May 8, 2023

Public-Private Partnerships in the Era of Autonomy

The American economy and its global economic dominance in the world are at a critical point in history. The decisions and strategies to embrace and capitalize on rapidly evolving technologies are crucial for national security.

Public-Private Partnerships in the Era of Autonomy
The American economy and its global economic dominance in the world are at a critical point in history. The decisions and strategies to embrace and capitalize on rapidly evolving technologies are crucial for national security.

Imagine Generative AI is like the invention of the combustion engine; in that context combining AI with machines is like inventing the automobile. Just like the automobile ushered in a new era of human mobility and transformed the economy so too will the Era of Autonomy. Also called the "fourth industrial revolution," the Era of Autonomy will connect over a trillion machines. The software and algorithms running on these machines will make our future intelligent and autonomous. It's a quantum leap forward in the way our economy works and how we use technology.

In this new Machine Economy, intelligent machines and AI play a central role in producing, distributing, and consuming goods and services. It's a future where automation, robotics, and advanced AI technologies transform traditional economic activities.

In the Machine Economy, machines do complex tasks, make decisions, and learn, often better than humans. They are connected through the Internet of Things (IoT) and can communicate with each other, sharing information and coordinating activities. This interconnectedness allows for seamless integration and optimization of different economic processes.

Massively interconnected systems and decentralized commerce permeate the Machine Economy:

  1. Edge Computing: Machines equipped with AI algorithms can analyze a lot of data and make decisions based on predefined rules or learning algorithms without incurring the latency of cloud backhaul. This new architecture for computing makes real time decision-making and resource management possible, opening the door to new levels of software innovation..
  2. Seamless Connectivity: The IoT enables machines, devices, and systems to connect and communicate in real-time utilizing a plurality of next generation RAN systems and protocols. This departure from legacy telco oligarchy allows machines to make informed decisions and adapt to changing conditions while enabling a new class of telecommunications carrier to form.
  3. Machine to Machine Commerce (M2M): The Machine Economy allows machines to interact with each other and other economic actors without human intervention. They can negotiate, make contracts, and exchange value autonomously, forcing radical innovation to occur in the legacy financial system infrastructure and opening the door to entirely new players for the first time in a generation.
  4. Digital Currency and Smart Contracts: Digital currencies, like cryptocurrencies, are often used for transactions in the Machine Economy. Smart contracts ensure secure and automated execution of agreements between machines, which gives rise to entirely new form of asset ownership that will create entirely new marketplaces.

Building a strong Machine Economy will require investing in digital infrastructure over many years. This infrastructure is essential for supporting growth and innovation. The nation that takes the lead in this effort will shape future wealth and prosperity, just like in past periods of innovation.

For over 100 years, America has been the center of the global economy. But now, there is competition that could challenge America's economic dominance. China, for example, has cleverly used a mix of central planning and capitalism to rapidly modernize its economy and become a major player in innovation.

China's approach has shown early results, but centralized control over technology development may have limitations. Innovation thrives in free market economies that encourage originality.

Historically, America has relied on public-private partnerships (P3) as a means to accelerate the kind of innovation that both transformed society as well as ensured this country’s place on the global stage . These partnerships have been crucial in achieving progress in the past.

The U.S. Interstate Highways Act, enacted in 1956, is a prime example of the successful implementation of public-private partnerships that transformed society and the economy forever. This landmark legislation aimed to create a vast network of highways across the country, revolutionizing transportation and stimulating economic growth. To finance this ambitious project, the act established a partnership between the federal government and individual states, leveraging various funding mechanisms.

One key aspect of this partnership was the establishment of toll roads. Private companies were invited to build and operate sections of the interstate highways, collecting tolls from motorists to generate revenue. By involving the private sector, the government tapped into their expertise and resources, accelerating the construction process and ensuring efficient maintenance of the highways.

Furthermore, the federal government provided significant financial support to states for highway construction, offering matching grants to incentivize their participation. This financial collaboration between the government and individual states was crucial in funding the extensive interstate highway system. It enabled states to undertake large-scale infrastructure projects that they might not have been able to afford on their own.

Another form of public-private partnership within the Interstate Highways Act was the collaboration between the government and automobile manufacturers. The act mandated that the federal government work closely with automobile manufacturers to establish design standards for the highways. This cooperation ensured that the roads were compatible with the vehicles of that time, promoting safety and efficiency.

By leveraging the resources, expertise, and financial contributions of both the public and private sectors, the act successfully built a comprehensive network of highways that transformed transportation, facilitated economic development, and connected communities across the United States.

The example of Canadian war bonds during the First World War can provide valuable lessons for understanding the importance of public-private partnerships in driving generations of future economic prosperity.

During the First World War, Canada faced economic challenges and limited borrowing capacity from foreign lenders. To overcome this, the Canadian government introduced "Victory Bonds" as a way to raise capital from its own citizens. These bonds allowed individuals to invest in the war effort and provided a significant source of funding.

The government launched an extensive marketing campaign to promote Victory Bonds as a means for citizens to contribute to the war effort and raise essential funds. The government employed various strategies to market these bonds, including advertising campaigns, public rallies, and patriotic appeals. They emphasized the importance of national unity and encouraged citizens to invest in Victory Bonds as a way to demonstrate their support for the troops and the country.

The marketing efforts effectively mobilized the private sector and rallied public participation. Citizens from all walks of life were encouraged to purchase Victory Bonds, regardless of their income level. The bonds were available in different denominations, making them accessible to a wide range of investors. The government leveraged existing networks, such as banks, post offices, and community organizations, to facilitate the purchase and distribution of bonds.

The money raised through Victory Bonds played a pivotal role in mobilizing the private sector and supporting the war economy. The capital generated from the sale of these bonds provided crucial funding for the production of war-related goods and services. It enabled industries to expand their operations, hire more workers, and procure necessary resources to meet the demands of the war effort. The increased economic activity stimulated job creation and propelled economic growth across various sectors.

Additionally, the infusion of capital from Victory Bonds strengthened Canada's financial position and reduced its reliance on borrowing from foreign lenders. This self-sufficiency in funding allowed the government to have greater control over its economic destiny and ensured that the war effort was sustained. The success of the public-private partnership established through the issuance of Victory Bonds demonstrated the power of collective action and the significant impact that mobilizing the private sector can have on national objectives.

Canadian Victory Bonds and the US Interstate Highway Act brought together the resources and expertise of both the public and private sectors to drive progress and create a favorable environment for economic development. They enabled collaboration, investment, and the co-creation of economies that benefit society as a whole.

Establishing America as the center of gravity in the emerging Machine Economy will require a similar reinvention of the public-private partnership model.

We should think of governments as platforms that foster innovation and collaboration, rather than as closed systems of policy creation. Public-private partnerships can help reinvent legacy systems and drive progress and prosperity as we re-imagine taxation systems, real estate zoning processes, and the integration of ideas from academic institutions into national innovation efforts.

Public sector agencies have a rare opportunity to partner with companies operating in the field of advanced technologies to enable regional M2M commerce. This collaboration can provide a foundation for a modern system of tariffs that can self-fund the rapid expansion of digital infrastructure.

Public sector agencies, such as local governments or regional development authorities, can collaborate with autonomy-era companies specializing in areas like autonomous logistics. Together, they can establish frameworks and platforms that facilitate seamless communication and transactions between autonomous machines within a specific tax region.

By supporting the deployment of infrastructure that makes autonomous logistics possible, the public sector will attract manufacturers and technology providers to develop regulations, safety standards, and infrastructure requirements for their operation. The resulting commercial ‘solutions’ that emerge form the basis of future economic prosperity.

This process is not a one revolution cycle. It is perpetual.

To self-fund the rapid expansion of digital infrastructure, a modern system of tariffs can be introduced. Autonomous machines involved in M2M commerce can be equipped with sensors or identifiers that track the usage of infrastructure resources, such as roads or communication networks. These machines can be charged a tariff or usage fee based on their utilization of the infrastructure - just like any other public utility.

The collected tariffs can then be reinvested into expanding and upgrading digital infrastructure. Public sector agencies can collaborate with autonomy-era companies to develop intelligent systems that monitor infrastructure usage, analyze data, and allocate funds accordingly. This self-funding mechanism ensures that the expansion of digital infrastructure keeps pace with the growing demands of M2M commerce, without relying solely on public funds.

By partnering with autonomy-era companies and implementing a modern system of tariffs, public sector agencies can create a self-sustaining cycle. As M2M commerce grows and more autonomous machines utilize the infrastructure, the generated tariffs can be reinvested to expand the digital infrastructure further. This approach not only facilitates the development of a robust digital ecosystem but also reduces the burden on public finances, such as taxing property and income.

Additionally, this regional M2M commerce and tariff system can stimulate economic growth. It can attract businesses that rely on autonomous technologies, encourage entrepreneurship, and create job opportunities related to infrastructure expansion, maintenance, and technology development, resulting in what we all seek for our communities: Economic vibrancy..

As we enter the Era of Autonomy, there are immense opportunities for society to benefit from intelligent machines and advanced AI technologies. This future represents a historic shift, much like the Interstate Highway program or the effort to fund military victory abroad. Leading this effort will bring rewards in terms of wealth and prosperity. However, it is important to recognize that the successful manifestation and growth of the Machine Economy is not just about economic progress, but also a matter of national security. By reimagining the concept of public-private partnerships, we can position America to win and achieve great things in this new era.