Anthony J. Pennings, PhD

WRITINGS ON DIGITAL STRATEGIES, ICT ECONOMICS, AND GLOBAL COMMUNICATIONS

Statecraft and the First E-Commerce Administration

Posted on | January 7, 2016 | No Comments

One of techno-economic history’s most fascinating questions will deal with the stock market advances and technology developments during the eight years of the Clinton-Gore administration, especially those in the Internet and telecommunications sectors. During the 1990s, the Internet, a product of the Cold War became a tool of global commerce.

The Presidential election of 1992 was notable for the phrase, “It’s the Economy Stupid” as Clinton attacked Bush for ignoring economic and social problems at home. The reigning president had a dramatic military victory with the “Desert Storm” military offensive that drove the Iraqis out of Kuwait, but years of federal budget deficits under the Republicans spelled his doom. When the Clinton Administration moved into the White House in early 1993, the new administration was looking at budget deficits approaching a half a trillion dollars a year by 2000. Military spending and massive tax cuts of the 1980s had resulted in unprecedented government debt and yearly budget interest payments that exceeded US$185 billion in 1990, up substantially from the $52.5 billion a year when Ronald Reagan took office in 1982.[1] Reagan and Bush (like his son), while strong on national defense, never had the political courage to reduce government spending.

Clinton was forced to largely abandon his liberal social agenda and create a new economic agenda that could operate more favorably within the dictates of global monetarism. This meant creating a program to convince the Federal Reserve and bond traders that the new administration would reduce the budget deficit and lessen the government’s demand for capital.[2] Clinton made the economy the administration’s number one concern, even molding a National Economic Council in the image of famed National Security Council. Bob Rubin and others from Wall Street were brought in to lead the new administration’s economic policy. Clinton even impressed Federal Reserve Chairman Alan Greenspan who had grown weary of the Reagan legacy and what President Bush I had once called “voodoo economics”.[3]

Although the potential of communications revolution was becoming obvious, what technology would constitute the “information highway” was not clear. Cable TV was growing quickly and offering new information services, while the Bells were pushing ISDN and experimenting with ADSL and other copper-based transmission technologies. Wireless was also becoming a viable new communications option. But as the term “cyberspace” began to circulate as an index of the potential of the new technologies, it was “virtual reality” that still captured the imagination of the high tech movement. Although email was starting to become popular, it was not until the mass distribution of the Mosaic browser that the Internet moved out of academia into the realm of the popular imagination and use. At that point the Clinton Administration would take advantage of rapidly advancing technologies to help transform the Internet and its World Wide Web into a vibrant engine of economic growth.

President Clinton tapped his technology-savvy running mate to lead this transformation, at first as a social revolution, and then a commercial one. Soon after taking office in early 1993, Clinton assigned responsibility for the nation’s scientific and technology affairs to Vice-President Gore.[3] Gore had been a legislative leader in the Senate for technology issues, channeling nearly $3 billion into the creation of the World Wide Web with the High Performance Computing Act of 1991, also known as the “Gore Bill.” While the main purpose of the Act was to connect supercomputers, it resulted in the development of a high bandwidth (at the time) network for carrying data, 3-D graphics and simulations.[5] It also led to the development of the Mosaic browser, the precursor to Netscape and the Microsoft Internet Explorer browsers. Perhaps more important it provided the vision of networked society open to all types of activities, including the eventual promise of commerce. Gore then shaped the Information and Technology Act of 1992 to ensure that Internet technology development would apply in public education and services, healthcare, and industry. Gore drove the National Information Infrastructure Act of 1993, passed in the Congressional House in July of that year but it fizzled out due to new mood to turn to the private sector for more direct infrastructure building. Instead he turned his attention to the NREN (National Research and Education Network) which attracted attention throughout the US academic, library, publishing, and scientific communities and in 1996 pressed the “Next Generation Internet” project. Gore had taken the initiative to help create the Internet.

But it still was not open to commercial activity. The National Science Foundation (NSF) nurtured the Internet during most of the 1980s but although it contracted its networking out to private operators, the content remained strictly noncommercial by legislative decree. Provisions in the NSF’s original legislation restricted commerce because of the “acceptable use policy” clause its funded projects. But pressures began to mount on the NSF as it was becoming clear that the Internet was showing more commercial potential. Email use and file transfer were increasing dramatically and the release of Gopher, a point-and-click way of navigating the ASCII files by the University of Minnesota displayed textual information that could be readily accessed. Finally Congressman Rick Boucher introduced an amendment to the National Science Act of 1950 that allowed commercial activities on the NSFNET.[6] A few months later, while waiting for Arkansas Governor William Jefferson Clinton to take over the Presidency, outgoing President George Bush, Sr. signed the action into law. The era of Internet-enabled e-commerce had begun.

Notes

[1] Debt information from Greider, W. (1997) One World, Ready or Not: The Manic Logic of Global Capitalism. New York: Simon & Schuster. p. 308.
[2] Bob Woodward’s The Agenda investigated the changes the Clinton-Gore administration’s implemented after being extensively briefed on the economic situation they inherited. Woodward, B. (1994) The Agenda: Inside the Clinton White House. NY: Simon & Schuster.
[3] Information on Greenspan’s relationship with Clinton from Woodward, B. (1994) The Agenda: Inside the Clinton White House. NY: Simon & Schuster.
[4] Information on Gore’s contribution as Vice-President. Kahil, B. (1993) “Information Technology and Information Infrastructure,” in Branscomb, C. ed. Empowering Technology. Cambridge, MA: The MIT Press.
[5] Breslau, K. (1999) “The Gorecard,” WIRED. December, p. 321. Gore’s accomplishments are listed.
[6] Segeller, (1998) Nerds 2.0.1: A Brief History of the Internet

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AnthonybwAnthony J. Pennings, PhD is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College, and Victoria University in New Zealand. During the 1990s he was also a Fellow at the East-West Center in Honolulu, Hawaii.

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  • About Me

    Professor and Associate Chair at State University of New York (SUNY) Korea. Recently taught at Hannam University in Daejeon, South Korea. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, media economics, and strategic communications.

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