European Forum Alpbach 2015: Global inequality in IT - european elites have found a solution!

14 September 2015

Inequality and equality are, in political terms, a matter of distributive justice. The ideals of the French Revolution associated the right of all citizens to social equality before the law - “egalité” - with freedom (liberté), in other words with self-determination and fraternity (fraternité), and therefore with the solidarity of social groups. This claim was recently raised in France for reason of State. Equality which is defined as equal access to resources such as raw materials, fundamental basic health care, education and information is currently more fatally imbalanced than ever before, as shown by the current migration flows.

The issue of equality in the 21st century is also a question of developing and mastering technology and therefore primarily utilising electronic and digital technology and not just mechanical and industrial technology. The information and communication technologies (ITC) currently determine any social and economic progress that is made, as they have pervaded all areas of production. Future prosperity or hardship currently plays a part in determining equality or inequality when using information and communication technologies. This means that the otherwise highly developed continent of Europe is in danger of losing ground on leading nations such as the USA or emerging economic powers in Asia in the post-industrial knowledge-based society for the first time in its history. This is down to a number of different reasons including a lack of broadband coverage and adequate infrastructure, serious dependencies on technology leaders from the Internet community of the regions mentioned and a lack of appropriate education in information technology.

How can we overcome this situation in Europe?

Europe needs equality, self-determination and solidarity across the entire continent with around 500 million people. It is therefore essential to create a “digital single space”. Due to its complexity, this aim requires special emphasis to be placed on countless politically-coordinated issues. This includes creating information superhighways so that information can be exchanged throughout the Union without any restrictions, creating a consistent electronic marketplace for online trade and for using telecommunications services establishing a position in the promising areas of information technology such as big and open data, cloud computing, mobility and in social networks and last but by no means least it involves establishing trust which makes it possible to provide all these accomplishments of the network society as standard products from a highly developed area of knowledge.

What challenges do we face in seeking to achieve equality?

It is vital that Europe comes of age when it comes to the cross-sectional technology ITC. We will only be able to overcome the current dependencies on hardware and software, electronic platforms and our fundamental infrastructure for the future if we pull together irrespective of national considerations. Europe has already recognised that digital future concepts such as cloud computing and big data and the increasingly prominent concept of mobility offer huge potential which must now be exploited. Europe has initiated the process for new IT productivity with its cloud strategy. It is now necessary to achieve all the objectives that are being pursued. The same applies to the big data analysis, the restructuring of European industry with a shift towards Production 4.0, electronic trade, improved data security and concepts for network identity and of course to other IT future technologies such as e.g. the “Internet of Things” which will network all relevant social sectors such as the environment, medical care and our energy infrastructures in future using sensor technology and provide new unexpected possibilities for manufacturers and suppliers as well as for consumers.

How do we achieve equality? Elites are not a contradiction in terms!

Elites are required to achieve equality in the digital world. This is not a contradiction in terms. We are currently already facing an intellectual deficit in Europe when it comes to information technology and flagship projects relating to this and this gap will get bigger every day if we are not determined about laying the foundations for developing a digital elite in Europe. A joint European research area such as that which the opinion leaders in Brussels have set out to achieve for years must now become a reality and the digital world also sets the rules on how to do this. Networking and pooling knowledge, developing specialist knowledge clusters, pooling expertise and a free and unrestricted “open science” discussion are the main requirements at this moment in time. Other framework conditions relate to the creation of new corporate cultures and innovative forms of funding to ensure that solutions developed in Europe are also employed in marketing. The European Union will only be able to stop the current “brain drain” in the natural sciences and enhance the appeal of the European research area with the best knowledge and network environments, which will enable it to play a key role worldwide in the “War on Talents” in future.

The companies in the IT sector and the main IT users in the public sector must assume a pioneering role in helping to achieve the elite concept. The switch from proprietary, licensed IT systems of major hardware and software manufacturers in America and Asia to open source products such as Linux is a way of showing how the creation of elites works when it comes to using information technology.

The creation of elites in the information technology sector also requires the support of the economy for scientific faculties across Europe and especially the incorporation of highly talented young people in the IT sector. The list of potential IT specialisations is longer than ever before as a result of all areas of life being permeated with information technology. We don’t just need experts for the basics such as software programming, hardware development for encryption technologies, we also need trained computer scientists to provide views on issues such as the environment, life sciences or the energy industry that are both indispensable and dramatically different. We also need computer scientists to help us adapt the knowledge they have gained privately on how to use new media to new forms of collaboration required on the market by using information technology.

I consider the declaration and implementation of a campaign throughout Europe for educating IT elites as part of the economic policy to be an important way of supporting the reestablishment of equality in global economic areas. The digital world cannot be defined by the gap between “digital natives” and “digital immigrants”, but instead should be a utility where everybody puts down their roots.

Social and industrial inequality just go to show that the digital policy is failing. Equality comes from IT elites that pave the way for our company to the future. We have no other choice!

The issue of equality purely revolves around the question “how?”

There is both a positive and negative outlook for Austria and Europe as far as creating a digital society is concerned. On the one hand, we have created outstanding foundations for the continued development of prosperity with the deep-rooted industry cultures in Europe over the course of the last century. On the other hand, this traditional conservatism is currently preventing us from being courageous and taking on new challenges presented by the digital society, daring to leave old and tried-and-tested economic structures behind us and introducing innovative concepts for shaping the future.

The entire information society in Europe will only be able to reach parity with the USA and Asia if we also establish the required ecosystem for innovation and shape our digital society to meet our own profoundly European values without looking at the front runners from the competition overseas. The visions for an economically and scientifically united Europe, which there is no shortage of in the European Union, should act as sufficient motivation to overcome all types of fragmentation that stand in the way of the economic giant that is the EU.

Digital single market

I would just like to take this opportunity to single out a few approaches for a European strategy for repositioning the continent as a powerful economic power in the 21st century which I consider to be particularly pressing. There has been movement in important political regulations for the definitive transformation of the continent into a post-industrial, digital and network-based knowledge-based society under Jean Claude Juncker over the last few months after many years of the same old policy. Both digital commissioners Andrus Ansip and Günther Oettinger presented their “digital single market” offensive on 6 May of this year. Based on three political fields of action with a total of 16 initiatives, the aim is to finally remove existing barriers to integration and to bring the challenge of the century to create a digital single market to a successful conclusion.

At present, equality is primarily considered to be about fair access to digital goods and services. It is therefore no coincidence that this is the first field of action of the new offensive and I am convinced that this will unhinge the European turf mentality for the first time. The objectives are clearly defined: Unlimited e-commerce in Europe, a single major European telecommunications market based on network neutrality, exemplary data protection throughout Europe and leading-edge cyber security for achieving the best possible acceptance among the major IT value drivers of cloud computing, big data, mobility and social networks.

The second field of action of the offensive logically addresses the social framework conditions, in order to ensure the unconditional free flow of data between companies, scientific institutions and citizens of the Union. The focus is primarily on developing common, binding standards for IT interfaces and telecommunications gateways. It is only possible to pool resources which we now require to make up ground in the IT sector in the markets and the European Research Area with the best possible interoperability of network facilities and digital infrastructures and a strict focus of all public institutions and the academic community in Europe on open data.

The third field of action represents the next step towards establishing the ecosystem that has been addressed. The aim is to achieve greater entrepreneurship by improving the links between university education and the support systems for company start-ups such as business incubators and market accelerators and to take a more courageous approach to providing risk capital. Business spin-offs from the basic university research sector or start-ups from applied research funding are significant indicators of an economic system and the company as a whole’s ability to compete and reinvent itself. While 11 new university spin-offs were formed in Austria in 2014, the MIT (Massachusetts Institute of Technology in Cambridge, MA) set an unparalleled record with around 26,000 spin-offs over the course of its 150-year history.

It is high time to overcome the lamentable desire of the R&D society to have a few more million euros in research funding which more often than not founders as a result of the parallel nature of a restricted market focus and the cocooning of science in the ivory tower in favour of a true cultural change towards becoming a continent full of creators. In order to create a type of “gold fever” in the long-term when establishing entrepreneurship, the higher educational institutions must receive bonus payments from the government incentive schemes, in order to address innovative company spin-offs more effectively when it comes to providing systematic proof of payments and records.

European data protection

The second European milestone as far as establishing the digital society is concerned relates to the implementation of European data protection. The Minister of Justice of the European Union gave the green light for the new basic regulation to be introduced on 15 June 2015. The “right to be forgotten” is incorporated into the proposed legislation and the definitive requirement for data processors to gain consent from data holders to process data is a highlight of the data protection reform which gives the citizen the right to determine which personal information they make available again. The European Parliament that has been further strengthened in the Union’s political system will request further improvements until the new data protection regime finally comes into force. Even if this is a time-consuming procedure, 1 January 2016 now appears to be realistic as the date when it will be implemented. Gone are the days when major US multinational data companies of the calibre of Google, Facebook or Microsoft were able to pick countries with a low level of data protection as loopholes for pressing ahead with their imperial economic policy in the slipstream of unequal established European values. I hope that the European data protection will make it easier to punish competition law violations resulting from a hidden vendor lockin.

Substantial fund financing

It is also necessary to have financial strength to achieve equality. As is the case with almost all American elite universities which manage their innovation policy with top-level funds, it is now also necessary to introduce a “new thought process” in Europe for strategic investments in infrastructure. The subsidy policy that does not have the best reputation will be replaced with loans based on EFSI guarantees, which come from the EU budget, for the EFSI (European Funds for Strategic Investments) system proposed by the Commission President Juncker. The fund which has been established in the structures of the EIB (European Investment Bank) envisages expenditure of 315 billion euros for the period from mid-2015 to 2017.

However, experts have been criticial of the fact that the equity ratio of the EU has been set too low at just 21 billion and a leverage effect of 1:15 is unrealistic. The common conclusion is therefore to incorporate the nation states in the funding.

According to the EIB presentation, an investment volume of around 600 billion euros is required in Europe to close the gap on the leading world regions in the competition for infrastructures that are significant for society as a whole by 2020. A guarantee-based subsidised loan for projects compliant with European infrastructure strategies will however not improve the investment climate in the long term, as uncontrolled, incorrectly prioritised and therefore unrefundable grants shall be omitted in future.

However, the Juncker fund also faced a significant blow. The European Parliament as part of a trio with the EU Commission and the European Council was unable to maintain the framework program for research and innovation “Horizon 2020”. A compromise was reached in favour of the EFSI to reduce this facility by around 2.2 billion euros. Only the “European Research Committee” (ERC) flagship project and the support of young scientists as part of the Marie-Sklodowska Curie program remained unaffected.

Tax money for loan defaults of banks, which allocate loans along with the EIB, is paid into the fund. Unfortunately, it became evident during this conflict that financial service providers follow a completely different logic when it comes to the charging of interest and loan repayments to that of long-term value added in education and science. Despite the fact that investments in these sectors are highly profitable, national research funding instruments and the European collaborative research institute in particular, which created international networks between top scientists and innovative companies with the strategic support of the funding systems over the last decade and in doing also built a bridge from basic research to application orientation (“conquering the valley of death”), will be confronted with a more difficult situation in future.

Strategic infrastructures for telecommunications, electricity, health and transport are an indispensible part of the ecosystem innovation. However, the combination of business and science for developing and implementing product, service, organisation and social innovations also plays a huge part in the proposed strategic new beginning. I therefore doubt whether it is wise to compare the performance of one pillar with the performance of another.

I recently suggested establishing a European IT foundation with the aim of enhancing IT intelligence in Europe and developing marketable future solutions which for the most part justify a European value added chain and cannot be strategically purchased immediately by global investors. I considered the EIB model to be a good example to apply for this vision, yet the approach I took for this model was to ensure that the major IT players in the EU and users and beneficiaries of advanced IT solutions from high-grade IT-dependent industries such as transport, health, mechanical engineering or environmental engineering pay into the funding pool proportionate to their market size, in order to support promising start-ups.

This type of European IT fund could take on the role of a stable European core shareholder who is able to protect European interests and pool value-added potential. This IT fund could also focus on the allocation of funds to the required development strategies for implementing mega trends and gear the necessary developments precisely to the requirements of a European industry 4.0 society. A “platform for strategic IT developments” could also be used to combine European IT research, the IT start-up scene and the major industrial users in relation to development funding and opening up global markets for achievements in the European IT sector.

I believe it would be sensible to combine the concept of a European IT future fund with the mechanisms of the Juncker fund. This would mean combining infrastructures with the development of marketable IT solutions at organisational level.