Busting Technology Myths: AI, Jobs, Politics, & Privacy

Nicholas Brathwaite: Hi everyone. This is the Tech Surge Deep Tech podcast presented by Celesta Capital. In each episode, we spotlight issues and voices at the intersection of emerging technologies, company building, and venture investment. I'm Nicholas Brathwaite, founder and managing partner at Celesta.

In today's episode, we are pleased to welcome Rob Atkinson, who is the founder and president of the Information Technology and Innovation Foundation. That organization, the ITIF, is ranked as the world's top think tank for science and technology policy. Rob and his team contribute significantly to shaping the debate and helping policymakers and other stakeholders understand the issues at the intersection of technology and public policy.

And over the past several decades, Rob has served on or advised a number of distinguished national and international technology and economic commissions within each of the Clinton, Bush, Obama, Trump, and Biden administrations. Rob is also an internationally recognized scholar. and author of several books, including Technology Fears and Scapegoats, 40 Myths About Privacy, Jobs, AI, and Today's Innovation Economy.

Also, Innovation Economics, The Race for Global Advantage, Big is Beautiful, Debunking the Myth of Small Business, and The Past and Future of America's Economy. Rob, thank you very much for joining us. There is so much that I'm excited to talk with you about.

Rob Atkinson: Nic, thanks for having me. I'm looking forward to getting into it.

Nicholas Brathwaite: Well, why don't we start by having you tell us a little bit about the ITIF. Of course, ITIF, You and I have talked about this and I'm familiar with it, but please share a little bit for our listeners about the organization's mission and the role that you play. Sure. So I started

Rob Atkinson: ITIF, it's in DC, I started it in 2006 because I felt there was no real think tank or policy group that was advising government, not just in the US, but around the world on, the importance of innovation and the importance of government not screwing it up and ideally hopefully getting it right and you know it's funny because when you're an entrepreneur and you're you're slaving away uh trying to make your company and build your company kind of the last thing you think about is government and policy but It's really important.

It's important for more for some industries and companies and others, but overall it's pretty important. And so what our mission is, is to help policymakers do the right thing to help drive more innovation. And, uh, we work really hard to get them to not do bad thing, which is probably more the case than the former nowadays, where there's lots and lots of, uh, policy efforts to squash innovation or limited, you know, all in the name of protecting the public or other kinds of things, but oftentimes misguided

Nicholas Brathwaite: So Rob, I think you'll agree with me that without a doubt, this is a very dynamic time in the technology space.

In fact, in my view, I'm not sure there's ever been a period in history when we've seen greater scale or pace of technology discovery. Um, based on what you just said about ITIF, I can imagine that because of those dynamics, along of course with the shifting geopolitical landscape, this must be a quite busy time for you.

Rob Atkinson: You know, there's really three things that make this the busiest time we've ever had. One of them is exactly what you said, the emergence of new technologies. Plus, the overarching importance of AI, so just to give an example, one of my colleagues who leads our biotech work just proposed an interesting project today on the intersection of drug discovery and AI.

So there's all this technology, not just AI, that's coming about, robotics, autonomous systems, you name it. Secondly, you have the issue of China, which looms large, uh, on how that's China's affecting innovation and innovators around the world. And thirdly, you have this unprecedented tech lash, not just in Europe, but increasingly in the U S and it's, uh, you know, people who advocate for it, frankly, propose things that are just really harmful, really, really bad.

And so, you know, spending your time, you can spend all your time on one of those things, but really when all three are going on at the same time, there's a lot to do.

Nicholas Brathwaite: Yeah, and some of those are topics I want to double click on later on in the conversation. But for now, I want to talk about a topic that you've addressed, um, several times.

For example, in your book, Innovation Economics, the Race for Global Advantages, you explore the critical role of innovation and driving economic growth and competitiveness. As Deep Tech invested at Celesta, You know, we see a groundswell of opportunities out there for technologies, entrepreneurs and companies.

Um, but this environment is also extremely competitive and technology is advancing so quickly that it is often difficult for companies, let alone nations to build and maintain competitive advantages. I'm interested in getting your comments on these dynamics and the intersection between this innovative environment and, and the groundswell we're seeing in new ideas and new technologies and new discoveries and how countries can leverage advanced technology to create competitive advantages.

Rob Atkinson: Yeah. So, you know what, my first book was, uh, I think it was 2005. It was the past and future of America's economy, long waves of innovation that power cycles of growth and the long. sort of theory among innovation economists of what are called general purpose technologies, which a lot of people are saying AI is that today.

But certainly it was technologies like the internal combustion engine, steel, electricity, chemicals, electronics. And the idea is that those emerge, um, Not just evenly, but, but, but in clumps. And the last time this happened, really, was the, you know, the idea, sort of, laptop, smartphone, internet era. It's a pretty interesting era.

For the most part, the U. S. was really the only place that really understood that and took it seriously and really was able to take advantage of it. And so, you know, I literally had meetings as late as the early 2000s where the Europeans would come over and the most important thing they wanted to talk about was their steel industry.

You didn't really have China, you know, the Japanese were stuck in the past with, uh, you know, there's a term called Wintelism and Nick, you know, having worked, I believe at Intel, uh, Wintelism is Windows and Intel. So the Japanese had missed that boat. So we were able to do really well, partly because of that, partly because of our inherent advantages.

I think what's different today is, you know, Countries know they missed the boat that time, but they don't want to miss the boat this time. So you've got a lot of countries, uh, the Koreans are trying to get into all this now, the Japanese, the, obviously the Chinese, the Israelis, the Europeans, the Canadians who we'll, we'll talk about in a minute.

So in that sense, there's just more people, more countries focused on these, on these new technology, including deep tech. And at one level, that's great for the world because the faster we innovate as a world, the better off humanity will be. But it also means a little bit tougher environment for, for U. S. innovators.

Nicholas Brathwaite: So I'm, I'm from, originally from the Caribbean, and I'm, I'm very good friends with Prime Minister Martial Barbados and I serve on a group council. And one of the challenges smaller economies or even emerging economies have is they tend to be late adopters of technology. And often they're trying to leverage technologies that were optimized for the way they want to use it.

How can smaller economies leverage this whole idea of innovation economics?

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Rob Atkinson: So there's two parts of that I'd like to break down. Size is one, and level of development is another. And so you mentioned, I think, some of the Caribbean islands that are small, but they're, perhaps a little bit behind. So let's just talk about small countries that aren't behind.

I just saw a fantastic study by a couple of economists at the London School of Economics and Singapore University talking about the amazing job Singapore has done on scaling digital technologies. Who would have thought? A little, pretty tiny country, yet their entire government strategy was all of government.

Super flexible, focused on how Singaporean entrepreneurs could scale technologies globally. They've done a pretty good job. You look at Israel, Israel's done a pretty good job. Uh, so Taiwan's not all that big. So I don't think size itself is a limiter. In fact, some, in some ways, size might be an advantage because you can coordinate, you can align.

You can really focus on core missions. I think the bigger challenge, uh, is really around more level of development. Although to be fair, we'll, we'll talk about that in a moment. Canada is not all that big, uh, at least from a GDP or population perspective, they should be able to do what Israel has done or Sweden or, you know, Taiwan, and they haven't, so it's not just being small that's an advantage.

You have to be able to utilize it. I think for developing countries, though, a lot of the key for them, I think, is two things. One is being a fast follower adopter. It's striking how many developing countries don't adopt these technologies as fast as they could. They don't transform their government, their banking, their education systems through these technologies.

And then secondly, identifying, you know, a few really good entrepreneurs who are willing to take a global, you know, build a global business. Those people are in every economy. It's more of like a random chance, you know, they tend to be distributed randomly around the world. And how do you take advantage of that and nurture those folks?

And I think some countries have done a better job than others.

Nicholas Brathwaite:  But of course, vision and policies play an important role. So what would you consider to be some of the core pillars of policy tenets of a strong innovation economy?

Rob Atkinson: Well, the most important one is, and it's the simplest one, you have to want it.

I mean, it really is as simple as that. If you're, if you're, if your political economy, if your political system is either lazy or corrupt or thinks that oil and gas are the key or whatever it might be, yeah, you're not going to do it. Um, I don't think the U. S. as a whole, I wouldn't put them as a, as at the front of the pack in terms of being hungry.

Just to use that. I don't think we're hungry. I think our entrepreneurs are hungry. I don't think as a country we're hungry anymore. You know, you go look at some countries that are hungry and like, I think the Koreans are hungry now. The Taiwanese are hungry. The Israelis are hungry. So I think that's number one.

You got to really want it and you got to be willing to prioritize it in your politics. And that means making political choices that are going to Piss off some vested interest groups because you know innovation isn't just I mean This is how the Europeans think about innovation a company that builds something really cool and they hire another 10 percent of their workers That's how they conceive of innovation by and large what innovation really is is a company that does something cool And completely destroys a lot of other things through creative destruction.

But that's where a lot of the values comes from, you know, and you have to be willing to be cool with that. You have to be able to say, you know what, okay, we're going to completely transform our finance industry with FinTech, or we're going to transform our taxi industry with, with, you know, Uber, and we're going to transform our Uber industry with, uh, with completely autonomous vehicles.

So if you're not comfortable with that, uh, you're going to have a harder time. And that's one of the things the U S is. been good at historically, we've been more willing to accept those kinds of disruptions. But I think we're losing that ability or we're losing some of it. So I think that's another one.

And finally, you got to, you got to kind of make it easy for entrepreneurs to do business. You got to make sure the tax code is not outrageous. You got to make sure the regulatory system is, I mean, good example, if you look at our drone policy, other countries have way better policies for drone entrepreneurs than the U.S. does. RFAA has been a laggard. It's been very slow. It's been very risk averse. You know, those things matter, uh, you, you, you want to, you want your entrepreneurs to be able to go out and cutting edge. You know, if you're in the construction, if you're in innovation and construction, I wouldn't want to be in the U.S. You got to deal with 7, 000 local building codes, you know, that's tough. Uh, you want to be in a place that says, Hey man, we want 3D printed housing or whatever other innovations are coming in housing. So the government has a key role in making sure they're, and finally the government has a key role in funding research universities and making sure kids are going into STEM and some of these other key factors.

Nicholas Brathwaite: But you mentioned several countries that are hungry. I'd like to bring one up and that is India. Over the past few years, investments in India have been increasing, one would say almost exponentially. What are your thoughts on India from a policy perspective? What are they doing well? And, you know, what concerns would you have if you were an investor looking at opportunities in India today?

Rob Atkinson: So you're absolutely right, Nick, that India is doing better than it has been. But I look at India and I'm like, man, talk about an underperformer. This is a country that should be growing twice as fast. This is a country for the last 10 years that should have been seen by everybody in the world as the natural alternative to China.

Companies were begging for an alternative to China. Everybody knew you had to have a, you know, a, a, a, a dual, dual production sims, one in China, one elsewhere. And the Indians have just, they can't seem to get out of their way. Um, You know, I remember a number of years ago, some, some Indian company was building something, and it was some socialist state province that basically, you know, they were like three quarters of the way through building it, and the socialist said, nah, you can't do it anymore.

India's a lot better than they were before, don't get me wrong. But, you know, India, if India wanted to, They could be a global innovation powerhouse within 10 years. They really could and all they have all Easier said than done. They got us get rid of the corruption. They've got to make the electricity system work I mean last time I was in India the power went out at the airport for like 10 minutes.

I just went out Like, what the hell? They've got to make sure that their roads and logistics and infrastructure system work so you can get in. They've got to get rid of some whole bunch of stupid tariffs on, particularly on imports. If you're building something, an electronics thing, you don't want to have to pay high imports on some capacitor or some chip coming in there.

You got to make sure that they can train more workers. But the advantage India has is it's, first of all, a lot of English language speakers, a lot of engineers who've been trained in Britain or the U. S. or Canada and are really, really good. Um, the critical mass of foreign companies that are doing things there and a desperate desire by multinationals to develop a second production hub.

So I think India has enormous possibilities, but they, they just are so bureaucratic and so political. You know, I, I was over there a few years ago and I was meeting with the head of their, essentially their federal communications commission. And I'm waiting, uh, in, in this little sort of lobby hut, uh, with, with holes in the plaster, How hard is it to buy a bucket of plaster and plaster the holes, but nonetheless, and a big sign that says, if you are told that you should give a bribe, call this number.

Yeah, that's not a good sign. You know, I get, I'm glad they're competing, they're fighting bribery, but anyway, long way of saying, I think India could do great, but they, they really have to make the tough political choices to fix the kind of institutional problems they have. If they could do that, they, they grow a lot faster.

Nicholas Brathwaite: Yeah, I, I think things are, things have changed and are changing rapidly in India. I've, I've been doing. Business in India for over 20 years, and I've been involved in setting up several businesses in India that became very large, including one that grew to revenues of almost a billion dollars. And and I can tell you that things have changed and they're changing.

And the rate of change is even accelerating. The level of innovation that you see coming out of India is also much. Um, it's also very impressive. And I think there's a good chance in the deep tech space that you will see some very globally. Significant businesses, um, coming out of India based on the level of innovation and the problems that some of these companies are trying to solve, because many of them are solving problems that quite frankly are different from what you see in, in the United States and Europe.

And the problems are actually the kind of problems that the majority of the world are dealing with. I've also seen in recent times a significant improvement in the self confidence of the Indian entrepreneur where they is tackling much bigger problems than they were even 10 years ago. So I think, um, I think India is on the way, but of course there are, there are challenges and issues that still need to be addressed.

But let's change, let's change topics for a while and talk more about emerging technologies. AI is of course the area everyone is talking about these days and there are lots of debates around regarding speed versus safety in AI development. Huge amount of capital is flowing into, into the space and every big tech company is making some kind of a play in AI and, and one could say that the government has been, one could argue that it means slow.

In action so far, what are your thoughts regarding striking the balance, the right balance and how do we address the valid concerns around AI without necessarily stifling innovation?

Rob Atkinson: Well, ITIF wrote a long report, very easy to read, about four months ago. We identified about 25 or so concerns that policy makers have raised around the world, around AI.

Everything from deep fakes to job loss to racial bias, all sorts of things. And we then went through and looked at each one of them and said, Is it a real problem? Is it a global problem? Is it national? Do we need regulation, et cetera? And by and large, what we argued was almost all of these issues are dealt with through existing regulations.

So give an, give an example, AI in vehicles, it's already regulated. If you put a vehicle on the road in the United States, it's regulated by the, by the National Highway Transportation Safety Board, uh, agency. Uh, if you want to put a drug, you know, device on the market, that's. using AI for medical diagnostics that's regulated by the FDA.

If you want to use AI as a finance tool to make decisions around loans, that's regulated by the fair credit reporting act. So a lot of this is already being addressed on things. I mean, we don't need, in my view, we don't need to regulate a AI dating app. So what if it's biased? So what if it's wrong? You just go to a different one.

That's better. Um, okay. So I'm very skeptical, frankly, of having AI specific regulation. I don't know that we need it. I think we're better off thinking about specific application areas. Now I'll give you an example, and that's facial recognition. Um, this is a point we talk about in the book, where you hear this narrative, uh, it's constant narrative, that facial recognition doesn't, is not as accurate at, at, uh, identifying dark skinned faces.

Well, that would be a big problem. The only problem with that assessment is it's actually technically relating to a study done on the technology that's similar, facial analysis, which isn't facial recognition. And secondly, the National Institute of Standards and Technology, uh, every couple years, uh, Companies give their, their, their devices and their, their systems to NIST to test.

And this goes through this rigorous testing on different types of faces, age, gender, race, all sorts of things to see, are they biased? And what NIST has consistently found is that the best ones are simply not statistically biased. The worst ones are. So the answer is not to say that we can't have facial recognition.

It's just simply to say if government. is going to adopt a facial recognition system, they need to adopt one that is NIST certified. And so we see a lot of the things like that. What I worry about with AI regulation is both what Canada's doing and what the Europeans are doing. The Europeans have the AI Act, and I think it's going to really slow down innovation.

You potentially have to go to the government to get your algorithm approved through regulators. We've never done that before. Uh, so I worry that you may not be able to reuse data for one, if you collected it for one purpose or another. So I'm much more about let's go slow, but let's kind of see where we are.

Let's really see if harms emerge before we go too fast.

Nicholas Brathwaite: I think there, I think there are a couple of challenges that, that we cannot ignore. One is the fact that even though we have regulatory agencies for many applications today, many of the policies or guidelines did not necessarily contemplate. Yeah, and and the impact of AI.

And so at the minimum, we have to look at updating the policies or guidelines of some of these organizations. Um, the second is that, you know, in in the in AI implementations, you have human in the loop, both as the front end and the back end. And The front end is where you see some of the bias come in and then the back end has to do with, you know, some people's naivety, maybe a wrong recommendations that might be that they may be following, you know, the fact that you don't have the ability to question the recommendations coming.

So there's, there's some opportunities for technology to expand into the space that would help improve the reliability. And the efficacy of the systems that we are dealing with. But I do agree with you that it's not clear that you need to have overarching type of policies, but for sure, we're going to need to have the current agencies take a look at the existing policies and guidelines and make adjustments that that's appropriate.

Do you agree with that?

Rob Atkinson: Absolutely. 100 percent agree with both things you said. Um, we've long argued that existing regulatory bodies need to understand AI and adjust what they're doing to make sure that it's consistent with AI. So 100 percent agree with that. Again, very different than a national AI, Uber AI law that affects all AI.

And then secondly, with bias, I, I agree with you. However, I think again, it depends on sort of the system. Um, you know, we were asked by a group that was working with a group of fortune. Fortune 100s or Fortune 50s, I don't remember. And it was a bunch of HR senior leaders in companies that wanted to get out in front on using AI in both hiring and personnel decision making, which is great.

I mean, that's what we're going to do, but they wanted to get out in front to make sure that they weren't going to be using technologies that were unintentionally biased. And I think that a lot of companies want to do that, and I just sort of hate to sort of jump too far ahead in things, because I think we should sort of let the market work out a bit before we jump too soon.

Because think about it this way, if you're, if you have a hiring elder, and let's just say it's biased against tall people like I, like I am, I'm six foot six. Uh, Or it's biased against people who have red hair or whatever it might be. You know, if you're a company deploying that, that's the last thing you want.

You really have every incentive in the world to have an algorithm that's exactly accurate. Same thing with, with, with insurance policies, for example. You have every incentive in the world to make sure those are accurate. I think the biggest area really is in government use where sometimes government procurement folks either aren't that aware, like for example, sentencing algorithms.

We have to be really, really careful with sentencing algorithms. Uh, there have been cases where there have been biased and, uh, but, but overall, I think we need to sort of see how developers work on this. How industry does it, um, how researchers focus on it. And I do agree. We need better research on the bias issue.

I just really don't think we should jump in right now with overarching AI, which is what, uh, You also just said.

Nicholas Brathwaite:  So the challenges around biases, whether, you know, it's there or not sure. If you're aware of the bias, you can do something about it. The concerns when you're not aware of the bias, right? So, so, so let's move on in your most recent book, which was published earlier this year.

And the title is technology fares and scapegoats 40 myths about privacy jobs, AI and today's innovation economy. It's a fabulous book. I haven't read it yet, but I've read reviews about it, and I just ordered the book so I could read it. But based on this, I'd like to throw out some of the myths, if you want to call it that, or perceptions, and get your response to them.

So, are you okay with that? Absolutely. So, AI will take away all of our jobs. Your thoughts?

Rob Atkinson: Utter nonsense. Oh my gosh. Utter, utter nonsense. That one drives me crazy more than anything else. Historically, and we've done the study, looked at all the data on that, going back to 1870. Historically, when technology eliminates jobs, what happens is the products that those workers were making gets cheaper, right?

You don't need a thousand workers to make a car, you only need five out of the car gets cheaper. So what happens with that? What happens is people have more money. They spend the money on something else. Every single study, whether it's the International Labor Organization or OECD or whatever, shows the exact same thing.

What people make a mistake of here, it's what economists call the lump of labor fallacy, that if a job is eliminated somewhere else, it's gone for good. There's no other jobs will ever get created to take its place. That's point number one. Point number two, if we're lucky, if we're lucky, AI will double our productivity rate.

Right now the productivity rate in the U. S. is the lowest it's probably ever been, really, really bad. Uh, and we've had in the sixties, for example, in the fifties, we had 3 percent productivity growth rates, 35 percent growth of real income in a decade and unbelievably low unemployment rate. So I just don't buy that notion.

I think it's terrible. We have to have a more productive economy. Especially as the baby boomers get older, especially as American workers want more money, rightly so. So I think it's a terrible idea, uh, really bad.

Nicholas Brathwaite: All right, next one. Technology is eroding privacy.

Rob Atkinson: Well, that was one that my colleague David Moschella wrote, and David's been a long time IT industry maven and been involved in the industry.

But one of the points he makes is, um, Think about all the things that you can go online today and find out about. You know, certain diseases you might have, sexual orientation, you know, all sorts of things that in the old days you wouldn't go into a library to do that, you might be too embarrassed. Uh, if you were living in a small town, you definitely didn't want that.

So there, at one level, it's really boosted our privacy because people can really explore important areas of information for their lives that Maybe you're sensitive and you can do it. Secondly, I, I, when people say this, I, I keep saying, okay, give me an example from your personal life where this has been a problem.

What most people are afraid of is that somehow your Google search is going to be put in the front page of the New York Times. Um, Yeah, I don't think so. I haven't seen that happen yet. Um, you know, people often talk about targeted advertising on the internet, as if somehow the advertiser knows it's Nick or it's Rob.

That's not what happens. It's a blind match. So, uh, the advertiser knows that I might like riding bicycles, because I've searched on bikes, and so I might get an ad for bicycles, but the bike maker doesn't know that Rob Atkinson has searched on bikes. There's a lot of confusion about that, and I don't know.

I think for most people, this has been a privacy enhancer. Back that up one point. We've advocated for a national privacy bill for 15 years. So that doesn't mean we don't need a national privacy bill. We should have one. Uh, but the idea inherently that somehow we don't have privacy, I think is a myth.

Nicholas Brathwaite: I think one thing we could probably agree upon is that, um, by the way, I don't disagree with you, but attitude to privacy.

Has changed in the social media era. So when you have somebody who, from the time they were born, the naked baby pictures are being posted on Facebook, it's hard to believe that they will have the same attitude towards privacy as maybe our generation or previous generations did. Do you agree? Right. No, absolutely.

Rob Atkinson: That's possible. Absolutely. Although, you know, one thing I, we're, we're a little bit, I want to call us radical. But one thing that does piss me off, I'll have to say that, does irritate me. One of the things I'd like to do is get, is overthrow HIPAA, Health Information and Privacy Protection Act. I would love to be able to have an option to click on a button that says all of my health data.

By the way, not mandatory. If you don't want to do this, feel free not to do it. All of my health data can be shared in a de identified, anonymous way. To support health research. I would do that. I'm an organ donor on my driver's license I would do that because I think it's important for us to collaborate to contribute to the public good and help solve Pretty critical health problems that big data analytics could contribute to but there's so much opposition even to that idea where you could opt in Voluntarily to do that And so in some ways, I think the privacy debate has gone way too far.

It's all about individual rights. Well, sorry, but we also have collective responsibilities. Uh, you know, I can say that, Nick, because I'm a Canadian, you know, and, uh, you know, the American ethos is, um, you know, life, liberty, and pursuit of happiness. Uh, Canadian is, uh, prosperity, good government, I forget the other one.

Um, so Canadian ethos is more kind of the collective good is there in America as Americans were like, yeah, we don't like that. But I do think that people should be a little bit more aware of that, that, you know, a lot of these really interesting, for example, educate educational data analytics, uh, activities have been shut down.

How are we going to know what works for certain kids? I mean, kids are so different in terms of their learning styles and their ability to really teaching style. If we could use big data and AI on that, that one to crack that. That'd be phenomenal. But if all the parents are screaming, you know, you can't use Jimmy's data, even if it's anonymous, and we're going to slow down on that.

Nicholas Brathwaite: But there's so many of these questions I'd like to ask, but I'll ask one last one. Um, AI will destroy humanity.

Rob Atkinson: Well, look, even Elon Musk doesn't believe that anymore because Musk used to think that and now Elon says, no, at least according to the last thing he rewrote, it's only going to, AI has no desire to kill us.

They will just. put us into mountain camps, kind of the way gorillas have been moved up in Africa into these mountain reserves and, and we all be living up in the Rocky somewhere. So a couple of reasons why, uh, first of all, if you talk to AI scientists, you'll get some that sort of are in that camp and there's.

certain groups that are funding this enormously. And then there's other AI scientists who are pretty darn good, just as good. And they say, no, this is nonsense. There's, there's no intelligence here. There's no consciousness behind AI. So I I'm on their side. Um, secondly, I'm on the side of humans building control.

So I think what we're doing now with, uh, NSF and, and, and the U S and Canada, the, I think Canada, but certainly the UK with AI safety institutes. and funding AI safety research. Fantastic. Let's do more of that. You know, I said to some AI scientists once at a conference, I said, if you really believe that you should leave the field because you're destroying the entire human race.

So let's leave the field and let's cut all NSF funding. And they clearly didn't like that idea. So anyway, no, I don't believe that. I think it's a terrible, again, a terrible myth that slows us down. I think AI is going to be fantastic. It's not to say we shouldn't have care as it's developed and implemented, but to say it's going to kill.

It'd be like saying back in 1910, you know, in a hundred years, the car is going to kill 30, 000 people a year. We have to stop. Well, the net benefits of the car, even with 30, 000 people killed, outweigh the cost. As sad as that is, what we really ought to be working on is getting that number down to maybe 3, 000.

And autonomous vehicles have the real potential to do that. So you can use AI to, you know, drastically cut the death rate on American roads. I think that's what we should be thinking about.

Nicholas Brathwaite: Absolutely. So let's, let's change topics a little bit and talk about the global tech landscape. Absolutely. So one of the, one of today's, you know, it seems like never ending topics is the U.

S. or the West versus China. Do you think it is right to focus so much attention on China? And are they as strong of a threat as many people believe to the U. S. dominance in technology? I believe the

Rob Atkinson: answer is, to both of those questions, is a yes. We're in the middle, or I should say the final stages of a two year study funded by the Smith Richardson Foundation to assess just how innovative Chinese firms are.

Very difficult study. Don't, I don't, I'm under no illusions. That's an easy one. But we've been looking at about eight different key industries, uh, robotics, fine chemicals, biotechnology, EVs, nuclear, commercial nuclear power, semiconductors, AI, and quantum. And I have to tell you, we're, the Chinese are ahead, or at least on par, I think, in EVs.

They're certainly, I believe, ahead on commercial nuclear power in terms of innovation. The other ones, they're not. Um, but what is really Really shocked me. And I've been studying Chinese tech since 2008 is how fast they're moving, how much progress they're making. Uh, so I, I think it's a mistake to underestimate their capabilities.

Uh, it doesn't mean they're going to win on everything. It doesn't mean they're juggernauts, but they're really, really, they've got a better system than we think. They're pouring an enormous amount of money into this, and at the end of the day, money does matter. If you can hire a boatload of engineers and scientists on it, put them on a problem, that's a big leg up.

So I do think we should be focused on it. Absolutely. And more importantly, it should motivate us to do better in the U. S. and the West overall, to have a better and stronger innovation system. Just one simple example of that is our Research and Development Tax Credit, which helps companies get a tax credit for the R& D they use, and now it's refundable, partly.

In 1995, we were the most, the highest in the world. We were the best. And now we're 34 nations. The Chinese R& D credit is almost four times more generous than the U. S. credit. That's a crime. We should double our R& D credit tomorrow. We should make it way more refundable for startups. Not that hard to do.

Doesn't cost an enormous amount of money, and that would make it, better for innovation based companies in the U. S. to thrive.

Nicholas Brathwaite: I think this, this topic in itself could be an entire podcast. I personally believe that over the greatest threat and to our dominance is, is not China or any other country, although competitively they are improving.

I believe the greatest threat is, you know, our own policies around Research and development and entrepreneurship and, you know, making sure that we continue to Make it easy Easier for people to be able to to innovate in this country.

Rob Atkinson: Yeah, I think they're both related and I think I couldn't agree with you more, you know, we you know, it's funny because back people sort of They either don't know the history or they laugh at it, but the U.S. on both sides of the aisle in the 80s, when we were responding to the Japanese challenge and everybody laughs, oh, the Japanese challenge, well, we took it seriously. And both Republicans and Democrats did an enormous amount. One of the things they did is they changed ARISA, which managed pension funds, to allow them to invest in venture.

That was a big deal. Uh, we created the R& D tax credit. We, we created the Bayh Dole Act, which is really important for spinning out, uh, technologies out of universities. Before that, the federal government owned all that. We re in we re architected to create the National Institute of Standards and Technology.

Uh, we've created the federal lab, uh, tech transfer program. So, uh, Yeah, at one point we did all this stuff with STEM and expanded NSF funding. So we were able to do that and now today we're, well, maybe not, you know, we've done a few things recently, but, so I agree with you a hundred percent. We've got to see this as a wake up call and get back on the horse.

‍Nicholas Brathwaite: But of course, Celeste is a deep tech investor, and we believe that this is one of the areas where we haven't paid enough attention, like, you know, over the last couple of decades, we have not invested as much in deep technology, and we think it's time for that to change. And, you know, we started Celesta, uh, You know, a little over 10 years ago.

And since then you can see the kind of opportunities that are here, but I think we need more focus on deep tech investing. So next, next area in terms of emerging hubs for technology and innovation, do you see new regions or countries that are well positioned to rise over the next decade or two,

‍Rob Atkinson: You know, one of the problems, we have a new report coming out that we're doing with a think tank in Korea, uh, comparing and contrasting the national innovation systems of China, Taiwan, South Korea, Japan, and the U.S. And what we find is that each country has strengths and each country has weaknesses. There's no, I wish I could identify like the perfect country that gets it all right. Um, nobody does that. I like what the Singaporeans are doing. I think they've They're pretty good. I sound like I'm going to contradict myself, Nick, but I think in 10 years, you're going to see India and certainly parts of India, different India is a huge, both population and geography.

I think there'll be certain tech hubs in India that really, really move up the ladder and become, you know, globally, Prominent in their own right, even more so than they are now. I don't see much in Latin America. To me, Latin Americans have, the politics there are so problematic that I just don't see them breaking out.I think it's, you potentially see something in Africa. Um, I've been really impressed with a few, and I wish I knew more about Africa than I do. So I'm, but I've been really impressed by a few African countries, Ghana, Kenya, a few others.

‍Nicholas Brathwaite: Nigeria, Nigeria has some, some activities there too, but they have some other issues.

‍Rob Atkinson: Botswana is another one, Nigeria. I think what you, you, you, you just see a lot of entrepreneurial energy. You see some governments that are interested in that. So you could imagine one or two of those places kind of rising up and, Becoming seen as well. Hey, we're a real global hub. And I think one of the advantages of that, I think a lot of multinationals would, would like to be in Africa for two reasons.

It's a huge growing market. No question that Africa, the African market is going to be one of the fastest growing markets in the next century. And then secondly, just for kind of an ESG reason, you want to be an average, you want to help, you want to help out a developing economy. So I think those would be ones.And I, the other ones I would point to would be some in Eastern Europe. I'm really struck by how committed the, uh, government officials that I've talked to from Slovenia, Romania, various countries over there, just really, really hungry. Uh, Poland, you know, they, they know what bad, bad economics is like. They, their parents or grandparents lived with it, unfortunately.

So I can, you can see some East, one or two Eastern European hubs pop up and really do well, I think. I'm very pessimistic, frankly. We'll talk about that a little bit. I'm, I'm, I'm pessimistic about the Anglo, some of the Anglo countries besides the U. S., Britain, Australia, Canada. I think if they got their act together, they could do well.It's not clear to me. They have the capability of getting their act together.

‍Nicholas Brathwaite: But I'm, as I mentioned earlier, I'm a, I'm very, very bullish on, on India and, and so is our firm. Um, but I also believe Africa is one to watch. I have, I happen to have a friend who, um, actually is educated in Canada as well.And, and he already started. Two unicorns in Africa that have attracted, you know, capital from some of the biggest private equity firms globally. Um, and I think there are many opportunities there. I've been spending some time studying that. So let's talk a little bit about Canada. You mentioned Canada. I know you're a Canadian.Um, you know, I went to school in Canada and Canada has, you know, some of the best researchers on the planet. Um, the Canadian research, um, capabilities are, are very, very good. And Canada produces some, some top engineering talent and, and has become somewhat as a, somewhat of a, um, Of a supplier of technical talent into, into us companies, but Canada doesn't seem to have benefited much from the quality of research or the quality of technical talent and certainly economically.So what are your thoughts on that? I know you've recently started a division of ITIF, um, called the center for Canadian innovation and competitiveness. I'm interested in getting your thoughts about Canada.

Rob Atkinson: Yeah. There was this belief for a long, long time among most people. People who studied innovation or thought about it, that if you had the right ingredients, that somehow your entrepreneurs would grow, would, would, would, you know, bake a beautiful innovation pie.

And Canada always had the right ingredients. They always scored near the top for ingredientism, which is research at universities, which are STEM talent. Uh, rule of law, energy, infrastructure, et cetera, et cetera. Canada always had that. What we've now realized is that ingredients are only part of it. You have to be able to then scale those ingredients, combine them in new ways.

That's where Canada has failed, frankly. That's not to say that there aren't some growth companies in Canada. There certainly are, uh, but nowhere near as much as they should have. So I think here's a few problems. I just saw a new study and it was looking at the role of immigration on growth. And. No surprise, what it found was that high skilled immigration was an unalloyed growth and innovation driver.

No question about it. Low skill immigration, they found out, was not. One of the factors with low skill immigration, they said, also, is the other problem it does is it raises housing prices, because housing markets don't respond as quickly as immigration. We've certainly seen that in Canada, where they've had high levels of immigration, some of it high skilled, but the housing markets haven't responded.

So what I always thought Canada could do would be they could be sort of a reasonable cost alternative to Silicon Valley. But that's not what Vancouver is. You know, Vancouver is a high priced alternative. I mean, it's maybe not quite as costly as Silicon. Toronto is not a low cost alternative anymore. So I think the Canadians have made a big mistake by not addressing the housing challenge sooner.

Because I think a lot of companies and entrepreneurs would be willing to go to Canada if they could say, man, I can, I can buy a house for half of what I buy in Silicon Valley and be in this really great environment with high skills, engineers and the like, that's number one. Number two, Canada has good universities.

But the entire ethos up there is just give us money to do research and wonderful things will happen. This is known in science policy circles as the Vannevar Bush hypothesis, the linear model to pour, pour money into research and outcome good things. I don't think that's the way to do it. I think you have to align your research capabilities with your entrepreneurial and company needs.

Now, I think a place that has done that enormously well is San Diego. UC San Diego, their engineering department is constantly talking to the companies in the localities, particularly the wireless companies, but more than that, they have a thing called UC Connect, they work to connect the universities with the entrepreneurs.

Canada really hasn't done that systemically. There's some experiments, but they haven't done that systemically. I'll give you one last example. Um, As you know very well, I said their major economic development commerce agency, science agency came out with a proposal this year to revamp their research and development tax credit, what they call SHRED.

I don't think SHRED works very well. It's really a government grant program that masquerades as a tax program. And I think we, we laid out a whole comprehensive agenda on how to fix it and prove it. I don't see the Canadian government taking the political steps to do that. So at one level, Nick, I'm, I think if Canada took the right steps and, and to be fair, there's a lot of people in Canada now raising these issues, talking about it, putting forth ideas. So that's super great. I'd look, I would look to see if both the liberals and the conservatives are willing to take risks and really make the changes that are needed. Because if they are, I think Canada has very, very strong promise, but if they're not, I don't.

‍Nicholas Brathwaite: Again, this could be another topic we could explore in more depth later on, maybe in another podcast, but in the interest of time, I'll have one more policy related question.That is almost every country in the world would love to have a strong tech economy, at least so they, so they claim. Um, but it's much easier said than done. What are some of the necessary fundamentals to building a strong innovation ecosystem?

‍Rob Atkinson: Well, I think there's a couple of things. There's a report we did a number of years ago on the Indian innovation economy.And we came up with this concept of the innovation pyramid or the innovation triangle. And on the base, you have to get the baseline stuff right. You have to have the rule of law. You have to have respect for intellectual property. It can't be so strong, but it also can't, can't be weak. You have to have a tax code that's not, you know, takes everybody's money.Uh, you have to have a reasonably good education system. So, you know, those are all kind of, those are all the chips that get you in the game now. And I think most countries realize they have to do, you have to have infrastructure that works. You, you have to have an open trading system. Okay, that's, that's entry level.That gets you in the game. Now, now you want to start winning some hands? What do you have to do? I think you have to do a few things. One is you have to have a regulatory system that's pro innovation. I mean, that's pretty basic, but you have to think about how can your regular, how do your regulations as they stand right now limit innovation, particularly in new entrant Disruptive innovation.So, for example, in many, many states, it's illegal to sell a car directly from the producer. Uh, now Musk has been able to sort of work a little bit around that. There's all sorts of restrictive laws we have in states and at the federal government. So you gotta, you gotta be willing to do that. You have to be funding research at a, at a very robust level.You know, the United States in the 1960s, The government itself funded more R& D than every other country in the world combined, business and government. Take every corporation outside of the U. S., every government outside of the U. S. USG was funding more R& D. Now, am I saying that the U. S. government or any government should fund all of it?Of course not. Of course not. But that funding, that early stage research is really, really critical. And we're not doing that in the U. S. anymore. You know where we rank in terms of our research university funding as a share of GDP? At the OECD, we're like 24th. It's, it's, it's atrocious. You know, we, we should be putting in 25, 30 billion dollars a year more into our research universities.Uh, no, you don't want to do that overnight. You want to build it up. So I think you got to, you got to do things like that. You got to really make sure that more and more kids want to get into STEM. You got to make sure that your immigration system is pro STEM. You got to make sure your tax code is, is friendly to innovation.You know, you want your government to the extent your government buys things. You want your procurement system to be pro innovation. Um, that's a big deal. Historically, the defense department drove a lot of innovation. So those are, I guess, some of, some of the main things I would think about. I think the last thing would be we're in a world now where for better or worse, we're going to have to think more about, uh, things like the chips act just because of the cost of doing business, the cost of capital, you know, there may be some industries I'd put biotech into that semiconductors where aerospace where we can't let those industries go to China.No, I, I just don't, I think that's a. That's like no way. So we may end up having to have some incentive programs to say, Hey, global companies or American companies, we want you to invest in the U S and here's, here's an incentive to do that. So I think that's another, another feature we need to be exploring.

‍Nicholas Brathwaite: But you mentioned intellectual property. And so my last question today is around intellectual property. We believe that intellectual property is extremely important, especially for creating sustainable competitive advantages. What are your thoughts on IP and any advice you can give entrepreneurs and founders who are listening to this podcast regarding the importance of IP?

‍Rob Atkinson: By the way, Nick, I would remiss if I didn't add one more, and that's a balanced antitrust system. You know, our whole view is you want to be focused on anti competitive conduct, not structure. Under U. S. antitrust law, getting big through playing fair and innovating and doing the best mousetraps is not illegal, and I fear our antitrust system has lost sight of that.Again, That's different than Conduct, a company, a big company that's exclusionary or whatever. That's different. In terms of IP, uh, obviously differs by type of company. Is it something you'd want to use copyright for or trade secrets or patents? That differs by product, by business sector, but clearly patenting early, it's pretty important.You know, it's interesting. Alexander Graham Bell got his patent in, uh, Supposedly 20 minutes before Elijah, I forget his last name, who ended up founding, uh, the predecessor to Lucent, Western Electric, you know, if his patent had gotten in, he would be, he would have owned the telephone patent. So making sure that your, your, your work is, is protected, not just in this country, but frankly, around the world.Uh, it's, it's pretty critical. You're the expert on a lot of this, Nick, but my understanding from, certainly from some academic studies on this, that patenting is pretty important to get early stage capital. If you have a patent, it's a lot easier to get because people know that they can trust that the great thing you've, you've developed is going to be, is going to be safe and you can prosecute people who try to take it.

‍Nicholas Brathwaite: Rob, this has been a fascinating discussion. Thank you so much for taking the time to speak with us today.

‍Rob Atkinson: Nick, it's been my pleasure. Thanks a lot.

‍Nicholas Brathwaite: Well, thank you all for tuning in to Tech Search Podcast from Celesta Capital. If you enjoyed this episode, feel free to share it, subscribe, or leave us a review on your favorite podcast platform. We'll be back every two weeks with more insights and discussions of all things deep tech. Bye for now.