How bad could it get? America’s ugly election

Purposely pointless paperwork

In America such problems were inevitable,

says Michele Evermore of the National Em-

ployment Law Project, a think-tank, be-

cause the country has invested very little in

modernising its unemployment-insur-

ance systems. Spending on administration

has fallen since 2001, even before account-

ing for inflation. Some states, including

Florida, deliberately designed their sys-

tems to be difficult to use to discourage

workers from applying. In August Ron De-

Santis, Florida’s Republican governor, ad-

mitted that the state’s system was designed

with lots of “pointless roadblocks”. 

Yet elsewhere the pandemic has re-

vealed how effective digitising govern-

ment services can be. Governments have

for the most part been able to transfer mon-

ey into the accounts of hundreds of mil-

lions of people without queues at govern-

ment offices or banks. In Britain the

previously unloved Universal Credit sys-

tem, which distributes welfare benefits,

proved its worth when almost 1m people

signed up to it in two weeks without having

to go to a job centre. Britain has no national

identity card or citizenship register—a pro-

blem in keeping track of people. But a digi-

tal workaround, whereby people were able

to prove their identity by scanning the elec-

tromagnetic chip in their passports with a

mobile phone, seems to have been effec-

tive. Though people had to wait five weeks

for payments—a political decision—they

mostly got them.

Governments that have embraced the

idea of digitising their services—and in-

vested in them—have performed admira-

bly. In Estonia, a country where digital gov-

ernment is so advanced that it is possible to

vote online, all citizens have a digital 

id

linked to their bank account and the tax

system. That meant that working out

which Estonians were furloughed and get-

ting benefits to them was fairly straightfor-

ward. Taiwan, another digital pioneer,

adapted its health-insurance system to im-

plement an economic stimulus intended

to help face-to-face businesses, says Au-

drey Tang, Taiwan’s digital minister. After

paying at a restaurant, for example, citi-

zens can use their insurance card at an 

atm

to reclaim cash from the government.

Covid-19 will probably accelerate a shift

online. During the pandemic the governors

of New York and California legalised digital

marriages. When New Jersey’s leaders real-

ised the extent of the shutdown, they in-

vested in putting more services online,

says Beth Noveck, the state’s chief innova-

tion officer. Her office created a single gov-

ernment website through which residents

can find information on the coronavirus

and book tests for it, among other things.

Other states have followed suit. Her office

is also trying to find ways to streamline the

awkward process of verifying people’s

identities online in America, which like

Britain has no national 

id

cards. In France

social-security paperwork, which previ-

ously had to be sent by post, can now be

submitted electronically.

Some think that a bonanza of digital in-

vestment may be coming. “Everyone now

can see that the digitisation that will take

place will be enormous and billions and

billions will be spent,” says Daniel Korski,

who runs Public, a venture-capital firm

that invests in the digitisation of public

services. He points to various government

it

contracts that are nearing renewal. Brit-

ain’s 

nhs

is among the services most likely

to change. Harpreet Sood, a practising 

gp

who is also in charge of technology for the

nhs

, says that before the pandemic 7% of

his consultations were done remotely.

During lockdown the figure jumped to

90%. Not everything can be diagnosed over

the phone, he says, but a lot can. 

Not everything works well digitally. At

the height of the pandemic almost all fam-

ily-court hearings in Britain stopped ex-

cept for the most urgent cases, such as the

removal of children from abusive parents.

Those were put online, with judges expect-

ed to make decisions based on evidence de-

livered over sometimes patchy internet

connections. But the backlog has forced

some people to deal with the problems out-

side the courtroom. Couples going through

contested divorces have not been able to

get judgments on their financial disputes,

so arbitration has thrived, says Samantha

Woodham, a British barrister who runs the

Divorce Surgery, which provides legal ad-

vice to spouses breaking up.

The pandemic has not just drawn atten-

tion to more efficient ways of operating; it

has also required governments to do new

things. Track-and-trace systems work only

if governments know who their citizens

are and can contact them reliably. Estonia’s

officials can do so easily; Britain’s and

America’s cannot. In China in order to

board public transport or enter their own

apartment buildings people have to show

qr

codes on their phones to verify that they

have not been to a virus hotspot recently. 

In Britain and America the lack of 

id

cards means that different government re-

cords are isolated in different depart-

ments. Health-care records do not identify

where somebody works and vice versa. Lo-

cal administrations do not always have ac-

cess to central-government records. With

no simple way of connecting names and

addresses, Britain’s government has had to

rely on data from credit checks to verify

people’s identities before posting them co-

vid-19 tests. When its track-and-trace sys-

tem was being built, contact tracers were

not able to connect swiftly clusters of cases

linked to workplaces because local govern-

ment did not have the data. As a result

some local outbreaks were not spotted

quickly enough to stamp out the spread.

Tony Blair, a former prime minister, is

among those who have called for Britain to

invest in a citizenship register like the one

in Estonia. Such projects take time and

money but could prove a worthwhile in-

vestment. Sharing information can help

with more than stopping the virus. Better

data-sharing would allow governments to

improve even mundane services such as

rubbish collection or managing street

parking. Better digital identities would not

just help track patients—they would also

reduce the risk of digital fraud, one of the

few industries to have thrived under lock-

down. If Americans had digital identities

like Estonians, organising November’s

presidential election would be easier. 

Such changes will not be cheap. And the

implications for privacy must be taken se-

riously. Implemented badly, new digital

systems could create new opportunities for

fraud, instead of making it more difficult. A

state that gathers more and more granular

information ought to be able to make better

policy—but it will also find it easier to

snoop on citizens. Not all governments can

be trusted with such powers. 

7

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The Economist

September 5th 2020

51

1

F

ew firms

struggle with too much suc-

cess. One is Naspers, a South African

media group founded in 1915. In a prescient

bid to diversify away from newspapers in

2001 it paid $32m for a large stake in a pid-

dly Chinese startup. Tencent, the startup in

question, has since morphed into a gaming

and messaging behemoth worth over

$670bn. Dealing with the windfall presents

unique management headaches.

The unexpected upshot of a South Afri-

can investment in China is a European con-

sumer-internet giant. A year ago Naspers

listed Prosus, a vehicle for its online bets,

in Amsterdam. By dint of owning 31% of

Tencent, worth about $208bn, as well as

other investments made since, Prosus is

the 

eu

’s fourth-most-valuable firm. It is

also the closest that Europe has to the glo-

bal tech stars that dominate the world’s

stockmarkets. Its boss, Bob van Dijk, ac-

knowledges the firm’s model may be un-

usual in the tech world. But, he argues, it

can still deliver value.

Prosus has invested billions—and has

ever more billions to invest, thanks to Ten-

cent’s continued success—into all manner

of online ventures, from e-commerce to

food delivery, distance learning and classi-

fied ads. Though run from the Netherlands,

much of its empire lies in emerging mar-

kets, a nod to its African heritage. Deep

pockets let it build online businesses or ag-

gregate local players into global platforms.

As exciting as that sounds, Mr van Dijk

has a more prosaic problem: proving to the

outside world the firm needs to exist. He

insists Prosus has found a distinctive ap-

proach. Unlike venture capitalists, it does

not need to return money to investors. It

can back businesses for the very long term

and, because it runs some of them, has “an

operator’s 

dna

”. Few of its investments

have been busts.

Investors are sending mixed signals. Its

market capitalisation of $167bn is about a

fifth less than the value of its Tencent

shares. Add the other firms it has stakes in,

some of which are listed, as well as $4.5bn

of net cash on its balance-sheet, and the

discount rises to 33%—a gap of $80bn or so

(see chart). Its share price has risen of late, 

Prosus