How the Tech Community Can Help Fight Inflation: A SOTU Letter to President Biden

As a representative of some 1500 American technology companies, I wrote an open letter to President Biden in advance of his State of the Union remarks on how the tech community can help to address one of the defining challenges of his presidency: inflation. You can also see a copy of the formal letter submitted to the White House. https://www.dropbox.com/s/2mfmtocv13hwhz9/CTA%20SOTU%20Letter.pdf?dl=0

Dear Mr. President,

Congratulations on completing your first thirteen months in office. As you reflect on the past year and what’s ahead for our great nation, I expect that inflation – and your administration’s efforts to reign in rising prices – will be a major topic of your upcoming State of the Union address. As you know, inflation is a serious concern for millions of Americans. It hurts those living on fixed and lower incomes, negates wage gains and has ripple effects impacting the entire U.S. economy.

Economists broadly agree that inflation can be fought in two ways: raising interest rates and improving productivity. Historically, high rates have chilled the American economy and discouraged consumers from making purchases and businesses seeking to invest, expand and create new jobs. In short: high interest rates are a bitter medicine for all but banks, loan sharks and people with lots of money.

More, higher interest rates will squeeze government discretionary spending. A five percent interest rate on our $30 trillion debt is $1.5 trillion in annual interest payments. Covering this interest will mean taking on new debt – an additional burden for future generations – or slashing government-funded programs at a time when millions of Americans are still struggling.

As a representative of some 1500 American technology companies, I am writing to share my thoughts on how the U.S. tech community can support the national fight against inflation. Broadly speaking, tech advances can help improve productivity and combat inflation. Productivity gains come from greater efficiencies which often rely on new technologies and better deployment of technology. For example, home computers, smartphones, printers, and new video conferencing apps allowed a big portion of our workforce to go remote in March 2020. Similarly, new apps and services support at-home food delivery, bring doctors to our homes through telehealth appointments and connect millions to remote learning opportunities.

But we are just scratching the surface of what’s possible. Tech-forward policies can support self-driving and electric cars to reduce environmental impact and make transportation cheaper and more accessible. Drones and robots will ease congestion, speed deliveries and save lives. Remote patient monitoring, telehealth and artificial intelligence will save doctors’ time, improve diagnoses and cut healthcare costs. And all of these technologies, supported by your Administration’s continued commitment to expanded broadband deployment, can empower Americans and support your administration’s focus on building a better future.

No nation is better suited than ours to promote innovation. We are blessed with many of the world’s most innovative companies and people, driven by a shared commitment to challenging the status quo and asking “why not?” Our country was founded and nourished by immigrants, attracting the best, brightest and most innovative. This diversity is our secret sauce, seeding a culture where new ways of solving problems define who we are. Our innovation also stems from our Constitution, which lays out principles of freedom foundational to the nation’s creativity and can-do spirit. These ingredients combine to produce unparalleled entrepreneurs, Nobel Prize winners and leaders in almost every field. The result is innovative companies whose success is the envy of the world.?

But, Mr. President, that success is not guaranteed. Other countries have seen our achievements and put in place policies and plans to emulate them. Too often, these countries focus on erecting barriers for American companies – trying to copy, hamstring or fine companies providing much-loved services around the globe – rather than investing in their own innovation ecosystems. Even worse, our own government’s policies encourage this behavior. As just one example, the Federal Trade Commission (FTC) has recently abandoned the time-tested consumer welfare standard in favor of efforts to protect existing competitors. America, the land of competition, should never hold the threat of government action over the heads of companies seeking to innovate.

Ultimately, if we want to fight inflation we should be asking our businesses what’s needed to bring down prices. Here are some bipartisan ideas that resonate within the CTA membership and the broader business community:

Reduce Shipping and Import Costs

Amid the COVID-19 pandemic, ocean shipping companies raised prices up to tenfold and saw a sixfold increase in profits while charging exorbitant rates to companies with products stuck on ships moored offshore. Continued supply chain constraints mean record shipping costs passed on to retailers and ultimately consumers. The Ocean Shipping Reform Act (OSRA 2021), bipartisan legislation introduced by Senators Klobuchar and Thune, is a good first step to rein in companies profiteering from a crisis. We should also invest in automation technology at American ports, which can help to manage growing container volume.

We should focus on promoting free and fair trade, particularly with allies and like-minded partners. Most immediately, that would mean eliminating the Trump administration tariffs imposed on many imports, which function as an additional tax on American consumers. We should also seize?opportunities to reverse previous administration’s isolationist policies by negotiating tariff-cutting trade deals with friendly nations.

Encourage High-Skilled Immigration

America urgently needs to build up a workforce with skills in the STEM fields. Businesses in the tech industry struggle to find workers with the right skills to fill open positions, a problem made worse by current labor shortages. This can end with a smart immigration policy, which welcomes the best and brightest from around the world. We must change our immigration laws so that the smartest and most creative people not only choose the U.S. as a place to study, but can stay here and help build great companies.

We should also welcome immigrants who are willing to work hard and adopt American values. My wife, now a retina surgeon, and her parents escaped communist Poland and like so many others are grateful for the freedom here. Immigrants are often more patriotic and knowledgeable about American history than Americans themselves. They’re also more likely to be entrepreneurs and start businesses. We need more of them to grow our economy and build up our workforce.

Provide Legal Clarity and Fewer Lawsuits

Tech advances are paving the way to a better world, but too often they’re stopped in their tracks by the threat of litigation. As just one example, trial lawyers are holding up development of a much-needed national policy on self-driving vehicles. This despite the demonstrated benefit from cars that are 95% safer and empower the elderly and disabled.

Recent actions by the FTC have also targeted certain “Big Tech” companies on the basis of their size. Many of these same companies offer powerful online business and personal tools for free, or offer consumer goods at highly competitive prices.?In a time of rising inflation, American companies providing low or no-cost consumer benefits should be celebrated, not chastised.

Mr. President, as you and your administration grapple with the challenge of inflation, I urge you to adopt smart policies that will unleash American innovation. If we get it right, our economy and our people will thrive.

Sincerely,

Gary Shapiro