Welcome back. In this video, we'll look at why we need a new social contract for the digital economy. First, let's unpack what a social contract is. A social contract is the shared idea that our best interests depend on keeping a civil society. Our best interests are morality, fair politics, and physical safety. Thomas Hobbes came up with the social contract theory years ago. After the brutal English Civil War back in the 1650s, he said, "We contract with each other for security and stability in an otherwise dog-eat-dog world." Not long after, John Locke expanded the concept to include property in exchange for sovereign governance and protection. He saw the social contract as a promise of life, liberty, and private property. This language made its way through Thomas Jefferson into the United States Declaration of Independence. US citizens are familiar with their right to life, liberty, and the pursuit of happiness. Social contracts don't uphold themselves. Our democratic institutions came about during the shift from agrarian feudalism to industrial capitalism. The Industrial Revolution brought great wealth to a new class, the captains of industry, even as their workers faced brutal conditions. The gap widened and well-being between upper and lower classes. But with the rise of industrial society and capitalism as an economic system, we saw the creation of democracies, created as a means of collective governance. Reforms in Britain, United States, and other parts of the world addressed this growing social and economic gap. Suffrage, the right to vote was distributed to some of the people. Reforms led to public education, social safety nets, and labor laws on the one hand and income taxes and anti-trust measures and security legislation on the other. Theodore Roosevelt pushed for environmental protections in wildlife preservation. The 1930s, the United States revised its social contract again this time in response to crisis. After the Great Depression, 25 percent of the American workforce was put out of work. So President Franklin Delano Roosevelt responded with his new deal. He called for investment to public infrastructure, he called social security and unemployment insurance, and he called for legislation across banking, agriculture, labor relations, and even homeownership. It was a rebalancing of power and a new contract in society between government, the private sector, and civil society. The next major revisions came after World War II. For starters, the Servicemen's Readjustment Act provided benefits to US war veterans. Millions of vets took advantage of paid tuition for college and millions more applied for low cost mortgages and low interest loans. These opportunities boosted the American economy and they also contributed to social stability. Then the United Nations was formed year after Bretton Woods. This was to prevent another World War, another campaign of genocide. The UN published its Declaration of Human Rights, and every member state agreed to uphold it. The allies made a commitment to rebuild the economies of Japan and Germany. President John F. Kennedy's, "A rising tide lifts all boats," metaphor, captured the spirit of those revisions. Unfortunately, those boats ran aground in the 1980s. Combination of economic missteps, technological change, and rules favoring the powerful and weakened institutions widened the gap again between those in power and those without it. Progress hasn't just stopped, it's reversed, at least in the United States, but also in a number of other developed countries. Today, US citizens live shorter lives, infant and maternal mortality rates are up, wages are down, access to education and opportunity has declined. Median income adjusted for inflation was actually lower in 2016 than it was in 1974. Forty percent of Americans in 2016 made less than the 1968 minimum wage. There's a general belief new rules had been imposed by the few without public consent. For the first time in modern history, we have growing economies and a declining middle class. We have growing wealth creation and declining prosperity. Like any deal, a new social contract holds up if those involved do their part to keep it. The old social contract has been broken with a new one to replace it. We see the same trends perhaps less extreme in other Western democracies. We're amid a global economic transformation as significant as the Industrial Revolution. The industrial age social contract came together over decades. In some sense, it took centuries to mature. Today's digital economy social contracts are taking shape infinitely faster. Think of Moore's law, transistors on a circuit board doubling with every new version, growing smaller by the year every 18 months and denser. Change in the digital age accelerates just like that, and our regulations and policies can't keep up. Digital technologies contribute to the need for a new social contract, and you can help us write and implement it.
