Last month, Moon Jae-in took South Korea’s presidential election in a landslide victory. It one of the first national elections, since the beginning of the coronavirus outbreak. People were made to wear masks and gloves and use hand sanitizer before going into voting booths.
Nevertheless, reports say voters turned out in record numbers to support the Democratic Jae-in, whose party made campaign promises to pass a “Green New Deal” and steer South Korea into a low carbon future.
Like similar proposed programs in the U.S. and Europe, Jae-in’s Green New Deal, aims to address climate change in an economically positive way. His program includes a carbon tax, large investments in clean and renewable energy, phasing out of domestic and overseas financing for fossil fuels, and supporting transitions to green jobs. The whole concept is pretty much boilerplate at this point.
This week, Jae-in announced another New Deal — a Digital New Deal.
South Korea’s Digital New Deal
With this new New Deal the Jae-in government will prioritize support for technological development — particularly artificial intelligence and 5G wireless technology — aimed at producing jobs and boosting over economic growth in a post-COVID-19 world. The Korean Herald quotes, Vice Finance Minister Kim Yong-beom saying:
The Korean version of the New Deal Project focuses on digital-based projects, which creates great synergy with private investments or businesses and allows creation of jobs… It is an innovative infrastructure that could work as a foundation for all industries and areas and was selected (carefully).
The newspaper reports the government said more details will be announced next month.
Jae-in’s Digital New Deal is not necessarily unique. Similar concepts have been played with before — though aimed at more specific goals.
In a 2018 opinion piece in the Financial Times, business columnist Rana Foroohar proposed a Digital New Deal, aimed at addressing job loss due to AI-driven automation.
Foroohar suggested tax incentives for companies to retrain workers replaced by automation to be placed in other positions within the firm — rather than getting rid of them completely. She also suggested government subsidies should be given to firms to help pay worker salary, expand and upgrade operations, and cover the cost of training.
As another example, a French group calling themselves the Digital New Deal Foundation, is seeking local government regulations to support the AI and 5G industries. The group says they aim, “To shed as much light as possible on the developments at work within the phenomenon of digitalization, in the broadest sense of the word, and to develop avenues for concrete actions for French and European companies and public decision-makers,” and “To participate in the development of a French and European thought of digital regulation in the service of the establishment of a balanced framework and durable.” But at the end of the day, their goal is clearly to ensure France and the rest of Europe don’t get left behind in the AI and 5G revolutions.
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Of course everyone is not on board with government subsidies for the tech industries. Arguing against government subsidies for the tech industries in 2002, the Cato Institute warns of, “An inventory of high-tech pork-barrel spending.” They write:
Washington subsidy and entitlement programs typically have a never-ending lifespan and often open the door to increased federal regulatory intervention. That kind of political meddling could also displace private-sector investment efforts or result in technological favoritism by promoting one set of technologies or providers over another. Moreover, subsidy programs are unnecessary in an environment of technological competition, characterized by both proliferating consumer choices and uncertain market demand for new services. Finally, perhaps the leading argument against the creation of a dDgital New Deal is that by inviting the feds to act as a market facilitator, the industry runs the risk of becoming more politicized over time.
Nevertheless, with the official introduction now of the South Korean Digital New Deal we have to wonder if other similar Digital New Deal programs will pop up elsewhere around the world. If they do, investors in AI and 5G technologies will be the biggest winners right off the bat.
Both AI and 5G development have already taken much longer than people were expecting. This has sent many early investors crashing into disillusionment. (I explain this phenomenon in much more depth here in a previous Energy and Capital article). But both technologies are the inevitable future. And both would be among the top priories in national Digital New Deals.
I’m kind of surprised, there is no major politician on either side here in the U.S. (at least that I can find), who has already proposed the idea. Seems like long-hanging fruit that has yet to be plucked, if you ask me. I mean, it’s a concept most people can easily wrap their minds around (especially already having Green New Deals as a reference), makes for a good hashtag, and it can be heavily politicized, meaning it might even provide an opportunity for career building – AOC built her name on a Green New Deal, someone else might be able to the same with a Digital New Deal.
I don’t know. I’m not a political strategist. But what I do know is that if Digital New Deals are part of more national agendas, today’s AI and 5G investors are sitting in the catbird seat.
Again, I recommend taking a look at the article I mentioned earlier. The development of AI and 5G has taken longer than most people hoped. But they both will be a major part of our lives in the future. And these are areas every investor should have at least a small stake.
Over the past few years, our inside market analyst Chris DeHaemer has been studying the AI and 5G markets, as well as other rapidly developing technologies like tap-and-go, carefully selecting the best of the breed to carve out a tech portfolio that has already seen massive gains.
DeHaemer made more than 2,000%, by being an early Bitcoin adopter. And, honestly, he’s the last guy you’d think of like a Bitcoin owner. Among the billion other differences between him and the stereotypical crypto guy, the most important is Dehaemer actually sold Bitcoin for a huge profit. He’s one of the few people I know who actually made significant money in Bitcoin.
Right now, DeHaemer is putting the final touches on a new report, on the most powerful technological trends going to make the biggest impact in a new post-COVID environment, which he plans to release exclusively to Energy and Capital readers. Be on the lookout for that new report soon.
Until next time,
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bull and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.