American Exceptionalism Is Fading Yet Formidable

Bloomberg View , April 20, 2018

One of the stranger moments in Mark Zuckerberg’s 10 hours of congressional testimony started as a softball question. Bucking the hostile script favored by members of both parties, Sen. Dan Sullivan, an Alaska Republican, tried to position Facebook as an example of what makes the U.S. great.

“Mr. Zuckerberg, quite a story, right?” he opened. “Dorm room to the global behemoth that you guys are. Only in America, would you agree with that?”

“Senator, mostly in America,” Zuckerberg answered.

Sullivan tried again. “You couldn’t -- you couldn’t do this in China, right? Or, what you did in 10 years.”

Again, Zuckerberg demurred. “Well -- well, senator, there are -- there are some very strong Chinese Internet companies.”

“Right but -- you’re supposed to answer ‘yes’ to this question,” Sullivan said, to laughter. “Okay, come on, I'm trying to help you, right?”

What was going on?

On Twitter, Washington Post foreign affairs reporter Ishaan Tharoor posited a generational divide: “An older senator wanted Zuckerberg to pay lip service to American exceptionalism. He wasn’t interested. Indicative maybe of a broader generational gap—millennials not so moved by such needless piety.” (Sullivan was born in November 1964, putting him at the very end of the baby boom.)

It’s not surprising that Tharoor took exception to Sullivan’s “only in America” riff. Tharoor is not merely a millennial with a young guy’s disdain for people over 40. He is the very definition of that much-abused word “globalist.” The son of a prominent Indian politician, author, and diplomat, Tharoor went to the United Nations International School in New York. When he finally entered an American institution, Yale University, he experienced what he described in a 2012 interview as “culture shock.” To adapt, he said, he “built my identity around what were, at that time, my left-wing politics.” No wonder he finds casting Facebook as a uniquely American success story an example of “needless piety.” Only an unsophisticated rube would entertain such a notion.

Zuckerberg’s response wasn’t as negative. It was simply precise: mostly in America. Never say never. Never say only. Exceptionalism will inevitably have exceptions. No responsible corporate chief would ignore potential competition from abroad -- or (as many of Tharoor’s Twitter followers noted) insult the national pride of potential customers. Zuckerberg doesn’t need to make the European Union even more hostile.

But it’s not in fact an accident that Facebook, Google, and Amazon started in the U.S. rather than France, India, or China. Suggesting that there’s nothing special about the economic, cultural, and political conditions that led to these success stories is both naive and dangerous -- especially as politicians from the president on down are flirting with attitudes and policies that would shift the U.S. business environment toward greater cronyism, less dynamism, and more central control. The country does have entrepreneurial advantages that even China, for all its brains and ambition, lacks.

There’s no question that Chinese citizens can build powerful technology and significant enterprises based on it. As Zuckerberg said, China has some strong Internet companies. Chinese investors now account for about a quarter of all venture capital, according to a new Wall Street Journal analysis, and the amount is rising. The country is way ahead of the U.S. in the adoption of mobile payment systems. And thanks to the government’s keen interest in surveillance, Chinese startups are leaders on facial-recognition software.

But China increasingly lacks a truly private sector, independent of Communist party priorities and demands. That absence limits both entrepreneurial opportunities and long-term growth.

You’d never see a spectacle like Zuckerberg’s testimony in China. For Democrats, Facebook is a scapegoat for Donald Trump’s election. If only the company hadn’t shared so much data or permitted so much fake news, they imagine, Hillary Clinton would be president. For Republicans, the company is a symbol of the out-of-touch Silicon Valley liberal echo chamber. Facebook was perfectly happy to spread around everyone’s information, they tell themselves, as long as it helped Obama. Now it threatens to censor right-wing voices.

Both parties have reason to attack Zuckerberg’s company, in other words, yet he survived the hearings largely unscathed. If Facebook were Chinese, by contrast, the interrogation would have been behind closed doors and significantly less pleasant. The result might well be a shutdown of the service.

As if to drive home the difference, even as Zuckerberg was being grilled in Washington, the Chinese government cracked down on Beijing ByteDance Technology, a media startup valued at $20 billion. (The company is better known as Toutiao after its popular news aggregation app, where user-generated whimsy coexists with official sources.) Officials ordered the company to block downloads of four news sharing apps, suspend live-streaming on its video app, and completely shutter its popular Neihan Duanzi service, which let users share memes, jokes, and videos. It also had to delete its WeChat account.

There were no public hearings to consider or justify the action, and little official explanation. The ostensible reason was vulgar content and, according to the State Administration of Radio and Television, “strong resentment from internet users.” The abject, politically charged apology by founder Zhang Yiming suggested that the regime felt a broader threat. The company, he said, “took the wrong path”:

Content appeared that was incommensurate with socialist core values, that did not properly implement public opinion guidance -- and I am personally responsible for the punishments we have received….
As a start-up company developing rapidly in the wake of the 18th National Congress of the Chinese Communist Party, we profoundly understand that our rapid development was an opportunity afforded us by this great era. I thank this era. I thank the historic opportunity of economic reform and opening; and I thank the support the government has given for the development of the technology industry.
I profoundly reflect on the fact that a deep-level cause of the recent problems in my company is: a weak [understanding and implementation of] the “four consciousnesses” [of Xi Jinping]; deficiencies in education on the socialist core values; and deviation from public opinion guidance. All along, we have placed excessive emphasis on the role of technology, and we have not acknowledged that technology must be led by the socialist core value system, broadcasting positive energy, suiting the demands of the era, and respecting common convention.

Among other promises, Zhang pledged to do more to cooperate with and promote “authoritative media content,” otherwise known as official Communist party outlets. That hints at the company’s real offense. Although they weren’t overtly political, its services competed with official channels for attention. They fostered self-expression and let people communicate in hard-to-control ways. Users started to connect in real life, organizing activities and creating a culture outside officially sanctioned groups.

Truly entrepreneurial ventures tend to have unpredictable results. They grow in unanticipated ways and tap previously unidentified desires. Not all of their consequences are positive. And even the benefits threaten the status quo. To reap the advantages, you have to put up with the risks. You can’t keep things under control. Accepting that tradeoff has made the U.S. an exceptional home for growth companies. The question that Sullivan was groping toward is whether, in a panic over internet politics, we’ll destroy that all-too-rare environment.