This article was written by Dylan Hendricks and first appeared on Medium.
The Problem: The world became too complex for this generation of governments.
If there’s one lesson from 2016 that we should take with us as a starting point, it’s that our current governance structures are no longer serving us. As the world has become globally interconnected in trade and culture, it’s also become commonplace for us to focus on the implications of our actions at the extreme ends of the scale: how they factor into the global picture of market dynamics and carbon emissions and migration patterns, and how they show up locally in terms of the jobs and products and community culture stuff that makes up our daily lives. Positioned awkwardly between our planet-scale problems and our people-scaled ones, nation states find themselves with few effective levers at either end.
As a result, public trust in national governments has plummeted in western democracies. Automation and global outsourcing, which have no inherent national root, have pushed millions of older and low-skill workers out of the middle class in western countries, while post-industrial governments struggle in vein to understand what’s needed for retraining and infrastructure investment. In both Britain and America, 2016 was marked by populist revolts against a global culture that, in the pursuit of social progress, was perceived by now-struggling communities as overwriting the assumptions and traditions that once propelled their prosperity.
It’s becoming clear that global governance bodies like the UN and WTO are failing to stabilize and maintain the post-WWII geopolitical order. Global growth has stagnated. Multinationals acquire each other at unprecedented rates as nations compete for their largess. Conflict is brewing around the world, manifesting in frequent bursts of civil unrest and factional warfare. All this, and climate change and political upheaval have fomented the worst migrant crisis in modern history.
Most national governments now face an existential battle on two fronts: protecting themselves from their own disgruntled populations, and defending against foreign governments vying for power in the next wave of global dominance. It’s as though we’re in one big Mexican standoff between every country and religion and tribe in the world, all pointing guns at each other while we wait for the next big shoe to drop. That’s how Russia, though economically beleaguered and globally isolated, has found itself so powerful suddenly — it’s a good time to be a chaos agent.
The Solution, Step 1: Understand, accept, and embrace the new tools of coordination.
A major factor in the world’s current transformation is the rise of distributed platforms like Uber, Google, and Amazon. This is Innovation 101, but many of us still tend to think about these services as just miscellaneous companies and technologies that have all happened to crop up around the same time, and that aren’t particularly relevant outside of the areas they’ve come to dominate. Sure, we shop in our underwear now and order taxis from our phones, but Amazon and Uber haven’t really changed the fabric of our society, have they? How could they?
In reality, all of these platforms are more alike than they are different, and understanding why they exist now (and why they’ve become so dominant) is key to forming a coherent view of what comes next for work, education, healthcare, and yes, governance.
Just take a step back and look at the current battery of services provided by platforms, all of which were conceived in the last five-to-fifteen years: shopping (Amazon/Alibaba), media (Youtube, Netflix, Spotify), personal communication (Skype/Whatsapp/WeChat), cultural communication (Facebook/Twitter/Snapchat), transportation (Uber/Lyft), accommodations (Airbnb), dating (Tinder, OKCupid), classifieds and resale (Craigslist, eBay) investment (Wealthfront, Betterment) and even work (TaskRabbit, UpWork).
Whereas traditional organizations rely on rigid infrastructure that’s inordinately expensive to build and maintain, the rules, management and service provision of platforms are defined entirely by software. This makes them much easier to develop and launch, and orders of magnitude cheaper to run, scale, maintain and improve. Most platforms also create both sides of the markets that they enter, facilitating both supply and demand wherever they exist. The Airbnb app creates both lodgers and hosts, the TaskRabbit app both workers and their part-time employers.
Significantly, national borders are mostly irrelevant for platforms, which scale their membership networks across the known world simply through people downloading them onto their phones. The algorithmic matchmakers of Tinder and broadcasters of Netflix are replicated and distributed for free. And while Netflix and Uber and Airbnb spread quickly around the globe, they deliver services that can meet the individual context of every single user. Unlike a TV network or a retail store or a federal law, everybody’s Netflix queue and Amazon shopping lists are customized specifically to them and available everywhere at any hour.
This ability–to provide global access and localized personalization– is both the critical weakness of the current nation state and the table stakes for networked platforms. It’s why they’ve been so successful. Uber, founded in 2009, is already the third-largest private employer on the planet. Think about that for a second.
The problem, of course, is that this current class of platforms have broken free of national constraints by riding the commercial infrastructure of multinational corporations. This isn’t in itself a problem, but where these private ventures have been phenomenally successful in developing compelling experiences and technologies, they’re neither incentivized nor equipped to navigate the social contracts that governments and the public have hammered out over centuries of hard-earned progress. Airbnb provides an incredible service to its customers and a novel revenue stream to its providers, but it disrupts low-income housing as much as it does traditional hotel chains. Another way of saying this: these platforms have already become too important to be managed entirely by individual companies.
How do we move forward? As nations squabble internally to defend themselves against the daunting implications of globalization, the viability of centralized global governance has never felt further away. We likewise have little reason to believe that individual consumer preferences for platform companies are going to yield any better results, as all of these services benefit directly from network effects: whoever has the most users is likely to continue to capture the most users. In due course, Uber will continue to dominate ride-sharing, because both drivers and passengers know that’s where the action is.
But here’s the thing: for the Uber’s, Airbnb’s, and Whatsapp’s of the world, network effects may prove to be their only real advantage. The essential service they provide — on-demand matching of people, things and tasks — is inherently a commodity that can easily be replicated and duplicated. When you don’t own any infrastructure, your overhead is low, but so is your lock-in. It seems likely that Uber realizes this, as they are now investing in speculative moonshots like self-driving fleets and flying cars at a near-desperate pace.
The Solution, Step 2: Enter the 21st century city-state.
Residents in Austin, Texas and Barcelona, Spain have already discovered what happens when local regulations push Uber out of the local market: a dozen equivalent services emerge to fill the void. With their relatively self-contained infrastructure, populations and industries, cities might represent the ideal scale for governance and policy in the wild west that is the twenty-first century global economy.
Cities, of course, have always played the role of cultural catalyst during times of historic transition. Democracy was birthed through the powerful city states of ancient Greece, and Baghdad once sparked a golden age of science and art that spread across medieval Arabia. Today, individual cities like Sao Paulo and London provide the economic engines that power entire countries.
More importantly, real democratic work can likely get done in cities in a way that is currently impossible in the western climate of cold civil war. While national divides are complex, the easiest predictor of whether somebody voted Democrat or Republican in the 2016 American election wasn’t whether they were white or educated, but whether they lived in a city or not. In the Brexit vote, 75% of Londoners voted to stay in the EU against the will of a thin majority elsewhere in the country. Like it or not, residents of cities currently agree a lot more on the fundamentals than the entire populations of nations do.
And unlike nations, cities are inherently governable. They are large enough to implement meaningful system-wide policies, and small enough that residents can reasonably influence those policies through council hearings, mayoral elections, and local protest. And while only one-in-five Americans trust the federal government to make the right decisions, nearly three-quarters trust their local and city governments. Cities like New York and San Francisco have already pledged to use the many means at their disposal to protect against unwanted federal policies during the Trump administration.
So, to recap:
- In our hyper-globalized world, national governments are failing to provide an effective balance between global coordination and local context, and have lost the public’s trust.
- Platforms are really good at specifically those things, and can be hosted by anybody that has a captive audience.
- Cities have both a captive audience and the public trust.
Now imagine this: take a white label version of your favorite platform, and restructure it as a city service, or a private/public partnership. The contracts and negotiations for how gig workers are hired and paid now become subject to the regulations of the city, which are subject to the democratic will of the city residents. The app’s profit, once vacuumed back to the corporate mothership, is now a form of direct revenue for the city. Like a state lottery, every rideshare and guestroom hotel becomes a direct investment in your favorite public good: education, healthcare, poverty eradication, childcare.
Now imagine the full suite of publicly owned matching services relevant to the domain of the city: transportation, accommodations, up-skilling, task-routing, job-matching. Add to this the platform services that are just now emerging, and that will represent the next wave of platform innovation over the coming decade: urban agriculture, food waste re-use, micro-certification of job skills, community health, citizen journalism.
These emerging services are, for the moment, being developed and marketed as individual apps, to be eventually bought by Facebook or Samsung or Comcast. But if cities embark down this path, they could become the foundation for the next generation of civic platforms (a goal that is gaining traction in many circles, for many compelling reasons)
The Solution, Step 3: The Internet of Cities, and a new framework for social innovation.
Not every city is up for the investment and development required to launch such ambitious services, nor do they need to be. If one particularly innovative and well-organized city can mount version 1, the software could be copied, forked or licensed by other cities. Rather than creating a series of silos, they would form a comprehensive network, an Internet of Cities. In the same way that Netflix accounts transition seamlessly from one country to another, updating the available video library to that region’s selections, these civic platforms would allow users to engage with the same civic services across different cities, while also empowering each participating city to implement its own business logic for how much the services cost, how their workers are hired and paid, and where the resulting profits are directed.
As more cities adopt this civic platform foundation and adapt it to their own needs, the resulting network would provide pragmatic infrastructure for sharing data, best practices and case studies across different regions and countries. It would give policy makers and social entrepreneurs a set of tools and clear levers for designing pilots, measuring impact and iterating towards desired objectives. It would recenter much of the policy debate around new technologies and innovations to the city level, or the town level, or the county level, where local populations would gain tremendous agency in defining their own path forward.
Most importantly, power would become fundamentally more distributed. Cities would gain the opportunity to forge new social contracts with their residents around the privacy and security of the copious personal data that makes these services possible. While legal constraints over data-ownership have stymied innovation in areas like healthcare, emerging technologies like the blockchain offer a new foundation for data security that could prove essential in our increasingly vulnerable and hyper-connected society. Nobody wants the federal government or corporations to own all of their data, and we certainly can’t be bothered to manage it ourselves. But a trusted public system, girded by the blockchain, might just get us where we’re trying to go.
These are not pie-in-the-sky ideas. Everything I’m describing here is ready to pilot, today, if the right city comes along with an appetite for bold civic reinvention. Because these platforms are still so new, there is nothing insurmountable within existing laws preventing cities from creating and managing their own. They could be developed quickly from existing public code. They would create large revenue pools with low fixed costs. And they would furnish more efficient and cost-effective services than any government program currently can, targeted to the specific needs and context of each locale.
The cases for the Internet of Things and Smart Cities have both been made, and are now stuck in a holding pattern. Perhaps it’s time we pursued the obvious hybrid: the Internet of Cities.