Elizabeth_WarrenThe folks over at RegBlog are running a series of essays on “Rooting Out Regulatory Capture,” a problem that I’ve spent a fair amount of time discussing here and elsewhere in the past. (See, most notably, my compendium on, “Regulatory Capture: What the Experts Have Found.”) The first major contribution in the RegBlog series is from Sen. Elizabeth Warren (D-MA) and it is entitled, “Corporate Capture of the Rulemaking Process.”

Sen. Warren makes many interesting points about the dangers of regulatory capture, but the heart of her argument about how to deal with the problem can basically be summarized as ‘Let’s Build a Better Breed of Bureaucrat and Give Them More Money.’  In her own words, she says we should “limit opportunities for ‘cultural’ capture'” of government officials and also “give agencies the money that they need to do their jobs.”

It may sound good in theory, but I’m always a bit perplexed by that argument because the implicit claims here are that:

(a) the regulatory officials of the past were somehow less noble-minded and more open to corruption than some hypothetical better breed of bureaucrat that is out there waiting to be found and put into office; and

(b) that the regulatory agencies of the past were somehow starved for resources and lacked “the money that they need to do their jobs.”

Neither of these assumptions is true and yet those arguments seem to animate most of the reform proposals set forth by progressive politicians and scholars for how to deal with the problem of capture. Continue reading →

The FCC’s transaction reviews have received substantial scholarly criticism lately. The FCC has increasingly used its license transaction reviews as an opportunity to engage in ad hoc merger reviews that substitute for formal rulemaking. FCC transaction conditions since 2000 have ranged from requiring AOL-Time Warner to make future instant messaging services interoperable, to price controls for broadband for low-income families, to mandating merging parties to donate $1 million to public safety initiatives.

In the last few months alone,

  • Randy May and Seth Cooper of the Free State Foundation wrote a piece that the transaction reviews contravene rule of law norms.
  • T. Randolph Beard et al. at the Phoenix Center published a research paper about how the FCC’s informal bargaining during mergers has become much more active and politically motivated in recent years.
  • Derek Bambauer, law professor at the University of Arizona, published a law review article that criticized the use of informal agency actions to pressure companies to act in certain ways. These secretive pressures “cloak what is in reality state action in the guise of private choice.”

This week, in the Harvard Journal of Law and Public Policy, my colleague Christopher Koopman and I added to this recent scholarship on the FCC’s controversial transaction reviews. Continue reading →

In theory, the Food & Drug Administration (FDA) exists to save lives and improve health outcomes. All too often, however, that goal is hindered by the agency’s highly bureaucratic, top-down, command-and-control orientation toward drug and medical device approval.

Today’s case in point involves families of children with diabetes, many of whom are increasingly frustrated with the FDA’s foot-dragging when it comes to approval of medical devices that could help their kids. Writing today in The Wall Street Journal, Kate Linebaugh discusses how “Tech-Savvy Families Use Home-Built Diabetes Device” to help their kids when FDA regulations limit the availability of commercial options. She documents how families of diabetic children are taking matters into their own hands and creating their own home-crafted insulin pumps, which can automatically dose the proper amount of proper amount of the hormone in response to their child’s blood-sugar levels. Families are building, calibrating, and troubleshooting these devices on their own. And the movement is growing. Linebaugh reports that:

More than 50 people have soldered, tinkered and written software to make such devices for themselves or their children. The systems—known in the industry as artificial pancreases or closed loop systems—have been studied for decades, but improvements to sensor technology for real-time glucose monitoring have made them possible.

The Food and Drug Administration has made approving such devices a priority and several companies are working on them. But the yearslong process of commercial development and regulatory approval is longer than many patients want, and some are technologically savvy enough to do it on their own.

Linebaugh notes that this particular home-built medical project (known as OpenAPS), was created by Dana Lewis, a 27-year-old with Type 1 diabetes in Seattle. Linebaugh says that: Continue reading →

DM coverOn May 3rd, I’m excited to be participating in a discussion with Yale University bioethicist Wendell Wallach at the Microsoft Innovation & Policy Center in Washington, DC. (RSVP here.) Wallach and I will be discussing issues we write about in our new books, both of which focus on possible governance models for emerging technologies and the question of how much preemptive control society should exercise over new innovations.

Wallach’s latest book is entitled, A Dangerous Master: How to Keep Technology from Slipping beyond Our Control. And, as I’ve noted here recently, the greatly expanded second edition of my latest book, Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom, has just been released.

Of all the books of technological criticism or skepticism that I’ve read in recent years—and I have read stacks of them!—A Dangerous Master is by far the most thoughtful and interesting. I have grown accustomed to major works of technological criticism being caustic, angry affairs. Most of them are just dripping with dystopian dread and a sense of utter exasperation and outright disgust at the pace of modern technological change.

Although he is certainly concerned about a wide variety of modern technologies—drones, robotics, nanotech, and more—Wallach isn’t a purveyor of the politics of panic. There are some moments in the book when he resorts to some hyperbolic rhetoric, such as when he frets about an impending “techstorm” and the potential, as the book’s title suggests, for technology to become a “dangerous master” of humanity. For the most part, however, his approach is deeper and more dispassionate than what is found in the leading tracts of other modern techno-critics.

Continue reading →

Permissionless Innovation 2nd edition book cover -1I am pleased to announce the release of the second edition of my book, Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom. As with the first edition, the book represents a short manifesto that condenses — and attempts to make more accessible — arguments that I have developed in various law review articles, working papers, and blog posts over the past few years. The book attempts to accomplish two major goals.

First, I attempt to show how the central fault line in almost all modern technology policy debates revolves around “the permission question,” which asks: Must the creators of new technologies seek the blessing of public officials before they develop and deploy their innovations? How that question is answered depends on the disposition one adopts toward new inventions. Two conflicting attitudes are evident.

One disposition is known as the “precautionary principle.” Generally speaking, it refers to the belief that new innovations should be curtailed or disallowed until their developers can prove that they will not cause any harms to individuals, groups, specific entities, cultural norms, or various existing laws, norms, or traditions.

The other vision can be labeled “permissionless innovation.” It refers to the notion that experimentation with new technologies and business models should generally be permitted by default. Unless a compelling case can be made that a new invention will bring serious harm to society, innovation should be allowed to continue unabated and problems, if they develop at all, can be addressed later.

I argue that we are witnessing a grand clash of visions between these two mindsets today in almost all major technology policy discussions today. Continue reading →

For decades Congress has gradually deregulated communications and media. This poses a significant threat to the FCC’s jurisdiction because it is the primary regulator of communications and media. The current FCC, exhibiting alarming mission creep, has started importing its legacy regulations to the online world, like Title II common carrier regulations for Internet providers. The FCC’s recent proposal to “open up” TV set top boxes is consistent with the FCC’s reinvention as the US Internet regulator, and now the White House has supported that push.

There are a lot of issues with the set top box proposal but I’ll highlight a few. I really don’t even like referring to it as “the set top box proposal” because the proposal is really aimed at the future of TV–video viewing via apps and connected devices. STBs are a sideshow and mostly just provide the FCC a statutory hook to regulate TV apps. Even that “hook” is dubious–the FCC arbitrarily classifies apps and software as “navigation devices” but concludes that actual TV devices like Chromecast, Roku, smartphones, and tablets aren’t navigation devices. And, despite what activists say, this isn’t about “cable” either but all TV distributors (“MVPDs”) like satellite and telephone companies and Google Fiber, most of whom are small TV players. Continue reading →

retainerAs “software eats the world,” the reach of the Digital Revolution continues to expand to far-flung fields and sectors. The ramifications of this are tremendously exciting but at times can also be a little bit frightening.

Consider this recent Washington Post headline: “A College Kid Spends $60 to Straighten His Own Teeth. What Could Possibly Go Wrong?” Matt McFarland of the Post reports that, “A college student has received a wealth of interest in his dental work after publishing an account of straightening his own teeth for $60.” The student at the New Jersey Institute of Technology, “had no dentistry experience when he decided to create plastic aligners to improve his smile,” but was able to use a 3D printer and laser scanner on campus to accomplish the job. “After publishing before-and-after pictures of his teeth this month, [the student] has received hundreds of requests from strangers, asking him to straighten their teeth.”

McFarland cites many medical professionals who are horrified at the prospect of patients taking their health decisions into own hands and engaging in practices that could be dangerous to themselves and others. Some of the licensed practitioners cited in the story come across as just being bitter losers as they face the potential for the widespread disintermediation of their profession. After all, they currently charge thousands of dollars for various dental procedures and equipment. Thanks to technological innovations, however, those costs could soon plummet, which could significantly undercut their healthy margins on dental services and equipment. On the other hand, these professionals have a fair point about untrained citizens doing their own dental work or giving others the ability to do so. Things certainly could go horribly wrong.

This is another interesting case study related to the subject of a forthcoming Mercatus paper as well as an upcoming law review article on 3D printing of mine, both of which pose the following question: What happens when radically decentralized technological innovation (such as 3D printing) gives people a de facto “right to try” new medicines and medical devices? Continue reading →

Christopher GiancarloU.S. Commodity Futures Trading Commission (CFTC) Commissioner J. Christopher Giancarlo delivered an amazing address this week before the Depository Trust & Clearing Corporation 2016 Blockchain Symposium. The title of his speech was “Regulators and the Blockchain: First, Do No Harm,” and it will go down as the definitive early statement about how policymakers can apply a principled, innovation-enhancing policy paradigm to distributed ledger technology (DLT) or “blockchain” applications.

“The potential applications of this technology are being widely imagined and explored in ways that will benefit market participants, consumers and governments alike,” Giancarlo noted in his address. But in order for that to happen, he said, we have to get policy right. “It is time again to remind regulators to ‘do no harm,'” he argued, and he continued on to note that

The United States’ global leadership in technological innovation of the Internet was built hand-in-hand with its enlightened “do no harm” regulatory framework. Yet, when the Internet developed in the mid-1990s, none of us could have imagined its capabilities that we take for granted today. Fortunately, policymakers had the foresight to create a regulatory environment that served as a catalyst rather than a choke point for innovation. Thanks to their forethought and restraint, Internet-based applications have revolutionized nearly every aspect of human life, created millions of jobs and increased productivity and consumer choice. Regulators must show that same forethought and restraint now [for the blockchain].

What Giancarlo is referring to is the approach that the U.S. government adopted toward the Internet and digital networks in the mid-1990s. You can think of this vision as “permissionless innovation.” As I explain in my recent book of the same title, permissionless innovation refers to the notion that we should generally be free to experiment and learn new and better ways of doing things through ongoing trial-and-error. Continue reading →

The FCC has signaled that it may vote to overhaul the Lifeline program this month. Today, Lifeline typically provides a $9.25 subsidy for low-income households to purchase landline or mobile telephone service from eligible providers. While Lifeline has problems–hence the bipartisan push for reform–years ago the FCC structured Lifeline in a way that generally improves access and mitigates abuse (the same cannot be said about the three other major universal service programs).

A direct subsidy plus a menu of options is a good way to expand access to low-income people (assuming there are effective anti-fraud procedures). A direct subsidy is more or less how the US and state governments help lower-income families afford products and services like energy, food, housing, and education. For energy bills there’s LIHEAP. For grocery bills there’s SNAP and WIC. For housing, there’s Section 8 vouchers. For higher education, there’s Pell grants.

Programs structured this way make transfers fairly transparent, which makes them an easy target for criticism but also promotes government accountability, and gives low-income households the ability to consume these services according to their preferences. If you want to attend a small Christian college, not a state university, Pell grants enable that. If you want to purchase rice and tomatoes, not bread and apples, SNAP enables that. The alternative, and far more costly, ways to improve consumer access to various services is to subsidize providers, which is basically how Medicare the rural telephone programs operate, or command-and-control industrial policy, like we have for television and much of agriculture.

Because the FCC is maintaining the consumer subsidy and expanding the menu of Lifeline options to include wired broadband, mobile broadband, and wifi devices, there’s much to commend in the proposed reforms. Continue reading →

[This is an excerpt from Chapter 6 of the forthcoming 2nd edition of my book, “Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom,” due out later this month. I was presenting on these issues at today’s New America Foundation “Cybersecurity for a New America” event, so I thought I would post this now.  To learn more about the contrast between “permissionless innovation” and “precautionary principle” thinking, please consult the earlier edition of my book or see this blog post.]


 

Viruses, malware, spam, data breeches, and critical system intrusions are just some of the security-related concerns that often motivate precautionary thinking and policy proposals.[1] But as with privacy- and safety-related worries, the panicky rhetoric surrounding these issues is usually unfocused and counterproductive.

In today’s cybersecurity debates, for example, it is not uncommon to hear frequent allusions to the potential for a “digital Pearl Harbor,”[2] a “cyber cold war,”[3] or even a “cyber 9/11.”[4] These analogies are made even though these historical incidents resulted in death and destruction of a sort not comparable to attacks on digital networks. Others refer to “cyber bombs” or technological “time bombs,” even though no one can be “bombed” with binary code.[5] Michael McConnell, a former director of national intelligence, went so far as to say that this “threat is so intrusive, it’s so serious, it could literally suck the life’s blood out of this country.”[6]

Such outrageous statements reflect the frequent use of “threat inflation” rhetoric in debates about online security.[7] Threat inflation has been defined as “the attempt by elites to create concern for a threat that goes beyond the scope and urgency that a disinterested analysis would justify.”[8] Unfortunately, such bombastic rhetoric often conflates minor cybersecurity risks with major ones. For example, dramatic doomsday stories about hackers pushing planes out of the sky misdirects policymakers’ attention from the more immediate, but less gripping, risks of data extraction and foreign surveillance. Well-meaning skeptics might then conclude that our real cybersecurity risks are also not a problem. In the meantime, outdated legislation and inappropriate legal norms continue to impede beneficial defensive measures that could truly improve security. Continue reading →