spending – Technology Liberation Front https://techliberation.com Keeping politicians' hands off the Net & everything else related to technology Mon, 10 Apr 2023 14:17:32 +0000 en-US hourly 1 6772528 Podcast: What’s Wrong with Industrial Policy? https://techliberation.com/2022/02/18/podcast-whats-wrong-with-industrial-policy/ https://techliberation.com/2022/02/18/podcast-whats-wrong-with-industrial-policy/#comments Fri, 18 Feb 2022 15:54:29 +0000 https://techliberation.com/?p=76954

I recently joined Rep. Dan Crenshaw on his Hold These Truths podcast to discuss, “What’s Wrong with Industrial Policy.” We chatted for 25 minutes about a wide range of issues related to the the growing push for grandiose industrial policy schemes in the US, including the massive new 3,000-page, $350 billion “COMPETES Act” legislation that recently passed in the House and which will soon be conferenced with a Senate bill that already passed.

On the same day this podcast was released this week, I also had a new op-ed appear in  The Hill on “The Coming Industrial Policy Hangover.” In both that essay and the podcast with Rep. Crenshaw, I stress that, beyond all the other problems with these new industrial policy measures, no one is talking about the fiscal cost of it all. As I note:

In the rush to pass legislation, we’ve barely heard a peep about the $250-$350 billion price tag. This follows a massive splurge of recent government borrowing, which led to the U.S. national debt hitting another lamentable new record: $30 trillion. China already owns over $1 trillion of that debt, making one wonder if we’re really countering China by adopting a massive, new and unfunded industrial policy that they will end up financing indirectly.

Read my oped for more details and for a deeper dive of what’s wrong with the bills, see my earlier essay here on “Thoughts on the America COMPETES Act: The Most Corporatist & Wasteful Industrial Policy Ever.”

Additional Reading from Adam Thierer on Industrial Policy:

]]> https://techliberation.com/2022/02/18/podcast-whats-wrong-with-industrial-policy/feed/ 1 76954 Thoughts on the America COMPETES Act: The Most Corporatist & Wasteful Industrial Policy Ever https://techliberation.com/2022/01/26/thoughts-on-the-competes-act-the-most-corporatist-wasteful-industrial-policy-ever/ https://techliberation.com/2022/01/26/thoughts-on-the-competes-act-the-most-corporatist-wasteful-industrial-policy-ever/#comments Wed, 26 Jan 2022 19:37:24 +0000 https://techliberation.com/?p=76942

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: 5G mobile networks, biometrics, quantum information science, “the development of safe and trustworthy artificial intelligence and data science,” cybersecurity literacy, drone security, microelectronics, electronic waste, genomics, isotope development, and the Large Hadron Collider and high intensity lasers, among many other things. The measure also proposes a broad array of Green New Deal-esque efforts focused on things like: biometrology, climate and Earth modeling, deforestation and overfishing / “driftnet” fishing matters, marine mammal research, solar energy, bioenergy, the creation of a National Engineering Biology Research and Development Initiative and a Regional Clean Energy Innovation Program at the Department of Energy, clean water programs, a national clean energy incubator program, and helium conservation, again among many other things. There are even provisions addressing the trading of shark fins and almost 70 pages of provisions on coral reef conservation.

A Sweeping Macroeconomic Planning Exercise

There are more sweeping macroeconomic provisions and mandates in the bill. For example, the COMPETES Act would create a new “national supply chain database,” as well as a Supply Chain Resiliency and Crisis Response Office in the Department of Commerce, while also requiring the Director of White House Office of Science & Technology Policy to develop and submit to Congress a 4-year comprehensive national S&T strategy. The measure also includes trade adjustment assistance for workers, firms, and farmers and even provisions dealing with currency undervaluation. There are also many provisions addressing drug manufacturing and medical supply chain issues. There are even proposed expansions of federal antitrust power. (Apparently, once America’s grandiose industrial policies magically create global powerhouses in every sector, we’ll need expanding antitrust action to tear them all down and start all over again! Meanwhile, perhaps the greatest irony of the new industrial policy efforts is that, while lawmakers are falling all over themselves to shower corporate America with hundreds of billions of taxpayer dollars, policymakers are simultaneously on a regulatory and antitrust jihad against many successful tech companies with bills that would break them up or destroy their business models.)

Perhaps most radically, the measure includes a 25-page section proposing a sweeping new “National Critical Capabilities Review” process to oversee outbound investments. Covington lawyers noted that, if such a regulatory regime is enacted, “the United States would become the first major Western advanced economy to adopt a broad-gauged outbound investment screening process, raising the prospect of a new era in national security-based reviews and restrictions of international investment flows.”

Finally, the COMPETES Act includes a huge assortment of other national security and foreign policy-related provisions, most of which focus on countering China in some fashion. “There’s a lot of Cold War-style influence mongering happening here,” says Reason’s Elizabeth Nolan Brown, including programs that sound like they could have been concocted by the CIA, such as the bill’s “Countering China’s Educational and Cultural Diplomacy in Latin America” initiative. But there is also a lot of language here addressing other regions or countries, including: Oceania, Africa, the Arctic, the Middle East, Iran, Hong Kong, Taiwan, and others.

The relationship of most of these provisions to U.S. industrial competitiveness is tenuous to say the least. Nonetheless, those provisions take up a huge amount of space in this nearly 3,000-page industrial policy measure and may end up complicating its passage.

A Chicken in Every Pot

The inclusion of “Regional Technology and Innovation Hubs” in the bill deserves special attention. The Act proposes $7 billion over four years to fund 10 different innovation hubs and it includes many provisions about how and where money will be spent. It’s hard to see how spreading $7 billion across 10 hubs is actually going to result in much once every special interest gets their cut of the action, but proposals like these are all the rage these days. It’s the equivalent of policymakers promising a high-tech chicken in every pot, or a Silicon Valley in every state.

In a two-part series for Discourse, I documented the problems associated with the many previous government efforts to create innovation hubs, tech clusters, or science parks. The government’s  track record in this regard is long and lamentable. Instead of following a time-tested approach getting the broad innovation policy environment right through a “generalized” approach to economic growth and development, most policymakers took unwise shortcuts and tried using “targeted” development schemes that were incredibly risky and ended up squandering a huge amount of taxpayer resources.

But all those failed past efforts probably won’t stop this high-tech pork barrel effort from rolling forward in some fashion. The proposed new regional hub effort comes on top of an announcement last July by the Commerce Department that the agency plans to allocate $1 billion in pandemic recovery funds to create or expand “regional industry clusters” as part of the administration’s new “Build Back Better Regional Challenge.” The agency’s list of possible winning funding ideas includes an “artificial intelligence corridor” and a “climate-friendly electric vehicle cluster.” And there are many other federal and state programs throwing money at the idea of hub or “cluster” formation, or even just highly cronyist efforts to attract a single big tech firm. (Anyone remember the Foxconn fiasco in Wisconsin?)

As Matt Mitchell and I have noted, this growing trend represents the collision of federal industrial policy and long-standing state-based economic development efforts. Regardless of how well-intentioned they may be, it is highly unlikely these new tech pork barrel efforts will produce better results than the long string of earlier federal and state failures.

Secondary Effects & Unforeseeable Costs

A bill this big presents many other big opportunities for corporations and other special interests. It’s no wonder that many companies, trade associations, and other special interests are lining up to support this effort. In a recent study co-authored with Connor Haaland (“Does the US Need a More Targeted Industrial Policy for AI & High-Tech”), we outlined “the way rent-seeking and cronyism often become chronic problems for highly targeted, big-budget industrial policy efforts.” Those problems will grow exponentially if the COMPETES Act passes. Everyone expects a cut of the action when Washington starts showering sectors with money.

But there’s a bigger problem associated with the everything-and-the-kitchen-sink approach to such a massive industrial policy bill.  All the ambiguities associated with a monster measure like this means that agency bureaucrats will be left to fill in all the details for many years to come. It is folly of the highest order to believe that all these agencies will work together in a tightly coordinated and consistent way to advance industrial policy efforts or address “strategic objectives.” Anyone currently following the fight between the FAA and FCC over the rollout of 5G wireless networks will know what I am talking about. Moreover, delegating broad authority and big money to all these agencies just further reinforces the rent-seeking instincts of special interests, who will rush to their respective regulatory masters with hat in hand. This presents agencies with an added policy lever to blackmail companies into doing what they want without any new regulations even being issued.

And then there is the final consideration: where will all the money come from for this grand exercise in technocratic central planning? The Senate bill costs an estimated $250 billion. To be clear, that’s A QUARTER TRILLION DOLLARS. We’re talking big money, and chances are that the final price tag for the House’s COMPETES Act will be even higher. Does the money to fund all this profligate spending just fall like manna from industrial policy heaven? No, it will come out the pockets of the American taxpayer and American companies (who will just pass the bill along to consumers). This will have dynamic effects on growth and innovation that are almost never discussed in industrial policy debates. Here’s how Connor Haaland and I put it in our big study:

“First, a dollar spent pursuing one objective is a dollar that could have been invested differently, and potential better. Second, the very act of imposing taxes to cover these state gambits results in costs and distortions that must be accounted for. Some of these costs are deadweight losses associated with taxes and tax collection more generally. But this points to a third lesson: The true potential costs associated with industrial policy programs also need to account for the negative secondary effects of rent-seeking, bureaucracy, and the many other downsides of the political system, included cost overruns and corruption.”

As the old saying goes: There is no free lunch.

Conclusion: There Is a Better Way

Some advocates of the COMPETES Act label it a “competitiveness bill” or an “innovation initiative.” It takes a great deal of hubris to pretend that that the economy is just a giant machine to be manipulated and that policymakers can easily “dial in” the desired innovation results through massive bills and expanded bureaucracy.

Lawmakers and bureaucrats are not going to allocate capital more efficiently than private innovators and investors. Nor are they going to be able to “shore up supply chains” or create tech hubs in every city just by sprinkling a little magical industrial policy pixie dust thinly across the entire nation.

We should not try to compete with China by becoming China. Nor do we need to. Markets and supply chains recover from setbacks faster than governments can. This week, the White House reiterated its support for industrial policy efforts to strengthen supply chains and extend subsidies to the semiconductors industry. But, assuming the COMPETES Act passes, it’ll take years to get all the planning and spending going. When government spins those proverbial dials, it does so very slowly and extremely inefficiently. Meanwhile, the same day the White House was making these announcements, it was also touting that $80 billion in private investment has been announced by the US semiconductor industry recently. Just last week, Intel announced it plans to invest at least $20 billion in two new chip-making facilities in Ohio. Scott Lincicome and Ilana Blumsack have documented the many other private initiatives underway by the semiconductor industry to expand domestic manufacturing capacity, as well as efforts by foreign firms like Samsung to invest here to take advantage of our skilled workforce and vibrant capital market. This is all happening despite the fact that Congress is still debating an industrial policy measure that may end up being too bloated to even achieve successful passage this session.

Does government have any role to play? It certainly does. Most current industrial policy proposals fail to understand that the most important thing that policymakers can do is to clean up decades of earlier failed industrial policy efforts. Industrial policies in fields like energy, aviation, space, communications and other sectors skewed markets in unnatural and inefficient ways by favoring specific technologies and companies over others. This is because industrial policy all too often devolves into the business of picking winners and losers. This is not always done in a formal way or even with clear intent. Rather, when government is throwing around billions and engaging in casino economics by placing big bets, a lucky few will win at the expense of others.

Of course, not all government support is as wasteful or corporatist in character. “Basic” R&D efforts are certainly more defensible than most “applied” or “targeted” efforts. “When government is supporting basic R&D,” Connor Haaland and I have noted, “the chances of wasting scarce resources on risky investments can be minimized to some degree, at least as compared with highly targeted applied R&D investments in unproven technologies and firms.”

And then there are all of the education and training efforts governments can undertake. If lawmakers were smart, they would have just limited their efforts to the sort of things found in Titles III, V, and VI of the COMPETES Act, which relates to boosting STEM education, high-tech workforce training, improving National Science Foundation research efforts, and funding various other federal science agencies and labs, that conduct more basic research. And more flexible immigration policies are also essential.

Meanwhile, government defense spending isn’t going to dry up anytime soon and it continues to represent an indirect form of industrial policy given the trillions of dollars that are spread around through the so-called “military-industrial complex.” That certainly doesn’t mean America should be greatly expanding its already bloated defense budgets in the name of expanding industrial policy. Yet, for better or worse, government is always going to be spending a lot of money on defense priorities and it gives it a chance to address whatever “strategic” needs it has.

But the current industrial policy behemoth advancing in Congress represents a misguided effort at domestic retrenchment and a collapse into a lamentable sort of techno-mercantilism thinking that happens every quarter century or so. In my paper with Haaland as well as a separate essay, I have documented just how misguided the “Japan panic” of the 1980s and 90s was. One policymaker and pundit after another lined up to breathlessly proclaim the end of America if we failed to adopt a grandiose industrial policy to counter Japan. Of course, that industrial policy approach ended up being such a disaster that even the Japanese government itself declared in a 2000 report that “the Japanese model was not the source of Japanese competitiveness but the cause of our failure.”

Moreover, it is worth noting what happened with the Internet and digital technology in the U.S. versus the rest of the world in the 1990s and beyond. America essentially put a policy firewall between the emerging digital technology sector and the old industrial policy regime we had for analog sectors and technologies, like broadcasting and wireline telephony. And thank God we did! America’s digital technology sector thrived, and U.S.-headquartered tech companies became household names across the globe. Meanwhile, the Europeans have spent 20 years crafting one misguided industrial policy scheme after another to equal America’s accomplishments. Despite highly targeted and expensive efforts to foster a domestic digital tech base, the EU has instead generated a string of industrial policy failures that Haaland and I documented in detail here.

Corporatism, cronyism, and profligate pork-barrel spending were not the sources of America’s competitive advantage in digital technology, and top-down planning did not make our digital technology companies global powerhouses.  Instead, we got our innovation culture right for digital technology. First and foremost, our the default regulatory policy for the digital economy was permissionless innovation. No one had to ask anyone for the right to develop all those new digital technologies and online platforms. The Clinton Administration’s 1997 “Framework for Global Electronic Commerce” announced that “governments should encourage industry self-regulation and private sector leadership where possible” and “avoid undue restrictions on electronic commerce.” Second, investors saw that positive policy ecosystem developing and moved quickly to shower entrepreneurs in this sector with unprecedented private venture capital investment. Third, education and career opportunities in these sectors expanded accordingly. Real-time “learning by doing” took place as millions of people learned new digital skillsets on the fly. Kids learned how to code before anyone could even teach them how to type. Most importantly, talented immigrants and foreign investors then came here to take advantage of all this, allowing America to steal away the best and brightest from the rest of the world.

This constitutes one of the greatest capitalist success stories in human history, and it all happened without targeted, technocratic, top-down industrial policy planning. This is the more principled and less costly vision for innovation policy America needs today to counter China and the rest of the world. There is absolutely no reason that we can’t apply this same vision to aviation, space, semiconductors, energy, nanotech, AI, and many other sectors of importance.

Additional Reading from Adam Thierer on Industrial Policy:

Other critical essays on industrial policy:

]]> https://techliberation.com/2022/01/26/thoughts-on-the-competes-act-the-most-corporatist-wasteful-industrial-policy-ever/feed/ 2 76942 Can Government Reproduce Silicon Valley Everywhere? https://techliberation.com/2021/09/12/can-government-reproduce-silicon-valley-everywhere/ https://techliberation.com/2021/09/12/can-government-reproduce-silicon-valley-everywhere/#comments Sun, 12 Sep 2021 17:36:07 +0000 https://techliberation.com/?p=76903

Wishful thinking is a dangerous drug. Some pundits and policymakers believe that, if your intentions are pure and you have the “right” people in power, all government needs to do is sprinkle a little pixie dust (in the form of billions of taxpayer dollars) and magical things will happen.

Of course, reality has a funny way of throwing a wrench into the best-laid plans. Which brings me to the question I raise in a new 2-part series for  Discourse magazine: Can governments replicate Silicon Valley everywhere?

In the first installment, I explore the track record of federal and state attempts to build tech clusters, science parks & “regional innovation hubs” using state subsidies and industrial policy. This is highly relevant today because of the huge new industrial policy push at the federal level is building on top of growing state and local efforts to create tech hubs, science parks, or various other types of industrial “clusters.

At the federal level, this summer, the Senate passed a 2,300-page industrial policy bill, the “United States Innovation and Competition Act of 2021,” that included almost $10 billion over four years for a Department of Commerce-led effort to fund 20 new regional technology hubs, “in a manner that ensures geographic diversity and representation from communities of differing populations.” A similar proposal that is moving in the House, the “Regional Innovation Act of 2021,” proposes almost $7 billion over five years for 10 regional tech hubs. Meanwhile, the Biden administration also is pitching ideas for new high-tech hubs. In late July, the Commerce Department’s Economic Development Administration announced plans to allocate $1 billion in pandemic recovery funds to create or expand “regional industry clusters” as part of the administration’s new Build Back Better Regional Challenge. Among the possible ideas the agency said might win funding are an “artificial intelligence corridor,” an “agriculture-technology cluster” in rural coal counties, a “blue economy cluster” in coastal regions, and a “climate-friendly electric vehicle cluster.”

In my essay, I note that the economic literature on these efforts has been fairly negative, to put it mildly. There is no precise recipe for growing tech clusters, as most economists and business analysts note.

“Despite several attempts, Silicon Valley has not been successfully copied elsewhere,” notes Mark Zachary Taylor, author of “The Politics of Innovation: Why Some Countries Are Better Than Others at Science and Technology.” Judge Glock, a senior policy adviser with the Cicero Institute, offers a more blistering assessment of such efforts: “Almost every American state has tried to fund the creation of biotech clusters, projects that almost inevitably end with weeds growing through the parking-lot pavement and a trail of corrupt bargains.”

I then highlight the key findings from several major studies of these efforts, all of which make it clear that, as cluster scholars by Aaron Chatterji, Edward Glaeser and William Kerr noted in 2014 after gathering all the research conducted on the topic: existing evidence “suggests that the regional foundation for growth-enabling innovation is complex and that we should be cautious of single policy solutions that claim to fit all needs.” Furthermore, “even if clusters of entrepreneurship are good for local growth, it is less clear that cities or states have the ability to generate those clusters.”

I also highlight research from my Mercatus Center colleagues on “The Economics of a Targeted Economic Development Subsidy” documenting costs of state-level planning & case study of Foxconn fiasco. They summarize the fairly miserable track record of state and local mini-industrial policy efforts. As they note, the extensive economic literature on this matter finds that “the net effect of targeted economic development subsidies is likely to be negative” because “the taxes funding the subsidies will discourage more economic activity than will be encouraged by the subsidies themselves.” Similarly, Harvard Business School economist Josh Lerner evaluated dozens of similar targeted development efforts from around the globe in his 2009 book Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed—and What to Do About It. He concluded that “for each effective government intervention, there have been dozens, even hundreds, of failures, where substantial public expenditures bore no fruit.”

In my essay, I also discuss the astonishing array of federal efforts to promote the geographic spread of high-tech sectors and jobs since 2000. Throughout Bush, Obama, Trump & Biden admins, there’s been a lot of spending, but not a lot of success. Just lots of new laws and bureaucracies:

In 2012, the Obama administration launched the multiagency Rural Jobs and Innovation Accelerator Challenge and Advanced Manufacturing Jobs and Innovation Accelerator Challenge. This occurred at roughly the same time President Obama was launching his Startup America initiative. He also signed the JOBS Act (Jump-start Our Business Startups) in 2012. All these efforts included various measures to support the spread of advanced manufacturing and high-tech startups across the U.S. But none of these efforts have borne much fruit so far.

In the second installment of this series, I explore better ways to encourage regional tech innovation and economic development without doubling down on failed programs of the past. Specifically, I explain why, when it comes to economic development efforts, policymakers would be wise to avoid the costly, ineffective “fun stuff” and refocus on time-tested “boring” strategies:

The boring approach to economic development seeks to promote an open innovation culture that is conducive to risk-taking, investment and growth without the need to extend targeted privileges to particular firms or industries. Such a culture comes down to a classic mix of simplified and equally applied taxes, streamlined permitting processes and sensible regulations, limits on frivolous lawsuits, and clear protection of contracts and property rights. As Matt Mitchell and I argued previously, policymakers need to resist the urge to go for broke with splashy policies and programs. They need to appreciate the benefits of generalized economic development policy (a.k.a. the boring approach) as opposed to far riskier targeted development efforts.

I also highlight recent research explaining how perhaps the simplest way to strengthen existing clusters, or give rise to new ones, is to make sure America’s immigration policies are hospitable to the best and brightest minds from across the globe.

And I note how, due to the problems associated with many other forms of government-sponsored R&D assistance, many scholars and policymakers are increasingly turning to the idea of government-sponsored competitions and prizes as a superior way to distribute R&D assistance.

With competitions, governments can set broad goals to help facilitate the search for important societal needs. The prizes then create a powerful incentive for innovators to pursue those goals, not only to win money, but also to gain recognition from peers and the public. Another alternative is just using lotteries to distribute R&D money instead of having agencies target grants. That at least avoids political shenanigans and paperwork delays, although it may not be a particularly effective approach.

There is also some good news is overlooked in today’s rush to make big industrial policy gambles: Venture capitalists and new startups are already spreading out naturally.

A 2021 study on “The State of the Startup Ecosystem” by Engine, a research and advocacy organization supporting startups, revealed that “as Series A funding grew over the last fifteen years, more of that growth has started to shift to areas located outside of the largest ecosystems.” Series A funding refers to the initial round of outside venture capitalist investment in startups. The report looked at Series A deals from 2003 to 2018 and found that “Series A rounds outside of the top five ecosystems grew nearly 900 percent, while the number of rounds outside of the top nine grew nearly tenfold.” Whereas Series A fundings outside of the top five ecosystems stood at 38% in 2003, they had jumped up to 43% in 2018. “The increase in deal location diversity over this period reflects an increasing spread in venture capital investment across the country and less centralization of investment in areas like Silicon Valley,” the report concluded.

Meanwhile, tech innovators and investors are increasingly engaging in innovation arbitrage as they move to cities and states across the nation that are more hospitable to entrepreneurial activities. Firms and investors are voting with their feet (and dollars) by flocking to areas where tech clusters can more naturally sprout because the general policy environment is sound.

But government efforts to artificially try to create regional innovation hubs in a top-down, technocratic fashion will almost certainly persist. As they do, some will argue that this time will be different! Perhaps, but it is more likely that the past is prologue; these new hubs will likely cause federal politicians to jockey for position to have their regions named one of the winners and get a big cut of all the new high-tech pork being served up by Washington. We can do better.

Jump over to  Discourse to read both installments here and here.

Also, down below I list several other things I have written recently on industrial policy efforts more generally.

]]> https://techliberation.com/2021/09/12/can-government-reproduce-silicon-valley-everywhere/feed/ 1 76903 Skeptical Takes on Expansive Industrial Policy Efforts https://techliberation.com/2021/03/15/skeptical-takes-on-expansive-industrial-policy-efforts/ https://techliberation.com/2021/03/15/skeptical-takes-on-expansive-industrial-policy-efforts/#comments Mon, 15 Mar 2021 17:09:11 +0000 https://techliberation.com/?p=76845

[Last updated 3/25/22]

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.

Scott Lincicome and Huan Zhu, “Questioning Industrial Policy: Why Government Manufacturing Plans Are Ineffective and Unnecessary,” Cato Institute Working Paper, June 16, 2021.

[I]ndustrial policy – properly defined – has an extensive and underwhelming history in the United States, featuring high costs (seen and unseen), failed objectives, and political manipulation. Surely, not every U.S. industrial policy effort has ended in disaster, but facts here and abroad argue strongly against new government efforts to boost “critical” industries and workers and thereby fix alleged market failures. Such efforts warrant intense skepticism – skepticism that today is unfortunately in short supply.

Adam Thierer, “Industrial Policy as Casino Economics,” The Hill, July 12, 2021.

While some government investments will always be necessary, policymakers engaging in casino economics means bad industrial policy bets and taxpayer money squandered on risky ventures best made by private actors. We need to keep Uncle Sam’s gambling habits in check.

Adam Thierer, “Thoughts on the America COMPETES Act: The Most Corporatist & Wasteful Industrial Policy Ever,” Technology Liberation Front, January 26, 2022.

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.

Adam Thierer & Connor Haaland, “Does the US Need a More Targeted Industrial Policy for AI & High-Tech?” Mercatus Center at George Mason University, Special Study, November 2021.

This paper considers how both the recent history of high-tech industrial policy efforts at the national and international level—as well as some state and local economic development efforts in the United States—might better inform the wisdom of proposed efforts for AI or other high-tech sectors. That history is spotted with some limited successes alongside a long string of costly failures. We explore the reasons for those failures and recommend that the US refocus on the policy prerequisites that helped give rise to the computing and internet revolutions: a more generalized approach to economic development rooted in light-touch regulation and taxation of emerging technology.

Samuel Gregg, “Can America Build A Broad-Based Economy?”  Law & Liberty, March 1, 2022

Of course, if a government decides to put enough money and resources behind a given industrial policy, it will likely produce some results. Yet the same is true of the gambler. If she stays in the casino long enough and spends enough money, she will win a few hands of cards. But the odds are that she will also lose a great deal of money, especially if she is as inept a gambler as the government is maladroit at identifying industry trends or entrepreneurial opportunities. Moreover, just as a compulsive gambler’s behavior will have numerous negative effects on her family’s well-being, so too does industrial policy risk inflicting wider damage upon a nation’s economy and political system. The harms range from gross misallocations of resources to the rampant cronyism and rent-seeking that seems inseparable from industrial policy (which, I again note, its advocates studiously avoid discussing), to name just a few.

Phil Gramm & Mike Solon, “Peace Through Strength Requires Economic Freedom,” Wall Street Journal, March 1, 2022.

The America Competes Act is the House’s effort to outdo the Chinese Communist Party’s latest five-year plan. The 2,900-page bill would make an old Soviet commissar blush.  [. . . ] America’s success in the world economy has never depended on industrial policy or government subsidies. It has come from the relative absence of government planning and subsidies. This is hardly news. The U.S. government provided support for the efforts of Samuel Langley, the greatest aviation expert of the 1890s, in his effort to make America first in powered flight. His manned Aerodrome flopped into the Potomac River. It was the Wright brothers, two unsubsidized but determined bicycle makers from Dayton, Ohio, who flew at Kitty Hawk, N.C., and changed the world.

Scott Lincicome, “Moving Fast and Breaking Things,” Capitolism, February 2, 2022.

Adam Thierer, “The Coming Industrial Policy Hangover,”  The Hill, February 16, 2022.

In the rush to pass legislation, we’ve barely heard a peep about the $250-$350 billion price tag. This follows a massive splurge of recent government borrowing, which led to the U.S. national debt hitting another lamentable new record: $30 trillion. China already owns over $1 trillion of that debt, making one wonder if we’re really countering China by adopting a massive, new and unfunded industrial policy that they will end up financing indirectly.

Podcast: “What’s Wrong with Industrial Policy,” Hold These Truths with Rep. Dan Crenshaw, February 16, 2022.

Tad DeHaven and Adam Thierer, “ The Military-Industrial Complex Offers a Cautionary Tale for Industrial Policy Planning,” Discourse, March 25, 2022.

Wayne Crews, “What To Do Instead Of The America COMPETES Act,” Forbes, February 2, 2022.

All this spending and expansion of the federal government, atop which our leaders would lay the America COMPETES Act and doubtless its own accompanying guidebook, has massive, ignored regulatory effects. Trillions in government spending (”investment”) have altered and will alter the entire trajectory and competitive environment of industries engaged in large-scale enterprises and transactions. This removes vast swaths of business activity from free competitive enterprise altogether, and creates displacements and distortions such that the restoration of free enterprise becomes a near-impossible disentanglement. The result is, after 100 years of big government and seduction of and fusion with big business, the greatest endeavors—from infrastructure to artificial intelligence, from smart cities to space—now consist of “partnerships” with governments rather than free enterprise, at scales and at costs so gigantic they can only be ignored.

Adam Thierer, “‘Japan Inc.’ and Other Tales of Industrial Policy Apocalypse,” Discourse, June 28, 2021.

Perhaps the most ironic indictment of industrial policy punditry lies in the way all the earlier books and essays about Japanese planning not only failed to forecast the many flops associated with it, but also did not foresee China as a potential future economic juggernaut. [. . .] What might that tell us about the ability of experts to predict the future course of countries and economies?

Adam Thierer, “Can Government Reproduce Silicon Valley Everywhere?”  Technology Liberation Front, September 12, 2021.

government efforts to artificially try to create regional innovation hubs in a top-down, technocratic fashion will almost certainly persist. As they do, some will argue that this time will be different! Perhaps, but it is more likely that the past is prologue; these new hubs will likely cause federal politicians to jockey for position to have their regions named one of the winners and get a big cut of all the new high-tech pork being served up by Washington.

Weifeng Zhong, “Beijing Can’t Make Sense of Biden’s China Strategy. Can Biden?” Washington Examiner, July 01, 2021.

America is not China, and it would be a fatal mistake to equate competing with China with imitating what China does. Doing so would risk the advantageous U.S. position as the world’s chief innovator, whose ideas are turned into products by vibrant private sectors both domestically and internationally.

Mike Watson, “Industrial Policy in the Real World,” National Affairs, Summer 2021.

Given the nature of industrial policymaking in the United States, there’s little reason to believe future attempts at industrial planning will result in a more coherent, rational, or strategic allocation of resources than they have in the past. [. . .] In short, industrial policy in the United States cannot be steered by a small group of enlightened individuals, because a small group of enlightened individuals will never be at the helm. Indeed, in some sense, there is no single “helm” to speak of.
 

Samuel Gregg, “Industrial Policy Mythology Confronts Economic Reality,” Law & Liberty, September 3, 2021.

If prizes in policy debates were given out for persistence, those advocating for more widespread use of industrial policy in America would be first in line. No matter how many times it is pointed out that they don’t understand the nature and workings of comparative advantage; or avoid acknowledging how industrial policy fosters rampant cronyism and corruption; or highlight what they consider examples of countries in which industrial policy has been employed successfully (only to have it demonstrated that it didn’t quite work out the way they suggested), they don’t give up.

Elizabeth Nolan Brown, “If This Is How America COMPETES, We’re Going to Lose,” Reason, January 26, 2022.

the bill can’t simply address one main issue or a few critical needs. Instead, it tries to insert the government into every aspect of all sorts of industries and markets and pretend that bureaucrats can solve complex social and cultural issues.

Chang-Tai Hsieh, “Countering Chinese Industrial Policy Is Counterproductive,” Project Syndicate, September 15, 2021.

US political leaders have long tried to counter Chinese industrial policy. And now they seem to have decided that the best way to do that is to emulate it. But their agenda betrays a profound lack of understanding of the unique challenge posed by China’s coupling of an authoritarian political regime with a dynamic market economy.

Adam Thierer, “Industrial Policy Advocates Should Learn from Don Lavoie,” Discourse, November 5, 2021.

“In light of the inherent deficiencies of central planning,” Lavoie said, “it might be argued that the U.S. should instead try to reduce current government interference with the competitive process to the absolute minimum consistent with other political goals.” It remains wise advice for today’s policymakers.
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Anne O. Krueger, “America’s Muddled Industrial Policy,” CGTN, June 25, 2021.

Governments have a poor track record of identifying “winners” – be it a company or a category of technology – whereas private companies have proved better at transforming new discoveries into new products or cost savings. That is why the U.S. state traditionally has stuck to funding basic research.

Eric Boehm, “Massive Subsidies Won’t Solve the Semiconductor Supply Chain Crisis,” Reason, January 28, 2022.

Tracy C. Miller, “The Case for Limiting Government Semiconductor Subsidies,” The Hill, June 26, 2021.

Without the subsidies, firms would be more cautious about building or expanding foundries. If long-term production capacity is truly insufficient, high prices and anticipated profits give firms the right incentives to build or expand and satisfy demand at cost-covering prices.

Scott Lincicome, “The ‘Endless Frontier’ and American Industrial Policy,” Cato Institute Blog, May 26, 2021.

U.S. industrial policy has a long history of struggling to overcome political pressures, just as public choice predicts, and the EFA is no different. None of this means that all legislating is bad, or that politicians don’t at least occasionally vote in the national interest. Instead, the public choice framework simply adds another hurdle—along with things like the “knowledge problem,” seen and unseen costs, and misaligned incentives—to designing and implementing commercial policies specifically intended to beat the admittedly messy and imperfect situation that the market generates. It’s imperative that we understand these risks before supporting policies that, while they might look good on paper, could easily morph into a counterproductive boondoggle—one we’ve seen countless times with respect to U.S. industrial policy.

Daniel W. Drezner, “Is the United States capable of industrial policy in 2021?” Washington Post, June 14, 2021.

To believe that the United States can pursue a high-caliber industrial policy, however, requires assuming a more competent state than I have seen in the past decade.

Douglas Holtz-Eakin, “The Nicest Thing I Can Write About Supply Chain Policy,” The Daily Dish, June 10, 2021.

Nevertheless, the Senate just passed a provision for $50 billion to subsidize chip fabrication – something the president had requested – and the House will doubtlessly concur. That might seem like an industry victory, but wait until it realizes that the administration will assume it gives it the right to insist on union jobs, micromanage the design of chips, and dictate the pricing and distribution of the products. Good luck with that. As the definitive volume on policy analysis (Benjamin Franklin’s Poor Richard’s Almanack) put it, “He that lieth down with dogs shall rise up with fleas.”

Lipton Matthews, “Industrial Policy—a.k.a. Central Planning—Won’t Make America Great,” Mises Wire, November 5, 2021.

Although industrial policy is in vogue, the evidence suggests that it is not necessary for long-term development. Moreover, despite the popularity of industrial policy in China, America remains the world’s economic power, and by following China, it may lose this vaunted position.

Richard Beason, “Japanese Industrial Policy: An Economic Assessment,” National Foundation for American Policy, November 2021.

There is no evidence to support the claim that Japanese industrial policy during the 1955-1990 period enhanced growth rates by sector, industries with economies of scale (greater efficiency when produced in increased amounts), productivity growth or “competitiveness.” The reality of the political process and government spending priorities makes it very difficult for such policies to be effective. Furthermore, even if political pressures had not intervened, it seems questionable to suggest that government policymakers would be better than actual market participants in determining the most efficient allocation of resources to produce the best economic outcomes.

Douglas Irwin, “ Memo to the Biden administration on how to rethink industrial policy,” Peterson Institute for International Economics, October 2020.

The challenge for policymakers is to identify such industries without succumbing to the notion that every industry is vital to some public objective. For example, the goal of “economic security” is so broadly defined and open-ended that virtually every domestic producer could claim the need for government support on that basis. The risk is that ill-conceived government programs will encourage corrupt behavior in which industries benefit themselves without contributing to national welfare.

Jim Pethokoukis, “Will Biden’s embrace of industrial policy pay off?” AEI Blog, January 15, 2021.

The history of such efforts in advanced capitalist economies gives ample reason for skepticism about the effectiveness of such top-down government planning, from Japanese economic stagnation to the now-mothballed Concorde supersonic jet to France’s failed attempt to create a thriving tech sector. The Internet might seem like the exception that negates the rule, but what turned out to be a successful partnership of government and entrepreneurs didn’t arise out of some master plan from Washington. And what do even the smartest plans look like when filtered through the dodgy quality of American governance? Maybe as an excuse for cronyism and protectionism.

Adam Thierer & Connor Haaland, “Should the U.S. Copy China’s Industrial Policy?” Discourse, March 11, 2021.

America needs to embrace its already vibrant venture capital market, the benefits of basic science and prize competitions, and a light-touch regulatory approach instead of gambling taxpayer dollars on grandiose industrial policy schemes that would likely become boondoggles.

Connor Haaland & Adam Thierer, “Can European-Style Industrial Policies Create Tech Supremacy?” Discourse, February 11, 2021.

Thus far, however, the Europeans don’t have much to show for their attempts to produce home-grown tech champions. Despite highly targeted and expensive efforts to foster a domestic tech base, the EU has instead generated a string of industrial policy failures that should serve as a cautionary tale for U.S. pundits and policymakers, who seem increasingly open to more government-steered innovation efforts.

Phil Levy & Christine McDaniel, “ Does the U.S. Need a Vigorous Industrial Policy?” Discourse, February 16, 2021.

we are certainly hearing new enthusiasm these days about industrial policy. It seems to have proponents or converts on both sides of the aisle. This either means that a new consensus has emerged, or it means that the term is being used so loosely that it has lost its original meaning. I’ll go with the latter; it now means different things to different people.

Wall Street Journal columnist Greg Ip discussing why “ The traditional skepticism toward industrial policy is well deserved.”

The traditional skepticism toward industrial policy is well deserved. Once Washington starts writing checks for semiconductors, other industries may get in line with the outcome determined more by political clout than economic merit. As in shipbuilding, the targeted companies may end up in perpetual need of federal protection and unable to compete internationally

David Ignatius, “The U.S. is quietly mobilizing its economy against China,” Washington Post, March 4, 2021.

The industrial policy the AI commission recommends could unlock talent and innovation. But if officials aren’t careful, government intervention could also afflict our best companies with the dead weight and dysfunction of our broken political system. We need government to spawn brainpower, not bureaucracy.

Veronique de Rugy, “Support for Industrial Policy is Growing,” AIER, January 18, 2020.

Looking at the federal government today tells me that the problems surrounding R&D programs in the past continue today, and will continue tomorrow, because they are simply a consequence of the normal functioning of government. It is hard to wish these problems away, even in the face of the private sector’s “imperfections.” Those arguing for more funding in R&D should proceed with caution.
This bill is proposing to give money with risk-averse restrictions to a risk-averse organization (the NSF) to be dispersed among other risk-averse organizations (Universities) into a system with increasingly risk-averse incentives. Note that I’m not saying “it’s all fubar’d lets burn it to the ground!” but I am suggesting that instead of slamming on the accelerator, we should be asking “what would a tune-up and an oil change look like instead?”

Ryan Bourne, “Do Oren Cass’s Justifications for Industrial Policy Stack Up?”  Cato Commentary, August 15, 2019.

Oren Cass asserts that markets cannot generally allocate resources efficiently by industry. Yet he provides no meaningful metrics to show this is the case, nor shows why his policies would deliver better outcomes. His two main claims about the benefits of a manufacturing sector — “stable employment” and “strong productivity growth” — are directly contradictory. A plethora of evidence suggests as countries’ get richer due to automation and technological improvements, they demand relatively more services, and so the industrial sector declines in employment terms.
Scott Lincicome, “ Manufactured Crisis: ‘Deindustrialization, Free Markets, and National Security,” Cato Policy Analysis No. 907, January 27, 2021.
This skepticism—mostly absent from Washington—is indeed warranted: analyses of the U.S. manufacturing sector and the relationship between trade and national security, as well as the United States’ long and checkered history of security‐​related protectionism, undermine the theoretical justifications for imposing protectionism and industrial policy in the name of national defense. Instead, open trade, freer markets, and global interdependence will in almost all cases produce better outcomes in terms of national security and, most importantly, preventing wars and other forms of armed conflict.
Matthew Lau, “Trudeau government’s ‘industrial policy’ creates all the wrong incentives,” Toronto Sun, March 16, 2021.
]]> https://techliberation.com/2021/03/15/skeptical-takes-on-expansive-industrial-policy-efforts/feed/ 4 76845 New Paper on “A History of Cronyism & Capture in the Information Technology Sector” https://techliberation.com/2013/07/02/new-paper-on-a-history-of-cronyism-capture-in-the-information-technology-sector/ https://techliberation.com/2013/07/02/new-paper-on-a-history-of-cronyism-capture-in-the-information-technology-sector/#comments Tue, 02 Jul 2013 13:48:02 +0000 http://techliberation.com/?p=45048

WP coverThe Mercatus Center at George Mason University has just released a new paper by Brent Skorup and me entitled, “A History of Cronyism and Capture in the Information Technology Sector.” In this 73-page working paper, which we hope to place in a law review or political science journal shortly, we document the evolution of government-granted privileges, or “cronyism,” in the information and communications technology marketplace and in the media-producing sectors. Specifically, we offer detailed histories of rent-seeking and regulatory capture in: the early history of the telephony and spectrum licensing in the United States; local cable TV franchising; the universal service system; the digital TV transition in the 1990s; and modern video marketplace regulation (i.e., must-carry and retransmission consent rules, among others.

Our paper also shows how cronyism is slowly creeping into new high-technology sectors.We document how Internet companies and other high-tech giants are among the fastest-growing lobbying shops in Washington these days. According to the Center for Responsive Politics, lobbying spending by information technology sectors has almost doubled since the turn of the century, from roughly $200 million in 2000 to $390 million in 2012.  The computing and Internet sector has been responsible for most of that growth in recent years. Worse yet, we document how many of these high-tech firms are increasingly seeking and receiving government favors, mostly in the form of targeted tax breaks or incentives.

We argue that the creeping cronyism could have two major negative ramifications. First, it could dull entrepreneurialism and competition in this highly innovative sector since time and resources spent on influencing politicians and capturing regulators cannot be spent competing and innovating in the marketplace. Cronyism will also negatively impact consumer welfare by denying consumers more and better products and services. Additionally, consumers might end up paying higher prices or higher taxes due to government privileges for industry.

Second, cronyism also raises the specter of greater government control of the Internet and of the digital economy. When policymakers dispense favors, they usually expect something in return. They also become accustomed to having greater informal powers over the sector receiving favors, and contribute to DC’s infamous “revolving door” problem.

High-tech America’s recent embrace of Washington could take it down the familiar path followed by the agriculture, telecommunications, and automotive sectors (among many others), with government becoming both protector and punisher of industry. Today’s dynamic tech industries will increasingly come under the “Mother, may I?” permission-based regulatory regime that encumbered the older information technology sectors.

Tech Lobbying sectoral breakdown

Finally, this paper offers strategies for stalling and diminishing the cronyism already taking root in the high-tech sector. We suggest several targeted reforms to limit or undo cronyism. Generally speaking, however, we note that, as economist David R. Henderson argued in an earlier Mercatus Center report, “There is only one way to end, or at least to reduce, the amount of cronyism, and that is to reduce government power.”

The paper can be downloaded from the Mercatus website, SSRN, or Scribd. The Scribd version is embedded down below. (Also, here’s some coverage of the paper over at the Washington Post’s “Wonkblog” from our old colleague Tim Lee. Here’s more coverage from Bloomberg Businessweek and the San Francisco Chronicle. And here’s a U.S. News oped that Brent and I wrote condensing our paper into just 600 words. Finally, a short 3-minute video of me discussing the problem of tech cronyism is also embedded below.)

A History of Cronyism and Capture in the Information Technology Sector [Thierer and Skorup – July 2013] by Adam Thierer

]]> https://techliberation.com/2013/07/02/new-paper-on-a-history-of-cronyism-capture-in-the-information-technology-sector/feed/ 1 45048 Who Cares about Broadband? https://techliberation.com/2010/08/12/who-cares-about-broadband/ https://techliberation.com/2010/08/12/who-cares-about-broadband/#comments Thu, 12 Aug 2010 15:13:23 +0000 http://techliberation.com/?p=31120

The folks at the Pew Research Center’s Internet & American Life Project came out with another installment of their “Home Broadband” survey yesterday. This one, Home Broadband 2010, finds that “adoption of broadband Internet access slowed dramatically over the last year.” “Most demographic groups experienced flat-to-modest broadband adoption growth over the last year,” it reports, although there was 22% growth in broadband adoption by African-Americans.  But the takeaway from the survey that is getting the most attention is the finding that:

By a 53%-41% margin, Americans say they do not believe that the spread of affordable broadband should be a major government priority. Contrary to what some might suspect, non-internet users are less likely than current users to say the government should place a high priority on the spread of high-speed connections.

This has a number of Washington tech policy pundits scratching their heads since it seems to cut against the conventional wisdom.  Cecilia Kang of The Washington Post penned a story about this today (“Support for Broadband Loses Speed as Nationwide Growth Slows“) and was kind enough to call me for comment about what might be going on here.

I suggested that there might be a number of reasons that respondents downplayed the importance of government actions to spur broadband diffusion, including that: (1) many folks are quite content with the Internet service they get today; (2) others might get their online fix at work or other places and not feel the need for it at home; and (3) some may not care two bits (excuse the pun) about broadband at all.  More generally, I noted that, with all the other issues out there to consider, broadband policy just isn’t that important to most folks in the larger scheme of things. As I told Kang, “Let’s face it, when the average family of four is sitting around the dinner table, to the extent they talk about U.S. politics, broadband is not on the list of topics.”

I also noted that many Americans are getting increasingly fed up with the scope of government power and the sort of wasteful spending that is increasingly bankrupting our nation and future generations.  More specifically, to the extent people know about them, existing universal service schemes for telephone service are massively inefficient and a prime example of why many Americans don’t trust their government to deliver on such grandiose tech-entitlement promises. One government report after another lambastes the waste, fraud, and abuse that runs rampant today our universal service system, and yet, those programs just keep growing and growing, year after year.

That’s why I told Kang that extending the same kind of federal aid to broadband providers is not likely to be any more efficient. “My skepticism comes from a poor government track record on tech funding,” I told her.  And I suspect that many people are equally skeptical for such reasons, and that might be influencing their answers when responding to Pew or other surveys.

Finally, I bet there are some folks out there who believe that, to the extent government should have a role in the “spread of affordable broadband” at all, that role should be focused on (1) clearing the deck of unnecessary regulatory burdens that prevent quicker rollout of privately-funded networks, and (2) limiting any subsidies that may be needed after that to targeted state and local programs for the truly neediest, not grandiose federal tech-pork barrel schemes.  Indeed, that’s my own position.

Of course, as I’ve noted here many times before, liberty is a loser these days and the natural progression of history is for Big Government to just grow and grow and grow.  So, I am prepared to get in line for my own tech handouts, as I noted in my essay last October, “Broadband as a Human Right (and a short list of other things I am entitled to on your dime).”

]]> https://techliberation.com/2010/08/12/who-cares-about-broadband/feed/ 2 31120 Federal Spending Transparency: Unlocking the Power of Abstraction https://techliberation.com/2010/05/19/federal-spending-transparency-unlocking-the-power-of-abstraction/ https://techliberation.com/2010/05/19/federal-spending-transparency-unlocking-the-power-of-abstraction/#respond Wed, 19 May 2010 21:17:12 +0000 http://techliberation.com/?p=28913

I’ll present a short paper and lead some discussion on federal spending transparency tomorrow at an OMB Watch conference entitled “Strengthening Federal Spending Transparency: A Working Conference to Develop a Plan of Action.”

My paper is called “Federal Spending Transparency: Unlocking the Power of Abstraction.” It builds on lessons I learned from developing the Earmarkdata.org model aimed at getting earmark information out of Congress.

Information scientists will find the paper amateurish and riddled with imperfections. Policy people will find it obscure and dense. That’s what you get when you translate between two languages and cultures.

The goal:

Each piece of the policy making process—the budgets, bills, votes, etc.—should originate as structured data, feeding directly into the information infrastructure that the transparency community creates. A budget should come out not just in paper and PDF versions, but as a data set containing all the meaning that exists in the physical documents.

Make sense? If not, you’ll want to get yourself to where it does.

]]> https://techliberation.com/2010/05/19/federal-spending-transparency-unlocking-the-power-of-abstraction/feed/ 0 28913 Are Gamers Served by More Government Regulation and Spending? https://techliberation.com/2009/01/26/are-gamers-served-by-more-government-regulation-and-spending/ https://techliberation.com/2009/01/26/are-gamers-served-by-more-government-regulation-and-spending/#comments Tue, 27 Jan 2009 01:30:56 +0000 http://techliberation.com/?p=15931

The Entertainment Consumers Association (ECA) is a group that does some good things to mobilize gamers to fight misguided regulation of video games. I greatly appreciate their tireless efforts to fight stereotypes and myths about games and gamers, and to specifically counter the hysteria about video games that we sometimes see in the press, and definitely see in political circles on a regular basis.  They’re a great ally in the fight for freedom of speech and artistic expression in this field.

That’s why I was so sorry to see the ECA launch a new campaign that encourages gamers to petition their congressional leaders and encourage them to regulate the high-tech economy more and waste more taxpayer dollars on inefficient universal service programs and subsidies:

Net Neutrality and Universal Broadband are not only great for America; they allow us to play the games we want at high speeds! … ECA believes that Universal Broadband and Net Neutrality are vital for the development of the national infrastructure, and believes that this bill is an important opportunity to let Congress know that you agree.

Sorry, but someone at the ECA will have to tell me how Net neutrality regulation will make my online Madden and Tiger Woods Golf experience move faster. If anything, such regulations would slow things down by making it more difficult for carriers and gaming networks to create more effective bandwidth management schemes and pricing plans such that my video game bits can get through faster. Is that called “discrimination”? You better believe it, and it’s a great thing. Go ask Microsoft why they signed up Limelight Networks a couple of years ago to help them make the Xbox Live experience more tolerable.  Empowering regulators to micromanage this process, by contrast, is just going to quash innovative approaches to the problem and invite more regulation of high-tech markets in general. That won’t help gamers in the long run.

Regarding the call for universal service subsidies… I suppose I could see the ECA’s logic if those schemes actually worked. But we have 70 years of experience with these pork subsidy programs and they have proven to be an abysmal failure. They are prone to extreme waste, fraud, and abuse and, worse yet, those inefficient subsidies have discouraged competition in rural areas. You’re not going to get more entry in the broadband business by subsidizing favored local operators all day long. And subsidizing risky new ventures isn’t much better since it just lets bureaucrats roll the dice with our tax dollars.  Bad idea.

Finally, there’s a more important principle matter at stake here: If you want to hold the line on future government attempts to regulate video games, it’s generally not a good idea to come to Congress asking for favors in the form of new regulation or spending. With one hand government giveth; with the other they (eventually) take away.

]]> https://techliberation.com/2009/01/26/are-gamers-served-by-more-government-regulation-and-spending/feed/ 11 15931