probably needs to, and I think medium to long term what we’re going to see is a rationalization. So for example, things like the John Oliver led net neutrality goofiness. I mean that’s a would be cause in search of an actual problem, for example. And it feels like they’re getting smarter about that. And you might take a look at things, just to pick on one company, but AT&T is doing an in worker retraining. You know, nobody ever gives them credit for that. The safety net of the United States, let alone other countries is broken. Not because it doesn’t have more cash, but because it only deals with people in retirement. You need ways and systems that help people lifelong learn. AT&T is awesome at doing that. Walmart’s awesome at doing that. You know, a lot of these big companies that get picked on for things are unfairly maligned because of the, a lot of really progressive things that they’re trying to take a look at. It feels to me, the one I did before De-global was called the roaring 2020s, and it tried to, in analogizing to the gilded age, envision what’s the next decade of reform going to look like? Where are the areas that are reforms are needed and what sort of reforms might help a global internet driven economy work for more people to expand the American dream, to make it more accessible.
Tom: This may be a good lead into talk a little bit about antitrust. We’ve had a traditionally restrained antitrust enforcement policy. Basically kind of ex post policy based on if a company did something bad and it produced harms, the government had the authority to go after them. And obviously Europe has had a more aggressive antitrust policy in a sense. You know, we’re becoming a little less relevant because Europe is taking the lead on all these companies, global companies and if the European authorities prosecute them it may not make any difference what we do, but first of all, do you agree with that? And secondly, do you see, and obviously there’s a lot of pressure here for us to move more and more in a European direction in terms of antitrust enforcement. So how do you see that all playing out?
Bruce: I guess I start by agreeing with your observation that if, as with privacy, if the US takes a let’s just keep waiting and seeing approach and the EU moves and it’s global companies, then some deals won’t be allowed and some existing players will be deemed to be too dominant and most folks want to be able to operate in the EU and in China. And so it gets harder. You have to make a decision. Do you just want to operate in one region or do you want to be global? And thereby you abide by decisions. That all said, I’m increasingly of the belief that the Chicago school, which said that unless prices are going up, consumers basically aren’t being harmed, I think that may miss the way platforms and aggregators are dominating the new data economy. And this is the area where the left and the right are actually working really well together because they’re, although there was that blow up last week on the judiciary committee about whether they’re cooperating in their oversight because pre-hearing one of the chairman made a kind of conclusionary comment which led the Republican to observe, hey, if you already know the answer, why are we having the hearing? But I do think there are a variety of ways in which, in particular, Google and Amazon are really dominant and they are both, as Senator Warren described them, and she gets things right from time to time, if you’re the referee and you’re a player in the game, it doesn’t always make for the fairest calls. So first if you want to sell, in theory, you’ve got your own website, tpi.org and you can sell hats and t-shirts on it, but the reality is if you’re not on the Amazon platform, so they’ve acquired a level of market dominance, sort of matters. If you want to sell on their platform, first, they’re going to take a cut for letting you sell, which seems fair. It’s their platform. Then they’re also going to observe in real time, what are you selling, what’s succeeding, what are you charging, and they’re going to be able to then offer their own knock off products at a slightly lower rate. Even when you change your price, they will automatically undercut you and when you search on your platform for the product, they’re going to give their generic offering before yours and suggest it’s preferred. That feels to me like, boy, that’s not a very competitive environment
Tom: It may be good for consumers.
Bruce: Well, it may or may not be good for consumers. This goes a little bit to the question of is it better to have fewer market companies that keep their prices down? Is that better for consumers? If you pay with your data and your privacy, is that a price or is that valued at zero? They’re starting to ask legitimate new questions. In my mind, this is a client interest, so I’ll acknowledge that, but we work with Sonos. Sonos is suing Google. Sonos is exactly the innovative startup success story we all want. Really smart guys who realized, man, we think we can come up with a better way to have wireless high-fidelity sound from speakers. They make a product everybody loves. Awesome. That’s great. Except what they’re finding is, well Amazon’s competing against them with products that sure look like theirs, Google’s competing with products that sure looked like theirs. You know, they were selling on Amazon and suddenly they’re facing this, wow, it’s harder to find us and that we’re not, you know the number one search place, whether it’s searching through Google or searching through Amazon. Sure feels like something changed in a way that’s unfavorable to us. In the case of Sonos, they’re actually suing because their IP is being infringed. The challenge is, and I’m sure you’ve heard and maybe written about the doctrine in the valley. They wrote about infringement where some a player may say, look, I know I’m going to infringe their IP, but it’s going to take them years. I’ve easily got the cash to afford both litigation and when I lose the settlement, no big deal and I can last. If you’re Google, you can last five or 10 years of just let’s go fight it in court for a long time. Meanwhile, I will iterate in the kind of way Internet Explorer used to suck. Netscape was way better, but over time Internet Explorer became better. There’s the idea, let’s just infringe their IP. Let’s fight them. Maybe we’ll owe them, I don’t know, a billion or two at the end, but by then we’ll knocked them out of business and will have taken over the market and we’ll iterated a better product. Now the case of Sonos they’re to go into the ITC to fight. The ITC has the power to block product at the border, which, post-patent reform, it’s sort of the only injunctive relief or injunctive like relief. So I think those who think we need to reconsider antitrust law have a pretty legitimate case as to why it merits looking at.
Tom: Of course this intellectual property law. If you infringe and then if you get caught all you have to pay is what you would have paid originally anyway in terms of a licensing fee.
Bruce: And that’s why the some would call it efficient. But it’s, as we think about what’s in the consumer interest, and look this is hard. It’s not like easy policy, in my mind, in the consumer interest, more competitors is better than fewer competitors. Lower prices are better than higher prices. Protecting IP is better than not protecting IP or allowing efficient infringement. Having a few dominant players gobble up would be competitors or as we’re seeing in the case of Instagram and Snapchat, just replicating their stuff and you know, and leveraging your position, that’s not good. And I think, I like to think my data has a value. And while yes, I’m getting services from quote unquote free, I’m paying with something there. And so, I am a lifelong Republican and I am decidedly a capitalist, but I think re-examining antitrust law in the era of data is a pretty legitimate undertaking. I may or may not agree with everybody’s solutions, but I pretty much agree with everybody’s conclusion that something has changed.
Tom: We could go on and talk about these things for a while. But before, since I know you’re an astute observer of the political scene, before we stop, I’d like to get your views on the current political scene.
Bruce: Uh, it’s a wild, wacky, not anything I had predicted. At the broadest level, it’s the same disruption we see from technology, we see from geopolitics, we see culturally has arrived in politics. And one measure of that, we have a federal election every two years. In a 10 federal elections from 1960 through 1978, three of them saw the party in control of the House, the Senate, and/or the White House change. Fast forward into 10 federal elections from 1980 to 1998, four out of 10 were change elections. In this century. we’ve had 10 more federal elections. 8 out of the 10 have been change elections. Voters are not happy. They’re worried about the future. They don’t trust the Democratic party, the Republican party, and they keep turning over who’s in charge of what. So you start with as a backdrop, it’s an age of disruption. Donald Trump is a symptom more than a cause. In the narrowness of what we’re looking at right now, it sure feels like the two biggest disruptors in American politics are going to go head to head. Bernie Sanders and Donald Trump, and I get all of the rational reasons why, well you know, a majority of Democrats would prefer a moderate, they would, over Senator Sanders or Senator Warren. A majority of Republicans in 2016 would have preferred a normal candidate and not Donald Trump. It’s just that the primaries are the way they are. In an era where people are feeling disrupted and are looking to disrupt a political system they don’t think has their back. Increasingly, the most energized, loudest base has the most virality, the most cohesion, the highest punching power. It just feels to me right now that the Biden guys are holding on for the last hurrah and that’s keeping the moderate split, that the guy with the most resources, you know, Mayor Bloomberg, just will continue to have a credibility problem with Democrats and though what’s more likely to beat Donald Trump than somebody who starts with an unlimited billions of dollars. At the same time for a lot on the left, he’s going to be an unacceptable choice. Amy Klobuchar feels like she ought to live in that sweet spot, but she just hasn’t so far. It’s just hard to see her path for getting the visibility. Senator Warren seems done, but it just feels like through Super Tuesday, a meaningful plurality will be in the hands of Senator Sanders and he’s going to go to Milwaukee either with the majority or with the meaningful most number of delegates, and then are they really going to let super delegates in the second round swamp, which is the way the rules are set up. But if the Sanders, so-called Bernie bros, win the plurality of delegates, head to Milwaukee, and then get taken out by superdelegates again a) that feels pretty good for Donald Trump’s getting reelected cause it feels like a, that has the risk of being 1968. if they pick Sanders, it has the risk where they were the 1968 democratic convention in Chicago where there were riots in the street. If they picked Senator Sanders, well that has the feel of 1972 with George McGovern where they went super woke super liberal and Richard Nixon had a super big landslide. Although he of course did dumb things which led to his ultimate departure. So that’s my take on our normal politics.
Tom: I mean not that there’s anything that can be done about it, but do you think we’ve come to rely too much on primaries? I mean there, there was something to be said about the smoke-filled rooms. You can’t go back, I don’t think.
Bruce: Well and maybe spoken like a guy who would be in the smoke-filled rooms.
Tom: Well, not me, I’m not an insider.
Bruce: I think within this week I have both read articles explaining why primaries are the key to avoiding the establishment remaining ignorant and blind to what has meant so many Americans feeling disrupted. Power to the people of primaries is pretty compelling. At the same time, I am an establishment type person in my education, in my background, in my career. And so I like to think that people who have a, you know, I think one of the great presidents was George H.W. Bush. He was the ambassador to China. He had been a sitting vice president. He had been a Congressman, he’d been chairman of the party. Even the head of the CIA. I think on the job training is really good. And I would think that for my CEO, so why wouldn’t I think that for the CEO of my country. At a minimum, what I hope is that I hope they realize that letting Iowa and New Hampshire always go first as if it’s some kind of constitutional birthright is really unhealthy. They’re not representative states. I am obviously not running for president ever now, but they’re not representative demographically. They’re not representative geographically. Why not come up with, whether it’s a regional system or a rotating system, but some, there’s gotta be a better way.
Tom: So obviously you’re predicting, I mean, that’s what, that’s what the markets would say now, and the polls and how it’s going to be Sanders against Trump. But in terms of who you would think would have a better chance of beating Trump, Sanders or one of the moderates, what do you think?
Bruce: For anybody listening to this who’s heard me speak, depending upon when you heard me answer this question, I have variously said Senator Warren, Mayor Pete, Mayor Mike, Joe Biden, and Bernie Sanders. So I’ve pretty much covered the field. The only one I’ve never said we’ll win the nomination is Amy Klobuchar. And I think Senator Klobuchar in a lot of ways would be the most likely to rally the entire democratic party together. And boy, she actually, we’ll see if it’s again tonight, but she’s a hell of a good debater. That aside, it’s really hard to beat an incumbent president. It doesn’t happen very often and when you take an incumbent president who hasn’t faced a recession, they’ve never lost. A president running for reelection without a recession in the two years prior to the reelx never lost. Had Lyndon Johnson run in 68 he probably would have lost the primary in that. Then I would have a counterfactual data point, but since he bailed before the primary, they’ve never lost. By contrast, every president who’s faced a recession in the two years before their reelection has lost, whether it’s George H.W. Bush or Jimmy Carter. You got to go back to 1924, silent Cal Coolidge was the last incumbent who faced the recession in the two years before his reelection that nevertheless he won and it’s also for what it’s worth, the last year the Washington baseball team won the world series. I don’t know if history rhymes or repeats or what.
Tom: Actually, I have one last question, which is a little bit more in your professional wheelhouse, although I guess all of these things are in your professional wheelhouse. Do you think that the tech sector and the tech industries are doing a good job of representing their interests in government, either in the US or Brussels, wherever, because there used to be, especially when you started out at Department of Commerce, there used to be a lot of criticisms saying they were just doing a terrible job
Bruce: So there’s always criticism, first. The second, I would say tech has long punched well above its weight in policy outcomes. Sure, people want to pick on them, left or right, but Google’s policy engagement, for example, when in, 2012 was it, when the Federal
Trade Commission staff said they’re a monopoly, they’re a problem.
Tom: Part of the staff.
Bruce: Well, the career guys…
Tom: I think it was just one of the bureaus.
Bruce: The Competition Bureau. They’re the guys.
Tom: Not the Bureau of Economics.
Bruce: Well, okay. Both the Democratic and Republican political appointees said, these aren’t the droids we’re looking for. It feels like tech, if you measure it by policies they’ve advanced and outcomes they’ve avoided, has punched above their weight. The idea that the biggest, most dominant trillion dollar players in our economy are as unregulated as they are, that’s never happened before. You’ve never had people be able to be that dominant in the economy and be that overwhelmingly unregulated. So, I would say they’ve been incredibly successful. It does feel, in this roaring 2020s of broad reforms, economic, societal, and otherwise, we’re in for a bit of a reckoning. If we get it right, like we did in the gilded age, we’re going to have a healthier economy and a healthier tech sector long term. Admittedly, I have been a tech advocate for decades, so it’s probably within my interest to say that they’ve been well-represented and they’ve been effective. But boy, they’ve lost very few fights.
Tom: Well, this has been extremely interesting and I really appreciate your taking the time to do this and we will get this up on our website soon.
Bruce: Thanks for having me on. It’s a pleasure.