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To: allen v.w. who wrote (6191)	12/2/1998 11:01:00 PM
From: allen v.w.	Respond to of 40688

The Emerging Digital Economy CHAPTER EIGHT CHALLENGES AHEAD This report has focused on the emergence of the digital economythe promise it contains and some of the challenges it poses. Some of the challenges are technical, others involve the development of standards, and still others require significant capital investments. The digital revolution is also changing the respective roles of government and the private sector. In the 19th and for much of the 20th centuries, governments played a key role in helping build or actively regulate much of the country's infrastructure. The federal government made extensive land grants to encourage private capital to expand the nation's rail network. Government subsidies were used to stimulate the development of an airline industry. Federal and state dollars combined to build and maintain the interstate highway system. In communications, the government granted a virtual monopoly to a single company and regulated the industry after its breakup. Most power companies have been regulated monopolies at the state or federal level. The federal government funded and developed early versions of the Internet for national security and research purposes. It will continue to provide funding for research and development on future Internet and high-performance computing technologies. However, most of the capital to build the computing and telecommunications infrastructure is being provided by the private sector. The pace of technological development and the borderless environment created by the Internet drives a new paradigm for government and private sector responsibilities. Creating the optimal conditions for the new digital economy to flourish requires a new, much less restrictive approach to the setting of rules. Governments must allow electronic commerce to grow up in an environment driven by markets, not burdened with extensive regulation, taxation or censorship. While government actions will not stop the growth of electronic commerce, if they are too intrusive, progress can be substantially impeded. Where possible, rules for the Internet and electronic commerce should result from private collection action, not government regulation. Governments do have a role to play in supporting the creation of a predictable legal environment globally for doing business on the Internet, but must exercise this role in a non-bureaucratic fashion. Greater competition in telecommunications and broadcast industries should be encouraged so that high-bandwidth services are brought to homes and offices around the world and so that the new converged market place of broadcast, telephony and the Internet operate based on laws of competition and consumer choice rather than those of government regulation. There should be no discriminatory taxation against Internet commerce. The Internet should function as a seamless global marketplace with no artificial barriers erected by governments. -------------------------------------------------------------------------------- As with any major societal transformation, the digital economy will foster change and some upheaval. The Industrial Revolution brought great economic and social benefit, but it also brought about massive dislocations of people, increased industrial pollution, unhealthy child labor and unsafe work environments. Societies were often slow in responding to these negative side effects. Similarly, the digital economy may bring potential invasions of privacy, easier access by children to pornographic and violent materials and hate speech, more sophisticated and far-reaching criminal activity and a host of other as-yet unknown problems. The private sector and government, working together, must address these problems in ways that make the Internet a safe environment while not impeding its commercial development. The U.S. Government's "Global Framework for Electronic Commerce," posted on the Internet at ecommerce.gov, describes a market-driven framework that will stimulate the growth of the digital economy while offering flexible, industry-driven solutions that will effectively address problems that may arise. Steps are now being taken in the United States and around the world to meet these public policy goals. Perhaps the greatest challenge the U.S. faces, however, is to put in place the human resource policies necessary for the digital economy. If the trends described in this study continue, millions of jobs will likely be created, while millions of others will be lost. The good news is that the net economic growth anticipated by this digital revolution will likely create more jobs than those that are lost. Further, the jobs created are likely to be higher-skilled and higher-paying than those that will be displaced. However, it is clear that we will face great challenges in preparing the current workforce and future workers to fill the new jobs that will be created. If we do not have a sufficient number of well-educated and trained people to fill these jobs, then the good news can turn to bad. If these public policy issues can be resolved, and electronic commerce is allowed to flourish, the digital economy could accelerate world economic growth well into the next century.