Here’s a new DC EKG podcast I recently appeared on to discuss the current state of policy development surrounding artificial intelligence. In our wide-ranging chat, we discussed:

• why a sectoral approach to AI policy is superior to general purpose licensing
• why comprehensive AI legislation will not pass in Congress
• the best way to deal with algorithmic deception
• why Europe lost its tech sector
• how a global AI regulator threatens our safety
• the problem with Biden’s AI executive order
• will AI policy follow same path as nuclear policy?
• global innovation arbitrage & the innovation cage
• AI, health care & FDA regulation
• AI regulation vs trade secrets
• is AI transparency / auditing the solution?

Listen to the full show here or here. To read more about current AI policy developments, check out my “Running List of My Research on AI, ML & Robotics Policy.”

In a new essay in The Dallas Morning News (“Licensing restrictions for health care workers need to be flexible to fight coronavirus“),  Trace Mitchell and I discuss recent efforts to reform occupational licensing restrictions for health care workers to help fight the coronavirus.  Trace and I have written extensively about the need for licensing flexibility over the past couple of years, but it is needed now more than ever. Luckily, some positive reforms are now underway.

We highlight efforts in states like Massachusetts and Texas to reform their occupational licensing rules in response to the crisis, as well as federal reforms aimed at allowing reciprocity across state lines. We conclude by noting that:

It should not take a crisis of this magnitude for policymakers to reconsider the way we prevent fully qualified medical professionals from going where they are most needed. But that moment is now upon us. More leaders would be wise to conduct a comprehensive review of regulatory burdens that hinder sensible, speedy responses to the coronavirus crisis.

The “Internet of Things” (IoT) is already growing at a breakneck pace and is expected to continue to accelerate rapidly. In a short new paper (“Projecting the Growth and Economic Impact of the Internet of Things“) that I’ve just released with my Mercatus Center colleague Andrea Castillo, we provide a brief explanation of IoT technologies before describing the current projections of the economic and technological impacts that IoT could have on society. In addition to creating massive gains for consumers, IoT is projected to provide dramatic improvements in manufacturing, health care, energy, transportation, retail services, government, and general economic growth. Take a look at our paper if you’re interested, and you might also want to check out my 118-page law review article, “The Internet of Things and Wearable Technology: Addressing Privacy and Security Concerns without Derailing Innovation” as well as my recent congressional testimony on the policy issues surrounding the IoT.)

I want to bring to everyone’s attention an important new white paper by Dr. Robert Graboyes, a colleague of mine at the Mercatus Center at George Mason University who specializes in the economics of health care. His new 67-page study, Fortress and Frontier in American Health Care, seeks to move away from the tired old dichotomies that drive health care policy discussions: Left versus Right, Democrat versus Republican, federal versus state, and public versus private, and so on. Instead, Graboyes seeks to reframe the debate over the future of health care innovation in terms of “Fortress versus Frontier” and to highlight what lessons we can learn from the Internet and the Information Revolution when considering health care policy.

What does Graboyes mean by “Fortress and Frontier”? Here’s how he explains this conflict of visions:

The Fortress is an institutional environment that aims to obviate risk and protect established producers (insiders) against competition from newcomers (outsiders). The Frontier, in contrast, tolerates risk and allows outsiders to compete against established insiders. . . .  The Fortress-Frontier divide does not correspond neatly with the more familiar partisan or ideological divides. Framing health care policy issues in this way opens the door for a more productive national health care discussion and for unconventional policy alliances. (p. 4)

He elaborates in more detail later in the paper:

the Frontier encourages creative destruction and disruptive innovation. Undreamed-of products arise and old, revered ones vanish. New production processes sweep away old ones. This is a place where unknown innovators in garages destroy titans of industry. The Frontier celebrates and rewards risk, and there is a brutal egalitarianism to the creative process. In contrast, the Fortress discourages creative destruction and disruptive innovation. Insiders are protected from competition by government or by private organizations (such as insurers and medical societies) acting in quasigovernmental fashion. In the Fortress, insiders preserve the existing order. Innovation comes from well-established, credentialed insiders who, it is presumed, have the wisdom and motives and competence to identify opportunities for innovation.

In framing the debate in this fashion, Graboyes hopes that we will start paying more attention to the supply side of health care policy debates:

The debate over coverage (and over related issues concerning how health care providers are paid) has focused attention almost exclusively on the demand side of health care markets—who pays how much to whom for which currently offered services. The debate underplays questions of supply—how innovation can alter the very nature of the health care delivery system. (p. 3-4)

This is where Graboyes brings the Internet and information technology into the story to illustrate a powerful point: We could unlock many important life-enriching and potentially life-saving innovations by embracing the same vision we applied to the Internet and IT sectors. Graboyes is kind enough to cite my work on permissionless innovation and the importance of not letting public policy be dictated by excessive fear of worst-case scenarios regarding new technological innovations. As I noted in my book on the topic, “living in constant fear of worst-case scenarios—and premising public policy upon them—means that best-case scenarios will never come about. When public policy is shaped by precautionary principle reasoning, it poses a serious threat to technological progress, economic entrepreneurialism, social adaptation, and long-run prosperity.”

Had fear of potential worst-case outcomes driven policy for the Net, we might have never seen many of the life-enriching innovations that we enjoy today, as Graboyes explains eloquently in this passage:

Knowing what we know today, it would not be hard to persuade a cautious observer in 1989 to radically slow the pace of IT innovation. IT arguably poses personal risks as grave as those that health care poses. Cell phones have been essential components of improvised explosive devices in war zones. The 9/11 atrocities would have been difficult or impossible to carry out without cell phones. Thieves have used the Internet to steal. Stalkers have used the Internet to terrify their prey. Child predators find their victims on the web. People have been murdered by strangers they met in chatrooms. IT has allowed individuals and governments to violate others’ privacy in countless ways. Drug dealers and terrorist networks organize their efforts via cell phone and Internet. The Internet has greatly reduced the cost of destroying another’s reputation, and news accounts tell of suicides following cyberbullying. Our laws demand terribly high standards of safety and efficacy for drugs. We require no such standards for computers, cell phones, and software, but given the nefarious uses to which they are sometimes put, decades ago one could easily have argued for doing so. Had we done so, we would now be living in a much poorer, less interesting world—and perhaps one with even greater risks to life and limb than we have now. No online predators or improvised explosive devices, but also no OnStar to save you after an automobile crash or smartphone to alert police to your life-threatening situation and geographic location. (p. 41)

In other words–and this is another lesson I stress at length in my work–precautionary policies create profound trade-offs that are not always well understood upon enactment of new laws or regulations. As I noted in my book, “When commercial uses of an important resource or technology are arbitrarily prohibited or curtailed, the opportunity costs of such exclusion may not always be immediately evident. Nonetheless, those ‘unseen’ effects are very real and have profound consequences for individuals, the economy, and society.”

What Graboyes does so well in his new paper is prove that these trade-offs are already at work in the American health care system and that we had better get serious about acknowledging them before real damage is done. And what makes Fortress and Frontier such an enjoyable read is that Graboyes is a gifted story-teller who explains in clear terms how expanded health care innovation opportunities could improve the lives of real people. It’s not just abstract, textbook talk. We hear stories of real-world innovators and the patients who need their inventions. For example, Graboyes tells of “an unheralded doctor who pioneered stem-cell therapy in a small-town hospital, a carpenter and puppet-maker who invented functional prosthetic hands costing one-thousandth the price of professionally made devices (aided by an evolutionary biologist who started a worldwide consortium of amateur prosthetists), and college students who devised a low-cost treatment for clubfoot.” (p. 4) And much, much more.

“The most important thing to understand about disruptive innovation is that it often comes (perhaps usually comes) from strange and unexpected places,” Graboyes notes. (p. 20) “[A] shift from Fortress to Frontier would benefit the health and finances of Americans,” he argues, and “the task begins by easing limits on the supply of health care services, thereby clearing the way for innovators to take health care in directions we cannot yet imagine.” (p. 39)

Importantly, Graboyes also offers another reason why America should embrace the “frontier” spirit: Our global competitive advantage in this space is at risk if we don’t:

Moving health care from the Fortress to the Frontier may be more a matter of necessity than of choice. We are entering a period of rapid technological advances that will radically alter health care. Many of these advances require only modest capital and labor inputs that governments cannot easily control or prohibit. If US law obstructs these technologies here, it will be feasible for Americans to obtain them by Internet, by mail, or by travel. (p. 41-2)

He highlights several areas in which this debate will play out going forward including (and notice the intersection with the modern digital technologies and tech policy debates we often discuss here): genomic knowledge and personalized medicine, 3-D printing, artificial intelligence, information sharing via social media, wearable technology, and telemedicine.

To make sure that America can capitalize on the same innovative spirit that gave us the Information Revolution, Graboyes concludes his study with a laundry list of needed policy reforms. These include:

• reform of FDA drug & device approval process to expedite reviews.
• ensure that Americans have a “right to know” about themselves and their health (i.e., that individuals have a right to possess their own genetic information and to receive information about how to interpret the results.)
• abolish state certificate-of-need laws, which unnecessarily “require that hospital developers obtain government permission before building a new facility, or expanding an existing one, or even adding a specific piece of medical equipment.”
• reform state-based licensing laws, which “put barriers in the way of doctors moving from other states” and create physician shortages. Also need to reform state laws to allow nurse practitioners, optometrists, and others to practice independently of physicians.
• reform tort law by capping noneconomic damages, instituting a “loser pays” rule to discourage frivolous lawsuits, establishing safe harbors for vaccine developers, and more.
• revising tax laws to make sure medical devices are not hit with discriminatory tax burdens that discourage innovation, and then also revising other taxes that skew incentives in the health insurance marketplace.

Graboyes itemizes dozens of other potential reforms to give policymakers a smorgasbord of options from which to choose. It is unlikely that all the reforms he lists will be adopted, but even if policymakers would just pick a few of those proposed action items, it could provide a real boost to medical innovation in the short term. Importantly, most of these proposed reforms could be implemented without stirring up contentious debate over the future of the Affordable Care Act (ACA).

Needless to say, I highly recommend Fortress and Frontier and I very much hope that the vision that Graboyes articulates in it comes to influence public thinking and future policymaking in the health care arena. In a follow-up post, I will also discuss how Fortress versus Frontier provides us with another “innovation paradigm” that can help us frame future innovation policy debates in many other contexts.

Well, you got it!  Here’s a essay of mine that The Daily Caller ran today discussing the ramifications of the decision.

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Internet freedom got a reprieve Tuesday when the U.S. Court of Appeals for the District of Columbia slapped down a brazen attempt by the Federal Communications Commission (FCC) to ignore the rule of law and begin imposing onerous regulations on broadband network operators. The decision, Comcast v. FCC, deals with arcane matters of regulatory agency jurisdiction, but the stakes were profound and the ramifications for the future of the Internet will reverberate for years to come.

In a nutshell, the FCC argued it had the right to impose so-called “Net neutrality” regulations on a private broadband operator based merely on a handful of principles that the agency had previously said it would not be enforcing as law. Net neutrality regulations would put FCC bureaucrats in the Internet’s driver’s seat and let them determine what was “just and reasonable” of private networks. Critics have rightly feared that Net neutrality sounded all too much a Fairness Doctrine for the Internet since similar language had been used in the broadcast era to justify all sorts of FCC meddling and micromanagement.

Regardless, the FCC’s original position—that its Net neutrality principles were only principles and nothing more—made sense since even a high school civics student can tell you that only Congress can make laws. Moreover, for a brief time, even the FCC seem to realize that laws that would comprehensively regulate such an important sector of the American economy, as Net neutrality rules would, almost certainly require our elected leaders in Congress to reopen and tweak existing statutes like the Telecommunications Act of 1996. After all, Congress had never authorized wide-reaching regulation of the Net or broadband networks, and so, if the agency wanted to extend its regulatory tentacles and wrap them around the Internet it only seems reasonable they get the blessing of lawmakers before doing so. And, for a time, the FCC stuck to a “Hands Off the Net” approach.

Regrettably, the FCC decided to ignore that earlier logic, throw statutory authority to the wind, and instead concoct creative interpretations regulatory authority via something know as “ancillary jurisdiction.” To simplify things greatly, the agency has some leeway under existing laws to use various clauses of previous congressional enactments to regulate the sectors and technologies it oversees. In this case, the FCC claimed that it had “ancillary jurisdiction” to enforce amorphous Net neutrality policy principles against Comcast under past case law or, more amazingly, via some of the deregulatory-minded passages from the Telecom Act of 1996. It was an astonishing display of bureaucratic hubris that flaunted the rule of law and asked the courts to essentially look the other way while the agency magically invented its own authority to act and expand its powers.

But the U.S. Court of Appeals for the District of Columbia (the D.C. Circuit) was not about to turn a blind eye. In fact, this particular appeals court has been a near constant pain in the keister for the FCC since the agency’s regulatory shenanigans are frequently brought before the court and just as frequently struck down as over-zealous, unconstitutional exercises of power.

In yesterday’s Comcast decision, the D.C. Circuit calmly but meticulously decimated each and every twisted rational that the FCC set forth in defense of its Internet power grab. Paraphrasing an earlier Supreme Court decision, the court noted that the FCC’s decision, not only “strain[ed] the outer limits of even the open-ended and pervasive jurisdiction that has evolved by decisions of the Commission and the courts,” but sought to “shatter them entirely.” More profoundly, the court noted that “Were we to accept [the agency’s] theory of ancillary authority, we see no reason why the Commission would have to stop there, for we can think of few examples of regulations that apply to [] common carrier services, [] broadcast services, or [] cable services that the Commission… would be unable to impose upon Internet service providers.”

In other words: Stop right there FCC! This is exactly what courts should be doing when rogue regulatory agencies run well afoul of their statutorily-defined limits, but all too often agencies get a free pass instead in the name of “agency deference.” Luckily that didn’t happen this time around thanks to the D.C. Circuit.

The question now is whether the FCC learns its lesson — that it should seek the proper authority from Congress before it imposes new regulations like Net neutrality rules — or if the agency instead engages in another effort to concoct regulatory authority via regulatory re-classification. If the agency takes that latter approach and tries to pigeonhole the Internet and broadband services into the public utility regulatory models of the past, it will set the stage for Regulatory World War III. Lawsuits will fly. Some carriers have already promised as much.

When will the agency accept the fact that it is not above the law and that there is a right way in a democracy to go about changing policies that have such a profound impact on our economy? Regardless of what one thinks of the recent health care bill, imagine if the Department of Health and Human Services would have tried to ram it through as a regulatory scheme instead of having Congress debate it and vote on it. People would have been outraged. And yet that’s exactly what the FCC is proposing to do when it comes to Net neutrality regulation and regulatory reclassification of the Internet as sleepy public utility. You know, because public utility regulation has worked soooo well in other contexts!

The D.C. Circuit’s decision yesterday should encourage the Commission to pause and reconsider its current approach. Unfortunately, it’s more likely that the agency will instead retrench and fight on in a futile attempt to take the law into its own hands and ignore the will of Congress. For the sake of Internet freedom, we have to hope the courts will continue to hold the line against such shameless regulatory overreach. And if Congress does use this as an opportunity to reopen the Telecom Act, they should tightly limit the powers of the FCC and make a strong stand in defense of Internet freedom.

Over on the WashingtonWatch.com blog, I’ve laid out in the simplest terms I could what’s going on in terms of procedure with health care overhaul legislation. The post, called “What is Deeming, Anyway?“, comes in at a mere 900 words… If you’re a real public policy junkie, you might like it.

But what about the transparency oriented processes that President Obama and leaders like Speaker Pelosi promised the public? Recall that the Speaker promised to post the health care bill online for 72 hours before a vote back in September.

There was debate about whether she stuck to her promise then. And it was probably a one-time promise. It’s almost certain that she will not do so now. If she lines up the votes to pass the bill, the vote will happen. Right. Then.

What about President Obama’s promise to put health care negotiations on C-SPAN? The daylong roundtable debate on health care was an engaging illustration of what happens when you do transparent legislating. Voters got a clearer picture of where each side stands—and perhaps saw that there actually is some competence on both sides of the aisle. Some competence.

The health care negotiations going on right now are the ones that matter. This is when the most important details are being hammered out. This is when the bargaining that draws the public’s ire is happening. But I’m not seeing it on C-SPAN.

President Obama’s promise may have been naive, but that doesn’t excuse it. The inside negotiations going on this week represent an ongoing violation of the president’s C-SPAN promise.

And there’s good reason to anticipate that the president will violate his Sunlight Before Signing promise as well. This was his promise to post bills online for five days after he receives them from Congress before signing them into law.

The reason why I’m so confident of a prospective violation—aside from the promise being flouted more often than not—is that the White House has posted the Senate-passed health care overhaul bill on the “Pending Legislation” page of Whitehouse.gov. H.R. 3590 as passed by the Senate is right there in among the bills Congress has passed, which are getting their five-day public review.

If the White House plans to argue that the health care overhaul legislation got the five-day public review President Obama promised, that will not fly at all.

The substance of the Sunlight Before Signing promise is to post bills for five days after Congress’ final vote. (I’ve recommended starting the clock at “presentment,” the formal constitutional step when the president receives a bill from Congress.)

Something other than that, such as posting the Senate bill before it passes the House—while failing to post the “fixer” bill for five days—would fundamentally violate the president’s transparency promise.

What an irony if all this were to happen this week, which, after all, is Sunshine Week!

Over at “Convergences,” I write on the origins of the idea of a “public option” for health insurance. In part, I note:

At a superficial level, the “public option” for health care is both appealing and puzzling. From a competition policy standpoint, the entry into the market of a subsidized competitor offering a wide array of benefits certainly might put downward pressure on prices as well as easing humanitarian concerns about access. Equally obvious, though, are objections. What mechanism of accountability would exist to ensure that this subsidized entity is well run? It cannot be allowed to go bankrupt; nor is it likely that unhappy customers would have much leeway in suing it. How would it avoid driving private insurers out of the market for low-end service entirely? How much of a subsidy would it get, and how is this to be funded? Since the party and administration that sponsored this proposal are associated with the intelligentsia, however, people hoping to improve the health care system probably felt entitled to trust that these questions had good answers. Somewhere, someone deep in the bowels of the brain trust had considered these issues. Curious about this, I found myself reading one of the more serious works to address the public option, a paper by Randall D. Cebul, James B. Rebitzer, Lowell J. Taylor and Mark E. Votruba entitled, “Unhealthy Insurance Markets: Search Frictions and the Cost and Quality of Health Insurance,” identified as NBER Working Paper No. 14455, from October 2008.

Read my whole piece, here.

See my take on the election and the prospects for capitalism in today’s Wall Street Journal:

If Barack Obama ran for president by calling for a heavier hand of government, he also won by running one of the most entrepreneurial campaigns in history. Will he now grasp the lesson his campaign offers as he crafts policies aimed at reigniting the national economy? Amid a recession, two wars, and a global financial crisis, will he come to see that unleashing the entrepreneur is the best way to raise the revenue he needs for his lofty priorities?