Senior Fellow in Technology & Innovation at the R Street Institute in Washington, DC. Formerly a senior research fellow at the Mercatus Center at George Mason University, President of the Progress & Freedom Foundation, Director of Telecommunications Studies at the Cato Institute, and a Fellow in Economic Policy at the Heritage Foundation.
I wanted to draw your attention to this important address on online platform regulation by Alex Chisholm, the head of UK’s Competition and Markets Authority. That’s the non-ministerial department in the UK responsible for competition policy issues. Chisholm delivered the address on October 27th at the Bundesnetzagentur conference in Bonn. It’s a terrific speech that other policymakers would be wise to read and mimic to ensure that antitrust and competition policy decisions don’t derail the many benefits of the Information Revolution.
“Today, as regulators, we have the responsibility but also the great historical privilege of playing an influential role in the deployment throughout the economy of the latest of these defining technological eras,” Chisholm began. “As regulators, we must try to minimise the inevitable mismatch between how we’ve done things before and the opportunities and risks of the new,” he argued.
He continued on to specify three recommendations for those crafting policy on this front: Continue reading →
Today, the U.S. Department of Transportation and the Federal Aviation Administration (FAA) announced that it will soon require Unmanned Aircraft Systems (UAS) or private drones, used for both personal and commercial purposes, to be registered in a national database. To facilitate this process, the agencies announced the creation of a new federal task force that will develop recommendations for a UAS registration process. Rules are to be published by November 20th (presumably to cover new devices sold before Christmas).
Here are some quick initial reactions on the proposed registration rules: Continue reading →
One of my favorite themes, and not just in the field of tech policy, is the “Unintended Consequences of Well-Intentioned Regulations.” I believe that all laws and regulations have dynamic effects and that to fully appreciate the true impact of any particular public policy, you must always closely investigate the potential opportunity costs and unintended consequences associated with those policies. Because all too often laws and regulations are hastily put on the books with the very best of intentions in mind, only to later be shown to produce the opposite of what was intended.
Today’s case in point comes from a Wall Street Journal article by Rachel Bachman and it involves how the growing wave of cycling helmet laws are having a net negative impact on public health because they discourage ridership in the aggregate. Thus, those potential riders are then either (a) just less active overall or (b) driving their cars to get where they need to go. And both of those results are, ultimately, riskier than cycling without a helmet. For that reason, Bachman reports, cycling advocates “are pushing back against mandatory bike-helmet laws in the U.S. and elsewhere. They say mandatory helmet laws, particularly for adults, make cycling less convenient and seem less safe, thus hindering the larger public-health gains of more people riding bikes.” Supporting evidence comes from this 2012 paper in the journal Risk Analysis by Piet de Jong, a professor in the department of applied finance and actuarial studies at Sydney’s Macquarie University. His paper included an empirical model that showed how mandatory bike-helmet laws “have a net negative health impact.”
This strikes me as one of the very best examples of how to do dynamic benefit-cost analysis and show the full range of societal impacts associated with well-intentioned regulations. And it reminds me of the playground example I use in several of my papers: Laws and liability threats discouraged tall playground climbing structures in the ’80s and ’90s. Continue reading →
The big news out of Europe today is that the European Court of Justice (ECJ) has invalidated the 15-year old EU-US safe harbor agreement, which facilitated data transfers between the EU and US. American tech companies have relied on the safe harbor to do business in the European Union, which has more onerous data handling regulations than the US. [PDF summary of decision here.] Below I offer some quick thoughts about the decision and some of its potential unintended consequences.
#1) Another blow to new entry / competition in the EU: While some pundits are claiming this is a huge blow to big US tech firms, in reality, the irony of the ruling is that it will bolster the market power of the biggest US tech firms, because they are the only ones that will be able to afford the formidable compliance costs associated with the resulting regulatory regime. In fact, with each EU privacy decision, Google, Facebook, and other big US tech firms just get more dominant. Small firms just can’t comply with the EU’s expanding regulatory thicket. “It will involve lots of contracts between lots of parties and it’s going to be a bit of a nightmare administratively,” said Nicola Fulford, head of data protection at the UK law firm Kemp Little when commenting on the ruling to the BBC. “It’s not that we’re going to be negotiating them individually, as the legal terms are mostly fixed, but it does mean a lot more paperwork and they have legal implications.” And by driving up regulatory compliance costs and causing constant delays in how online business is conducted, the ruling will (again, on top of all the others) greatly limits entry and innovation by new, smaller players in the digital world. In essence, EU data regulations have already wiped out much of the digital competition in Europe and now this ruling finishes off any global new entrants who might have hoped of breaking in and offering competitive alternatives. These are the sorts of stories never told in antitrust circles: costly government rulings often solidify and extend the market dominance of existing companies. Dynamic effects matter. That is certainly going to be the case here. Continue reading →
I recently finishedLearning by Doing: The Real Connection between Innovation, Wages, and Wealth, by James Bessen of the Boston University Law School. It’s a good book to check out if you are worried about whether workers will be able to weather this latest wave of technological innovation. One of the key insights of Bessen’s book is that, as with previous periods of turbulent technological change, today’s workers and businesses will obviously need find ways to adapt to rapidly-changing marketplace realities brought on by the Information Revolution, robotics, and automated systems.
That sort of adaptation takes time, but for technological revolutions to take hold and have meaningful impact on economic growth and worker conditions, it requires that large numbers of ordinary workers acquire new knowledge and skills, Bessen notes. But, “that is a slow and difficult process, and history suggests that it often requires social changes supported by accommodating institutions and culture.” (p 223) That is not a reason to resist disruptive forms of technological change, however. To the contrary, Bessen says, it is crucial to allow ongoing trial-and-error experimentation and innovation to continue precisely because it represents a learning process which helps people (and workers in particular) adapt to changing circumstances and acquire new skills to deal with them. That, in a nutshell, is “learning by doing.” As he elaborates elsewhere in the book:
Major new technologies become ‘revolutionary’ only after a long process of learning by doing and incremental improvement. Having the breakthrough idea is not enough. But learning through experience and experimentation is expensive and slow. Experimentation involves a search for productive techniques: testing and eliminating bad techniques in order to find good ones. This means that workers and equipment typically operate for extended periods at low levels of productivity using poor techniques and are able to eliminate those poor practices only when they find something better. (p. 50)
Luckily, however, history also suggests that, time and time again, that process has happened and the standard of living for workers and average citizens alike improved at the same time. Continue reading →
I wanted to draw your attention to yet another spectacular speech by Maureen K. Ohlhausen, a Commissioner with the Federal Trade Commission (FTC). I have written here before about Commissioner Ohlhausen’s outstanding speeches, but this latest one might be her best yet.
On Tuesday, Ohlhausen was speaking at U.S. Chamber of Commerce Foundation day-long event on “The Internet of Everything: Data, Networks and Opportunities.” The conference featured various keynote speakers and panels discussing, “the many ways that data and Internet connectiviting is changing the face of business and society.” (It was my honor to also be invited to deliver an address to the crowd that day.)
As with many of her other recent addresses, Commissioner Ohlhausen stressed why it is so important that policymakers “approach new technologies and new business models with regulatory humility.” Building on the work of the great Austrian economist F.A. Hayek, who won a Nobel prize in part for his work explaining the limits of our knowledge to plan societies and economies, Ohlhausen argues that: Continue reading →
On the whiteboard that hangs in my office, I have a giant matrix of technology policy issues and the various policy “threat vectors” that might end up driving regulation of particular technologies or sectors. Along with my colleagues at the Mercatus Center’s Technology Policy Program, we constantly revise this list of policy priorities and simultaneously make an (obviously quite subjective) attempt to put some weights on the potential policy severity associated with each threat of intervention. The matrix looks like this: [Sorry about the small fonts. You can click on the image to make it easier to see.]
I use 5 general policy concerns when considering the likelihood of regulatory intervention in any given area. Those policy concerns are:
privacy (reputation issues, fear of “profiling” & “discrimination,” amorphous psychological / cognitive harms);
safety (health & physical safety or, alternatively, child safety and speech / cultural concerns);
security (hacking, cybersecurity, law enforcement issues);
Make sure to watch this terrific little MR University video featuring my Mercatus Center colleague Don Boudreaux discussing what fueled the “Orgy of Innovation” we have witnessed over the past century. Don brings in one our our mutual heroes, the economic historian Deirdre McCloskey, who has coined the term “innovationism” to describe the phenomenal rise in innovation over the past couple hundred years. As I have noted in my essay on “Embracing a Culture of Permissionless Innovation,” McCloskey’s work highlights the essential that role that values—cultural attitudes, social norms, and political pronouncements—have played in influencing opportunities for entrepreneurialism, innovation, and long-term growth. Watch Don’s video for more details:
Last week while I was visiting the Silicon Valley area, it was my pleasure to visit the venture capital firm of Andreessen Horowitz. While I was there, Sonal Chokshi was kind enough to invite me on the a16z podcast, which was focused on “Making the Case for Permissionless Innovation.” We had a great discussion on a wide range of disruptive technology policy issues (robotics, drones, driverless cars, medical technology, Internet of Things, crypto, etc.) and also talked about how innovators should approach Washington and public policymakers more generally. Our 23-minute conversation follows:
And for more reading on permissionless innovation more generally, see my book page.
I was delivering a lecture to a group of academics and students out in San Jose recently [see the slideshow here] and someone in the crowd asked me to send them a list of some of the many books I had mentioned during my talk, which was about future policy clashes over various emerging technologies. I cut the list down to the five books that I believe best frame the nature of debates over innovation and technology policy. They are:
Virginia Postrel, The Future and Its Enemies (1998): Contrasts the conflicting worldviews of “dynamism” and “stasis” and shows how the tensions between these two visions influences debates over technological progress. No book has had a greater influence on my own thinking about debates over innovation and progress.
Joel Mokyr, Lever of Riches: Technological Creativity and Economic Progress (1990): One of the finest histories of technological innovation ever penned. It’s certainly my favorite. It explores how earlier technologies evolved and created social and economic tensions.
Matt Ridley, The Rational Optimist: How Prosperity Evolves (2010): Makes the case for “rational optimism” in debates about technology and innovation and takes on pessimistic critics of technological change.
Larry Downes, The Laws of Disruption: Harnessing the New Forces That Govern Life and Business in the Digital Age (2009): Explains how lawmaking in the information age is inexorably governed by the “law of disruption” or the fact that “technology changes exponentially, but social, economic, and legal systems change incrementally.” That fact, he explains, has profound ramifications for all technology policy debates going forward.
If you haven’t read these amazing books yet, add them to your collection right now! They are worth reading again and again. They will forever change the way you think about debates over technology and innovation.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology. Learn more about TLF →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.
Quick Thoughts on FAA’s Proposed Drone Registration System
by Adam Thierer on October 19, 2015 · 1 comment
Here are some quick initial reactions on the proposed registration rules: Continue reading →