Articles by Adam Thierer

Adam ThiererAdam is a senior research fellow at the Mercatus Center at George Mason University. He previously served as President of the Progress & Freedom Foundation, Director of Telecom. Studies at the Cato Institute, and Fellow in Economic Policy at the Heritage Foundation.


My latest AIER column examines the impact increased lobbying and regulatory accumulation have on entrepreneurialism and innovation more generally. Unsurprisingly, it’s not a healthy relationship. A growing body of economic evidence concludes that increases in the former lead to much less of the latter.

This is a topic that my Mercatus Center colleagues and I have done a lot of work on through the years. But what got me thinking about the topic again was a new NBER working paper by economists Germán Gutiérrez and Thomas Philippon entitled, “The Failure of Free Entry.” Their new study finds that “regulations and lobbying explain rather well the decline in the allocation of entry” that we have seen in recent years.

Many economists have documented how business dynamism–new firm creation, entry, churn, etc–appears to have slowed in the US. Explanations for why vary but Gutiérrez and Philippon show that, “regulations have a negative impact on small firms, especially in industries with high lobbying expenditures.” Their results also document how regulations, “have a first order impact on incumbent profits and suggest that the regulatory capture may have increased in recent years.”

In other words, lobbying and cronyism breed a culture of rent-seeking, over-regulation, and rule accumulation that directly limit new startup activity and innovation more generally. This is a recipe for economic stagnation if left unchecked. Continue reading →

CollegeHumor has created this amazing video, “Black Mirror Episodes from Medieval Times,” which is a fun parody of the relentless dystopianism of the Netflix show “Black Mirror.” If you haven’t watched Black Mirror, I encourage you to do so. It’s both great fun and ridiculously bleak and over-the-top in how it depicts modern or future technology destroying all that is good on God’s green earth.

The CollegeHumor team picks up on that and rewinds the clock about a 1,000 years to imagine how Black Mirror might have played out on a stage during the medieval period. The actors do quick skits showing how books become sentient, plows dig holes to Hell and unleash the devil, crossbows destroy the dexterity of archers, and labor-saving yokes divert people from godly pursuits. As one of the audience members says after watching all the episodes, “technology will truly be the ruin of us all!” That’s generally the message of not only Black Mirror, but the vast majority of modern science fiction writing about technology (and also a huge chunk of popular non-fiction writing, too.)

Continue reading →

I have been covering telecom and Internet policy for almost 30 years now. During much of that time – which included a nine year stint at the Heritage Foundation — I have interacted with conservatives on various policy issues and often worked very closely with them to advance certain reforms.

If I divided my time in Tech Policy Land into two big chunks of time, I’d say the biggest tech-related policy issue for conservatives during the first 15 years I was in the business (roughly 1990 – 2005) was preventing the resurrection of the so-called Fairness Doctrine. And the biggest issue during the second 15-year period (roughly 2005 – present) was stopping the imposition of “Net neutrality” mandates on the Internet. In both cases, conservatives vociferously blasted the notion that unelected government bureaucrats should sit in judgment of what constituted “fairness” in media or “neutrality” online.

Many conservatives are suddenly changing their tune, however. President Trump and Sen. Ted Cruz, for example, have been increasingly critical of both traditional media and new tech companies in various public statements and suggested an openness to increased regulation. The President has gone after old and new media outlets alike, while Sen. Cruz (along with others like Sen. Lindsay Graham) has suggested during congressional hearings that increased oversight of social media platforms is needed, including potential antitrust action.

Meanwhile, during his short time in office, Sen. Josh Hawley (R-Mo.) has become one of the most vocal Internet critics on the Right. In a shockingly-worded USA Today editorial in late May, Hawley said, “social media wastes our time and resources” and is “a field of little productive value” that have only “given us an addiction economy.” He even referred to these sites as “parasites” and blamed them for a long list of social problems, leading him to suggest that, “we’d be better off if Facebook disappeared” along with various other sites and services.

Hawley’s moral panic over social media has now bubbled over into a regulatory crusade that would unleash federal bureaucrats on the Internet in an attempt to dictate “fair” speech on the Internet. He has introduced an astonishing piece of legislation aimed at undoing the liability protections that Internet providers rely upon to provide open platforms for speech and commerce. If Hawley’s absurdly misnamed new “Ending Support for Internet Censorship Act” is implemented, it would essentially combine the core elements of the Fairness Doctrine and Net Neutrality to create a massive new regulatory regime for the Internet. Continue reading →

Slate recently published an astonishing piece of revisionist history under the title, “Bring Back the Golden Age of Broadcast Regulation,” which suggested that the old media regulatory model of the past would be appropriate for modern digital media providers and platforms. In the essay, April Glaser suggests that policymakers should resurrect the Fairness Doctrine and a host of old Analog Era content controls to let regulatory bureaucrats address Digital Age content moderation concerns.

In a tweetstorm, I highlighted a few examples of why the so-called Golden Era wasn’t so golden in practice. I began by noting that the piece ignores the troubling history of FCC speech controls and unintended consequences of regulation. That regime gave us limited, bland choices–and a whole host of First Amendment violations. We moved away from that regulatory model for very good reasons.

For those glorifying the Fairness Doctrine, I encourage them to read the great Nat Hentoff’s excellent essay, “The History & Possible Revival of the Fairness Doctrine,” about the real-world experience of life under the FCC’s threatening eye. Hentoff notes: Continue reading →

[This essay originally appeared on the AIER blog on May 28, 2019. The USA TODAY also ran a shorter version of this essay as a letter to the editor on June 2, 2019.]

In a hotly-worded USA Today op-ed last week, Senator Josh Hawley (R-Missouri) railed against social media sites Facebook, Instagram, and Twitter. He argued that, “social media wastes our time and resources,” and is “a field of little productive value” that have only “given us an addiction economy.” Sen. Hawley refers to these sites as “parasites” and blames them for a litany of social problems (including an unproven link to increased suicide), leading him to declare that, “we’d be better off if Facebook disappeared.”

As far as moral panics go, Sen. Hawley’s will go down as one for the ages. Politicians have always castigated new technologies, media platforms, and content for supposedly corrupting the youth of their generation. But Sen. Hawley’s inflammatory rhetoric and proposals are something we haven’t seen in quite some time.

He sounds like those fire-breathing politicians and pundits of the past century who vociferously protested everything from comic books to cable television, the waltz to the Walkman, and rock-and-roll to rap music. In order to save the youth of America, many past critics said, we must destroy the media or media platforms they are supposedly addicted to. That is exactly what Sen. Hawley would have us do to today’s leading media platforms because, in his opinion, they “do our country more harm than good.”

We have to hope that Sen. Hawley is no more successful than past critics and politicians who wanted to take these choices away from the public. Paternalistic politicians should not be dictating content choices for the rest of us or destroying technologies and platforms that millions of people benefit from. Continue reading →

[This essay originally appeared on the AIER blog on May 23, 2019 under the title, “Spring Cleaning for the Regulatory State.”]

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Spring is in full blossom, and many of us are in the midst of our annual house-cleaning ritual. A regular deep clean makes good sense because it makes our living spaces more orderly and gets rid of the gunk and grime that has amassed over the past year.

Unfortunately, governments almost never engage in their own spring-cleaning exercise. Statutes and regulations continue to accumulate, layer by layer, until they suffocate not only economic opportunity, but also the effective administration of government itself. Luckily, some states have realized this and have taken steps to help address this problem.

Mountains of Regulations

First, here are some hard facts about regulatory accumulation:

  • Red tape grows: Since the first edition of his annual publication Ten Thousand Commandments in 1993, Wayne Crews has documented how federal agencies have issued 101,380 rules. Other reports find agency staffing levels jumped from 57,109 to 277,163 employees from 1960 to 2017, while agency budgets swelled in real terms from $3 billion in 1960 to $58 billion in 2017 (2009$).
  • Nothing ever gets cleaned up: A Deloitte survey of U.S. Code reveals that 68 percent of federal regulations have never been updated and that 17 percent have only been updated once. If a company never updated its business model, it would fail eventually. But governments get away with doing the same thing without any fear of failure. “If it were a country, U.S. regulation would be the world’s eighth-largest economy, ranking behind India and ahead of Italy,” Crews notes.
  • The burden of regulatory accumulation is getting worse: “The estimate for regulatory compliance and economic effects of federal intervention is $1.9 trillion annually,” Crews finds, which is equal to 10 percent of the U.S. gross domestic product for 2017. When federal spending is added to regulatory costs are added to federal spending, Crews finds, the burden equals $4.173 trillion, or 30 percent of the entire economy. Mercatus Center research has found that “economic growth in the United States has, on average, been slowed by 0.8 percent per year since 1980 owing to the cumulative effects of regulation.” This means that “the US economy would have been about 25 percent larger than it actually was as of 2012” if regulation had been held to roughly the same aggregate level it stood at in 1980.

In sum, the evidence shows that the red tape is growing without constraint, hindering entrepreneurship and innovation, deterring new investment, raising costs to consumers, limiting worker opportunities/wages, and undermining economic growth.

Regulations accumulate in this fashion because the administrative state is on autopilot. Legislatures pass broad statutes delegating ambiguous authority to agencies. Bureaucrats are then free to roll the regulatory snowball down the hill until it has become so big that its momentum cannot be stopped.

The Death of Common Sense

Policy makers enact new rules with the best of intentions, of course, but we should not assume that the untrammeled growth of the regulatory state produces positive results. There is no free lunch, after all. Every regulation is a restriction on opportunities for experimentation with new and potentially better ways of doing things. Sometimes such restrictions make sense because regulations can pass a reasonable cost-benefit test. It would be foolish to assume that all regulations on the books do.

Spring cleaning for the regulatory state, therefore, should be viewed as an exercise in “good governance.” The goal is not to get rid of all regulations. The goal is to make sure that rules are reasonable and cost-effective so that the public can actually understand the law and get the highest value out of their government institutions.

Philip K. Howard, founder and chair of the nonprofit coalition Common Good and the author of The Death of Common Sense, has written extensively about how regulatory accumulation has become a chronic problem. “Too much law,” he argues, “can have similar effects as too little law.” “People slow down, they become defensive, they don’t initiate projects because they are surrounded by legal risks and bureaucratic hurdles,” Howard notes. “They tiptoe through the day looking over their shoulders rather than driving forward on the power of their instincts. Instead of trial and error, they focus on avoiding error.”

In such an environment, risk-taking and entrepreneurialism are more challenging and economic dynamism suffers. But regulatory accumulation also hurts the quality of government institutions and policies, which become fundamentally incomprehensible or illogical. “Society can’t function when stuck in a heap of accumulated mandates of past generations,” Howard concludes. This is why an occasional regulatory house cleaning is essential to unleash economic opportunity and improve the functioning of our democratic institutions.

Regulatory House Cleaning Begins

Reforms to address this problem are finally happening. In a series of new essays, my colleague James Broughel has documented how several states — including IdahoOhioVirginia, and New Jersey — are undertaking serious efforts to get regulatory accumulation under control. They are utilizing a variety of mechanisms, including “regulatory reduction pilot programs” and “red tape review commissions.” Recently, Idaho actually initiated a sunset of its entire regulatory code and will now try to figure out how to clean up its 8,200 pages of regulations containing 736 chapters of state rules.

Meanwhile, other states are undertaking serious reform in one of the worst forms of regulatory accumulation: occupational licenses. The Federal Trade Commission notes that roughly 30 percent of American jobs require a license today, up from less than 5 percent in the 1950s. Research by economist Morris Kleiner and others finds that “restrictions from occupational licensing can result in up to 2.85 million fewer jobs nationwide, with an annual cost to consumers of $203 billion.” And many of the rules do not even serve their intended purpose. A major 2015 Obama administration report on the costs of occupational licensing concluded that “most research does not find that licensing improves quality or public health and safety.”

ArizonaWest Virginia, and Nebraska are among the leaders in reforming occupational-licensing regimes using a variety of approaches. In some cases, the reforms sunset licensing rules for specific professions altogether. Other proposals grant workers reciprocity to use a license they obtained in another state. Finally, some states have proposed letting most professions operate without any license at all but then requiringall, but then require them to make it clear to consumers that they are unlicensed.

The Need for a Fresh Look

Sunsets are not silver-bullet solutions, and the recent experience with sunsetting and “de-licensing” requirements at the state level has been mixed because many legislatures ignore or circumvent requirements. Nonetheless, sunsets can still help prompt much-needed discussions about which rules make sense and which ones no longer do.

Sunsets can be forward-looking, too. I have proposed that when policy makers craft new laws, especially for fast-paced tech sectors, they should incorporate a clause that what we might think of as “the Sunsetting Imperative.” It would demand that any existing or newly imposed technology regulation should include a provision sunsetting the law or regulation within two years. Reforms like these are also sometimes referred to as “temporary legislation” or “fresh look” requirements. Policy makers can always reenact rules that are still relevant and needed.

By forcing a periodic spring cleaning, sunsets and fresh-look requirements can help stem the tide of regulatory accumulation and ensure that only those policies that serve a pressing need remain on the books. There is no good reason for governments not to clean up their messes on occasion, just like the rest of us have to.

I (Eye), Robot?

by on May 8, 2019 · 0 comments

[Originally published on the Mercatus Bridge blog on May 7, 2019.]

I became a little bit more of a cyborg this month with the addition of two new eyes—eye lenses, actually. Before I had even turned 50, the old lenses that Mother Nature gave me were already failing due to cataracts. But after having two operations this past month and getting artificial lenses installed, I am seeing clearly again thanks to the continuing miracles of modern medical technology.

Cataracts can be extraordinarily debilitating. One day you can see the world clearly, the next you wake up struggling to see through a cloudy ocular soup. It is like looking through a piece of cellophane wrap or a continuously unfocused camera.

If you depend on your eyes to make a living as most of us do, then cataracts make it a daily struggle to get even basic things done. I spend most of my time reading and writing each workday. Once the cataracts hit, I had to purchase a half-dozen pair of strong reading glasses and spread them out all over the place: in my office, house, car, gym bag, and so on. Without them, I was helpless.

Reading is especially difficult in dimly lit environments, and even with strong glasses you can forget about reading the fine print on anything. Every pillbox becomes a frightening adventure. I invested in a powerful magnifying glass to make sure I didn’t end up ingesting the wrong things.

For those afflicted with particularly bad cataracts, it becomes extraordinarily risky to drive or operate machinery. More mundane things—watching TV, tossing a ball with your kid, reading a menu at many restaurants, looking at art in a gallery—also become frustrating. Continue reading →

Over at the American Institute for Economic Research blog, I recently posted two new essays discussing increasing threats to innovation and discussing how to counter them. The first is on “The Radicalization of Modern Tech Criticism,” and the second discusses, “How To Defend a Culture of Innovation During the Technopanic.”

“Technology critics have always been with us, and they have sometimes helped temper society’s occasional irrational exuberance about certain innovations,” I note in the opening of the first essay. The problem is that the “technology critics sometimes go much too far and overlook the importance of finding new and better ways of satisfying both basic and complex human needs and wants.” I continue on to highlight the growing “technopanic” rhetoric we sometimes hear today, including various claims that “it’s OK to be a Luddite” and push for a “degrowth movement” that would slow the wheels of progress. That would be a disaster for humanity because, as I note in concluding that first essay:

Through ongoing trial-and-error tool building, we discover new and better ways of satisfying human needs and wants to better our lives and the lives of those around us. Human flourishing is dependent upon our collective willingness to embrace and defend the creativity, risk-taking, and experimentation that produces the wisdom and growth that propel us forward. By contrast, today’s neo-Luddite tech critics suggest that we should just be content with the tools of the past and slow down the pace of technological innovation to supposedly save us from any number of dystopian futures they predict. If they succeed, it will leave us in a true dystopia that will foreclose the entrepreneurialism and innovation opportunities that are paramount to raising the standard of living for billions of people across the world.

In the second essay, I make an attempt to sketch out a more robust vision and set of principles to counter the tech critics. Continue reading →

A decade ago, a heated debate raged over the benefits of “a la carte” (or “unbundling”) mandates for cable and satellite TV operators. Regulatory advocates said consumers wanted to buy all TV channels individually to lower costs. The FCC under former Republican Chairman Kevin Martin got close to mandating a la carte regulation.

But the math just didn’t add up. A la carte mandates, many economists noted, would actually cost consumers just as much (or even more) once they repurchased all the individual channels they desired. And it wasn’t clear people really wanted a completely atomized one-by-one content shopping experience anyway.

Throughout media history, bundles of all different sorts had been used across many different sectors (books, newspapers, music, etc.). This was because consumers often enjoyed the benefits of getting a package of diverse content delivered to them in an all-in-one package. Bundling also helped media operators create and sustain a diversity of content using creative cross-subsidization schemes. The traditional newspaper format and business is perhaps the greatest example of media bundling. The classifieds and sports sections helped cross-subsidize hard news (especially local reporting). See this 2008 essay by Jeff Eisenach and me for details for more details on the economics of a la carte.

Yet, with the rise of cable and satellite television, some critics protested the use of bundles for delivering content. Even though it was clear that the incredible diversity of 500+ channels on pay TV was directly attributable to strong channels cross-subsidizing weaker ones, many regulatory advocates said we would be better off without bundles. Moreover, they said, online video markets could show us the path forward in the form of radically atomized content options and cheaper prices.

Flash-forward to today. Continue reading →

Image result for joseph schumpeterIn my first essay for the American Institute for Economic Research, I discuss what lessons the great prophet of innovation Joseph Schumpeter might have for us in the midst of today’s “techlash” and rising tide of techopanics.  I argue that, “[i]f Schumpeter were alive today, he’d have two important lessons to teach us about the techlash and why we should be wary of misguided interventions into the Digital Economy.” Specifically:
We can summarize Schumpeter’s first lesson in two words: Change happens. But disruptive change only happens in the right policy environment. Which gets to the second great lesson that Schumpeter can still teach us today, and which can also be summarized in two words: Incentives matter. Entrepreneurs will continuously drive dynamic, disruptive change, but only if public policy allows it.
Schumpeter’s now-famous model of “creative destruction” explained why economies are never in a state static equilibrium and that entrepreneurial competition comes from many (usually completely unpredictable) sources. “This kind of competition is much more effective than the other,” he argued, because the “ever-present threat” of dynamic, disruptive change, “disciplines before it attacks.”
But if we want innovators to take big risks and challenge existing incumbents and their market power, then it is essential that we get policy incentives right or else this sort of creative destruction will never come about. The problem with too much of today’s “techlash” thinking is that it imagines the current players are here to stay and that their market power is unassailable. Again, that is static “snapshot” thinking that ignores the reality that new generations of entrepreneurs are in a sort of race for a prize and will make big bets on the future in the face of seemingly astronomical odds against their success. But we have to give them a chance to win that “prize” if we want to see that dynamic, disruptive change happen.
As always, we have much to learn from Schumpeter. Jump over to the AIER website to read the entire essay.