The New York Times today published my response to an oped by Senators Lindsey Graham & Elizabeth Warren calling for a new “Digital Consumer Protection Commission” to micromanage the high-tech information economy. “Their new technocratic digital regulator would do nothing but hobble America as we prepare for the next great global technological revolution,” I argue. Here’s my full response:

Senators Lindsey Graham and Elizabeth Warren propose a new federal mega-regulator for the digital economy that threatens to undermine America’s global technology standing.

A new “licensing and policing” authority would stall the continued growth of advanced technologies like artificial intelligence in America, leaving China and others to claw back crucial geopolitical strategic ground.

America’s digital technology sector enjoyed remarkable success over the past quarter-century — and provided vast investment and job growth — because the U.S. rejected the heavy-handed regulatory model of the analog era, which stifled innovation and competition.

The tech companies that Senators Graham and Warren cite (along with countless others) came about over the past quarter-century because we opened markets and rejected the monopoly-preserving regulatory regimes that had been captured by old players.

The U.S. has plenty of federal bureaucracies, and many already oversee the issues that the senators want addressed. Their new technocratic digital regulator would do nothing but hobble America as we prepare for the next great global technological revolution.

This is a compendium of readings on “ progress studies ,” or essays and books which generally make the case for technological innovation, dynamism, economic growth, and abundance. I will update this list as additional material of relevance is brought to my attention.   

[Last update: 10/11/22]

Recent Essays

• Marc Andreessen, “The Techno-Optimist Manifesto,” a16z.com, October 16, 2023.
• Will Rinehart, “The Abundance Agenda,” The Exformation Newsletter, October 15, 2022.
• Sarah Constantin, “Unblocking Abundance: A Model for Activism,” Rough Diamonds, October 10, 2022.
• Derek Thompson, “The Forgotten Stage of Human Progress,” The Atlantic, May 11, 2022.
• Adam Thierer, “Where is ‘Progress Studies’ Going?” Progress Forum, April 23, 2022.
• Katherine Boyle, “The Case for American Seriousness,” Common Sense, April 18, 2022.
• William Rinehart, “Vetocracy, the Costs of Vetos and Inaction,” Center for Growth & Opportunity at Utah State University, March 24, 2022.
• James Pethokoukis, “Forget about Left Wing and Right Wing. How about an Up Wing America?” Faster Please, March 23, 2022.
• John W. Lettieri & Kenan Fikri, “The Case for Economic Dynamism and Why it Matters for the American Worker,” Economic Innovation Group, March 2022.
• Adam Kovacevich, “Saying YIMBY (Yes In My Back Yard) to “Civic Innovation,” Chamber of Progress, March 21, 2022.
• Eli Dourado, “Remove Barriers to Productivity,” City Journal, March 18, 2022.
• “A Case for Innovation and Optimism,” (A conversation with Jason Crawford), Discourse, March 2, 2022.
• Noah Smith, “A New Industrialist Roundup,” Noahpinion, February 3, 2022.
• James Pethokoukis, “When Will the Next Big Thing Arrive?” Faster Please, February 3, 2022.
• Alec Stapp & Caleb Watney,  “ Progress is a Policy Choice ,” Institute for Progress, January 20, 2022.
• Adam Thierer, “ How to Get the Future We Were Promised ,” Discourse, January 18, 2022.
• Katherine Boyle, “ Building American Dynamism ,” Future, January 14, 2022.  
• Derek Thompson, “ A Simple Plan to Solve All of America’s Problems ,” The Atlantic, January 12, 2022.
• Jason Crawford, “Progress, Humanism, Agency: An Intellectual Core for the Progress Movement,” Roots of Progress, January 11, 2022.
• Adam Thierer, “Defending Innovation Against Attacks from All Sides,” Discourse, November 9, 2021.
• Matthew Yglesias, “The Case for More Energy,” October 7, 2021.
• Jason Crawford, “ We need a new philosophy of progress ,” The Roots of Progress, August 23, 2021.
• Gale Pooley & Marian L. Tupy, “The Simon Abundance Index 2021,” Human Progress, April 22, 2021.
• Noah Smith, “ Techno-optimism for the 2020s ,” December 3, 2020. 
• Ezra Klein, “ Why We Can’t Build ,” Vox, April 22, 2020.
• Marc Andreesen, “ It’s Time to Build ,” Future, April 18, 2020.
• Eli Dourado, “ How do we move the needle on progress ?” September 26, 2019.
• José Luis Ricón, “ About the ‘Progress’ in Progress Studies ” September 6, 2019.
• Will Rinehart, “ Progress Studies: Some Initial Thoughts ,” August 30, 2019.
• Adam Thierer, “ Is There a Science of Progress ?” AIER, August 8, 2019.
• Patrick Collison and Tyler Cowen, “ We Need a New Science of Progress ,” The Atlantic, July 30, 2019.
• Tyler Cowen, “ The Case for the Longer Term ,” Cato Unbound, January 9, 2019.
• Vinod Khosla, “ We Need Large Innovations ,” Medium, January 1, 2018.
• Adam Thierer, “ How Technology Expands the Horizons of Our Humanity ,” Medium, November 19, 2018. 
• Chelsea Follett, “Utopianism: One of the Biggest Obstacles to Progress,” Human Progress, August15, 2018.
• Eli Dourado, “ How Technological Innovation Can Massively Reduce the Cost of Living ,” PlainText, January 29, 2016.

Books

• J. Storrs Hall, Where Is My Flying Car ? (Stripe Press, 2021).
• Matt Ridley, How Innovation Works: And Why It Flourishes in Freedom (New York: Harper, 2020).
• Andrew McAfee, More from Less (New York: Simon & Schuster, 2020).
• Ronald Bailey & Marian L. Tupy, Ten Global Trends Every Smart Person Should Know: And Many Others You Will Find Interesting (Cato Institute, 2020).
• Arthur M. Diamond Jr., Openness to Creative Destruction: Sustaining Innovative Dynamism (Oxford: Oxford University Press, 2019).
• Tyler Cowen, Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals (San Francisco, CA: Stripe Press, 2018).
• Steven Pinker, Enlightenment Now: The Case for Reason, Science, Humanism, and Progress (New York: Viking, 2018).
• Hans Rosling, Factfulness: Ten Reasons We’re Wrong about the World—and Why Things Are Better Than You Think (New York: Flatiron Books, 2018).
• Tim Harford, 50 Things That Made the Modern Economy (New York: Riverhead Books, 2017).
• Joel Mokyr, A Culture of Growth: The Origins of the Modern Economy (Princeton, NJ: Princeton University Press, 2017).
• Adam Thierer, Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom , 2nd ed. (Arlington, VA: Mercatus Center at George Mason University, 2016).
• Calestous Juma, Innovation and Its Enemies: Why People Resist New Technologies (New York: Oxford University Press, 2016).
• Deirdre N. McCloskey, Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World (Chicago: University of Chicago Press, 2016).
• Joe Carlen, A Brief History of Entrepreneurship: The Pioneers, Profiteers, and Racketeers Who Shaped Our World (New York: Columbia University Press, 2016).
• Robert Bryce, Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong (New York: Public Affairs, 2014).
• Matt Ridley, The Rational Optimist: How Prosperity Evolves (New York: Harper Collins, 2010).
• Larry Downes, The Laws of Disruption: Harnessing the New Forces That Govern Life and Business in the Digital Age (New York: Basic Books, 2009).
• Amar Bhidé, The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World (Princeton, NJ: Princeton University Press, 2008).
• Robert Friedel, A Culture of Improvement: Technology and the Western Millennium (Cambridge, MA: The MIT Press, 2007).
• Benjamin M. Friedman, The Moral Consequences of Economic Growth , (New York: Vintage Books, 2006).
• Virginia Postrel, The Future and Its Enemies (New York: The Free Press, 1998).
• David Landes, The Wealth and Poverty of Nations: Why Some Are So Rich and Some are So Poor (New York: W.W. Norton & Co, 1998).
• Robert Nisbet, History of the Idea of Progress (New Brunswick, NJ: Transaction Publishers, 1994).
• Joel Mokyr, Lever of Riches: Technological Creativity and Economic Progress (New York: Oxford University Press, 1990).
• Nathan Rosenberg and L. E.. Birdzell, How the West Grew Rich: The Economic Transformation of the Industrial World (New York: Basic Books, 1986).
• Samuel C. Florman, The Existential Pleasures of Engineering (New York: St. Martin’s Griffin, 1976, 1994).

After a slight delay, Jurimetrics has finally published my latest law review article, “Soft Law in U.S. ICT Sectors: Four Case Studies.” It is part of a major symposium that Arizona State University (ASU) Law School put together on “Governing Emerging Technologies Through Soft Law: Lessons For Artificial Intelligence” for the journal. I was 1 of 4 scholars invited to pen foundational essays for this symposium. Jurimetrics is a official publication of the American Bar Association’s Section of Science & Technology Law.

This report was a major undertaking that involved dozens of interviews, extensive historic research, several events and presentations, and then numerous revisions before the final product was released. The final PDF version of the journal article is attached.

Here is the abstract:

Traditional hard law tools and processes are struggling to keep up with the rapid pace of innovation in many emerging technologies sectors. As a result, policy­makers in the United States rely increasingly on less formal “soft law” governance mech­anisms to address concerns surrounding many newer technologies. This Article explores four case studies from different information technology areas where soft law mechanisms have already been utilized to address governance concerns. These four sectoral case stud­ies include domain name management, content oversight, privacy policy, and cyberse­curity matters. After considering the various soft law mechanisms used to address those issues, the Article concludes with some general thoughts about the effectiveness of those approaches and what lessons those case studies might hold for the use of soft law in other emerging technology sectors and contexts.

Originally published on the AIER blog on 9/8/19 as “The Worst Regulation Ever Proposed.”

Imagine a competition to design the most onerous and destructive economic regulation ever conceived. A mandate that would make all other mandates blush with embarrassment for not being burdensome or costly enough. What would that Worst Regulation Ever look like?

Taken together, these ideas represent one of the most radical regulatory plans any America politician has yet concocted.

Politicians, academics, and many others have been panicking over automation at least since the days when the Luddites were smashing machines in protest over growing factory mechanization. With the growth of more sophisticated forms of robotics, artificial intelligence, and workplace automation today, there has been a resurgence of these fears and a renewed push for sweeping regulations to throw a wrench in the gears of progress. Mayor de Blasio is looking to outflank his fellow Democratic candidates for president with an anti-automation plan that may be the most extreme proposal of its kind.

First, de Blasio proposes a new federal agency, the Federal Automation and Worker Protection Agency (FAWPA), to “oversee automation and safeguard jobs and communities.” He continues:

FAWPA would create a permitting process for any company seeking to increase automation that would displace workers. Approval of those plans would be conditioned on protecting workers; if their jobs are eliminated through automation, the company would be required to offer their workers new jobs with equal pay, or a severance package in line with their tenure at the company.

Second, de Blasio proposed a “robot tax” that would be imposed on large companies “that eliminate jobs through increased automation and fail to provide adequate replacement jobs.” Those firms would “be required to pay five years of payroll taxes up front for each employee eliminated” and that revenue would be used to fund new infrastructure projects or jobs in new areas, including health care and green energy. “Displaced workers would be guaranteed new jobs created in these fields at comparable salaries,” he says.

Mayor de Blasio’s first idea would be one of the most far-reaching and destructive regulations in American history. A federal agency with “a permitting process for any company seeking to increase automation that would displace workers,” is essentially a political veto over workplace innovations at nearly every business in America. The result would be a de facto ban on productivity improvements across all professions.

After all, there aren’t too many sectors in the modern economy where automation isn’t playing at least a limited role. Even the oldest agricultural and industrial sectors and professions have undergone a certain amount of automation over time, and continue to do so today. These automation improvements have been essential to growing businesses and the economy more generally.

These automation advancements also create new and better jobs. It isn’t always clear initially how automation will affect workers, but the evolution of markets and innovations always provides interesting, and usually beneficial, surprises.

For example, in the early 1980s, many feared ATMs would make all bank tellers irrelevant. Instead, we got more bank workers, but they are now doing different jobs. How would de Blasio’s plan have worked back then? Would his regulatory permitting process have vetoed banking innovations such as ATMs or online banking in the name of protecting workers from automation and potential job losses, which never even materialized?

Now magnify this challenge across the entire American economy and ask how these decisions will be made for every business that is considering some form of workplace automation that could theoretically affect workers, but in ways that are difficult to foresee.

This is one reason why de Blasio’s proposal would quality for the Worst Regulation prize. It would let bureaucrats at the new Federal Automation and Worker Protection Agency sit in judgment of what constitutes beneficial forms of innovation and ask them to predict or plan our technological future.

This is a recipe for economic stagnation because these new FAWPA regulators would, like most other regulators, be incentivized to play it safe and disallow more automations than they approve. The precautionary principle would triumph over permissionless innovation; innovators would be treated as guilty until proven innocent in the resulting political circus.

Mayor de Blasio’s proposed robot tax is equally misguided. Robert D. Atkinson, president of the Information Technology and Innovation Foundation, and Robert Seamans, associate professor at NYU’s Stern School of Business, have both written about the dangers of the idea.

“The last thing policymakers should do is reduce the incentive for companies to invest in new machinery and equipment, as that would slow down needed productivity growth,” argues Atkinson in his study on, “The Case against Taxing Robots.” Likewise, Seamans notes that, in many cases, “robots are complements to labor, not substitutes for labor.” Therefore, “a robot tax would make it harder to achieve productivity growth,” and, he says, “may perversely lead to fewer rather than more jobs.”

Both scholars also point out the definitional difficulty associated with efforts to define what constitutes a “robot,” or “automation.” That problem will only be compounded once regulatory proceedings begin and various special interests begin lobbying lawmakers and regulators for favorable classifications and exemptions to avoid new rules and taxes—or get them imposed on potential competitors. Rather than helping consumers and workers, this will limit choices and drive up prices.

Importantly, regulating robots also means regulating their underlying software algorithms, which means Washington will need to send in teams of code cops to control programmers. At some point that could raise serious free speech issues since computer code can be a form of protected speech under the First Amendment. Practically speaking, however, we may not have to worry about that result because de Blasio’s command-and-control scheme would discourage many people from becoming programmers or roboticists in the first place. All those jobs and businesses would move offshore pretty quickly and America’s competitive standing would suffer globally.

It is tempting to dismiss Mayor de Blasio’s extreme proposals as a desperate move to appeal to the far-left wing of the Democratic Party base and win some more possible votes for the nomination. He likely won’t get the nomination, but his call for radical regulation of robotics in the name of protecting workers may move the party further toward the fringe by encouraging other candidates to concoct similar plans. Of course, it would be nearly impossible for any other candidate to outdo de Blasio’s plan without essentially just calling for an outright ban on robotics and all forms of automation altogether. Let’s hope that’s not next up in the competition for Worst Regulation Ever.

I recently posted an essay over at The Bridge about “The Pacing Problem and the Future of Technology Regulation.” In it, I explain why the pacing problem—the notion that technological innovation is increasingly outpacing the ability of laws and regulations to keep up—“is becoming the great equalizer in debates over technological governance because it forces governments to rethink their approach to the regulation of many sectors and technologies.”

In this follow-up article, I wanted to expand upon some of the themes developed in that essay and discuss how they relate to two other important concepts: the “Collingridge Dilemma” and technological determinism. In doing so, I will build on material that is included in a forthcoming law review article I have co-authored with Jennifer Skees, Ryan Hagemann (“Soft Law for Hard Problems: The Governance of Emerging Technologies in an Uncertain Future”) as well as a book I am finishing up on the growth of “evasive entrepreneurialism” and “technological civil disobedience.”

Recapping the Nature of the Pacing Problem

First, let us quickly recap that nature of “the pacing problem.” I believe Larry Downes did the best job explaining the “problem” in his 2009 book on The Laws of Disruption. Downes argued that “technology changes exponentially, but social, economic, and legal systems change incrementally” and that this “law” was becoming “a simple but unavoidable principle of modern life.”

Downes was generally a cheerleader for such developments. For him, the pacing problem is more like the pacing benefit. But Downes is in the minority among most tech policy scholars in this regard. In the field of Science and Technology Studies (STS), discussions about the pacing problem and what to do about it are omnipresent and full of foreboding gloominess.

STS is a broad field of interdisciplinary studies unified by a concern with “the impacts and control of science and technology, with particular focus on the risks, benefits and opportunities that S&T may pose” to a wide range of values. STS studies incorporates many disciplines: legal and philosophical studies, sociology, anthropology, engineering, and others. In countless essays, papers, journal articles, and books, STS scholars lament the pacing problem and often insist something must be done, often without ever getting around to explaining what that something is.

Regardless of their field of study, there is broad recognition among these scholars that new technological, social, and political realities make the pacing problem a phenomenon worth studying.  In my Bridge essay, I identified three primary drivers of the pacing problem:

• Technological driver: The power of “combinatorial innovation,” which is driven by “Moore’s Law,” fuels a constant expansion of technological capabilities.
• Social driver: As citizens quickly assimilate new tools into their daily lives and then expect that even more and better tools will be delivered tomorrow.
• Political driver: Government has grown increasingly dysfunctional and unable to adapt to those technological and social changes.

The “Collingridge Dilemma”

Although they do not always refer to it by name, STS scholars regularly stress the so-called “Collingridge dilemma” in their work. The Collingridge dilemma refers to the extreme difficulty of putting proverbial genies back in their bottles once a given technology has reached a certain inflection point in society. The concept is named after David Collingridge, who wrote about the challenges of governing emerging technologies in his 1980 book, The Social Control of Technology .

“The social consequences of a technology cannot be predicted early in the life of the technology,” Collingridge argued. “By the time undesirable consequences are discovered, however, the technology is often so much part of the whole economics and social fabric that its control is extremely difficult.” He called this the “dilemma of control,” and asserted that, “When change is easy, the need for it cannot be foreseen; when the need for change is apparent, change has become expensive, difficult and time-consuming.”

In a sense, the “Collingridge dilemma” is simply a restatement of the pacing problem but with (1) greater stress on the social drivers behind the pacing problem and, (2) an implicit solution to “the problem” in the form of preemptive control of new technologies while they are still young and more manageable.

Specifically, for many STS scholars, Collingridge’s “dilemma” is preferably solved through the application of the Precautionary Principle. The contours of the Precautionary Principle are notoriously murky and ill-defined. Nonetheless, as I discussed a great length in my last book on the subject, the Precautionary Principle generally refers to the belief that new innovations should be curtailed or disallowed until their developers can prove that they will not cause any harm to individuals, groups, specific entities, cultural norms, or various existing laws, norms, or traditions.

You can see the logic of the Collingridge dilemma and the Precautionary Principle at work everywhere in STS scholarship today. Few scholars want to admit they favor the Precautionary Principle, however, so they often use different terminology. “Anticipatory governance” or “upstream governance” are the preferred terms of art these days.

For example, in a recent law review article about “Regulating Disruptive Innovation,” Nathan Cortez argues that “new technologies can benefit from decisive, well-timed regulation” or even “early regulatory interventions.” Similarly, writing in Slate in 2014, John Frank Weaver insisted we should regulate emerging tech like artificial intelligence “early and often” to “get out ahead of” various social and economic concerns.

In his last book, A Dangerous Master: How to Keep Technology from Slipping beyond Our Control, bioethicist Wendell Wallach also argued for new forms of upstream governance and defined it as a system that allow for “more control over the way that potentially harmful technologies are developed or introduced into the larger society. Upstream management is certainly better than introducing regulations downstream, after a technology is deeply entrenched, or something major has already gone wrong,” he argued. Wallach is basically just restating the Collingridge dilemma in this regard.

The problem with all these calls for the anticipatory or upstream governance solutions to the pacing problem and the Collingridge dilemma is that, like the Precautionary Principle more generally, the specific solutions are very incoherent or sometimes completely lacking. STS scholars almost always leave the reader hanging without offering a conclusion to their gloomy, pessimistic narratives about whatever technology or technological process it is they are critiquing. Critics are quick to issue bold calls-to-action, but rarely provide a detailed blueprint.

There are some exceptions. Some STS scholars have advocated for Precautionary Principle-minded legislation or agencies, like an “Artificial Intelligence Development Act,” a “National Algorithmic Technology Safety Administration” or a federal AI agency, such as a “Federal Robotics Commission.” Meanwhile, over the past decade, many STS scholars have pushed for national privacy and cybersecurity legislation, or expansive new forms of liability for technology companies. The regulatory authority sought in these cases would be squarely precautionary in character, aimed at addressing a wide array of hypothetical harms through permissioned-based rulemaking before those problems even materialize.

Technological Determinism?

Discussions about the pacing problem and the Collingridge dilemma have an air of technological determinism to them. Technological determinism generally refers to the notion that technology almost has a mind of its own and that it will plow forward without much resistance from society or governments. Here is a more scholarly definition from Sally Wyatt, who has explained how technological determinism is generally defined in a two-part fashion:

The first part is that technological developments take place outside society, independently of social, economic, and political forces. New or improved products or ways of making things arise from the activities of inventors, engineers, and designers following an internal, technical logic that has nothing to do with social relationships. The more crucial second part is that technological change causes or determines social change.

The opposite of technological determinism is usually referred to as “social constructivism,” which as Thomas Hughes notes, “presumes that social and cultural forces determine technical change.”

Ironically, among STS scholars, technological determinist reasoning is both (a) regularly on display, and (b) generally reviled. That is, many STS scholars speaking in deterministic tones about the inevitability of certain technological developments, but then they effortlessly shift into social constructivist mode when commenting on what they hope to do about it.

One of the most well-known technology critics of the past century was French philosopher Jacques Ellul. It is impossible to read his tracts and not find deterministic reasoning flying off every other page. He argued, for example, that technology is “self-perpetuating, all-persuasive, and inescapable,” and that it represents “an autonomous and uncontrollable force that dehumanized all that it touches.” Moreover, within the field of Marxist studies, technological determinism is ubiquitous. Of course, that goes back to Marx himself and his many ideological descendants, who held strongly deterministic views about the role industrial technology played in sharping history and socio-political systems. Plenty of other STS scholars remain hard-core social constructivist, however, and insist that dealing with the pacing problem and the Collingridge dilemma really just comes down to a matter of sheer social and political willpower.

Techno-determinist thinking is usually on display in more vivid terms among technological optimists. Reading the writings of futurists like Ray Kurzweil and Kevin Kelly, one cannot help but get the sense that they are pining for the day when we are all just assimilated into The Matrix. There is an air of utter futility associated with humanity’s efforts to resist the spread of various technological systems and processes. Philosopher Michael Sacasas refers to this mentality as “the Borg Complex,” which, he says, is often “exhibited by writers and pundits who explicitly assert or implicitly assume that resistance to technology is futile.”

The point I am trying to make here is that technological determinism is at work in all sorts of scholarship and punditry. Regardless of whether one subscribes to what Ian Barbour has labelled the warring viewpoints of “Technology as Liberator” or “Technology as a Threat,” very different people can hold strongly deterministic viewpoints.

Soft Determinism

The problem with all this talk about determinism—technological, social, political, or whatever—is that the lines are never quite as bright as some suggest. “Hard” determinism of any of these varieties simply cannot be correct. We have too many historical examples that run counter to both narratives.

Personally, I’ve always subscribed to what some refer to as “ soft technological determinism.” Technological historian Merritt Roe Smith defines “soft determinism” as the view “which holds that technological change drives social change but at the same time responds discriminatingly to social pressures,” as compared to “hard determinism,” which “perceives technological development as an autonomous force, completely independent of social constraints.”

Konstantinos Stylianou has offered a variant of soft determinism that zeroes in on better understanding the unique attributes of specific technologies and political systems when considering how difficult they may be to control. He argues that “there are indeed technologies so disruptive that by their very nature they cause a certain change regardless of other factors,” such as the Internet. Stylianou concludes that:

It seems reasonable to infer that the thrust behind technological progress is so powerful that it is almost impossible for traditional legislation to catch up. While designing flexible rules may be of help, it also appears that technology has already advanced to the degree that is able to bypass or manipulate legislation. As a result, the cat-and-mouse chase game between the law and technology will probably always tip in favor of technology. It may thus be a wise choice for the law to stop underestimating the dynamics of technology, and instead adapt to embrace it.

That may sound like just more hard deterministic thinking, but it represents a softer variety that holds that the special characteristics of some technologies are indeed altering our capacity to govern many newer sectors using traditional regulatory mechanisms. In my new law review article with Jennifer Skees and Ryan Hagemann, we conclude that this is the key factor motivating the gradual move away from “hard law” and toward “soft law” governance tools for a great many emerging technologies.

To be clear, this does not mean we are going to soon reach the proverbial “end of politics” or the “death of the nation-state” due to technology, or anything like that. As I point out in my forthcoming book, that sort of talk is silly. Some technology enthusiasts or libertarians use techno-determinist talk as if they are preaching a gospel of liberation theology—liberation from the state through technology emancipation, that is.

In reality, technology giveth and technology taketh away. Technology can empower people and institutions and help them challenge laws, regulations, and entire political systems. My forthcoming book documents how many “evasive entrepreneurs” are doing just that today, and with increasing regularity. But technology empowers government actors, too. In an unpublished 2009 manuscript entitled, “Does Technology Drive the Growth of Government?” my Mercatus Center colleague Tyler Cowen noted how growth of big government in the 20th century was greatly facilitated by various modern technologies (advanced transportation and communications networks, in particular). “Future technologies may either increase or decrease the role of government in society,” he noted, “but if history shows one thing, it is that we should not neglect technology in understanding the shift from an old political equilibrium to a new one.”

Thus, those who think that the pacing problem is a one-way ratchet to emancipation from state control need to realize that technology can be used for good and bad ends, and it can be used (and abused) by governments to expand their powers and limit our liberties. Similarly, those tech critics and STS scholars who lament how the pacing problem will undermine governments, democracy, or other institutions or values without radical interventions also are going too far. They need to recognize that while it is true many new technologies will march forward at a steady clip, it does not mean that society is powerless to bring some order to technological processes. We shape our tools and then our tools shape us. And then we create still more tools to improve upon previous tools, and the process goes on and on.

John Seely Brown and Paul Duguid put it best in this 2001 essay responding to “doom-and-gloom technofuturists”:

[T]echnological and social systems shape each other. The same is true on a larger scale. . . . Technology and society are constantly forming and reforming new dynamic equilibriums with far-reaching implications. The challenge . . . is to see beyond the hype and past the over-simplifications to the full import of these new sociotechnical formations.

So yes, the pacing problem is real, and it will continue to raise problems for social and political systems. But as Brown and Paul Duguid suggest, we’ll constantly adapt, form and reform new dynamic equilibriums, and then “muddle through,” just as we have so many times before.

Related Reading

• “The Pacing Problem and the Future of Technology Regulation”
• “Muddling Through: How We Learn to Cope with Technological Change”
• “A Short Response to Michael Sacasas on Advice for Tech Writers”
• “Are “Permissionless Innovation” and “Responsible Innovation” Compatible?”
• “Wendell Wallach on the Challenge of Engineering Better Technology Ethics”
• “Book Review: Calestous Juma’s “Innovation and Its Enemies’”
• “Evasive Entrepreneurialism and Technological Civil Disobedience: Basic Definitions”

Today, the U.S. Department of Transportation released its eagerly-awaited “Federal Automated Vehicles Policy.” There’s a lot to like about the guidance document, beginning with the agency’s genuine embrace of the potential for highly automated vehicles (HAVs) to revolutionize this sector and save thousands of lives annually in the process.

It is important we get HAV policy right, the DOT notes, because, “35,092 people died on U.S. roadways in 2015 alone” and “94 percent of crashes can be tied to a human choice or error.” (p. 5) HAVs could help us reverse that trend and save thousands of lives and billions in economic costs annually. The agency also documents many other benefits associated with HAVs, such as increasing personal mobility, reducing traffic and pollution, and cutting infrastructure costs.

I will not attempt here to comment on every specific recommendation or guideline suggested in the new DOT guidance document. I could nit-pick about some of the specific recommended guidelines, but I think many of the guidelines are quite reasonable, whether they are related to safety, security, privacy, or state regulatory issues. Other issues need to be addressed and CEI’s Marc Scribner does a nice job documenting some of them is his response to the new guidelines.

Instead of discussing those specific issues today, I want to ask a more fundamental and far-reaching question which I have been writing about in recent papers and essays: Is this guidance or regulation? And what does the use of informal guidance mechanisms like these signal for the future of technological governance more generally?

When Is “Voluntary” Really Mandatory?

The surreal thing about DOT’s new driverless car guidance is how the agency repeatedly stresses it “is not mandatory” and that the guidelines are voluntary in nature but then — often in the same paragraph or sentence — the agency hints how it might convert those recommendations into regulations in the near future. Consider this paragraph on pg. 11 of the DOT’s new guidance document:

The Agency expects to pursue follow-on actions to this Guidance, such as performing additional research in areas such as benefits assessment, human factors, cybersecurity, performance metrics, objective testing, and others as they are identified in the future. As discussed, DOT further intends to hold public workshops and obtain public comment on this Guidance and the other elements of the Policy. This Guidance highlights important areas that manufacturers and other entities designing HAV systems should be considering and addressing as they design, test, and deploy HAVs. This Guidance is not mandatory. NHTSA may consider, in the future, proposing to make some elements of this Guidance mandatory and binding through future regulatory actions. This Guidance is not intended for States to codify as legal requirements for the development, design, manufacture, testing, and operation of automated vehicles. Additional next steps are outlined at the end of this Guidance. [emphasis added.]

The agency continues on to request that “manufacturers and other entities voluntarily provide reports regarding how the Guidance has been followed,” but then notes how “[t]his reporting process may be refined and made mandatory through a future rulemaking.” (p. 15)

And so it goes throughout the DOT’s new “guidance” document. With one breath the DOT suggests that everything is informal and voluntary; with the next it suggests that some form of regulation could be right around the proverbial corner.

Agency Threats Are the Future of Technological Governance

What’s going on here? In essence, DOT’s driverless car guidance is another example of how “soft law” and “agency threats” are becoming the dominant governance models for fast-paced emerging technology.

As noted by Tim Wu, a proponent of such regimes, these agency threats can include “warning letters, official speeches, interpretations, and private meetings with regulated parties.” “Soft law” simply refers to any sort of informal governance mechanism that agencies might seek to use to influence private decision-making or in this case the future course of technological innovation.

The problem with agency threats, as my former Mercatus Center colleague Jerry Brito pointed out in a 2014 law review article, is that they are fundamentally undemocratic and represent a betrayal of the rule of law. The use of “threat regimes,” Brito argued, “places undue power in the hands of regulators unconstrained by predictable procedures.” Such regimes breed uncertainty by leaving decisions up to the whim of regulators who will be unconstrained by administrative procedures, legal precedents, and strict timetables. “[B]ecause it has no limiting principle,” Brito concluded, the agency threats model “leaves the regulatory process without much meaning” and “would obviously be ripe for abuse.”

The danger exists that we are witnessing gradual mission creep as the DOT’s “guidance” process slowly moves from being a truly voluntary self-certification process to something more akin to a pre-market approval process. Every “informal” request that DOT makes — even when those requests are just presented in the form of vague questions — opens the door to greater technocratic meddling in the innovation process by federal bureaucrats.

Coping with the Pacing Problem

Why are agencies like the DOT adopting this new playbook? In a nutshell, it comes down to the realization on their part that the “pacing problem” is now an undeniable fact of life.

I discussed the pacing problem at length in my recent review of Wendell Wallach’s important new book, A Dangerous Master: How to Keep Technology from Slipping beyond Our Control. Wallach nicely defined the pacing problem as “the gap between the introduction of a new technology and the establishment of laws, regulations, and oversight mechanisms for shaping its safe development.” “There has always been a pacing problem,” Wallach noted, but like other philosophers, he believes that modern technological innovation is occurring at an unprecedented pace, making it harder than ever to “govern” it using traditional legal and regulatory mechanisms.

Which is exactly why the DOT and whole lot of other agencies are now defaulting to soft law and agencies threat models as their old regimes struggle to keep up with the pace of modern technological innovation. As the DOT put it in its new guidance document: “The speed with which HAVs are advancing, combined with the complexity and novelty of these innovations, threatens to outpace the Agency’s conventional regulatory processes and capabilities.” (p. 8)  More specifically, the agency notes that:

The remarkable speed with which increasingly complex HAVs are evolving challenges DOT to take new approaches that ensure these technologies are safely introduced (i.e., do not introduce significant new safety risks), provide safety benefits today, and achieve their full safety potential in the future. To meet this challenge, we must rapidly build our expertise and knowledge to keep pace with developments, expand our regulatory capability, and increase our speed of execution. (p. 6)

Rarely has any agency been quite so blunt about how it is racing to get ahead of the pacing problem before it completely loses control of the future course of technological innovation.

But the DOT is hardly alone in its increased reliance on soft law governance mechanisms. In fact, I’m in the early research stages of a new paper about what soft law and agency threat models mean for the future of emerging technology and its governance. In that paper, I hope to document how many different agencies (FAA, FDA, FTC, FCC, NTIA, & DOT among others) are using some variant of soft law model to informally regulate the growing universe of emerging technologies out there today (commercial drones, connected medical devices, the Internet of Things, 3D printing, immersive technology, the sharing economy, driverless cars, and more.)

If nothing else, I would like to devise a taxonomy of soft law/agency threat models and then discuss the upsides and downsides of those models. If anyone has recommendations for additional reading on this topic, please let me know. The best thing I have seen on the issue is a 2013 book of collected essays on Innovative Governance Models for Emerging Technologies, edited by Gary E. Marchant, Kenneth W. Abbott and Braden Allenby. I’m surprised more hasn’t been written about this in law reviews or political science journals.

What Does It Mean for Innovation? And Accountable Government?

So, what does all this mean for the future of driverless cars, autonomous systems, and other emerging technologies? I think it’s both good and bad news.

The good news — at least from the perspective of those of us who want to see innovators freed up to experiment more without prior restraint — is that the technological genie is increasingly out of the bottle. Technology regulators are at an impasse and they know it. Their old regulatory regimes are doomed to always be one step behind the action. Thus, a lot of technological innovation is going to be happening before any blessing has been given to engage in those experiments.

The bad news is that the regulatory regimes of the future will become almost hopelessly arbitrary in terms of their contours and enforcement ceiling. Basically, in our new world of soft law and agency threats, you can tear up the Administrative Procedures Act and throw it out the window.  When regulatory agencies act in the future, they will do so in a sort of extra-legal Twilight Zone, where things are not always as they seem. Agencies will increasingly act like nagging nannies, constantly pressuring innovators to behave themselves. And sometimes that nagging will work, and sometimes it will even improve consumer welfare at the margin! It will work sometimes precisely because government still wields a mighty big hammer and no innovator wants to be nailed to the ground in the courts, or the court of public opinion for that matter. Thus, many — not all, but many — of those innovators will go along with whatever agencies like DOT suggests as “best practices” even if those guidelines are horribly misguided or have no force of law whatsoever. And because agencies know that many (perhaps most) innovators will fall in line with whatever “best practices” or “codes of conduct” that they concoct, it will reinforce the legitimacy of this model and become the new method of imposing their will on current or emerging technology sectors.

Again, agency threats won’t always work because some innovators will continue to engage in rough forms of “technological civil disobedience” and just ignore a lot of these informal guidelines and agency threats. Agencies will push back and seek to make an example of specific innovators (especially the ones with deep pockets) in order to send a message to every other innovator out there that they better fall in line or else!

But what that “or else!” moment or action looks like remains completely unclear. The problem with soft law is that, by its very nature, it is completely open-ended and fundamentally arbitrary. It is really just “ non-law law.” That’s the “legal regime” that will “govern” the emerging technologies of the present and the future.

Isn’t Soft Law Better Than the Alternative?

Now, here’s the funny thing about this messy, arbitrary, unaccountable world of soft law and agency threats: It is probably a hell of lot better than the old world we used to live in!

The old analog era regulatory systems were very top-down and command-and-control in orientation. These traditional regimes were driven by the desire of regulators to enforce policy priorities by imposing prior restraints on innovation and then selectively passing out permission slips to get around those rules.

As I noted in my latest book, the problem with those traditional regulatory systems is that they “tend to be overly rigid, bureaucratic, inflexible, and slow to adapt to new realities. They focus on preemptive remedies that aim to predict the future, and future hypothetical problems that may not ever come about. Worse yet, administrative regulation generally preempts or prohibits the beneficial experiments that yield new and better ways of doing things.” (Permissionless Innovation, p. 120)

For all the reasons I outlined in my book and other papers on these topics, “permissionless innovation” remains the superior policy default compared to precautionary principle-based prior restraints. But I am not so naïve as to expect that permissionless innovation will prevail in the policy world all of the time. Moreover, I am not one of those technological determinists who goes around saying that technology is an unstoppable force that relentlessly drives history, regardless of what policymakers say. I am more of a soft determinist who believes that technology often can be a major driver of history, but not without a significant shaping from other social, cultural, economic, and political forces.

Thus, as much as I worry about the new “soft law/agency threats” regime being arbitrary, unaccountable, and innovation-threatening, I know that the ideal of permissionless innovation will only rarely be our default policy regime. But I also don’t think we are going back the old regulatory regimes of the past and we absolutely wouldn’t want to anyway in light of the deleterious impacts those regimes had on innovation in practice.

The best bet for those of us who care about the freedom to innovate is to make sure that these soft law governance mechanisms have some oversight from Congress (unlikely) and the Courts (more likely) when agencies push too far with informal agency threats. Better yet, we can hope that the pace of technological change continues to accelerate and pressures agencies to only intervene to address the most pressing problems and then largely leaves the rest of the field wide open for continued experimentation with new and better ways of doing things.

But make no doubt about it, as today’s DOT guidance document for driverless cars makes clear, “agency threats” will increasingly shape the future of emerging technologies whether we like it or not.

If there are two general principles that unify my recent work on technology policy and innovation issues, they would be as follows. To the maximum extent possible:

1. We should avoid preemptive and precautionary-based regulatory regimes for new innovation. Instead, our policy default should be innovation allowed (or “permissionless innovation”) and innovators should be considered “innocent until proven guilty” (unless, that is, a thorough benefit-cost analysis has been conducted that documents the clear need for immediate preemptive restraints).
2. We should avoid rigid, “top-down” technology-specific or sector-specific regulatory regimes and/or regulatory agencies and instead opt for a broader array of more flexible, “bottom-up” solutions (education, empowerment, social norms, self-regulation, public pressure, etc.) as well as reliance on existing legal systems and standards (torts, product liability, contracts, property rights, etc.).

I was very interested, therefore, to come across two new essays that make opposing arguments and proposals. The first is this recent Slate oped by John Frank Weaver, “We Need to Pass Legislation on Artificial Intelligence Early and Often.” The second is Ryan Calo’s new Brookings Institution white paper, “The Case for a Federal Robotics Commission.”

Weaver argues that new robot technology “is going to develop fast, almost certainly faster than we can legislate it. That’s why we need to get ahead of it now.” In order to preemptively address concerns about new technologies such as driverless cars or commercial drones, “we need to legislate early and often,” Weaver says. Stated differently, Weaver is proposing “precautionary principle”-based regulation of these technologies. The precautionary principle generally 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.

Calo argues that we need “the establishment of a new federal agency to deal with the novel experiences and harms robotics enables” since there exists “distinct but related challenges that would benefit from being examined and treated together.” These issues, he says, “require special expertise to understand and may require investment and coordination to thrive.

I’ll address both Weaver and Calo’s proposals in turn.

Problems with Precautionary Regulation

Let’s begin with Weaver proposed approach to regulating robotics and autonomous systems.

What Weaver seems to ignore—and which I discuss at greater length in my latest book—is that “precautionary” policy-making typically results in technological stasis and lost opportunities for economic and social progress. As I noted in my book, if we spend all our time living in constant fear of worst-case scenarios—and premising public policy upon such fears—it means that best-case scenarios will never come about. Wisdom and progress are born from experience, including experiences that involve risk and the possibility of occasional mistakes and failures. As the old adage goes, “nothing ventured, nothing gained.”

More concretely, the problem with “permissioning” innovation is that traditional regulatory policies and systems tend to be overly-rigid, bureaucratic, costly, and slow to adapt to new realities. Precautionary-based policies and regulatory systems focus on preemptive remedies that aim to predict the future, and future hypothetical problems that may not ever come about. As a result, preemptive bans or highly restrictive regulatory prescriptions can limit innovations that yield new and better ways of doing things.

Weaver doesn’t bother addressing these issues. He instead advocates regulating “early and often” without stopping to think through the potential costs of doing so. Yet, all regulation has trade-offs and opportunity costs. Before we rush to adopt rules based on knee-jerk negative reactions to new technology, we should conduct comprehensive benefit-cost analysis of the proposals and think carefully about what alternative approaches exist to address whatever problems we have identified.

Incidentally, Weaver also does not acknowledge the contradiction inherent in his thinking when he says robotic technology “is going to develop fast, almost certainly faster than we can legislate it. That’s why we need to get ahead of it now.” Well, if robotic technology is truly developing “faster than we can legislate it,” then “getting out ahead of it” would be seemingly impossible! Unless, that is, he envisions regulating robotic technologies so stringently as to effectively bring new innovation to a grinding halt (or banning altogether).

To be clear, my criticisms should not be read to suggest that zero regulation is the best option. There are plenty of thorny issues that deserve serious policy consideration and perhaps even some preemptive rules. But how potential harms are addressed matters deeply. We should exhaust all other potential nonregulatory remedies first — education, empowerment, transparency, etc. — before resorting to preemptive controls on new forms of innovation. In other words, ex post (or after the fact) solutions should generally trump ex ante (preemptive) controls.

I’ll say more on this point in the conclusion since my response addresses general failings in Ryan Calo’s Federal Robotics Commission proposal, to which we now turn.

Problems with a Federal Robotics Commission

Moving on to Calo, it is important to clarify what he is proposing because he is careful not to overstate his case in favor of a new agency for robotics. He elaborates as follows:

“The institution I have in mind would not “regulate” robotics in the sense of fashioning rules regarding their use, at least not in any initial incarnation. Rather, the agency would advise on issues at all levels—state and federal, domestic and foreign, civil and criminal—that touch upon the unique aspects of robotics and artificial intelligence and the novel human experiences these technologies generate. The alternative, I fear, is that we will continue to address robotics policy questions piecemeal, perhaps indefinitely, with increasingly poor outcomes and slow accrual of knowledge. Meanwhile, other nations that are investing more heavily in robotics and, specifically, in developing a legal and policy infrastructure for emerging technology, will leapfrog the U.S. in innovation for the first time since the creation of steam power.”

Here are some of my concerns with Calo’s proposed Federal Robotics Commission.

Will It Really Just Be an Advisory Body?

First, Calo claims he doesn’t want a formal regulatory agency, but something more akin to a super-advisory body. He does, however, sneak in that disclaimer that he doesn’t envision it to be regulatory “at least not in any initial incarnation.” Perhaps, then, he is suggesting that more formal regulatory controls would be in the cards down the road. It remains unclear.

Regardless, I think it is a bit disingenuous to propose the formation of a new governmental body like this and pretend that it will not someday very soon come to possess sweeping regulatory powers over these technologies. Now, you may well feel that that is a good thing. But I fear that Calo is playing a bit of game here by asking the reader to imagine his new creation would merely stick to an advisory role.

Regulatory creep is real. There just aren’t too many examples of agencies being created solely for their advisory expertise and then not also getting into the business of regulating the technology or topic that is included in that agency’s name. And in light of some of Calo’s past writing and advocacy, I can’t help but think he is actually hoping that the agency comes to take on a greater regulatory role over time. Regardless, I think we can bank on that happening and I that there are reasons to worry about it for reasons noted above and which I will elaborate on below.

Incidentally, if Calo is really more interested in furthering just this expert advisory capacity, there are plenty of other entities (including non-governmental bodies) that could play that role. How about the National Science Foundation, for example? Or how about a multi-stakeholder body consisting of many different experts and institutions? I could go on, but you get the point. A single point of action is also a single point of failure. I don’t want just one big robotics bureaucracy making policy or even advising. I’d prefer a more decentralized approach, and one that doesn’t carry a (potential) big regulatory club in its hand.

Public Choice / Regulatory Capture Problems

Second, Calo underestimates the public choice problems of creating a sector-specific or technology-specific agency just for robotics. To his credit, he does admit that, “agencies have their problems, of course. They can be inefficient and are subject to capture by those they regulate or other special interests.” He also notes he has criticized other agencies for various failings. But he does not say anything more on this point.

Let’s be clear. There exists a long and lamentable history of sector-specific regulators being “captured” by the entities they regulate. To read the ugly reality, see my compendium, “Regulatory Capture: What the Experts Have Found.” That piece documents what leading academics of all political stripes have had to say about this problem over the past century. No one ever summarized the nature and gravity of this problem better than the great Alfred Kahn in his masterpiece, The Economics of Regulation: Principles and Institutions (1971):

“When a commission is responsible for the performance of an industry, it is under never completely escapable pressure to protect the health of the companies it regulates, to assure a desirable performance by relying on those monopolistic chosen instruments and its own controls rather than on the unplanned and unplannable forces of competition. [. . . ] Responsible for the continued provision and improvement of service, [the regulatory commission] comes increasingly and understandably to identify the interest of the public with that of the existing companies on whom it must rely to deliver goods.” (pgs. 12, 46)

The history of the Federal Communications Commission (FCC) is highly instructive in this regard and was documented in a 66-page law review article I penned with Brent Skorup entitled, “A History of Cronyism and Capture in the Information Technology Sector,” (Journal of Technology Law & Policy, Vol. 18, 2013). Again, it doesn’t make for pleasant reading. Time and time again, instead of serving the “public interest,” the FCC served private interests. The entire history of video marketplace regulation is one of the most sickening examples to consider since there have almost eight decades worth of case studies of the broadcast industry using regulation as a club to beat back new entry, competition, and innovation. [Skorup and I have another paper discussing that specific history and how to go about reversing it.] This history is important because, in the early days of the Commission, many proponents thought the FCC would be exactly the sort of “expert” independent agency that Calo envisions his Federal Robotics Commission would be. Needless to say, things did not turn out so well.

But the FCC isn’t the only guilty offender in this regard. Go read the history about how airlines so effectively cartelized their industry following World War II with the help of the Civil Aeronautics Board. Thankfully, President Jimmy Carter appointed Alfred Kahn to clean things up in the 1970s. Kahn, a life-long Democrat, came to realize that the problem of capture was so insidious and inescapable that abolition of the agency was the only realistic solution to make sure consumer welfare would improve. As a result, he and various other Democrats in the Carter Administration and in Congress worked together to sunset the agency and its hideously protectionist, anti-consumer policies. (Also, please read this amazing 1973 law review article on “Economic Regulation vs. Competition,” by Mark Green and Ralph Nader if you need even more proof of why this is a such a problem.)

In other words, the problem of regulatory capture is not something one can casually dismiss. The problem is still very real and deserves more consideration before we casually propose creating new agencies, even “advisory” agencies. At a minimum, when proposing new agencies, you need to get serious about what sort of institutional constraints you might consider putting in place to make sure that history does not repeat itself. Because if you don’t, various large, well-heeled, and politically-connected robotics companies could come to capture any new “Federal Robotics Commission” in very short order.

Can We Clean Up Old Messes Before Building More Bureaucracies?

Third, speaking of agencies, if it is the case that the alphabet soup collection of regulatory agencies we already have in place are not capable of handling “robotics policy” right now, can we talk about reforming them (or perhaps even getting rid of a few of them) first? Why must we just pile yet another sector-specific or technology-specific regulator on top of the many that already exist? That’s just a recipe for more red tape and potential regulatory capture. Unless you believe there is value in creating bureaucracy for the sake of creating bureaucracy, there is no excuse for not phasing out agencies that failed in their original mission, or whose mission is now obsolete, for whatever reason. This is a fundamental “good government” issue that politicians and academics of all stripes should agree on.

Calo indirectly addresses this point by noting that “we have agencies devoted to technologies already and it would be odd and anomalous to think we are done creating them.” Curiously, however, he spends no time talking about those agencies or asking whether they have done a good job. Again, the heart of Calo’s argument comes down the assertion that another specialized, technology-specific “expert” agency is needed because there are “novel” issues associated with robotics. Well, if it is true, as Calo suggests, that we have been down this path before (and we have), and if you believe our economy or society has been made better off for it, then you need to prove it. Because the objection to creating another regulatory bureaucracy is not simply based on distaste for Big Government; it comes down to the simple questions: (1) Do these things work; and (2) Is there a better alternative?

This is where Calo’s proposal falls short. There is no effort to prove that technocratic or “scientific” bureaucracies, on net, are worth their expense (to taxpayers) or cost (to society, innovation, etc.) when compared to alternatives. Of course, I suspect this is where Calo and I might part ways regarding what metrics we would use to gauge success. I’ll save that discussion for another day and shift to what I regard as the far more serious deficiency of Calo’s proposal.

Do We Become Global Innovation Leaders Through Bureaucratic Direction?

Fourth, and most importantly, Calo does not offer any evidence to prove his contention that we need a sector-specific or technology-specific agency for robotics in order to develop or maintain America’s competitive edge in this field. Moreover, he does not acknowledge how his proposal might have the exact opposite result. Let me spend some time on this point because this is what I find most problematic about his proposal.

In his latest Brookings essay and his earlier writing about robotics, Calo keeps suggesting that we need a specialized federal agency for robotics to avoid “poor outcomes” due to the lack of “a legal and policy infrastructure for emerging technology.” He even warns us that other countries who are looking into robotics policy and regulation more seriously “will leapfrog the U.S. in innovation for the first time since the creation of steam power.”

Well, on that point, I must ask: Did America need a Federal Steam Agency to become a leader in that field? Because unless I missed something in history class, steam power developed fairly rapidly in this country without any centralized bureaucratic direction. Or how about a more recent example: Did America need a Federal Computer Commission or Federal Internet Commission to obtain or maintain a global edge in computing, the Internet, or the Digital Economy?

To the contrary, we took the EXACT OPPOSITE approach. It’s not just that no new agencies were formed to guide the development of computing or the Internet in this country. It’s that our government made a clear policy choice to break with the past by rejecting top-down, command-and-control regulation by unelected bureaucrats in some shadowy Beltway agency.

Incidentally, it was Democrats who accomplished this. While many Republicans today love to crack wise-ass comments about Al Gore and the Internet while simultaneously imagining themselves to be the great defenders of Internet freedom, the reality is that we have the Clinton Administration and one its most liberal members—Ira Magaziner—to thank for the most blessedly “light-touch,” market-oriented innovation policy that the world has ever seen.

What did Magaziner and the Clinton Administration do? They crafted the amazing 1997 Framework for Global Electronic Commerce, a statement of the Administration’s principles and policy objectives toward the Internet and the emerging digital economy. It recommended reliance upon civil society, contractual negotiations, voluntary agreements, and ongoing marketplace experiments to solve information age problems. First, “the private sector should lead. The Internet should develop as a market driven arena not a regulated industry,” the Framework recommended. “Even where collective action is necessary, governments should encourage industry self-regulation and private sector leadership where possible.” Second, “governments should avoid undue restrictions on electronic commerce” and “parties should be able to enter into legitimate agreements to buy and sell products and services across the Internet with minimal government involvement or intervention.”

I’ve argued elsewhere that the Clinton Administration’s Framework, “remains the most succinct articulation of a pro-freedom, innovation-oriented vision for cyberspace ever penned.” Of course, this followed the Administration’s earlier move to allow the full commercialization of the Internet, which was even more important. The policy disposition they established with these decisions resulted in an unambiguous green light for a rising generation of creative minds who were eager to explore this new frontier for commerce and communications. And to reiterate,they did it without any new bureaucracy.

If You Regulate “Robotics,” You End Up Regulating Computing & Networking

Incidentally, I do not see how we could create a new Federal Robotics Commission without it also becoming a de facto Federal Computing Commission. Robotics and the many technologies and industries it already includes — driverless cars, commercial drones, Internet of Things, etc. — is becoming a hot policy topic, and proposals for regulation are already flying. These robotic technologies are developing on top of the building blocks of the Information Revolution: microprocessors, wireless networks, sensors, “big data,” etc.

Thus, I share Cory Doctorow’s skepticism about how one could logically separate “robotics” from these other technologies and sectors for regulatory purposes:

I am skeptical that “robot law” can be effectively separated from software law in general. … For the life of me, I can’t figure out a legal principle that would apply to the robot that wouldn’t be useful for the computer (and vice versa).

In his Brookings paper, Calo responded to Doctorow’s concern as follows:

the difference between a computer and a robot has largely to do with the latter’s embodiment. Robots do not just sense, process, and relay data. Robots are organized to act upon the world physically, or at least directly. This turns out to have strong repercussions at law, and to pose unique challenges to law and to legal institutions that computers and the Internet did not.

I find this fairly unconvincing. Just because robotic technologies have a physical embodiment does not mean their impact on society is all that more profound than computing, the Internet, and digital technologies. Consider all the hand-wringing going on today in cybersecurity circles about how hacking, malware, or various other types of digital attacks could take down entire systems or economies. I’m not saying I buy all that “technopanic” talk (and here are about three dozens of my essays arguing the contrary), but the theoretical ramifications are nonetheless on par with dystopian scenarios about robotics.

The Alternative Approach

Of course, it certainly may be the case that some worst-case scenarios are worth worrying about in both cases—for robotics and computing, that is. Still, is a Federal Robotics Commission or a Federal Computing Commission really the sensible way to address those issues?

To the contrary, this is why we have a Legislative Branch! So many of the problems of our modern era of dysfunctional government are rooted in an unwise delegation of authority to administrative agencies. Far too often, congressional lawmakers delegate broad, ambiguous authority to agencies instead of facing up to the hard issues themselves. This results in waste, bloat, inefficiencies, and an endless passing of the buck.

There may very well be some serious issues raised by robotics and AI that we cannot ignore, and which may even require a little preemptive, precautionary policy. And the same goes for general computing and the Internet. But that is not a good reason to just create new bureaucracies in the hope that some set of mythical technocratic philosopher kings will ride in to save the day with their supposed greater “expertise” about these matters. Either you believe in democracy or you don’t. Running around calling for agencies and unelected bureaucrats to make all the hard choices means that “the people” have even less of a say in these matters.

Moreover, there are many other methods of dealing with robotics and the potential problems robotics might create than through the creation of new bureaucracy. The common law already handles many of the problems that both Calo and Weaver are worried about. To the extent robotic systems are involved in accidents that harm individuals or their property, product liability law will kick in.

On this point, I strongly recommend another new Brookings publication. John Villasenor’s outstanding April white paper, “Products Liability and Driverless Cars: Issues and Guiding Principles for Legislation,” correctly argues that,

“when confronted with new, often complex, questions involving products liability, courts have generally gotten things right. … Products liability law has been highly adaptive to the many new technologies that have emerged in recent decades, and it will be quite capable of adapting to emerging autonomous vehicle technologies as the need arises.”

Thus, instead of trying to micro-manage the development of robotic technologies in an attempt to plan for every hypothetical risk scenario, policymakers should be patient while the common law evolves and liability norms adjust. Traditionally, the common law has dealt with products liability and accident compensation in an evolutionary way through a variety of mechanisms, including strict liability, negligence, design defects law, failure to warn, breach of warranty, and so on. There is no reason to think the common law will not adapt to new technological realities, including robotic technologies. (I address these and other “bottom-up” solutions in my new book.)

In the meantime, let’s exercise some humility and restraint here and avoid heavy-handed precautionary regulatory regimes or the creation of new technocratic bureaucracies. And let’s not forget that many solutions to the problems created by new robotic technologies will develop spontaneously and organically over time as individuals and institutions learn to cope and “muddle through,” as they have many times before.

Additional Reading

• Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom (2014)
• Muddling Through: How We Learn to Cope with Technological Change, June 30, 2014
• New Paper: “Removing Roadblocks to Intelligent Vehicles and Driverless Cars,” September 17, 2014
• Slide Presentation: Policy Issues Surrounding the Internet of Things & Wearable Technology, September 12, 2014
• [Video] Cap Hill Briefing on Emerging Tech Policy Issues (June 2014)
• The Growing Conflict of Visions over the Internet of Things & Privacy, January 14, 2012
• Can We Adapt to the Internet of Things? IAPP Privacy Perspectives, June 19, 2013
• My Filing to the FTC in its ‘Internet of Things’ Proceeding, May 31, 2013

[UPDATE 4/30/13: This article was subsequently published in Volume 65, Issues 2 of the Federal Communications Law Journal in April 2013. The links below now point to the final FCLJ version.]

The Mercatus Center at George Mason University has just released a new paper by Brent Skorup and me entitled, “Uncreative Destruction: The War on Vertical Integration in the Information Economy.”  Brent, who is the research director for the Information Economy Project at the George Mason University School of Law, and I have been working on this paper since the Spring and we are looking forward to getting it published in a law review shortly. The paper focuses on Tim Wu’s “separations principle” for the digital economy, something I’ve spent some time critiquing here in the past. Here’s the introduction from the 44-page paper that Brent and I just released:

Are information sectors sufficiently different from other sectors of the economy such that more stringent antitrust standards should be applied to them preemptively? Columbia Law School professor Tim Wu responds in the affirmative in his book The Master Switch: The Rise and Fall of Information Empires. Having successfully pushed net-neutrality regulation into the policy spotlight, Wu has turned his attention to what he regards as excessive market concentration and threats to free speech throughout the entire information economy.To support his call for increased antitrust intervention, Wu explains his view of competition in the information economy—a view that deviates substantially from current mainstream antitrust theory. First, Wu contends that “information monopolies” are pervasive in the information economy. Wu’s “monopolists” include Facebook, Apple, Google, and even Twitter. In The Master Switch and essays like “In the Grip of the New Monopolists,” Wu argues that these so-called monopolies are increasing their market power and require more aggressive oversight and regulation.Second, Wu argues that traditional antitrust analysis is not sufficient for information systems because they carry speech. He claims, “Information industries… can never be properly understood as ‘normal’ industries,”and traditional forms of regulation, including antitrust enforcement, “are clearly inadequate for the regulation of information industries.”Wu believes that because information industries “traffic in forms of individual expression” and are “fundamental to democracy,” they should be subject to greater regulatory treatment.Third, in contrast to current competition law’s focus on horizontal relationships, Wu desires a reinvigorated regulatory enforcement that addresses “the corrupting effects of vertically integrated power” in the information sectors.He is particularly concerned about private threats to free speech arising from such vertical integration.The solution, he says, is preventing vertical mergers in the information economy and the mandatory divestiture of vertically integrated companies. To implement this, Wu proposes a Separations Principle for the information economy, which would segregate information providers into three buckets, which we have labeled information creators, information distributors, and hardware makers.This article outlines Wu’s separations proposal, explains why his fears regarding vertical relationships should be rejected by regulatory and antitrust policymakers, and illustrates the legal and practical problems his Separations Principle poses. Wu justifies his Separations Principle by citing monopolies and market power in the information economy. He also advocates using U.S. antitrust authorities to enforce his Principle. We argue that the antitrust harms he fears are not present, and we highlight scholarship on the accepted benefits of vertically integrated firms. We show that Wu’s remedies are policy preferences wrapped in the language of competition law. In fact, the information economy is largely competitive and does not warrant interventionist regulatory enforcement. Since much of American economic vitality flows from the information economy and technology, policymakers should reject a radical antitrust remedy like Wu’s preemptive Separations Principle.

The paper can be downloaded from the Mercatus website, SSRN, or Scribd.

This week I will again be attending the Family Online Safety Institute’s excellent annual summit. The 2-day affair brings together some of the world’s leading experts on online safety and privacy issues. It’s a great chance to learn about major developments in the field. As I was preparing for the session I am moderating on Thursday, I thought back to the first FOSI annual conference, which took place back in 2007. What is remarkable about that period compared to now is that there was a flurry of legislative and regulatory activity related to online child safety then that we simply do not see today.

In fact, just 3 1/2 years ago, John Morris of the Center for Democracy and Technology and I compile a legislative index [summary here] that cataloged the more than 30 legislative proposals that had been introduced in the the 110th session of Congress. There was also a great deal of interest in these issues within the regulatory community. Finally, countless state and local measures related to online safety and speech issues had been floated. Today, by contrast, it is hard for me to find any legislative measures focused on online safety regulation at the federal level, and I don’t see much activity at the agency level either. I haven’t surveyed state and local activity, but it seems like it has also died down.

Generally speaking, I think this is a good development since I am opposed to most proposals to regulate online speech, expression, or conduct. But let’s ignore the particular wisdom of such measures and ask a simple question: What explains the decline in Internet safety legislation and online content regulation? I believe there are three possible explanations:

1) The effectiveness of education and awareness-building strategies

I would like to believe that all the efforts made by various groups and individuals (including myself) to encourage policymakers to adopt  “Educate & Empower” approaches over “Legislative & Regulate” approaches are finally bearing fruit. The first instinct for many policymakers is to legislate immediately and then worry about the consequences later (if at all). But such approaches, no matter how well-intentioned, often backfire and have myriad unintended consequences (including the problem addressed next). So, perhaps it is the case that lawmakers and regulators are finally coming to realize that education and awareness approaches — married to empowerment-based efforts — are actually the more sensible approach compared to a flurry of legislative measures that ultimately accomplish very little.

2) The deterrent effect of inevitable and lengthy constitutional challenges

Here are two things I know for certain: First, almost every Internet-related measure faces a constitutional challenge, typically on First Amendment grounds (but sometimes also on Sec. 230 grounds). Second, most of those challenges succeed. I don’t have hard stats to back up this assertion, but I’d bet that there are few areas of modern law that have witnessed a higher percentage of successful constitutional challenges in recent years than the field of cyberlaw.  Taking that as a given, one must assume that at some point it becomes a deterrent to additional state action in this field.  Why waste years legislating and regulating if it is all enjoined and then overturned a short time later?

3) Resurgence of privacy as major policy issue and the emergence of cybersecurity as a policy issue

It could also be that case that privacy policy crowds out congressional interest in online safety legislation. In fact, it seems like these issues often move in opposing waves. When a wave of online safety legislative and regulatory activity is cresting, interest in privacy policy seems to fall. That certainly seemed to be the case between roughly 2005 and 2008 when online safety dominated congressional debates and privacy was hardly on the radar.  Today the reverse is true. Privacy has been the dominant Internet policy issue of the past year or so. It is sucking all the oxygen out of the room — whether that room is a congressional hearing room, a regulatory agency event, or even academic conferences.

Importantly, cybersecurity has rapidly emerged as a major new fault line in Internet policy debates. It, too, is eating up a lot of the “attention bandwidth” available among policymakers today.  And intellectual property matters always seem to be percolating out there.

It is my belief that because some of these Net policy issues are so complicated, policymakers are sometimes discouraged from doing a “deep dive” on them. To the extent they do, it seems unlikely that lawmakers are willing to invest serious time in more than a couple of these arcane matters at one time. Also, don’t forget how busy the relevant committees (Commerce and Judiciary) are with other, not tech policy-related matters. On any given legislative day, they could be handling a wide range of other policy issues that crowd out the amount of attention they can devote to Net policy matters, which are often far down the list of legislative priorities. Again, I’m generally pretty happy about that fact! I’d rather lawmakers go slow on these issues, whether the slow pace of the action is intentional or not.

So, what do you think? Are there other possible explanations for why we’ve seen less activity on the online safety / Internet content regulation front in recent years?

by Adam Thierer & Berin Szoka

We’re hoping that the Government Accountability Office (GAO) has made some sort of mistake, because it’s hard to believe its latest findings about the paperwork burden generated by Federal Communications Commission (FCC) regulatory activity. In late January, the GAO released a report on “Information Collection and Management at the Federal Communications Commission” (GAO-10-249), which examined information collection, management, and reporting practices at the FCC. The GAO noted that the FCC gathers information through 413 collection instruments, which include things like: (1) required company filings, such as the ownership of television stations; (2) applications for FCC licenses; (3) consumer complaints; (4) company financial and accounting performance; and (5) a variety of other issues, such as an annual survey of cable operators.  (Note: This does not include filings and responses done pursuant to other FCC NOIs or NPRMs.)

Regardless, the FCC told the GAO that it receives nearly 385 million responses with an estimated 57 million burden hours associated with the 413 collection instruments. A “burden hour” is defined under the Paperwork Reduction Act as “the time, effort, or financial resources expended by persons to generate, maintain, or provide information to a federal agency.” And the FCC is generating 57 million of ‘em! Even though we are frequently critical of the agency, these numbers are still hard to fathom. Perhaps the GAO has made some sort of mistake here. But here’s what really concerns us if they haven’t made a mistake.

Assuming the GAO got these numbers right, just think of the deadweight economic loss associated with all this paperwork, and think of how it will grow in months and years to come! Can you imagine how much the numbers have likely grown so far this year, with the agency generating so many new public notices, notices of inquiry, requests for information, and more?  And just think what the paperwork burden will look like once the National Broadband Plan and Net neutrality regulations kick in!  Oh my… The agency has already promised lots more notices will flow out of the National Broadband Plan to implement various portions of it.

In terms of the deadweight loss, go back to the numbers Adam cited in his essay last week asking, “Will the FCC’s Nat’l Broadband Plan Be “Full Employment for Lawyers”? As noted there, lawyers were about the only group that did fairly well thanks the FCC’s over-zealous regulatory ways in the post-Telecom Act period. Greg Sidak of Georgetown University Law School found that the number of telecom lawyers–as measured by membership in the Federal Communications Bar Association–grew by a stunning 73% in the late 1990s. That was largely driven by a 37% hike in FCC spending and a tripling of the number of pages of regulations in the FCC Record in the post-Telecom Act period. Sidak argued, “If one assumes (very conservatively) that the average income of an American telecommunications lawyer is $100,000, then the current membership of the FCBA represents an annual expenditure on legal services of at least $340 million.” And we all know that those lawyers were making a heck of lot more than just $100K (and billed even more), so Sidak’s estimates were ultra-conservative: The deadweight loss of all this legal activity was much greater.

Indeed, a very conservative estimate of hourly rates for Washington communications lawyers would be $200/hour, but even at that rate, 57 million burden hours would equate to a total cost of $11.4 billion. In fact, when major Washington law firms use “blended rates” to bill out the time of senior partners, junior associates, and paralegals working in teams on things like regulatory filings, the figure is more like $350-400 (if not more)—which would equate to a deadweight cost of $20-23 billion every year.  To put that staggering number in perspective, leaks about the National Broadband Plan indicate that the FCC might be planning on spending about that much to subsidize broadband deployment over a decade.

Or, to use another comparison, NASA’s 2010 budget is a mere $18.69 billion.  That’s in the same ballpark as what, according to the GAO’s man-hour estimates, the FCC’s reporting requirements cost U.S. industry every year.  As Wernher von Braun famously said about the Apollo program, which he led: “We can lick gravity, but sometimes the paperwork is overwhelming.”

So, “if we can put a man on the moon,” as they say, why can’t we do something about this paperwork burden so America’s communications, media, and high-tech providers can focus on actually providing better, faster, and cheaper service to consumers?

by Adam Thierer & Berin Szoka

Move over, health care reform, climate change, and the economy. Judging by White House visits by various government agency heads, the Obama administration instead appears preoccupied with the re-regulation of communications, media, and the Internet. The Administration has just released logs of all visitors to the White House and Executive Office Buildings from Obama’s inauguration through August—including a staggering 47 visits by Federal Communications Commission (FCC) Chairman Julius Genachowski. By contrast, no other major agency head logged more than five visits.  Chairman Genachowski obviously has an audience with those at the highest levels of power, including the President himself, but this raises questions about just how “independent” this particular regulator and his agency really are.

Unprecedented Transparency by White House

The Administration deserves credit for releasing these visitor logs, which offer unprecedented transparency into the White House’s workings.  Unfortunately, the logs lack visitors’ affiliation and title, making it difficult to discern subtle patterns.  Furthermore, each entry indicates only one “visitee” and the total number of people involved.  Full disclosure requires identifying all meeting participants. Nonetheless, President Obama’s gesture is a great first step toward improved government accountability.

This openness allows us to ask questions we couldn’t pose for previous administrations—such as why the FCC head seems to have unparalleled access to the White House.  Lacking data from previous administrations, it’s difficult to make direct comparisons with previous FCC Chairmen, but the sheer number of visits by Chairman Genachowski leaves no doubt about his uniquely close involvement with the White House.

Given the ongoing economic/financial crisis, you might think that the President and White House officials would be meeting regularly with the heads of other independent agencies, such as the Federal Reserve, Securities and Exchange Commission, Small Business Administration, Federal Trade Commission, Federal Deposit Insurance Corporation, and National Labor Relations Board.  But not one of those agency heads appears to have logged a visit through August.  Climate change?  Just a single visit with the EPA Administrator.

And Cabinet-level officials?  Just 23 visits among 21 officials.  How is that possible, you might ask?  Apparently, Obama held just one full Cabinet meeting in the first seven months of his presidency (in May)—followed by a second meeting in November (well after the logs end). So, while President Obama and White House staffers were too busy to meet with Cabinet-level officials, they always made time for Chairman Genachowski.  Indeed, of the 1,786 visitors listed, only two logged more visits than Genachowski: Bancorp CEO Richard Davis (56) and Lee Sachs (61), Deputy Treasury Secretary.

President Obama appears as the “visitee” for two of Genachowski’s many visits, but could have met with him along with others if someone else was listed as the visitee.  More telling is that only 7 of his 47 visits included more than 10 attendees, and 25 were one-on-one—meaning that the FCC Chairman usually had a personal audience or a small audience.

Why all this attention for such a relatively obscure regulatory agency?  Genachowski served as Obama’s Technology Advisor during the campaign, the transition, and the beginning of the administration.  Eight of his 47 visits occurred before his long-anticipated nomination as FCC Chairman was announced on March 3, with 31 more before his June 29 confirmation.  Only eight occurred after his confirmation, but July and August are generally Washington’s slowest months, so it will be interesting to see just how many more visits he’s racked up since August when the administration releases updated logs.  Probably far more than any other independent agency head: Even his eight visits in July and August are remarkable compared to the near complete lack of visits by other agency heads.

How Independent?

Why care?  Well, at least in theory, “independent agencies” are supposed to be just that: independent.  They aren’t part of any Cabinet-level department and are supposed to be insulated from direct, day-to-day political pressure through bipartisan commissions, fixed terms, and safeguards against presidential removal.  At least that was always the “progressive ideal”: independent, “scientific” expert agencies and officials.

Of course, it was always more mythology than reality, since bureaucratic management is rarely “scientific” and these agencies are routinely subjected to blatant political pressure from White House officials and Congress.  Any history of America’s broadcast sector includes stories of political meddling at the FCC—often prompted by officials outside the agency.  Nonetheless, there are good reasons for maintaining a firewall between independent agencies and politicians—especially the FCC, whose extensive media regulations give it leverage that has been used to squelch political opposition to past administrations.

Even liberal Democrats, such as Alfred Kahn, a Carter appointee, have long recognized that the FCC is particularly vulnerable to “regulatory capture” by special interests.  That’s why the FCC requires disclose of all “ex parte” meetings between Commissioners or staff and “interested parties” outside government.  Genachowski’s predecessors, Kevin Martin and Michael Powell, were both criticized by Democrats for their close ties to the Bush administration, largely because of fears that special interests were influencing FCC decisions through the White House.  Had either Republican visited the White House half as often as Genachowski, there would have likely been howls from the Left about “undue influence.”

Interestingly, after his nomination, Chairman Genachowski met at least four times with Cass Sunstein, who now heads the Office of Information & Regulatory Policy (OIRA).  While Sunstein was not confirmed until September, their meetings raise important questions, since OIRA ultimately has final sign-off on the FCC’s regulations. Have the two continued to meet since?  If so, one hopes it was not to discuss Sunstein’s disturbing proposal for “electronic sidewalks” for cyberspace—a “Fairness Doctrine” for the Internet!

Is This Good or Bad for the Internet?

The critical issue is whether the FCC’s special relationship with the administration is beneficial for America’s dynamic digital economy.  That depends on whether you like the sound of a “New Deal 2.0” because—with the exception of some genuinely laudable eGoverment/transparency initiatives and openness to real spectrum reform (to be discussed at PFF’s upcoming event with Blair Levin this Tuesday, December 2nd)—that’s generally what the administration is pushing for in communications and media policy: command-and-control central planning of high-tech, backed by massive infrastructure subsidies and the re-regulation of sectors that have thrived since deregulation.

Under Genachowski, the FCC has essentially asserted jurisdiction over the entire Internet, recently inquiring about regulation of online television, video games, Google Voice, cloud computing, the Apple apps store, and resurrecting railroad-era concepts of common carriage “neutrality” in ways that could ultimately apply not only to broadband, but also to search engines, social networking, and devices.  As we’ve warned, Chairman Genachowski is leading us down the road of vastly increased government meddling across cyberspace.  That regulatory apparatus will inevitably be used as a tool of politics, if not by this administration, then by another less noble one in the near future—which might explain why some in this administration are so keenly interested in Chairman Genachowski’s FCC.

On Friday, the Federal Communications Commission (FCC) released a new Notice of Inquiry entitled, “Empowering Parents and Protecting Children in an Evolving Media Landscape” (MB Docket No. 09-194).  The purpose of this investigation is to:

seek information on the extent to which children are using electronic media today, the benefits and risks these technologies bring for children, and the ways in which parents, teachers, and children can help reap the benefits while minimizing the risks. (p. 2)… Our goal with this NOI is to gather data and recommend-ations from experts, industry, and parents that will enable us to identify actions that all stakeholders can take to enable parents and children to navigate this promising electronic media landscape safely and successfully. (p. 3)

This Notice builds on the FCC’s August 31st Report to Congress (“Implementation of the Child Safe Viewing Act; Examination of Parental Control Technologies for Video or Audio Programming”) that was required pursuant to the “Child Safe Viewing Act of 2007,” which Congress passed last year and President Bush signed last December. The goal of that bill and the FCC’s proceeding (MB Docket No. 09-26) was to study “advanced blocking technologies” that “may be appropriate across a wide variety of distribution platforms, including wired, wireless, and Internet platforms.” [I filed 150+ pages worth of comments in that proceeding, and here’s my analysis of why the bill and the FCC’s proceedings are worth monitoring. In previous posts here, I also listed all the major filings and reply comments that were submitted to the FCC in the matter.]

While the FCC’s new Notice outlines several positive impacts that media use may have for children, it then goes on to itemize a variety of concerns about media exposure:

While we recognize that electronic media technologies offer these potential benefits to children, we also explore the risks of harm that media use presents. As discussed below, these risks include (i) exposure to exploitative advertising; (ii) exposure to inappropriate content (such as offensive language, sexual content, violence, or hate speech); (iii) impact on health (for example, childhood obesity, tobacco use, sexual behavior, or drug and alcohol use); (iv) impact on behavior (in particular, exposure to violence leading to aggressive behavior); (v) harassment and bullying; (vi) sexual predation; (vii) fraud and scams; (viii) failure to distinguish between who can and who cannot be trusted when sharing information; and (ix) compromised privacy. We seek comment on these risks, whether parents, teachers, and children are aware of them, and what can be done to protect children from them.

It’s not really clear to me where the FCC finds the jurisdictional authority to investigate some of these things (hate speech? bullying?), but let’s not worry about that here. The question a lot of folks — especially those with strong First Amendment leanings — will be asking is: Where is the FCC heading with this in terms of new speech controls or content regulation?

In my earlier work on the “Child Safe Viewing Act,” I worried that the bill and resulting FCC investigation might be the beginning of “convergence-era content regulation.” I was pleasantly surprised, however, with the FCC’s final Report to Congress about the Child Safe Viewing Act, which did a very nice job highlighting the amazing diversity of parental control tools and methods on the market today.  That being said, the proceeding noted that “no single parental control technology available today works across all media platforms” and might have left the impression in minds of some critics that it was somehow possible to create a “universal” parental control or rating mechanism to deal with content across platforms.

Not only is it highly unlikely that such a silver-bullet solution is possible, but it’s unclear that it is even desirable.  I spent some time addressing this issue in my big filing to the FCC earlier this year.  If you jump to pg. 98 of my filing, you will find a section on “The Perils of Mandatory Controls, Restrictive Defaults or ‘Universal’ Ratings.” In it I argue:

the search for technological silver?bullet solutions and “universal” ratings or controls represents a quixotic, Holy Grail?like quest. Simply stated, if it sounds too good to be true, it probably is. There are no simple solutions or quick fixes to concerns about objectionable media content or online child safety. Only a “layered” approach—involving many tools, methods, and strategies—can get the job done right. And technological blocking controls are probably the least important part of that mix. Education and mentoring are far more important. Moreover…  any move to force “universal,” top?down solutions could destroy future innovation in this space. [There are] unforeseen downsides to mandating controls and defaults as well as efforts to create universal rating or labeling schemes.

Again, to be clear, the FCC’s final report to Congress did not recommend any such thing, and the agency is to be commended for that.  But, at the end of the Child Safe Viewing Act report to Congress, the agency also noted that another Notice of Inquiry would dig a little deeper into possible solutions, and now here it is.  But it still remains unclear where the FCC might take this in terms of concrete steps. I was pleased to see a strong focus on the importance of education and media literacy in the agency’s latest notice, so that’s very good news. But there’s also plenty of hand-wringing about the supposed negative impacts of media throughout the report, which leads one to believe that the agency isn’t going to just settle for education-based solutions.

Importantly, there’s also a lot of talk about the supposed dangers of advertising to children in the new Notice:

Exposure to excessive and exploitative advertisements is a significant risk children face from electronic media. Advertisements of particular concern for children include: (i) those that promote products specifically to children; (ii) those that promote unhealthy food, thereby contributing to childhood obesity, and (iii) those that contain inappropriate content, such as offensive language, sexual content, and

This is actually one area where the FCC does have a little jurisdictional authority under the Children’s Television Act of 1990. But I don’t see how the agency can read that statute, which was intended for broadcast television, too broadly.  Regardless, if I had to bet on one thing we are certain to see come out of this proceeding, I’d say some expanded advertising restrictions are in the works.  But, again, the agency’s limited jurisdiction makes it hard for me to understand where they plan to go with this or how it would pass muster in the courts once challenged.

Anyway, stay tuned. Comments in the matter are due to the FCC by late December.  Meanwhile, one wonders how long it will be before Sen. Rockefeller and others up on Capitol Hill start to engage more on content-related issues.  They’ve been fairly silent so far this year.  In light of Sen. Rockefeller’s past efforts on this front, it seems likely he’ll eventually engage in this debate — and likely in a very pro-regulatory fashion.

by Berin Szoka & Adam Thierer, Progress Snapshot 5.11 (PDF)

Ten years ago, Nobel Prize-winning economist Milton Friedman lamented the “Business Community’s Suicidal Impulse:” the persistent propensity to persecute one’s competitors through regulation or the threat thereof. Friedman asked: “Is it really in the self-interest of Silicon Valley to set the government on Microsoft?” After yesterday’s FCC vote’s to open a formal “Net Neutrality” rule-making, we must ask whether the high-tech industry—or consumers—will benefit from inviting government regulation of the Internet under the mantra of “neutrality.”

The hatred directed at Microsoft in the 1990s has more recently been focused on the industry that has brought broadband to Americans’ homes (Internet Service Providers) and the company that has done more than any other to make the web useful (Google). Both have been attacked for exercising supposed “gatekeeper” control over the Internet in one fashion or another. They are now turning their guns on each other—the first strikes in what threatens to become an all-out, thermonuclear war in the tech industry over increasingly broad neutrality mandates. Unless we find a way to achieve “Digital Détente,” the consequences of this increasing regulatory brinkmanship will be “mutually assured destruction” (MAD) for industry and consumers.

New Fronts in the Neutrality Wars

The FCC’s proposed rules would apply to all broadband providers, including wireless, but not to Google or many other players operating in other layers of the Net who favor such broadband-specific rules. With this rulemaking looming, AT&T came after Google with letters to the FCC in late September and then another last week accusing the company of violating neutrality principles in their business practices and arguing that any neutrality rules that apply to ISPs should apply equally to Google’s panoply of popular services. In particular, AT&T accused Google of “search engine bias,” suggesting that only government-enforced neutrality mandates could protect consumers from Google’s supposed “monopolist” control.

The promise made yesterday by the FCC—to only apply neutrality principles to the infrastructure layer of the Net—is hollow and will ultimately prove unenforceable. The reality is that regulation always spreads. The march of regulation can sometimes be glacial, but it is, sadly, almost inevitable: Regulatory regimes grow but almost never contract. Indeed, in some ways, the prediction we made just three weeks ago is already coming true: The basic premise of neutrality regulation is already being proposed for other layers of the Internet—and not just by AT&T in retaliation. One need not agree with all of AT&T’s accusations to recognize that, whatever the FCC might say today, any large online intermediary with a popular platform potentially faces the threat of “network neutrality” mandates—because every platform is essentially a “network,” too. We’re not just talking about “search neutrality” (Google as well as Microsoft) but also about “device neutrality” (mobile handsets), “app neutrality” (Apple’s iTunes store, Facebook’s developers and Google’s Android mobile OS) and so on for social networking, email, instant messaging, online advertising, etc.

An open letter sent to FCC Chairman Julius Genachowski this week by 28 founders and CEOs of leading application providers—including Amazon, Google, Facebook, Netflix, Craigslist, Sony and Twitter—speaks generally about the need for the FCC to enforce a “guarantee of neutral, nondiscriminatory access by users.” While many of these signatories may have in mind ISPs as the network “gatekeepers” that need to be reined in by the FCC, the more successful among them are likely to find this letter used against them in the future—perhaps even by co-signatories—to advance a broad conception of what the government must do to ensure “openness” and “access” for platforms at all layers of the Internet.

Dumb Networks, Dumb Devices

The intellectual foundations for this regulatory creep have already been laid by groups like Free Press and Public Knowledge and law professors like Columbia’s Tim Wu, Harvard’s Jonathan Zittrain and Seton Hall’s Frank Pasquale. As originally conceived by Tim Wu in 2003, “network neutrality” is not unique to broadband networks: “the basic economic problem found in the network neutrality debate (a form of ‘platform exclusion’ or ‘vertical foreclosure’) can be found in many other markets.” Indeed, Wu’s popular Net Neutrality FAQ declares:

The promotion of network neutrality is no different than the challenge of promoting fair evolutionary competition in any privately owned environment, whether a telephone network, operating system, or even a retail store. Government regulation in such contexts invariably tries to help ensure that the short-term interests of the owner do not prevent the best products or applications becoming available to end-users.

Zittrain picked up where Wu left off in The Future of the Internet and How to Stop It—attacking, as the enemies of innovation, not ISPs but the supposedly “closed” platforms of Apple, TiVo and Microsoft’s Xbox. Zittrain warns that:

If there is a present worldwide threat to neutrality in the movement of bits, it comes not from restrictions on traditional Internet access that can be evaded using generative PCs, but from enhancements to traditional and emerging appliancized services that are not open to third-party tinkering.

Zittrain’s general solution is “API [Applications Programming Interface] neutrality:” If you create a platform (whether hardware or software) and begin allowing third-party contributions (“generativity”), you will lose all control over devices or applications that can run on that platform.

Those who offer open APIs on the Net in an attempt to harness the generative cycle ought to remain application-neutral after their efforts have succeeded, so all those who built on top of their interface can continue to do so on equal terms…. [N]etwork neutrality ought to be applied to the new platforms of Web services that, in turn, depend on Internet connectivity to function.

Clearly, if Zittrain and his allies have their way, the sort of neutrality mandates envisioned by the FCC or some Congressmen for ISPs will eventually cover companies such as Apple, Google, Facebook, Myspace, Twitter and Amazon—all singled out by Zittrain in a New York Times op-ed in July:

If the market settles into a handful of gated cloud communities whose proprietors control the availability of new code, the time may come to ensure that their platforms do not discriminate. Such a demand could take many forms, from an outright regulatory requirement to a more subtle set of incentives — tax breaks or liability relief — that nudge companies to maintain the kind of openness that earlier allowed them a level playing field on which they could lure users from competing, mighty incumbents.

Frank Pasquale agrees on the need to restrain all “the dominant players at all layers of online life,” but focuses on his demand for a Federal Search Commission to control supposedly “biased” search results. While the FCC wrings its hands over “managed services” offered by ISPs, search engines are increasingly offering their own value-added services by “blending” algorithmically-derived results with special features like maps, videos, books or music depending on what the search term suggests the user is interested in. “Artificially” ensuring that these features appear on the first page of search results is clearly non-neutral, and necessarily involves search engines making ”managed” decisions as to whose features to include. Yet such features also clearly benefit users—dramatically improving the usefulness of search engines and helping to sustain struggling business models like music retailing.

But one need not resort to the works of “ivory tower” academics to see the slippery slope we’re already tumbling down with the infinitely elastic principle of “neutrality.” The prospect of the FCC gradually transforming into a “Federal Information Commission” becomes more apparent when one reads the Wireless Innovation and Investment Notice of Inquiry recently released by the FCC:

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?

One can imagine how some might use such 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” through regulation. Indeed, that’s precisely what AT&T has suggested in recent letters (September 25 ^th and October 14 ^th) to the FCC.

AT&T’s partner Apple has already been the subject of such attacks for its decision to block the Google Voice app earlier this summer. The incident marked the beginning of open warfare between Google and AT&T/Apple. The FCC quickly jumped into the mix, first questioning how Apple manages its iTunes apps store for the iPhone, then questioning how Google runs its free Voice application. What legal authority the FCC has over either service is far from clear, but Apple seems to have gotten the message: It recently approved the Spotify music streaming app for the iPhone, which could be a serious competitive threat to the iTunes music store. This small incident highlights how easily regulators can impose their will through informal mechanisms like open-ended investigations even without clear authority to issue rules or bring enforcement actions. Yet none dare call it what it is: regulatory blackmail.

The Inevitability of Regulatory Capture

No doubt, other industry players will cheer on such regulatory harassment of the titans of tech—and maybe even demand more of it. Regulatory creep is driven by more than the self-interests of every bureaucracy to expand its own mission, budget and staff. As the Electronic Frontier Foundation has noted, “Experience shows that the FCC is particularly vulnerable to regulatory capture.” While lobbyists play an important role in defending business from government, all too many businesses naively look at government as a beast that can be tamed, trained, and turned to one’s own advantage, and often try to use the expanding regulatory apparatus to their own advantage or simply throw their competitors under the bus to save themselves. The result is a Hobbesian regulatory “war of all against all” within industry.

As Professor Alfred E. Kahn explained in his 2-volume opus, The Economics of Regulation, all regulation—however high-minded—is inevitably captured by special interests because:

When a commission is responsible for the performance of an industry, it is under never completely escapable pressure to protect the health of the companies it regulates, to assure a desirable performance by relying on those monopolistic chosen instruments and its own controls rather than on the unplanned and unplannable forces of competition. […] Responsible for the continued provision and improvement of service, [the regulatory commission] comes increasingly and understandably to identify the interest of the public with that of the existing companies on whom it must rely to deliver goods.

If Internet regulation follows the same course as other industries, the FCC and/or lawmakers will eventually indulge calls by all sides to bring more providers and technologies “into the regulatory fold.” Clearly, this process has already begun. Even before rules are on the books, the companies that have made America the leader in the Digital Revolution are turning on each other in a dangerous game of brinksmanship, escalating demands for regulation and playing right into the hands of those who want to bring the entire high-tech sector under the thumb of government—under an Orwellian conception of “Internet Freedom” that makes corporations the real Big Brother, and government, our savior.

Toward a Less MAD World: Digital Détente

Sincere defenders of real Internet Freedom—that is, freedom from government techno-meddling—recognize that there will always be disputes over how companies deal with each other online across all layers of the Internet. The question is not whether we need a technical coordinating mechanism for handling such disputes. Someone should mediate conflicts over alleged deviations from abstract neutrality principles. But should that arbitrator be an inherently political body like FCC? Or should we instead look to truly independent, apolitical arbitrators like the Internet Engineering Task Force or collaborative efforts like the Network Neutrality Squad? Such alternative dispute resolution mechanisms and fora need not have the power of law to be effective: The weight of their expert opinion, based on careful investigation of the facts, would likely resolve most disputes, because companies have strong reputational incentives to comply with reasoned rulings by truly neutral experts. And the white hot spotlight of public attention has a way of disciplining marketplace behavior as well.

Government would still have a role to play, of course, in enforcing antitrust laws where anticompetitive harm to consumers can be proven, and in enforcing the promises companies make to consumers. Ultimately, however, certain business models and technologies require non-neutral treatment, and the best remedy for concerns about non-neutrality is competition itself: In the high-tech sector more than any other, disruptive innovation makes it difficult for even the most successful companies to stay on top forever. Competitive entry—or even the threat of new entry—provides a powerful check on the power of so-called “gatekeepers,” but even more important is the prospect that today’s leaders will be tomorrow’s laggards: There’s little reason to think Google (search and advertising), Apple (smart phones and music) and Facebook (social networking) won’t someday find themselves playing catch-up, just as IBM (computers), Microsoft (desktop software and search), Friendster and MySpace (social networking), and Yahoo! and AOL (web portals) have had to do.

“Digital Détente” would require that all parties concede something and work constructively toward a more “peaceful” ( i.e., less regulatory) resolution. And yet, no Internet company wants to disarm unilaterally, foreswearing politics as a continuation of competition by other means. Only through multilateral disarmament could they break out of the current cycle of regulatory one-upmanship: If the companies in the Internet ecosystem could form a united front against increased government regulation and in favor of removing existing regulatory obstacles to competition, they could all return to their core competencies of creativity and innovation.

The alternative is a regulatory “nuclear winter”: high-tech titans turning their political fire on each other, catching innocent third parties in the cross-fire and bringing a dark cloud of government regulation over the entire Internet. Such increased regulation would stifle investment and innovation throughout the Internet ecosystem. Thus, it is consumers who will ultimately suffer most from the tech industry’s suicidal impulse, as their choices and digital lives are impoverished. For their sake, we hope all industry players will step back from the brink to avoid such high-tech mutually assured destruction.

by Berin Szoka & Adam Thierer

This morning, the House Energy & Commerce Committee will hold a hearing on “Behavioral Advertising: Industry Practices And Consumers’ Expectations.” If nothing else, it promises to be quite entertaining:  With full-time Google bashers Jeff Chester and Scott Cleland on the agenda, the likelihood that top Google officials will be burned in effigy appears high!

Chester, self-appointed spokesman for what one might call the People for the Ethical Treatment of Data (PETD) movement, is sure to rant and rave about the impending techno-apocalypse that will, like all his other Chicken-Little scenarios, befall us all if online advertisers were permitted to better tailor ads to consumers’ liking. After all, can you imagine the nightmare of less annoying ads that might actually convey more useful information to consumers? Isn’t serving up “untargeted” dumb banner ads for Viagra to young women and Victoria’s Secret ads to Catholic school kids the pinnacle of modern online advertising?  Gods forbid we actually make advertising more relevant and interest-based!  (Those Catholic school boys may appreciate the lingerie ads, but few will likely buy bras.)

Anyway, according to National Journal’s Tech Daily Dose, the hearing lineup also includes:

• Charles Curran, Executive Director, Network Advertising Initiative
• Christopher Kelly, Chief Privacy Officer, Facebook
• Edward Felten, Director, Center for IT Policy, Princeton University
• Anne Toth, Chief Privacy Officer & Vice President, Policy, Yahoo!
• Nicole Wong, Deputy General Counsel, Google

That’s an interesting group and we’re sure that they will say interesting things about the issue. Nonetheless, because four of them have a corporate affiliation that fact will inevitably be used by some critics to dismiss what they have to say about the sensibility of more targeted or interest-based forms of online advertising. So, we’d like to offer a few thoughts and pose a few questions to make sure that Committee members understand why, regardless of what it means for any particular online operator, targeting online advertising is very pro-consumer and essential to the future of online content, culture, and competition.  As Wall Street Journal technology columnist Walt Mossberg has noted, “Advertising is the mother’s milk of all the mass media.”  Much of the “free speech” we all cherish isn’t really free, but ad-supported!

Our Approach

We have previously set forth a framework for analyzing advertising policy issues in two PFF reports: “Online Advertising & User Privacy: Principles to Guide the Debate” and “Targeted Online Advertising: What’s the Harm & Where Are We Heading?” At root, our model depends heavily on two common-sense, and inter-related, principles:

1. We live in a world of trade-offs; and
2. There is no free lunch.

Their Approach

We are deeply concerned that too few people are talking about—or even understand the relevance of—those two principles in the debate over targeted online advertising. It seems that too many who wish to retard the further evolution of the advertising marketplace are living a lie based upon the antithesis of our model. Many privacy advocates seem to imagine that regulatory actions don’t have consequences and that Congress can simply mandate new privacy standards for the Internet without having any impact on the free flow of ideas supported by, and direct facilitated through, advertising.

Simply put, the privacy critics often imagine that their values are indicative of everyone’s values. Our blogging colleague Jim Harper of the Cato Institute has referred to this as “preference imposition” but we’ll use a simpler term: Elitism. In essence, privacy advocates seem to believe that:

1. People are too ignorant, busy or just plain stupid, and cannot be trusted to make wise decisions for themselves (or their children); and/or
2. Everyone shares the same values or concerns when it comes to privacy such that a national “baseline” regulatory standard (namely, mandatory “opt-in” regulations for data collection and use) should govern the entire online marketplace.

Let’s be clear: Such a mandate, and the thinking behind it, would greatly impoverish the future Internet economy. Too many people think of the Internet as a magic box that just keeps cranking out free goodies. But something powers that box of goodies: advertising.  More than anything else, it’s advertising that keeps the Internet “Free, Innovative & Open,” to borrow the slogan of our friends at CDT, which seems to flirt with joining the PETD movement, despite their well-earned reputation for pragmatic skepticism of government interference with the Internet.

The regulatory advocates complain that giving consumers the right to opt-out of data collection and use isn’t meaningful because very few consumers will exercise the opt-out.  Again, they presume that this must be because users just don’t know what’s good for them because of course if they really understood what was being done with “their data,” they would never choose to just “give it away” for a few scraps from the advertisers’ table.  It never occurs to them that (i) many, perhaps most, users just don’t care and that (ii) that their “ignorance” about the all specific details of “how the sausage is made” (online data collection and use practices for targeting advertising) may be completely rational.

But just as importantly, would-be privacy regulatory don’t seem to understand—or perhaps simply don’t care—that what’s true of opt-out is also true of opt-in:  in practice, few people will bother doing either.  In a world of perfect information and infinite time, of course, there would be no difference in outcomes with the two different rules.  But in the real world with real constraints on time, knowledge and everything else, mandating opt-in would make all the difference in the world by severely limiting the ability of advertisers to target advertising.

The Ignored Trade-offs

We’ve been assembling evidence on the real-world costs of restricting targeted advertising. Here are just a few data points we’ve seen to give you a sense of what’s at stake:

• Relevance to Users: The best evidence that users prefer seeing more relevant ads is their increased likeliness to actually click on an ad—instead of just ignoring it or trying to block it. The most recent study of this issue concluded that Click-Through Rates (CTR) can be improved by as much as 670% by using basic behavioral targeting as compared to simple contextual targeting—0r even more than 1000% using more sophisticated targeting. Conversion rates (the percentage of clicks that actually result in a sale) also strongly indicate that consumers find ads more interesting, and in one 2005 study, were estimated to increase up to 3000% with behavioral targeting.
• Macro: More Revenue to Fund All Services & Content: eMarketer (in June 2008) estimated that U.S. spending on behavioral targeting would grow from $.775 billion in 2008 to $4.4 billion in 2012—representing fully a quarter of display ad spending.  The total amount of money at stake is huge:  U.S. online ad revenues totaled $23.5 billion in 2008.
• Micro: More Revenue for Individual Publishers: Estimates on the increased profitability of behavioral targeting range as high as 1200% (eMarketer).

While these examples illustrate the broad outlines of the trade-offs ignored by privacy regulatory advocates, the key dilemma to understand is this: If, under an opt-in regime, publishers would be able to target advertising for webpages based on the keywords contained within those pages, and not on other content the user has looked at, the value of most Internet content will depend not on how many eyeballs it attracts but primarily on the economic value of the keywords that are directly associated with it. Pages with keywords related to products and services will fetch a fine price because advertisers will be able to make money off ads on those pages ( e.g., a site for digital camera reviews). But content with little commercial value will generate little revenue. Indeed, this is perhaps the single greatest problem faced by journalism sites. Who wants to advertise on a story about North Korea? How many users are going to be interested in taking a honeymoon in the DMZ?

But if such websites could target advertising to users’ user’s likely interests based on an anonymous profile of their interests created by collecting data about their browsing “behavior,” web content becomes valuable because of the audience it attracts, not just because the content itself serves as a rough proxy for a user’s interests. This democratization of Internet advertising revenue is essential for sustaining the future of journalism in particular, but also for “free” culture more generally.

As we noted in our response to the FTC’s proposed self-regulatory guidelines on data collection for advertising:

Depending on how regulation is structured, therefore, it is possible that new privacy mandates would severely curtail the overall quantity of content and services offered—and greatly limit the ability of new providers to enter the market with innovative offerings. Alternatively, or perhaps additionally, companies would change the character of their offerings and water-down sophisticated services that cater to consumer demand; in other words, the quality of service would deteriorate. Bottom line: Something must give because there is no free lunch. Regulation is a giant game of economic whack-a-mole: Attempting to control one of the primary variables of price, quantity, or quality inevitably results in non-optimal adjustments in the other two variables. The absence of price as a variable in this context means there is one less variable for the government to control in the first place. Simply stated, stifling the evolution of the online advertising marketplace will likely result in fewer free online services and less content, less high-quality online services and content, or some combination of both… We stand at an important crossroads in the debate over the online marketplace and the future of a “free and open” Internet. Many of those who celebrate that goal focus on concepts like “net neutrality” at the distribution layer, but what really keeps the Internet so “free and open” is the economic engine of online advertising at the applications and content layers. If misguided government regulation chokes off the Internet’s growth or evolution, we would be killing the goose that laid the golden eggs…. These observations are even more relevant to the online marketplace, where advertising has been shown to be the only business model with any real staying power. Walled gardens, pay-per-view, micropayments, and subscription-based business models are all languishing. Consequently, the overall health of the Internet economy and the aggregate amount of information and speech that can be supported online are fundamentally tied up with the question of whether we allow the online advertising marketplace to evolve in an efficient, dynamic fashion. Heavy-handed privacy regulation (or co-regulation) could, therefore, become the equivalent of a disastrous industrial policy for the Internet that chokes off the resources needed to fuel e-commerce and online free speech going forward.

Our Challenge to the Advocates of Privacy Regulation

For these reasons, we have repeatedly issued the following three-part challenge in our previous work to those who advocate the regulation of online advertising:

1. Identify the harm or market failure that requires government intervention.
2. Prove that there is no less restrictive alternative to regulation.
3. Explain how the benefits of regulation outweigh its costs.

We’re still waiting…

We’ve also made it clear that there is an alternative to the pre-emptive, one-size-fits-all regulation demanded by the regulatory advocates:  We’ve proposed a “layered approach” based on user education, user empowerment, self-regulation and FTC enforcement of privacy policies.  Our goal is as follows:

The ideal state of affairs would be to create a system of tools and data disclosure practices that would empower each user to implement their personal privacy preferences while also recognizing the freedom of those who rely on advertising revenues to “condition the use of their products and services on disclosure of information”—not to mention the viewing of ads! Self-regulatory efforts can be refined, especially through technological innovation to better satisfy the concerns of policymakers, privacy advocates, and average consumers. For example, if websites and ad networks participating in a self-regulatory framework supplemented their current “natural language” privacy policies with equivalent “machine-readable” code [ e.g., P3p], that data could be “read” by browser tools that would implement pre-specified user preferences by blocking the collection of information depending on whether the privacy policies of certain websites or ad networks met the user’s preferences about data-use. Such robust and granular disclosure, if implemented for behavioral advertising, would exceed the wildest dreams of those who argue that users currently do not read privacy policies—without disrupting the browsing experience or cluttering websites. But this system would only work if users had to make real choices about “pay*ing+ for ‘free’ content and services by disclosing their personal information.”

A Final Word About Advertising

On some level, this debate isn’t about user privacy at all, but about the alleged evils of advertising as inherently manipulative.  Jeff Chester straddles both camps.  His rantings about the use of “neuromarketing” boil down to the same simple idea that the Neo-Marxists have been pushing for decades:  Since people are stupid, ignorant and/or lazy (see above), they’re easy to control and trick with shiny objects, pretty faces, memorable slogans, and catchy jingles. No better response to this argument has ever been made than was offered in this 1959 magazine ad by the ad firm Young & Rubicam (emphasis added for Chester’s benefit):

There is no chestnut more overworked than the critical whinny: “Advertising sells people things they don’t need.” We, as one agency, plead guilty. Advertising does sell people things they don’t need. Things like television sets, automobiles, catsup, mattresses, cosmetics, ranges, refrigerators, and so on and on. People don’t really need these things. People don’t really need art, music, literature, newspapers, historians. wheels, calendars, philosophy, or, for that matter, critics of advertising, either. All people really need is a cave, a piece of meat and, possibly, a fire. The complex thing we call civilization is made up of luxuries. An eminent philosopher of our time has written that great art is superior to lesser art in the degree that it is “life-enhancing.” Perhaps something of the same thing can be claimed for the products that are sold through advertising. They enhance life, to whatever degree they can.

When the history books are finally written, I think it’s clear that outgoing FCC Chairman Kevin Martin will likely go down as one of — if not the — most aggressively pro-regulatory Republican chairman in the agency’s history.  Despite his occasional claims of believing in free markets and his support for a couple of legitimately deregulatory decisions, his tenure at the FCC has generally been characterized by a growth of government power, spending, and bureaucracy. But don’t take my word for it; read the report he issued last week called “Moving Forward,” which to some of us looks more like moving backwards (or at least stuck in the same ol’ mud).

Martin, however, touts his regulatory actions and expansion of FCC power as uniformly pro-consumer. Martin is just another in the long line of statists who claims that consumer welfare can only be enhanced by adding layers of government mandates and regulatory red tape.  History teaches us a different lesson: That regulation and bureaucracy typically stifle innovation and competition and hurt consumer welfare in the process. Moreover, there are some constitutional considerations and limitations that should trump — or at least limit — the powers of unelected bureaucrats to run roughshod over our rights. But hey, who cares about those meddlesome little things like the First, Fifth, Tenth, or Fourteenth Amendments?!  Certainly not Kevin Martin.

What’s equally troubling about Martin’s tenure at the agency is the track record of mismanagement and the bad blood that seemingly surrounds everything and everyone he comes in contact with. The picture painted in the House Energy & Commerce Committee’s 110-page report, “Deception and  Distrust: The FCC Under Chairman Kevin J.Martin,” is not a pretty one — although the report failed to mention that waste, mismanagement, and other regulatory shenanigans have been going on at this agency under the days of Democratic rule, too.

Martin’s response to the House report was all too predictable: The evil corporate interests are out to get me!  “[M]ost of the criticisms contained in the Majority Staff Report,” Martin says in a letter released a few days ago, “reflect the vehement opposition of the cable and wireless industries to my policies to serve and protect consumers.”

Whatever.

I’m just glad this nightmare is over. Hopefully Martin’s tenure will serve as a cautionary tale for a future Republican administration: If you actually believe in free minds and free markets, try vetting the guy you install at the FCC to make sure he’s a true believer as well.

Before commenting on Lawrence Lessig’s latest call to abolish the Federal Communications Commission (he issued a similar call for the FCC’s abolition earlier this year, which I commented on here), let’s recall what Tim Lee posted yesterday about “Real Regulators“:

Too many advocates of regulation seem to have never considered the possibility that the FCC bureaucrats in charge of making these decisions at any point in time might be lazy, incompetent, technically confused, or biased in favor of industry incumbents. That’s often what “real regulators” are like, and it’s important that when policy makers are crafting regulatory scheme, they assume that some of the people administering the law will have these kinds of flaws, rather than imagining that the rules they write will be applied by infallible philosopher-kings.

Ironically, Prof. Lessig — who typically defends many forms of high-tech regulation like Net neutrality and online content labeling — is essentially agreeing with Tim’s critique of bureaucracy. But Lessig seems to ignore the underlying logic of Tim’s critique and instead imagines that we need only reinvent bureaucracy in order to save it. But I’m getting ahead of myself. First, let’s hear what Lessig proposes.

In a Newsweek column this week entitled “Reboot the FCC,” Lessig argues that the FCC is beyond saving because, instead of protecting innovation, the agency has succumb to an “almost irresistible urge to protect the most powerful instead.” Consequently, he continues:

The solution here is not tinkering. You can’t fix DNA. You have to bury it. President Obama should get Congress to shut down the FCC and similar vestigial regulators, which put stability and special interests above the public good. In their place, Congress should create something we could call the Innovation Environment Protection Agency (iEPA), charged with a simple founding mission: “minimal intervention to maximize innovation.” The iEPA’s core purpose would be to protect innovation from its two historical enemies–excessive government favors, and excessive private monopoly power.

As was the case with his earlier call to “blow up the FCC,” I am tickled to hear Lessig call for shutting down an agency that many of us have been fighting against for the last few decades. (Here’s a 1995 blueprint for abolishing the FCC that I contributed to, and here’s PFF’s recent “DACA” project to comprehensively reform and downsize the agency.)

But is Lessig really calling for the same sort of sweeping regulatory reform and downsizing that others have been calling for? And has he identified the real source of the problem that he hopes to correct?  I don’t think so. There are 3 basic problems with the argument Lessig is putting forward in his essay. I will address each in turn.

(1) Real Reform or Just Reshuffling of Deck Chairs?

The first problem is that Lessig isn’t really calling for complete abolition of the FCC; just the transfer of many of its regulatory responsibilities to the supposedly less “corrupt” new Innovation Environment Protection Agency (iEPA). As you read the paragraphs below, note how in the process of re-branding the FCC as the “iEPA,” Lessig seems to be handing that new agency a lot of the FCC’s old powers:

The iEPA’s first task would thus be to reverse the unrestrained growth of these monopolies. For example, much of the wireless spectrum has been auctioned off to telecom monopolies, on the assumption that only by granting a monopoly could companies be encouraged to undertake the expensive task of building a network of cell towers or broadcasting stations. The iEPA would test this assumption, and essentially ask the question: do these monopolies do more harm than good? With a strong agency head, and a staff absolutely barred from industry ties, the iEPA could avoid the culture of favoritism that’s come to define the FCC. And if it became credible in its monopoly-checking role, the agency could eventually apply this expertise to the area of patents and copyrights, guiding Congress’s policymaking in these special-interest hornet nests. The iEPA’s second task should be to assure that the nation’s basic communications infrastructure spectrum— the wires, cables and cellular towers that serve as the highways of the information economy—remain open to new innovation, no matter who owns them. For example, “network neutrality” rules, when done right, aim simply to keep companies like Comcast and Verizon from skewing the rules in favor of or against certain types of content and services that run over their networks. The investors behind the next Skype or Amazon need to be sure that their hard work won’t be thwarted by an arbitrary decision on the part of one of the gatekeepers of the Net. Such regulation need not, in my view, go as far as some Democrats have demanded. It need not put extreme limits on what the Verizons of the world can do with their network—they did, after all, build it in the first place—but no doubt a minimal set of rules is necessary to make sure that the Net continues to be a crucial platform for economic growth. Beyond these two tasks, what’s most needed from the iEPA is benign neglect. Certainly, it should keep competition information flowing smoothly and limit destructive regulation at the state level, and it might encourage the government to spend more on public communications infrastructure, for example in the rural areas which private companies often ignore.

“But beyond these limited tasks, ” Lessig claims, “whole phone-books worth of regulation could simply be erased. And with it, we would remove many of the levers that lobbyists use to win favors to protect today’s monopolists.”

Again, from what he’s said here, it sure doesn’t sound like “whole phone books worth of regulation” are being erased. What Lessig has done is essentially restate the current powers and responsibilities of the FCC.  I don’t see much serious downsizing being proposed here at all. Indeed, his call for Net neutrality regulation represents an expansion of bureaucracy.

Instead, what Lessig seems to be saying is that the new iEPA will do the job right because it will be less “corrupt” and enlightened. But that’s not true either.

(2) What Larry Doesn’t Get (about Bureaucracy)

Lessig is essentially calling for the same sort of “scientific” or “professional” bureaucracy that his progressive forefathers advocated a century ago when the modern regulatory leviathan was being envisioned and erected. But what has changed since then? Nothing. Special interests were able to gain influence then just as they do now.

This gets back to Tim Lee’s point about how many pundits and policymakers foolishly believe that everything will magically be better once rules are “applied by infallible philosopher-kings.” Apparently Lessig believes that lots of those folks will be walking the halls at the new iEPA. They’ll somehow be immune from the the “almost irresistible urge to protect the most powerful” that FCC bureaucrats have fallen prey to.

But Lessig provides no rational reason for us to believe that this will really be the case. And really, why should we believe that story? Do we have any good historical evidence to support such a proposition? To the contrary, everything we know from the history of regulation and bureaucracy tells us that exactly the opposite will be the case.

As I so often do when I debate quixotic progressives who say they can construct a more “enlightened” regulatory state, I invite Prof. Lessig to take a hard look at the definitive 2-volume Economics of Regulation by a far more experienced progressive Democrat, Professor Alfred E. Kahn. In Kahn’s masterwork, Prof. Lessig will find the following words of wisdom (and caution) from someone who spent a lifetime studying the issue:

When a commission is responsible for the performance of an industry, it is under never completely escapable pressure to protect the health of the companies it regulates, to assure a desirable performance by relying on those monopolistic chosen instruments and its own controls rather than on the unplanned and unplannable forces of competition.  … Responsible for the continued provision and improvement of service, [the regulatory commission] comes increasingly and understandably to identify the interest of the public with that of the existing companies on whom it must rely to deliver goods.

(3) No Right to Petition Government ?

At this point, Prof. Lessig and his defenders will no doubt say that everything will be different this time around when they reinvent bureaucracy. The secret, they seem to suggest, is “getting money out of politics” or “ending corruption” by “special interests.” Again, hard to argue against any of that — except to say as we have here many times before that if Big Government exists, special interests will exist to influence it (probably unduly so). Thus, the logical solution is real regulatory reform and downsizing of bureaucracy. That is the only way we are ever really going to solve the problem Prof. Lessig wants to address.

But Prof. Lessig and his supporters are obviously not going to accept that. What they want is government activism without the ugly downsides of lobbying and special interest influence polluting the process. Is there any way to do it? Again, for the reasons I have stated here, I doubt it. But what, exactly, would it mean in practice to let them try?  I fear that what Prof. Lessig and many other “progressives” mean by “ending special interest influence” is really ending the free speech rights of citizens to petition their government if those citizens happen to be corporations.

Let’s remember what the First Amendment says:

“Congress shall make no law … abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

Now, I certainly realize how unpopular this will be to some, but if you believe in the plain text of the Constitution then you should respect the right of citizens (including corporate entities) to petition (i.e., “lobby”) the government for consideration of their interests, especially if the government is imposing significant regulatory burdens on them. Calling for limits on the ability of the regulated to petition their regulators is a fundamental betrayal of the plain language of the First Amendment.

I don’t want to put words in Prof. Lessig’s mouth, but I have a feeling that this is where his proposal is heading. He says that the staff of his new iEPA will be “absolutely barred from industry ties” but doesn’t really spell out what that means. If it just means limits on who can be hired for certain positions in the new agency, I’m generally fine with that (even though I do not for one minute believe it will magically “end corruption.”) If, however, Lessig and his fellow progressives want rules restricting the ability of “interests” to communicate with this new agency, then I find such a proposal quite troubling.

One final point: What exactly counts as a “special interest”? No doubt, Lessig and other progressives equate interests with corporations. But what about unions, co-ops, non-profits, schools, charities, think tanks, etc.?  They all petition government endlessly. Would Lessig limit their rights?

I hope Prof. Lessig takes the time to ellaborate on his proposal because he may have good answers to many of the quibbles I have raised here. I really do want to take him at his word and believe that he is ready to radically reform the regulatory beast that has so completely failed in its mission to improve consumer welfare.  But I have my doubts. And, sadly, I have history on my side.