Digital Governance: Rethinking the Role of Government in an Era of Disruption
Power & Influence, Spring 2016, pp. 66-68.
“Rather than burying their heads in the sand, governments should seize the opportunity to provide the leadership that the digital revolution requires.”
Governments must recognize that their institutions, bureaucracies and policy frameworks designed for the 19th and 20th centuries are no longer meeting the needs of the 21st. The digital era represents an exponential shift in the pace of social, political and economic transformation. How governments respond to the radical changes brought on by the sharing economy and other digital age innovations will be a litmus test for the continued relevance of governing institutions, as well as their legitimacy and authority in a networked era where no single actor has an undisputed monopoly on public trust. Governments must rise to the challenge or become increasingly irrelevant to their citizens.
In the space of a few decades, the digital revolution has transformed how we work, how we connect with friends and family, and how we educate, inform and entertain ourselves. Increasingly, digital culture permeates our social interactions, our business transactions, our lives. It is forcing virtually all the sectors and institutions it touches to evolve— and this includes our public institutions. Through the pressures it creates, the new governance tools it offers us, and the new possibilities it generates, the digital revolution promises to transform the very nature of Canadian democracy and governance.
Canada’s Westminster parliamentary system of government is adaptable and has long been recognized for its ability to evolve in keeping with the demands of new eras and new challenges. But changes are occurring faster and are more widespread than ever, and many of our traditional governance tools and approaches are in danger of losing relevance.
Consider the ‘sharing economy,’ which encompasses the interactions enabled by disruptive technologies that provide alternatives to traditional services like taxis or hotels, for example. Sharing economy disruptors are posing challenges to all levels of government that could not have been imagined, let alone anticipated, a few years ago when the rules governing their sectors were developed. Governments need to rethink some of the fundamental premises of public governance, and the role of citizens and governments both in making and enforcing rules and in developing and implementing policy.
The Silicon Valley tech giant Uber may be the highest profile example of digital era disruption in this context. As the California-based ridesharing company makes waves across Canada and around the world, the established taxi industry has been organizing to defend itself from the threat that Uber presents. In Paris, cab drivers have torched car tires and rioted in the streets. In Montreal, industry vigilantes have hunted down Uber drivers to turn them in to municipal authorities. Similar protests have arisen in jurisdictions far and wide, from Toronto to Sao Paulo, Ottawa to Berlin. Against this backdrop, governments are understandably feeling pressure to act. The City of Toronto brought the ridesharing company to trial, arguing that Uber Canada should have applied for a taxi brokerage licence before commencing operations. The mayor of New York City has been forced to back down under intense pressure from imposing a controversial cap on new Uber drivers. Many city halls across the globe have been opting to crack down on Uber’s operations.
Attempts to enforce an unworkable status quo ante aren’t the answer. The sharing economy isn’t going anywhere, and enforcing out-dated rules won’t solve the governance challenges it presents. Governments should ask a simple question: what do citizens really want? They know the public is dissatisfied both with the service it is receiving from public transit and from often expensive and uncompetitive taxi systems because they are voting with their thumbs to use apps like Uber instead. If players in existing industries are losing out to nimbler digital competitors, in a democratic context, it’s tempting to say ‘tough luck.’ Such is the nature of a competitive marketplace. But some municipal governments have instead been responding with heavy-handed and shortsighted enforcement of out- dated rules that ignore what citizens really want.
Governments have a responsibility to help us understand the profound changes that are upon us, including the benefits and the dangers of the disruptive innovations characteristic of the emerging sharing economy. How governments deal with companies like Uber matters for at least two reasons.
First, the growth of the sharing economy and other digital age innovations raises issues that go far beyond the regulatory. These are ultimately policy issues that reframe the dialogue between government, citizens and other actors with regard to economic activity and development, safety and protection of rights, including privacy, as well as the relationships between levels of government.
Second, governments’ response to early sharing economy providers like Uber will influence how society deals with other emerging disruptors that are shaking up industries far beyond taxis and limousines. From Airbnb’s potential transformation of the hospitality industry and Netflix’s alternative to traditional television broadcasting, to the coming disruption of the financial sector by services like Kickstarter or TransferWise, Uber is merely the crest of a wave of digitally disruptive services that has been on the horizon for some time.
Governments have a choice: do they adapt and help channel these innovations into socially beneficial outcomes? Or, by forcing a dynamic and changing landscape into the static categories of yesterday’s governance, will they risk getting swept away into irrelevance? What will best serve the public good?
Governments should not make important policy decisions in a vacuum, in which established industry players may claim the lion’s share of a government’s attention, obscuring what the broad citizenry actually wants. Citizens may feel that Uber should be allowed to operate freely, for example, but have neither the time nor the means to put their interests before governments in an organized way.
In the absence of citizen input, some recalcitrant cities and jurisdictions have proven out-dated in their inflexible and unimaginative approaches.
There are other ways to respond. Some municipalities, both in Canada and abroad, have begun to recognize that services like Uber are ‘here to stay,’ and that citizens demand new and creative ways to respond to the need for regulation. The city of Boston, for example, has entered into a data sharing partnership with Uber that will use rider information to identify underserved areas, manage road repairs, and analyze traffic flows. Edmonton’s city council recently passed new regulations that apply to both taxis and Uber drivers, and allow Uber drivers to operate so long as they possess adequate commercial insurance. In California, when the state transportation commission was faced with the task of deciding whether Uber was a technology company or a traditional taxi brokerage, it decided to invent a new category, that of the Transportation Network Company, that better fits Uber’s unique business model. Now a new regulatory ecosystem is growing around a new business model for a new era, instead of forcing twenty-first century business to comply with 20th-century rules.
Such constructive engagement will provide better long-term results than denial of a changing reality. The sharing economy raises real and pressing issues. How, for example, are workers on sharing economy platforms to be categorized for tax purposes? What workplace protections and safeguards are they entitled to? How can users and consumers of sharing economy services be adequately insured? Are local industries being disrupted by digital newcomers entitled to transition assistance from the state? What is the role of local, provincial and national governments in regulating global platforms that may be headquartered on the other side of the globe while delivering services locally?
Thorny questions like these highlight some of the areas where we need all levels of government to safeguard the public good through constructive, far- sighted action. The digital era requires rethinking traditional governance boundaries. Policymakers, for example, have an opportunity to question some of their fundamental assumptions—from recognizing the need to expand traditional parameters of effective monitoring, to ensuring that the lifecycle of regulatory renewal begins moving at digital speeds. Relatedly, in the face of increasingly complex, cross-cutting policy issues, governments in the digital era have to learn to better consider and anticipate system-wide ramifications in a context where risks spill over quickly from one sector to another. And for this to happen, public institutions will have to learn to share information more effectively and to collaborate meaningfully, both internally and externally, all the while duly considering both the privacy and security of citizens’ information.
In Canada’s unique federal context, all this also necessarily means rising to the challenges of multi-level governance and learning to work efficiently and pragmatically across levels of government. The struggle of municipal governments to come to grips with new enterprises like Uber foreshadows the struggle that all levels of government will soon be experiencing. It signals the advent of radical digital change. Rather than burying their heads in the sand, governments should seize the opportunity to provide the leadership that the digital revolution requires. Citizens will thank them for it in the end.
Maryantonett Flumian is president of the Institute on Governance and a former deputy minister in the federal public service.
Davide Cargnello is chief research officer at the Institute on Governance leading the Institute’s applied research program on digital governance.