A Left-Right Technology Debate

Washington insiders met to debate how to address possibilities and problems posed by technology.
In two weeks, the United States will choose a president. While the issues that most affect the business and technology markets aren't likely to swing the election to one candidate or the other, the repercussions of this election on topics such as offshore outsourcing, intellectual property, corporate taxation, etc., are likely to be felt long after all the ballots are counted.

These were the sentiments expressed by representatives of both the Democratic and Republican parties Monday night in New York at a technology debate sponsored by the New York Software Industry Association. The movement of IT jobs to emerging economies continues to be one of the most contentious issues between political parties.

The focus often is on job losses, said Reed Hundt, former Federal Communications Commission chairman for President Bill Clinton. But, he added, "The global arbitrage of wages is more important and serious than the jobs themselves that are being sent overseas, and that's serious." New jobs aren't paying as well as those being outsourced, he said.

Hundt's opponent, Americans for Tax Reform president Grover Norquist, espoused the Republican free-market viewpoint. "Businesses are moving operations and jobs overseas because the U.S. has corporate interest rates higher than the rest of the world."

Neither Hundt nor Norquist claimed to be speaking on behalf of their parties' standard bearers. Rather, they agreed to the debate in an effort to articulate the views of their respective parties.

The debate also addressed intellectual-property rights and software patents. While these issues are hardly new to businesses, the emergence of peer-to-peer file sharing and open-source software is creating new dynamics. The debaters shared similar, although not identical, sentiments.

"Respect for intellectual-property rights protects IT jobs," Hundt said. Norquist agreed that businesses and individuals want to protect intellectual-property rights, but he wondered whether issuing large numbers of intellectual-property patents for technology was "carving up the Internet infrastructure and complicating the market."

Both debaters were likewise leery of proposed legislation in the Senate that would hold companies liable for creating technology that is used by others to infringe upon copyrights. Hundt called the Inducing Infringement of Copyrights Act of 2004, introduced by Sen. Orrin Hatch, R-Utah, a "dangerous bill for the technology industry because it calls file sharing a criminal act." Although the legislation has been put on hold, Hundt said passage of such a bill would mean "we're going to have to hire a lawyer for every kid in America to protect them from the Justice Department." The Bush administration and Congress should be focusing more on spam than peer-to-peer file sharing, he added.

Norquist agreed, saying that the entertainment industry has "cried wolf" in the past when they felt threatened by new technologies such as the VCR. "These technologies instead helped make Hollywood money," he said.

Where they disagreed, however, is how the government should approach containment of spam.

"Most Americans just want spam to go away; they don't much care how," Hundt said.

Norquist criticized Hundt for proposing what he called "one-size-fits-all" legislation. The market should decide the fate of spam, he said.

Hundt countered, saying that he doesn't advocate blanket legislation. Instead, he proposed prosecuting a single spammer as a warning to the rest of the industry.

The debate also addressed the government's role toward technology innovation, an area where Norquist and Hundt agreed the government could do more. Norquist concurred with President Bush's call to make tax credits permanent for research and development. In an April speech in Minneapolis, President Bush also said he would raise federal R&D spending to $132 billion, a 44% increase over the spending when he took office.

Kerry's position is to extend the 20% R&D tax credit that expired in June--a slightly different approach, although both candidates appear to be on the same page.

One way to spur innovation is for the government to be more of an early adopter of technology than it already is, Hundt said. While the economy is improving, corporate investments in capital and R&D are still down, he added, calling for the government to invest in "a little creative pump priming."

Innovation in any field helps the IT industry, Hundt said. "There's not one scientific application or research innovation that doesn't rely on software. Any research done, any investment in research, will be an investment in IT," he said. Taking a swipe at the Republican view that consumer spending has revived the economy, Hundt said, "A consumer-driven economy is great, unless you're selling IT."