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Governments’ Self-Disruption Challenge

LAGUNA BEACH – One of the most difficult challenges facing Western governments today is to enable and channel the transformative – and, for individuals and companies, self-empowering – forces of technological innovation. They will not succeed unless they become more open to creative destruction, allowing not only tools and procedures, but also mindsets, to be revamped and upgraded. The longer it takes them to meet this challenge, the bigger the lost opportunities for current and future generations.

Self-empowering technological innovation is all around us, affecting a growing number of people, sectors, and activities worldwide. Through an ever-increasing number of platforms, it is now easier than ever for households and corporations to access and engage in an expanding range of activities – from urban transportation to accommodation, entertainment, and media. Even the regulation-reinforced, fortress-like walls that have traditionally surrounded finance and medicine are being eroded.

This historic transformation will continue to gain momentum as it expands in both scale and scope. But its benefits will not be fully realized unless governments take steps to empower the forces of change, ensure that the massive positive externalities are internalized, and minimize the negative impacts. Unfortunately, this is proving extremely difficult for many advanced-country governments, partly because the failure to recover fully from the recent crisis and recession has undermined their credibility and functioning.

The emergence of anti-establishment and non-traditional political parties and candidates on both sides of the Atlantic is complicating even the most basic elements of economic governance, such as enactment of an active budget in the United States. In this context, taking the steps needed to upgrade economic systems, including infrastructure in the US and the incomplete union in Europe, or to meet historical challenges like the refugee crisis, seems all but impossible.