Is the Internet's Democracy Revolution a Myth?

Contrary to hopes, the Web hasn’t reduced corruption, conflicts of interest or greed. So how much power has technology really brought consumers?

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What a wonderful world.

It’s so digital, Internetted, Facebooked, Mark Zuckerberged and Steve Jobsey.

We lavish our Likes and shares, send each other viral video clips. Social networks drove the Arab Spring from Tunisia to Cairo to Yemen. They brought us the Israeli “Milky protest,” howling over the high cost of chocolate pudding in Israel compared with Germany and opened all our eyes. Every question, query, every thought, every problem is just one click away on Google. Hallelujah! Internet – the new democratic age.

Right? Or not?

A good place to start is of course the United States, and there’s no better time to start than the recent elections for Senate and Congress. Never before has Big Money had such destructive, terrifying influence. The elections in almost every state and region were bought for cash, provided by associations and organizations run by interest groups, some of which are completely invisible. Yes, let’s start from the U.S. – the biggest Internet and digital power in the world, the birthplace of companies like Google, Facebook, Apple, Amazon and Microsoft that are “changing the world” and bringing a new era of “democratization” to our lives.

Let’s see what’s happened in the 20 wonderful years of the digital revolution, from the perspectives of the American economy, politics, and the quality of life.

1. The health care system. Let us do a mental exercise. Imagine that that it’s the year 1994, twenty years ago, and you have a crystal ball. You peer into it and see the smartphone, a portable font of computing power that costs practically nothing.

Half of Americans would have this tiny machine in their pockets, the crystal ball shows, each with 1,500 times the computing power of the Apollo 11. The question is: What happens to the cost and effectivity of health care costs in America 2014?

I don’t know what you would have forecast in 1994, but the reality in 2014, after these 20 digital years, is that the American health care system is more corrupt, rotten, expensive and unequal. The American health care system costs $3 trillion a year, almost 20% of America’s GDP, yet a year ago 50 million Americans had no health coverage at all and 30 million were under-covered, which means any serious insurance event would reduce them to bankruptcy. More importantly, the only thing that might reduce the inequality and under-coverage is Obamacare.

What effect Obama-care or, as it’s officially called, the “Affordable Care Act” will have on the American health care system remains to be seen. Will it rein in costs? Or will coverage for millions more Americans send health care costs skyrocketing even more, corrupting the system even more? What’s sure is that the passage of the reform was not just a technological challenge, but a political one, and it isn’t a done deal yet. Some 80% of Republican voters want to repeal it, even though most politicians on the American right have no alternative to offer.

Will American health care become more effective and efficient? That can’t be assured. Most of the interest groups got their pound of flesh in the reform. What’s clear is that the big problem of the system isn’t a lack of technology but a surplus of power among the interest groups, which shaped the system for their own greater good.

The American health care system is ostensibly private but most of its funding is public. It features almost every bad thing about the private sector, government and politics. The best way to describe it may be: an equilibrium between seven powerful interest groups, each a master at (legally) greasing the politicians and regulators: interest groups, doctor unions, hospitals, drug companies, medical equipment companies, labor unions and lawyers. The voice of the eighth group, of patients and people ejected from corporate America, goes unheard.

2. Education. What is education like with a smartphone in half the people’s pockets, that can search the Web and access information in milliseconds?

Despite America’s tremendous wealth, its education system is mediocre, unequal and fossilized. The technology’s there to make it infinitely better. But inequality in the American education system is, like in the health care system, the mirror image of other ills in American economics and politics: profound economic inequality, the unwillingness of the establishment to accept change, bloated tuition fees for higher education and interest groups with huge political clout.

Many economists have been questioning the American higher-education model: sky-high tuition that leaves students starting their careers mired in debt, often for decades.

Do no evil?

3. Wall Street. Need we say more? The American financial system is more concentrated than ever. Its bite of the American economy is double that of 30 years ago, and we really don’t need to elaborate on the financial crises and inequality it generates. Even right-wing capitalists, categorical supporters of the free market, admit that Wall Street has become a monster out of control.

Let’s remember that Wall Street creates nothing. It only transfers computer bits. What have hundreds of millions of smartphones and social networks done for the costs of the financial system? I think you get the point.

Where are the technology and Internet companies? For a decade we’ve been told that Silicon Valley will bring revolution to the financial system. Yeah. Last month Apple announced the launch of Apple-Pay, its new payments system. Amazing. No wallet needed.

How will it work? Will Apple abolish our need for credit cards? Will it be slashing the fees of the credit card industry by 90% because the technology is so simple and accessible?

No it won’t. Apple simply hooked up with the cartel of Visa, MasterCard and American Express. It does not intend to lower that industry’s fees. Merchants will continue to pay the global credit cartel through the nose.

Almost all the successful technology companies are the ones that join arms with, or are sold to, or serve the business models of the old world’s big monopolies. Very few undermine the equilibrium of the market.

Facebook, Twitter, blogs, Google were supposed to be the apotheosis of democracy. So far their power has been much less than had been predicted.

The world of technology is axiomatically perceived as absolutely democratic and meritocratic, especially in the last decade, when the cost and speed of creating giant companies dramatically decreased. But that is to oversimplify the case. Many of the “successes” in the technology world involved startups getting bought by giants whose entire purpose was to stymie threatening competition and, sometimes, innovations that would, at times, cost people much less. High-tech is ridden with giants that have vast marketing power and organizational culture not so different from the great infrastructure, energy or finance monopolies.

4. Interest groups in politics. It’s become an unthinking mantra in the digital world that Internet, Facebook and their ilk are the greatest force of democracy in history. Sounds great; but is that “axiom” true?

The American political system is at one of its lowest and worst points in its history, from the perspective of its democracy. The only thing that talks in Washington is money, big money, not only Wall Street money but that of hundreds of powerful interest groups – arms manufacturers, drug companies, Big Labor, guilds, lawyers, alcohol and technology companies and more. There are almost 200,000 lobbyists and machers active in America, about double the number of reporters. These lobbyists aren’t enriching congressmen with knowledge about the latest technological developments; they’re mainly (legally) greasing the politicians on Capitol Hill; American politicians seem to be the hungriest for money in modern history, money intended to reassure their reelection. Everybody knows that Obama raised hundreds of millions of dollars with his Internet campaigns in 2008 and in 2012. Less well known is that on top of that “Internet money,” he and the Democratic Party are, like the Republicans, raising enormous sums from interest groups – banks, unions, drug companies, weapons, food, lawyers and real estate brokers – every guild in the United States that wants to continue to block competition and raise prices.

Facebook, Twitter, bloggers and Google, the ostensible apotheosis of democracy (since for the first time in history, the public could organize to promote common goals) have proven to be a lot less powerful than one might have thought. Politics in Washington is still for sale, whether via associations that operate in the open or closed-door cocktail parties, just as it was decades ago. In fact some say the amount of money and the special interests in Washington have just been increasing since the 1970s.

If anything the mechanisms of money, as well as the Dems and GOP, have learned how to use Facebook, Twitter and the Internet to their advantage much more thoroughly than the citizens’ movements have. The greater interest of the public remains weaker than that of the powerful industries and unions.

Astonishingly, the power of money and special interest groups continued to grow after the dreadful financial crisis of 2008, which should have been a turning point in American history, the point at which politicians and the public should have woken up and said: No more. It’s time to represent the people.

No question, Internet, social networks and search engines have changed our lives. But when it comes to dealing with the biggest ills of the age, the most painful aspects of our political and economic systems, there’s a yawning chasm between the rhetoric of the technological revolution and the reality.

The biggest failure of the Internet and the digital revolution is contending with one of the worst problems in Western democracy: the vast power of the interest groups. The same old institutions controlled by the power groups continue to be the ones to set the rules of the game.

“Internet doesn’t cure hemorrhoids or broken bones either,” scoffed a technology investor I spoke with last week. “Why expect it to reduce the dimensions of corruption, conflicts of interest and greed?”

Internet can’t do that any more than could the old watchdogs, including the press, he went on. “Internet does a lot of good things and a lot of bad things, like any technology. And as for education, lunch for every school child, a long study day, a hug, or a pair of glasses for those who in need are a lot more useful than tablet computers,” he said. “That doesn’t mean we shouldn’t get tablets into the classroom, but it means they won’t bring about change.”

For most of the last 20 years, Internet was primitive, and so were apps, he went on. “It’s only now that big-data tools are being used in health care. I feel it will have an effect. But I don’t see a smartphone doing brain surgery yet.”

He’s right of course. We can’t expect Internet and technology to do all that. But it should be stated loud and clear: The road to solving most of our social and economic ills isn’t innovation, technology, investment in education or any other slogan; the cure lies in reshaping our economy to serve the interest groups less and the people more.

Some months ago I met Joe Trippi, strategic adviser to the likes of Ted Kennedy, Walter Mondale, Gary Hart, Dick Gephardt, Jerry Brown and Howard Dean. At the time Trippi expansively analyzed the Internet revolution and changes it was bringing to politics. I asked if the wonderful democratization of Internet is a myth given the fact that the interest-group money controls politicians more than ever, compared with recent decades; even Dean, a symbol of ground-breaking digital campaigning, is now a lobbyist. Surprised by the question, Trippi thought about it and finally admitted that I had a point. But, he said, we’re approaching the point of change, when Internet will really start to change politicians. We hope so, Joe, we hope so.