On Tuesday, Nancy Pelosi, Speaker of the U.S. House of Representatives, posted the text of the “America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength Act of 2022,” or “The America COMPETES Act.” As far as industrial policy measures go, the COMPETES Act is one of the most ambitious and expensive central planning efforts in American history. It represents the triumph of top-down, corporatist, techno-mercantilist thinking over a more sensible innovation policy rooted in bottom-up competition, entrepreneurialism, private investment, and free trade.
Unprecedented Planning & Spending
First, the ugly facts: The full text of the COMPETES Act weighs in at a staggering 2,912 pages. A section-by-section “summary” of the measure takes up 109 pages alone. Even the shorter “fact sheet” for the bill is 20 pages long. It is impossible to believe that anyone in Congress has read every provision of this bill. It will be another case of having “to pass the bill so you can find out what’s in it,” as Speaker Pelosi once famously said about another mega-measure.
Of course, a mega bill presents major opportunities for lawmakers to sneak in endless gobs of pork and unrelated policy measures they can’t find any other way to get through Congress. The Senate already passed a similar 2,600-page companion measure last summer, “The U.S. Innovation and Competition Act.” Lawmakers loaded up that measure with so much pork and favors for special interests that Sen. John N. Kennedy (R-La.) labelled the effort an “orgy of spending porn.” Like that effort, the new COMPETES Act includes $52 billion to boost domestic semiconductor production as well as $45 billion in grants and loans to address supply chain issues.
But there are billions allocated for other initiatives, as well as countless provisions addressing other technologies and sectors. The list is seemingly endless and includes: Continue reading →
Industrial Policy is a red-hot topic once again with many policymakers and pundits of different ideological leanings lining up to support ambitious new state planning for various sectors — especially 5G, artificial intelligence, and semiconductors. A remarkably bipartisan array of people and organizations are advocating for government to flex its muscle and begin directing more spending and decision-making in various technological areas. They all suggest some sort of big plan is needed, and it is not uncommon for these industrial policy advocates to suggest that hundreds of billions will need to be spent in pursuit of those plans.
Others disagree, however, and I’ll be using this post to catalog some of their concerns on an ongoing basis. Some of the criticisms listed here are portions of longer essays, many of which highlight other types of steps that governments can take to spur innovative activities. Industrial policy is an amorphous term with many definitions of a broad spectrum of possible proposals. Almost everyone believes in
some form of industrial policy if you define the term broadly enough. But, as I argued in a September 2020 essay “On Defining ‘Industrial Policy‘,” I believe it is important to narrow the focus of the term such that we can continue to use the term in a rational way. Toward that end, I believe a proper understanding of industrial policy refers to targeted and directed efforts to plan for specific future industrial outputs and outcomes.
The collection of essays below is merely an attempt to highlight some of the general concerns about the most ambitious calls for expansive industrial policy, many of which harken back to debates I was covering in the late 1980s and early 1990s, when I first started a career in policy analysis. During that time, Japan and South Korea were the primary countries of concern cited by industrial policy advocates. Today, it is China’s growing economic standing that is fueling calls for ambitious state-led targeted investments in “strategic” sectors and technologies. To a lesser extent, grandiose European industrial policy proposals are also prompting new US counter-proposals.
All this activity is what has given rise to many of the critiques listed below. If you have suggestions for other essays I might add to this list, please feel free to pass them along. FYI: There’s no particular order here.
[This article originally appeared at Discourse on January 6, 2021.]
Time magazine recently declared 2020 “The Worst Year Ever.” By historical standards that may be a bit of hyperbole. For America’s digital technology sector, however, that headline rings true. After a remarkable 25-year run that saw an explosion of innovation and the rapid ascent of a group of U.S. companies that became household names across the globe, politicians and pundits in 2020 declared the party over.
“We now are on the cusp of a new era of tech policy, one in which the policy catches up with the technology,” says Darrell M. West of the Brookings Institution in a recent essay, “The End of Permissionless Innovation.” West cites the House Judiciary Antitrust Subcommittee’s October report on competition in digital markets—where it equates large tech firms with the “oil barons and railroad tycoons” of the Gilded Age—as the clearest sign that politicization of the internet and digital technology is accelerating.
It is hardly the only indication that America is set to abandon permissionless innovation and revisit the era of heavy-handed regulation for information and communication technology (ICT) markets. Equally significant is the growing bipartisan crusade against Section 230, the provision of the 1996 Telecommunications Act that shields “interactive computer services” from liability for information posted or published on their systems by users. No single policy has been more important to the flourishing of online speech or commerce than Sec. 230 because, without it, online platforms would be overwhelmed by regulation and lawsuits.
But now, long knives are coming out for the law, with plenty of politicians and academics calling for it to be gutted. Calls to reform or repeal Sec. 230 were once exclusively the province of left-leaning academics or policymakers, but this year it was conservatives in the White House, on Capitol Hill and at the Federal Communications Commission (FCC) who became the leading cheerleaders for scaling back or eliminating the law. President Trump railed against Sec. 230 repeatedly on Twitter, and most recently vetoed the annual National Defense Authorization Act in part because Congress did not include a repeal of the law in the measure.
Meanwhile, conservative lawmakers in Congress such as Sens. Josh Hawley and Ted Cruz have used subpoenas, angry letters and heated hearings to hammer digital tech executives about their content moderation practices. Allegations of anti-conservative bias have motivated many of these efforts. Even Supreme Court Justice Clarence Thomas questioned the law in a recent opinion.
Other proposed regulatory interventions include calls for new national privacy laws, an “Algorithmic Accountability Act” to regulate artificial intelligence technologies, and a growing variety of industrial policy measures that would open the door to widespread meddling with various tech sectors. Some officials in the Trump administration even pushed for a nationalized 5G communications network in the name of competing with China.
This growing “techlash” signals a bipartisan “Back to the Future” moment, with the possibility of the U.S. reviving a regulatory playbook that many believed had been discarded in history’s dustbin. Although plenty of politicians and pundits are taking victory laps and giving each other high-fives over the impending end of the permissionless innovation era, it is worth considering what America will be losing if we once again apply old top-down, permission slip-oriented policies to the technology sector. Continue reading →
There is a war going on in the conservative movement over free speech issues and FCC Commissioner Mike O’Reilly just became a causality of that skirmish. Neil Chilson and I just posted a new essay about this over on the Federalist Society blog. As we note there:
Plenty of people claim to favor freedom of expression, but increasingly the First Amendment has more fair-weather friends than die-hard defenders. Michael O’Rielly, a Commissioner at the Federal Communications Commission (FCC), found that out the hard way this week.
Last week, O’Rielly delivered an important speech before the Media Institute highlighting a variety of problematic myths about the First Amendment, as well as “a particularly ominous development in this space.” In a previous political era, O’Rielly’s remarks would have been mainstream conservative fare. But his well-worded warnings are timely with many Democrats and Republicans – including some in the White House – looking to resurrect analog-era speech mandates and let Big Government reassert control over speech decisions in the United States.
Shortly after delivering his remarks, the White House yanked O’Rielly’s nomination to be reappointed to the agency. It was a shocking development that was likely motivated by growing animosities between Republicans on the question of how much control the federal government–and the FCC in particular–should exercise over speech platforms, including platforms that the FCC has no authority to regulate.
For the 30 years that I have been covering media and technology policy, I’ve heard conservatives rail against the Fairness Doctrine, Net Neutrality and arbitrary Big Government only to see many of them now reverse suit and become the biggest defenders of these things as it pertains to speech controls and FCC regulation. It will certainly be interesting to see what a potential future Biden Administration does with the various new regulations that some in the GOP are seeking to impose. Continue reading →
Over at the Mercatus Center Bridge blog, Trace Mitchell and I just posted an essay entitled, “A Non-Partisan Way to Help Workers and Consumers,” which discusses the new Federal Trade Commission’s (FTC) Economic Liberty Task Force report on occupational licensing.
We applaud the FTC’s calls for greater occupational licensing uniformity and portability, but regret the missed opportunity to address root problem of excessive licensing more generally. But while FTC is right to push for greater occupational licensing uniformity and portability, policymakers need to confront the sheer absurdity of licensing so many jobs that pose
zero risk to public health & safety. Licensing has become completely detached from risk realities and actual public needs.
As the FTC notes, excessive licensing limits employment opportunities, worker mobility, and competition while also “resulting in higher prices, reduced quality, and less convenience for consumers.” These are unambiguous facts that are widely accepted by experts of all stripes. Both the Obama and Trump Administrations, for example, have been completely in league on the need for comprehensive licensing reforms. Continue reading →
With each passing year, Washington’s appetite for Internet regulation grows. While “Hands Off the Net!” was a popular rallying cry just a decade ago—and was even a shared sentiment among many policymakers—today’s zeitgeist seems to instead be “Hands All Over the Net.” Countless interests and regulatory advocates have pet Internet policy issues they want Washington to address, including copyright, privacy, cybersecurity, online taxation, broadband regulation, among many others.
Rep. Darrell Issa (R-CA) wants to do something to slow down this legislative locomotive. He has proposed the “Internet American Moratorium Act (IAMA), which would impose a two-year moratorium on “any new laws, rules or regulations governing the Internet.” The prohibition would apply to both Congress and the Executive Branch but makes an exception to any rules dealing with national security.
Will Rep. Issa’s proposal make any difference if implemented? Any congressionally imposed legislative moratorium is a symbolic gesture and not a binding constraint since Congress is always free to pass another law later to get around an earlier prohibition. So, in that sense, a moratorium might not change much. Nonetheless, such symbolic gestures are often important and Issa is to be commended for at least trying to raise awareness about the dangers of creeping regulation of online life and the digital economy.
If policymakers really want to take a more substantive step to slow the flow of red tape, they should consider a different approach. Instead of (or, perhaps, in addition to) a two-year legislative moratorium, they should impose a variant of “Moore’s Law” for information technology laws and regulations. “Moore’s Law,” as most of you know, is the principle named after Intel co-founder Gordon E. Moore who first observed that, generally speaking, the processing power of computers doubles roughly every 18 months while prices remain fairly constant.
I was very pleased to hear this announcement today from leading Senate and House Democrats regarding a much-needed update of our nation’s communications laws:
Today, Senator John D. (Jay) Rockefeller IV, Chairman of the U.S. Senate Commerce, Science, and Transportation Committee, Rep. Henry A. Waxman, the Chairman of the House Committee on Energy and Commerce, Senator John F. Kerry, the Chairman of the Senate Subcommittee on Communications, Technology, and the Internet, and Rep. Rick Boucher, the Chairman of the House Subcommittee on Communications, Technology, and the Internet announced they will start a process to develop proposals to update the Communications Act. As the first step, they will invite stakeholders to participate in a series of bipartisan, issue-focused meetings beginning in June. A list of topics for discussion and details about this process will be forthcoming.
I very much look forward to engaging with House and Senate staff on these issues since this is something I’ve spent a great deal of time thinking about over the past 15 years. Most recently, Mike Wendy and I released a paper entitled, “The Constructive Alternative to Net Neutrality Regulation and Title II Reclassification Wars,” in which we outline some of the possible reform options out there. We built upon PFF’s “Digital Age Communications Act Project,” (DACA) which was introduced in February of 2005 with the ultimate aim of crafting policy that is adaptive to the frequently changing communications landscape. You can find all the white papers from the 5 major working groups here. I also encourage those interested in this issue to take a look at the video from this event we hosted earlier this month asking, “What Should the Next Communications Act Look Like?” Lots of good ideas came up there.
Anyway, down below I have included the video from that event as well as a better description of the DACA model for those interested in details about how that model of Communications Act reform would work. I think DACA holds great promise going forward since it represents a moderate, non-partisan approach to reforming communications policy for the better. I pulled this summary from the paper that Mike Wendy and I recently penned: Continue reading →
There are a lot of interesting weekly roundups on the ‘Net. A search on “this week in” using Google reveals these weekly segments (among the top 50 results) on:
My colleagues at ACT aim to join the Poconos and Palestine by adding “antitrust” to the list! Per the ACT blog:
Today, we’re kicking off a new feature on the blog, a weekly round up of the tech industry’s various antitrust cases and “potential” antitrust concerns. While last week’s antitrust news was dominated by competition concerns outside the technology industry (health insurers and the BCS), there were a few notable stories coming out of the world tech competition.
It goes on to list antitrust discussion around Amazon, IBM, Google, Microsoft, and Oracle/Sun. Given the hard line talk from Christine Varney, head of DOJ’s antitrust division, this could be an ACTive weekly blog.
“Schools in Beijing are quietly removing the Green Dam filter, which was required for all school computers in July, due to complaints over problems with the software,” notes this Reuters report. Even though China backed down on their earlier requirement to have the Green Dam filter installed on all computers, according to Reuters “schools were still ordered by the Ministry of Industry and Information Technology to install the web filter, which Chinese officials said would block pornography and other unhealthy content.” The Reuters article mentions a notice carried on the home page of one Beijing high school that reads: “We will remove all Green Dam software from computers in the school as it has strong conflicts with teaching software we need for normal work.” The article also cites a school technology director, who confirmed that the software had been taken off most computers, as saying “It has seriously influenced our normal work.”
Ironically, many educators and librarians in the United States can sympathize since they currently live under similar requirements. Under the Children’s Internet Protection Act (CIPA) of 2000, publicly funded schools and libraries must implement a mandatory filtering scheme or run the risk of losing their funding. As the Federal Communications Commission summarizes:
[CIPA] imposes certain types of requirements on any school or library that receives funding for Internet access or internal connections from the E-rate program… Schools and libraries subject to CIPA may not receive the discounts offered by the E-rate program unless they certify that they have an Internet safety policy and technology protection measures in place. An Internet safety policy must include technology protection measures to block or filter Internet access to pictures that are: (a) are obscene, (b) child pornography, or (c) harmful to minors (for computers that are accessed by minors).
Of course, nobody wants kids viewing porn in schools, but CIPA has been know the block far more than that and has become a real pain for many educators, librarians, and school administrators who have to occasionally get around these filters to teach their students about legitimate subjects. Anyway, I just find it ironic that some American lawmakers have been making a beef about mandatory Internet filtering by the Chinese when we have our own mandatory filtering regime right here in the states. For example, Continue reading →
The
Times editorial notes that, “Because of a past tragedy, lawmakers and prosecutors are becoming overzealous in combating noxious behavior on the Web.” Specifically, they are referring to the tragic case of Megan Meier, the teen who committed suicide after being harassed on MySpace. “Members of Congress often try to expand the powers of federal prosecutors and courts when state law doesn’t produce the results they seek, especially when confronted with cases as heart-wrenching as Meier’s,” the Times noted. For example, in may 2008, Rep. Linda Sánchez (D-CA) introduced H.R. 1966 (originally H.R. 6123), the “Megan Meier Cyberbullying Prevention Act,” which would create a new federal felony to deal with this concern.
But creating a federal crime for something that is mostly peer-on-peer activity seems like overkill. Moreover, the
Times notes, “the bill is so vaguely written” that it “would have a hard time withstanding a 1st Amendment challenge if it ever became law.” As you’ll see in our paper, Berin and I agree, but we also point out that cyberbullying is a very serious matter since evidence suggests the cyberbullying is on the rise and that it can have profoundly damaging consequences for children.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology. Learn more about TLF →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.