In Present Tense
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In Present Tense

Photo by Shari Sirotnak on Unsplash

Envisioning a Public-Private Partnership

The Role of Robust Government in Innovation

Greetings from the Covid-19 crisis. I’m sitting at home watching my country, The United States, try to get this pandemic under control, with some governments succeeding while others flounder. It reminded me of a piece I drafted earlier this year about the need for governments and the private sector to work together.

I’ve watched the failure of the Federal Government to respond to the Covid-19 situation — primarily due to hollowing out of the backstops put in place to address such a situation when it would inevitably occur. Instead, the leaders in the federal government expect that the private sector will step in to fill this gap. And while the private sector has stepped up to the challenge, despite lack of communication, clear leadership, and feared profiteering; individual states, such as mine, California, are filling the gap of government leadership. I’m grateful for my state leadership, but that’s not the way it has to be. Leaders in England and New Zealand show a different way.

While this is a criticism on the state of my federal government today, it does not have to be a criticism on the state of my Federal Government in the future. The Government is only as good as those running it. And ultimately, a government’s role is to provide services to its citizens.

“Good government has made Americans’ lives better since the beginning. Among other immediately obvious things that government brought us and still operates today: Interstate Highways. The GPS in your smartphone. The water Americans in the Desert Southwest drink and shower in. The water that made the farms in California’s Central Valley possible. The industrial waterways that haul America’s biggest most valuable freight for the least money. Space flight. Radar and Air Traffic Control for absolutely every commercial flight in the country every day. The Internet.

[T]he only reason the government can’t do anything right anymore is because the people running it don’t want it to.” — Jeff McFadden, No Package Deals

The government provides services that are not necessarily profitable in the private sector, but are essential none-the-less and improve our lives.

The Market & Market Failures

A key feature of the private sector is that it is motivated by profits. A company makes money selling a product or service, which means that people have to want to pay money for that product or service. A company will go out of business if it doesn’t make money.

Because the private sector is focused on developing solutions to problems they can make money at, there are plenty of problems that go unsolved. These are called Market Failures — gaps the market system fails to fill due to corporate profit based incentives.

Beyond the Target Market

Governments have different needs from private sector customers. Unlike the private sector, the Government doesn’t have the luxury of a “target market,” it must provide services to all its citizens. In some cases, Government and Military clients have more rigorous requirements, especially when it comes to data security and privacy technology. Governments also invest in new technologies to address global scenarios that few private sector companies would consider. And Governments may invest in rival technologies to ensure a robust marketplace when a technology matures. We all benefit — individuals, companies and the market — from Government’s interest in addressing market failures.

  • Governments have different motivations. They are not profit driven. The government doesn’t ask for shares in a company in exchange for government funding.
  • Governments think long term. Many government institutions have long term employees with long term objectives.
  • Governments must be resilient. They must survive domestic and international volatility.
  • Governments fund experimental technology. An early version of Mosaic was developed to satisfy a communications scenario in case of nuclear war.
  • Government funding supports a competitive market. Governments are one customer of private sector products, and to ensure they have the best choices, will fund competitors.

Digital Identity is a Commons

Much of my research is on digital identity technology. Digital identity is one of the sectors where the market has failed to provide broad comprehensive solutions. We live in the digital identity equivalent of the pre-interstate highway system with the dream of using seamlessly interconnected and protected digital identities across government and private sector website — all with privacy baked in.

In 2019, my company, The Purple Tornado was engaged by the Department of Homeland Security Cybersecurity directorate to identify corporate and IoT digital identity market failures and published two reports. Our initial report, Gaps in Government Funded Identity Research, identified six areas of market failures:

  • Delegated Identity: The ability to have fine grained delegated identity for situations of parent/child or guardianship are inadequate. Customers are left to impersonating someone, for example in the case of managing a parent’s financial affairs.
  • IoT and Legal identity: Non-human identity is growing, and the human digital identity paradigm is not necessarily transferable to legal or IoT requirements.
  • User Experience: Companies tend to prioritize other features over usability, transferring this burden to the user.
  • Market Driven Technology: Profit based corporate incentives preference small and targeted solutions, creating a marketplace with many siloed solutions that lack interoperability. Companies tend to specialize in a certain digital identity aspect (authentication for example) or a market segment (like health care or banking), leading to more technology silos.
  • Data Security and Interoperability: It’s near impossible to securely share data using current technology.
  • Data Regulation: Data regulation is inconsistent at best and varies depending on industry sector (banking vs healthcare) and national jurisdiction (U.S. vs Europe).

Our report, Entities, Identities, Registries: Exploring Gaps in Corporate and IoT Identity, found 11 market failures in non-person entity identity in banking and finance. These failures are challenging problems for any company to solve because they are larger than any solution one company can develop.

Our current business zeitgeist has focused on what we can make in the competitive market system, and we’ve forgotten the benefits we gain from a robust national government that supports emerging technology solving broad goals.

I hope our experience with Covid-19 will help us see the possibilities of a positive role our government can play. It’s not the current state of the Federal Government, but it can be the future of our Federal Government. A Federal Government that enables and partners with the private sector to develop technologies that benefit us all — in healthcare, digital identity and many of the other problems we face today.

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