This month’s Cato Unbound symposium features a conversation about the continuing relevance of Albert Hirschman’s Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations, and States, fifty years after its publication. It was a slender by important book that has influenced scholars in many different fields over the past five decades. The Cato symposium features a discussion between me and three other scholars who have attempted to use Hirschman’s framework when thinking about modern social, political, and technological developments.

My lead essay considers how we might use Hirschman’s insights to consider how entrepreneurialism and innovative activities might be reconceptualized as types of voice and exit. Response essays by Mikayla Novak, Ilya Somin, and Max Borders broaden the discussion to highlight how to think about Hirschman’s framework in various contexts. And then I returned to the discussion this week with a response essay of my own attempting to tie those essays together and extend the discussion about how technological innovation might provide us with greater voice and exit options going forward. Each contributor offers important insights and illustrates the continuing importance of Hirschman’s book.

I encourage you to jump over to Cato Unbound to read the essays and join the conversations in the comments.

Whatever you think about this messy dispute between AT&T and Google about how to classify web-based telephony apps for regulatory purposes — in this case, Google Voice — the key issue not to lose site of here is that we are inching ever closer to FCC regulation of web-based apps!  Again, this is the point we have stressed here again and again and again and again when opposing Net neutrality mandates: If you open the door to regulation of one layer of the Net, you open up the door to the eventual regulation of all layers of the Net.

You might not buy that story initially but if you doubt it then I invite you to read just about any history of American broadcast media regulation over the course of the past seven decades. (You might want to start with Krattenmaker & Powe’s Regulating Broadcast Programming or Jonathan Emord’s Freedom, Technology, and the First Amendment). In such histories you will find a common theme: Once regulation of media and communications platforms gets underway, the natural progression of things is uni-directional — Up!  That is, when new questions arise about how to “deal with” a new service, network, platform, or technology, the general tendency is the “regulate up” instead of “deregulating down.”  When regulators are given a greater say about the contours of markets as technologies evolve and/or converge, we shouldn’t be surprised that their first instinct is to “bring them into the fold.”

And, sadly, that is exactly what is likely to occur eventually with Google Voice. The only really interesting question is what else regulators start mucking with in the search and applications layer once they get their hands on it.  And if you still insist that I am being overly paranoid about “regulatory creep” and the prospect of the FCC gradually transforming into the Federal Information Commission, then consider what the agency had to say about cloud computing in paragraph 60 (pg. 21) of the FCC’s recent Wireless Innovation and Investment Notice of Inquiry, which was launched on August 27th:

As other approaches, such as cloud computing, evolve, will established standards or de facto standards become more important to the applications development process? For example, can a dominant cloud computing position raise the same competitive issues that are now being discussed in the context of network neutrality? Will it be necessary to modify the existing balance between regulatory and market forces to promote further innovation in the development and deployment of new applications and services?

Wow, who knew that the FCC even had the authority to oversee or regulate the cloud, right?  Well, they don’t. But, again, this is exactly how things have unfolded before: Throw statutory authority to the wind and slowly start extending the agency’s regulatory tentacles into new areas, services, technologies, platforms, and networks.  In this case, you can just imagine how some folks will use that FCC language to accuse Google of being in “a dominant cloud computing position” such that “the context of network neutrality” will be applied to cloud service (like Google Voice!) to “modify the existing balance between regulatory and market forces.”  Indeed, that’s pretty much what AT&T is suggesting in their letter to the FCC this week.

In a post yesterday over at the Google Public Policy Blog, my old friend Rick Whitt of Google insists that Google Voice is different than a traditional common carrier telecom service and that it doesn’t belong in the same regulatory bucket as those older voice services.  To Rick and my other friends at Google, I have only one thing to say about that argument: Good luck with that!  My prediction: Within two to three years you’ll be under the FCC’s thumb.

Again, I very much hope I am proven wrong. But I know that I won’t be wrong because neither side is going to back down in the escalating net neutrality war of mutually assured destruction.  “Regulating up” will carry the day and become, once again, our new telecom M.A.D. policy.

Over at TechDirt, Mike Masnick has an interesting post asking “Why Did Apple Approve Spotify?” which builds on an AdAge column asking a similar question: “Did Apple Sacrifice ITunes With Latest Apps?”  As the title of that AdAge piece suggests, some folks are wondering if Apple shot itself in the foot by approving Spotify, a music streaming app that some regard as a potential iTunes killer.  I don’t really have any comment on the business angle here, rather, I wanted to just comment on Mike’s suggestion that one possible explanation for Apple’s approval of the app is that:

As we noted when the app was approved, Apple appears to be somewhat gunshy, following the FCC inquiry into why it “blocked” Google Voice on the iPhone (and, yes, Apple still insists it didn’t actually block the app, but Google says otherwise). Given the scrutiny, Apple probably realized that it was in for some serious political trouble if it blocked an app like Spotify, which would have received a lot of press attention. Oddly, the AdAge article doesn’t mention this at all.

Indeed, it is odd that AdAge didn’t bother mentioning that fact.  But what I find doubly odd here is that nobody is even blinking an eye at the prospect of such political meddling with — or even possible FCC regulation of — Apple, iTunes, or music streaming market in general!  Seriously, have we gotten to the point now in our Bold New World of Neutrality Regulation that innovative high-tech companies must live in fear of constant regulatory intervention even when they completely lack any statutory authority to play these games?  Moreover, does anyone think that the a bunch of Beltway bureaucrats can micro-manage music and high-tech application markets and give us more options than we have today?

I know the prospect of such meddling makes some academics and regulatory activists groups happy, but I can’t see how this ends well for consumers or high-tech markets more generally.  Regardless, for those of you who laugh when we suggest that the slippery slope of regulation is real, consider this case to be Exhibit A.  Or perhaps it’s Exhibit B since the Google Voice spat with Apple was already moving the FCC in the direction of becoming a device regulator and applying “handset neutrality” principles that have no basis in law.  It’s your anything-goes government at work.