By Adam Thierer & Jennifer Huddleston Skees

“ He’s making a list and checking it twice. Gonna find out who’s naughty and nice .”

With the Christmas season approaching, apparently it’s not just Santa who is making a list. The Trump Administration has just asked whether a long list of emerging technologies are naughty or nice — as in whether they should be heavily regulated or allowed to be developed and traded freely.

If they land on the naughty list, these technologies could be subjected to complex export control regulations, which would limit research and development efforts in many emerging tech fields and inadvertently undermine U.S. innovation and competitiveness. Worse yet, it isn’t even clear there would be any national security benefit associated with such restrictions.  

From Light-Touch to a Long List

Generally speaking, the Trump Administration has adopted a “light-touch” approach to the regulation of emerging technology and relied on more flexible “soft law” approaches to high-tech policy matters. That’s what makes the move to impose restrictions on the trade and usage of these emerging technologies somewhat counter-intuitive. On November 19, the Department of Commerce’s Bureau of Industry and Security launched a “ Review of Controls for Certain Emerging Technologies .” The notice seeks public comment on “criteria for identifying emerging technologies that are essential to U.S. national security, for example because they have potential conventional weapons, intelligence collection, weapons of mass destruction, or terrorist applications or could provide the United States with a qualitative military or intelligence advantage.”

The Commerce Department has long sought to control the use of such technologies through a combination of methods, including formal export controls. The process for establishing such controls was clumsily cobbled together over time, so Congress passed the Export Control Reform Act of 2018 (ECRA) to formalize these regulations. ECRA requires that the President formulate an interagency process to coordinate these rules with the goal of creating, “a regular and robust process to identify the emerging and other types of critical technologies of concern, as defined in United States foreign direct investment laws, and regulate their release to foreign persons as warranted regardless of the nature of the underlying transaction.” As part of this process, the Commerce Department is to create a list “of foreign persons and end-uses that are determined to be a threat to the national security and foreign policy of the United States . . .  and to whom exports, reexports, and transfers of items are controlled.”

Sweeping Breadth

That is what prompted the Trump Administration’s recent Emerging Technologies notice, which includes is a remarkably sweeping list of technologies that the Commerce Department is considering for the exports controls list. The list has 14 major categories:

(1) Biotechnology

(2) Artificial intelligence

(3) Position, Navigation, and Timing (PNT) technology

(4) Microprocessor technology

(5) Advanced computing technology

(6) Data analytics technology

(7) Quantum information and sensing technology

(8) Logistics technology

(9) Additive manufacturing / 3D printing

(10) Robotics

(11) Brain-computer interfaces

(12) Hypersonics

(13) Advanced materials

(14) Advanced surveillance technologies

The Department’s 14-category list also includes over 40 itemized examples of specific applications. For example, the “artificial intelligence” category alone includes a list of 11 applied types of AI, from AI cloud technologies and chipsets to neural networks to speech and audio processing.

The breadth of this list is remarkable in that it touches almost every emerging technology sector imaginable. It might have been easier for the Commerce Department to simply list those emerging technologies that will not be subject to review for potential export controls. It is an “everything-but-the-kitchen-sink” approach to emerging technology policy oversight and regulation that could clearly have far reaching consequences beyond national security.

There are some obvious dangers with such an open-ended review and it is important to remember these technologies have many beneficial applications as well as any potential risks.

Threatening Beneficial Uses

First, the potential export regulations create the danger of negative spillover effects that could undermine beneficial uses of each technology listed . All of the technologies listed have already been used in many ways that benefit both consumers and businesses. Limitations on their export could limit their availability or prevent improvements due to concerns that such broad interpretations of restrictions could limit the market.

For example, the regulation of AI mentioned above would not only address concerns about how AI might be used in weapons, but could even undermine the export of technology that has become a part of our everyday lives such as Siri in iPhones and Amazon’s Alexa. While the department claims that it seeks to “avoid negatively impacting U.S. leadership in the science, technology, engineering, and manufacturing sectors,” it is unlikely that any but the most narrowly tailored rules could actually avoid having a negative impact on innovation in the named technologies .

The more general purpose a technology the more difficult it will be to control the potential impact on the beneficial uses of the technology as well as the negative impacts. In fact, in some cases such as AI and robotics it can even be difficult to define what the technology is, because it is typically the applications and not the technology more generally that is being discussed and regulated. In many cases, the anti-export regulations would or could at least signal to entrepreneurial innovators that their time is better spent on other technologies or that their work should be taken elsewhere and risks the U.S. falling behind other countries in these important innovative areas.  

Undermining International Competitiveness

Second, the inquiry could undermine U.S. competitiveness by encouraging more offshoring in a world of innovation arbitrage opportunities . With our increasingly connected global economy and specifically the more mobile nature of many emerging technologies, it is becoming easier for innovators who find themselves subjected to onerous regulations in one country to move their research and development efforts to another. This is sometimes referred to as “ innovation arbitrage .”

While the U.S. remains a leader in attracting innovators, this scenario has already played out several times. For example, Amazon moved its drone testing program to the UK rather than test in the US due in large part to FAA regulations regarding drones. Similarly, 23andme also initially took its direct-to-consumer genetic testing abroad after the FDA threatened to shut down their product.

Heavily regulating the export of general applications of these technologies could actually backfire and encourage innovators to take their research to countries like China where they do not face such regulations. R. David Edelman, the director of the Project on Technology, the Economy, and National Security at MIT, has noted that while the inquiry might be “intended to help US companies be more competitive,” the reality is that “it would almost certainly give Chinese companies that don’t face those same restrictions a sizable advantage in the playing field.”

Moreover, if export controls undermine domestic innovation and competitiveness in this fashion and benefit developers in other countries, it means the U.S. will have less of a say over the ethical development of many important technologies. Bloomberg contributor Noah Smith observes that , when it comes to the global race for hegemony in genetic sciences, China is poised to take the lead. “If the U.S. shies away from developing genetic-engineering technology, these riches will flow to China, or to whatever other countries seize the technological edge,” he notes. That would be problematic not just from a competitive perspective, but also from an ethical perspective, because America would have less of a say in guiding the development of these important but controversial technologies. “Dystopian outcomes are also less likely with the U.S. at the helm,” Smith believes.

Limiting or Ending Technologies Consumers Already Enjoy

Third, the inquiry could pose a threat to everyday consumer technologies that are already widely distributed . The most interesting thing about the technologies listed in the notice is that many of them have moved well beyond the “emerging” phrase of development. They are already out in the wild and being used by people every day.

For example, among the AI technologies listed in the notice are “speech and audio processing (e.g., speech recognition and production)” as well as, “natural language processing (e.g., machine translation).” We already enjoy a great many services such as those today, including Siri and Alexa. Meanwhile, there are technologies already on the market that help disabled and autistic children communicate and interact with their peers using AI and robotics.

For example, the KASPAR robot helps children with such disabilities learn social skills to interact with their peers and teach conversational skills. Similarly, technology that translates apparently nonverbal sounds and other methods of communication into speech via apps and other technology with various voices that others can understand could be subject to development ending regulations or be unable to help children in other countries if the proposed export restrictions are phrased too broadly. Not only might new restrictions limit the development of new technologies, it could even limit or eliminate those that we have already embraced and improved the lives of many.

Risk to Research & Open-Source Efforts

Fourth, the expansion of export controls for many of the technologies listed in the inquiry opens the door to widespread policing of open source coding and communications , but offers no explanation of how that would even work. A large number of the technologies on the Commerce Department list have both commercial and non-commercial applications. Innovation scholars use terms like “ free innovation ” and “social entrepreneurialism” to describe innovative efforts that are undertaken by individuals or groups of people to pursue a broader array of social goals or values beyond just profit-seeking.

A prominent example of social entrepreneurs engaging in free innovation involves the use of 3D printers and open source designs to voluntarily create prosthetics for children with limb deficiencies. What happens to collaborative, non-commercial innovations like that if export controls are suddenly imposed on additive manufacturing technologies by the Department of Commerce? If one participant is based outside the US, is that sufficient to subject such collaboration to export controls? What, exactly, would be subjected to controls? The 3D printers? The open source blueprints? The website hosting such information? It is difficult to imagine how such regulation would work in practice but it is easy to imagine the effect it would have if pursued: It would create a massive chilling effect on many beneficial forms of innovation and simultaneously threaten freedom of speech and academic research.

This same problem could play out in many other technology fields listed in the Commerce Department notice, including: robotics, speech recognition, biotechnology, and genetic engineering, among many others often engage in open and cross-border collaboration for open source development. Free innovation and social entrepreneurialism are expanding rapidly in these and other emerging technology arenas. Thus, export control regulation can no longer hinge on going after “deep-pocketed” corporations looking to sell physical systems. To be truly effective, regulations will need to cover bottom-up, “grassroots” innovation. But that move will have profound ramifications for the freedom to freely tinker with or even freely research important technologies and technological processes.

Dubious National Security Benefits

There’s a final danger associated with this effort: it might not help advance America’s national security objectives , and could even hinder them.

To the extent that ECRA and this new Department of Commerce effort lead to heightened scrutiny for the many dozens of technologies identified, it could undermine research and development efforts in many of those fields. It could do so directly (by formally limiting or forbidding domestic R&D efforts) or indirectly (by incentivizing many domestic emerging tech innovators to move their operations offshore, or discouraging foreign developers from setting up shop here). Not only would such actions risk the US losing its lead in innovation, it could actually result in such regulations backfiring from a national security perspective.  

At the end of the day, the problem here is that Congress is failing to clearly identify what is “essential to the national security of the United States.” ECRA just passes the buck on that thorny question to the Commerce Department for a laundry list of emerging technologies. By soliciting public input, the best hope here is that experts in these various emerging technology sectors will step forward and identify the trade-offs associated with inclusion of most of these technologies on the export controls list. Hopefully, the list would then be narrowed the much smaller class of applied technologies that have a very real, immediate, and clearly catastrophic potential for harm to the national security interests of the nation. That would have been the better way to begin this process, but Congress and the Administration have instead adopted the opposite approach here and now we must hope that they are willing to significantly pare back the list of technologies even being considered for inclusion.

Back to the Crypto Wars?

In a sense, this debate was foreshadowed by the debate in the late 1990s over export controls for encryption technologies. As encryption emerged , law enforcement and national security agencies were concerned about its potential use by bad actors to hide or destroy evidence or information by using encrypted devices or services and sought to require backdoors to be able to access encrypted data and to restrict the export of certain types of encryption and certain encrypted devices. Such requirements, as the Information Technology & Innovation Foundation’s Daniel Castro and Alan McQuinn pointed out, would actually reduce the security of everyday Americans to cyber attacks, negatively impact U.S. businesses’ global competitiveness, and reduce the competitiveness and innovation of the technology sector not only in encryption but in related fields as well.

Luckily, many of these concerns were avoided and encryption restrictions have been narrowly tailored. Recent tensions between the FBI and tech companies like Apple illustrate that this debate is far from settled. Now it seems that the Commerce Department’s proposed restrictions could create the same vulnerabilities more broadly for a great number of emerging technologies.

“Soft Law” & Next Steps

In some ways this move to regulate technologies via export restrictions shows the dark side of the growing trend of “soft law.” Soft law, as we discuss in more detail in our forthcoming paper , includes regulatory actions such as guidance documents, working groups, sandboxing, and many other informal regulatory mechanisms. Such mechanisms are often used to regulate emerging technologies in the absence of formal actions or because the traditional policymaking apparatus cannot keep pace with the rapid evolution of technology. In many cases soft law has been used to accelerate technological development that otherwise might have been limited by traditional hard law.

But where soft law thrives in the vacuum left by a lack of formal delegation and regulation, this inaction also poses risks. Agencies like the Commerce Department could extend amorphous powers over emerging technologies without the expertise to fully understand the way such regulations might negatively affect beneficial technological developments, which are typically hard to predict in advance.

A smarter approach to export controls for emerging technologies begins with a rational assessment of:

1. a more robust evaluation of what really constitutes a tangible, immediate, irreversible, and catastrophic harm to the national security interests of the United States;
2. the practicality of proposed controls for any emerging technologies considered for inclusion on the list;
3. the wisdom of placing technologies on the list which already have been developed or marketed overseas (or appear poised to be); and,
4. the potential unintended consequences that any new export controls might have on the innovative potential of American creators and companies, the future of research in important sectors, the free flow of knowledge regarding peaceful applications, and the competitive standing of the United States relative to other countries.
5. whether catastrophic concerns about emerging technologies might be better addressed through multilateral accords or agreements aimed at achieving global consensus regarding inappropriate use and applications (as has been done in chemical weapon treaties and nuclear non-proliferation efforts).

Several specific technologies may still qualify for inclusion on the export controls list after such an evaluation, but it will start with a more limited approach and then expand as necessary. Such an approach assumes that in general purpose technology is not a threat until proven otherwise. By inverting the process in this fashion, the Administration wouldn’t be treating every emerging technology under the sun as guilty until proven innocent; innovations would be allowed to flourish naturally until the potential for harm is well-documented.

Unfortunately, the Commerce Department’s proposed approach does just the opposite and risks minimizing the benefits of these emerging technologies while doing little to advance national security interests in a meaningful way.

Whatever you want to call them–autonomous vehicles, driverless cars, automated systems, unmanned systems, connected cars, piloteless vehicles, etc.–the life-saving potential of this new class of technologies has been shown to be potentially enormous. I’ve spent a lot of time researching and writing about these issues, and I have yet to see any study forecast the opposite (i.e., a net loss of lives due to these technologies.) While the estimated life savings vary, the numbers are uniformly positive across the board, and not just in terms of lives saved, but also for reductions in other injuries, property damage, and aggregate social costs associated with vehicular accidents more generally.

To highlight these important and consistent findings, I asked my research assistant Melody Calkins to help me compile a list of recent studies on this issue and summarize the key takeaways of each one regarding at least the potential for lives saved. The studies and findings are listed below in reverse chronological order of publication. I may try to add to this over time, so please feel free to shoot me suggested updates as they become available.

Needless to say, these findings would hopefully have some bearing on public policy toward these technologies. Namely, we should be taking steps to accelerate this transition and removing roadblocks to the driverless car revolution because we could be talking about the biggest public health success story of our lifetime if we get policy right here. Every day matters because each day we delay this transition is another day during which 90 people die in car crashes and more than 6,500 will be injured. And sadly, those numbers are going up, not down. According to the National Highway Traffic Safety Administration (NHTSA), auto crashes and the roadway death toll is climbing for the first time in decades. Meanwhile, the agency estimated that 94 percent of all crashes are attributable to human error. We have the potential to do something about this tragedy, but we have to get public policy right. Delay is not an option.

Accelerating the Future: The Economic Impact of the Emerging Passenger Economy (June 2017)

an Intel Report

• p. 23: “If we conservatively assume that just 5 percent of these accidents are avoided in the decade from 2035 to 2045 due to pilotless vehicles, 585,000 lives will be saved during that time.”

Implications of connected and Automated vehicles on the Safety and Operations of Roadway Networks: A Final Report (Oct 2016)

By The University of Texas at Austin Center for Transportation Research

Chapter 4, Safety Benefits of CAVs

See Table 4.7,4.8, 4.9 (p.95-97) Annual economic cost and functional-years lost savings estimates from safety benefits of CAV technologies

• p. 78: The most recently-available U.S. crash database (the 2013 National Automotive Sampling System (NASS) General Estimates System (GES) was used, and results suggest that advanced CAV technologies may reduce… functional human-years lost by nearly 2 million (per year, assuming a market penetration rate of 100%)
• p. 80: Lane Departure Warning (LDW) systems can reduce 47% of all lane-departure-related crashes, corresponding to 85,000 crashes annually
• p. 80: Backing-crash countermeasures (like backup collision intervention via automated braking) could prevent almost 65,000 backup crashes a year.
• p. 80: With an assumption of 100% deployment and 100% device availability (for Road departure crash warning (RDCW) technology), an annually reduction of 9,400 to 74,800 U.S. road-departure crashes was predicted.
• p. 81: V2V systems, such as FCW, blind spot warning (BSW), and lane change warning (LCW), can serve as primary crash countermeasures, reducing U.S. light-duty vehicle-involved crashes by 76%. They further estimated that V2I systems, such as curve speed warning (CSW), red light violation warning system (RLVW), and stop sign violation warning (SSVW), if deployed anywhere they could be useful, could address 25% of all light-duty-vehicle crashes in the U.S. 

Automated Vehicle Crash Rate Comparison using Naturalistic Data (Jan. 2016)

Commissioned by Google, Performed by the Virginia Tech Transportation Institute (Data adjusts for unreported crashes)

• Estimated crash rates for the Self-Driving Car Project were lower for all three crash levels… Additionally, the rate of less-severe crashes (Level 3) for the Self-Driving Car was lower at a statistically significant level (39)
• See Table 10 p.41 “Current data suggest that self-driving cars may have low rates of more-severe crashes (Level 1 and Level 2 crashes) when compared to national rates or to rates from naturalistic data sets.”
• “The data also suggest that less-severe events (Level 3 crashes) may happen at a significantly lower rate for self-driving cars… none of the vehicles operating in autonomous mode were deemed at fault” (p.41)

The Future of Motor Insurance: How Car Connectivity and ADAS are Impacting the Market (2016)

HERE and Swiss Re

• See p.15, Figure 9: Accident Reduction Rate by Selected Features
• Advanced ADAS (highway pilot) would reduce accidents on motorways by 45.4% and on other roads by 27.5%
• Sophisticated ADAS (lane keeping assistant, emergency braking assistant, night vision) would reduce accidents on motorways by 25.7% and on other roads by 27.5%

A Preliminary Analysis of Real-World Crashes Involving Self Driving Vehicles (Oct. 2015)

University of Michigan’s Transportation Research Institute

• p. 14: The most common outcome of crashes for both vehicle types was property damage only, but self-driving vehicles had this outcome 10% more often than conventional vehicles. Consequently, self-driving vehicles experienced injury-related crashes 10% less often than conventional vehicles. The overall severity of crashes involving self-driving vehicles was also lower than for conventional vehicles.
• p. 18: Four main findings:

1. The current best estimate is that self-driving vehicles have a higher crash rate per million miles traveled than conventional vehicles, and similar patterns were evident for injuries per million miles traveled and for injuries per crash.
2. The corresponding 95% confidence intervals overlap. Therefore, we currently cannot rule out, with a reasonable level of confidence, the possibility that the actual rates for self-driving vehicles are lower than for conventional vehicles.      
3. Self-driving vehicles were not at fault in any crashes they were involved in.
4. The overall severity of crash-related injuries involving self-driving vehicles has been lower than for conventional vehicles.

• Limitations of the study (stating that crash rates for self-driving vehicles are higher than conventional vehicles) are corrected for in the more recent 2016 Google Study (see above), to show that actually self-driving vehicles crash less.

Ten Ways Autonomous Driving Could Redefine the Automotive World (June 2015)

McKinsey Report

• Suggests that advanced ADAS and AVs could reduce accidents by up to 90%

Connected and Autonomous Vehicles: The UK Economic Opportunity (Mar 2015)

KPMG

• p.2 & p.12: By 2030, connected and autonomous vehicles could save over 2,500 lives and prevent more than 25,000 serious accidents in the UK.

Preparing a Nation for Autonomous Vehicles (Oct. 2013)

Eno Center for Transportation

• p. 8, Table 2: Estimates of Annual Economic Benefits from AVs in the United States
• 10% market-penetration would mean 1,100 lives saved; 50% would be 9,600 lives; 90% would be 21,700 lives

A new bipartisan “sense of the Senate” resolution was introduced today calling for “a national strategy for the Internet of Things to promote economic growth and consumer empowerment.” [PDF is here.] The resolution was cosponsored by U.S. Senators Deb Fischer (R-Neb.), Cory A. Booker (D-N.J.), Kelly Ayotte (R-N.H.), and Brian Schatz (D-Hawaii), who are all members of the Senate Commerce Committee, which oversees these issues. Just last month, on February 11th, the full Commerce Committee held a hearing titled “The Connected World: Examining the Internet of Things,” which examined the policy issues surrounding this exciting new space.

[ Update:  The U.S. Senate unanimously approved the resolution on the evening of March 24th, 2015.]

The new Senate resolution begins by stressing the many current or potential benefits associate with the Internet of Things (IoT), which, it notes, “currently connects tens of billions of devices worldwide and has the potential to generate trillions of dollars in economic opportunity.” It continues on to note how average consumers will benefit because “increased connectivity can empower consumers in nearly every aspect of [our] daily lives, including in the fields of agriculture, education, energy, healthcare, public safety, security, and transportation, to name just a few.” And then the resolution also discussed the commercial benefits, noting, “businesses across our economy can simplify logistics, cut costs in supply chains, and pass savings on to consumers because of the Internet of Things and innovations derived from it.” More generally, the Senators argue “the United States should strive to be a world leader in smart cities and smart infrastructure to ensure its citizens and businesses, in both rural and urban parts of the country, have access to the safest and most resilient communities in the world.”

In light of those amazing potential benefits, the resolution continues on to argue that while “the United States is the world leader in developing the Internet of Things technology,” an even more focused and dedicated policy vision is needed to promote continued success. “[W]ith a national strategy guiding both public and private entities,” it argues, “the United States will continue to produce breakthrough technologies and lead the world in innovation.” 

Toward that end, the resolution says that it is the sense of the Senate that:

(1) the United States should develop a national strategy to incentivize the development of the Internet of Things in a way that maximizes the promise connected technologies hold to empower consumers, foster future economic growth, and improve our collective social well-being; (2) the United States should prioritize accelerating the development and deployment of the Internet of Things in a way that recognizes its benefits, allows for future innovation, and responsibly protects against misuse; (3) the United States should recognize the importance of consensus-based best practices and communication among stakeholders, with the understanding that businesses can play an important role in the future development of the Internet of Things; (4) the United States Government should commit itself to using the Internet of Things to improve its efficiency and effectiveness and cut waste, fraud, and abuse whenever possible; and, (5) using the Internet of Things, innovators in the United States should commit to improving the quality of life for future generations by developing safe, new technologies aimed at tackling the most challenging societal issues facing the world.

This is a pretty solid statement from this group of Senators, who appear committed to advancing a pro-innovation, pro-growth approach to the emerging Internet of Things universe of technologies. This is exciting because this reflects the strong bipartisan approach American policymakers adopted two decades ago for the Internet more generally. America’s unified, “light-touch” Internet policy vision worked wonders for consumers and our economy before, and it can happen again thanks to a vision like the one these four Senators floated today.

As I explained in more detail when I testified at the February 11th Senate Commerce hearing on IoT issue:

America took a commanding lead in the digital economy because, in the mid-1990s, Congress and the Clinton administration crafted a nonpartisan vision for the Internet that protected “permissionless innovation” — the idea that experimentation with new technologies and business models should generally be permitted without prior approval. Congress embraced permissionless innovation by passing the Telecommunications Act of 1996 and rejecting archaic Analog Era command-and-control regulations for this exciting new medium. The Clinton administration embraced permissionless innovation with its 1997 “Framework for Global Electronic Commerce,” which outlined a clear vision for Internet governance that relied on civil society, voluntary agreements, and ongoing marketplace experimentation. This nonpartisan blueprint sketched out almost two decades ago for the Internet is every bit as sensible today as we begin crafting a policy paradigm for the Internet of Things

I view this new Senate resolution on the Internet of Things as an effort to freshen up and extend that original vision that lawmakers crafted for the Internet back in the mid-1990s.  As I documented in my recent essay, “Why Permissionless Innovation Matters,” that vision has worked wonders for American consumers and our modern economy. Meanwhile, our international rivals languished on this front because they strapped their tech sectors with layers of regulatory red tape that thwarted digital innovation.

We got policy right once before in the United States, and we can get it right again with a policy vision like that found in this new Senate resolution for the Internet of Things.

Additional Reading

• testimony: “My Testimony for Senate Internet of Things Hearing,” February 11, 2015.
• essay: “What Cory Booker Gets about Innovation Policy,” February 16, 2015.
• essay: “A Nonpartisan Policy Vision for the Internet of Things,” December 11, 2014.
• law review article: “The Internet of Things and Wearable Technology Addressing Privacy and Security Concerns without Derailing Innovation,” November 2014.
• essay: “Don’t Hit the (Techno-)Panic Button on Connected Car Hacking & IoT Security,” February 10, 2015.
• essay: “Striking a Sensible Balance on the Internet of Things and Privacy,” January 16, 2015.
• essay: “Some Initial Thoughts on the FTC Internet of Things Report,” January 28, 2015.
• slide presentation: “Policy Issues Surrounding the Internet of Things & Wearable Technology,” September 12, 2014.
• essay: “CES 2014 Report: The Internet of Things Arrives, but Will Washington Welcome It?” January 8, 2014.

Give us our drone-delivered beer!

That’s how the conversation got started between John Stossel and me on his show this week. I appeared on Stossel’s Fox Business TV show to discuss the many beneficial uses of private drones. The problem is that drones — which are more appropriately called unmanned aircraft systems — have an image problem. When we think about drones today, they often conjure up images of nefarious military machines dealing death and destruction from above in a far-off land. And certainly plenty of that happens today (far, far too much in my personal opinion, but that’s a rant best left for another day!).

But any technology can be put to both good and bad uses, and drones are merely the latest in a long list of “dual-use technologies,” which have both military uses and peaceful private uses. Other examples of dual-use technologies include: automobiles, airplanes, ships, rockets and propulsion systems, chemicals, computers and electronic systems, lasers, sensors, and so on. Put simply, almost any technology that can be used to wage war can also be used to wage peace and commerce. And that’s equally true for drones, which come in many sizes and have many peaceful, non-military uses. Thus, it would be wrong to judge them based upon their early military history or how they are currently perceived. (After all, let’s not forget that the Internet’s early origins were militaristic in character, too!)

Some of the other beneficial uses and applications of unmanned aircraft systems include: agricultural (crop inspection & management, surveying); environmental (geological, forest management, tornado & hurricane research); industrial (site & service inspection, surveying); infrastructure management (traffic and accident monitoring); public safety (search & rescue, post-natural disaster services, other law enforcement); and delivery services (goods & parcels, food & beverages, flowers, medicines, etc.), just to name a few.

This is why it is troubling that the Federal Aviation Administration (FAA) continues to threaten private drone operators with cease-and-desist letters and discourage the many beneficial uses of these technologies, even as other countries rush ahead and green-light private drone services. As I noted on the Stossel show, while the FAA is well-intentioned in its efforts to keep the nation’s skies safe, the agency is allowing hypothetical worst-case scenarios get in the way of beneficial innovation. A lot of this fear is driven by privacy concerns, too. But as Brookings Institution senior fellow John Villasenor has explained, we need to be careful about rushing to preemptively control new technologies based on hypothetical privacy fears:

If, in 1995, comprehensive legislation to protect Internet privacy had been enacted, it would have utterly failed to anticipate the complexities that arose after the turn of the century with the growth of social networking and location-based wireless services. The Internet has proven useful and valuable in ways that were difficult to imagine over a decade and a half ago, and it has created privacy challenges that were equally difficult to imagine. Legislative initiatives in the mid-1990s to heavily regulate the Internet in the name of privacy would likely have impeded its growth while also failing to address the more complex privacy issues that arose years later.

This is a key theme discussed throughout my new book, “Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom.” The central lesson of the booklet is that living in constant fear of hypothetical worst-case scenarios — and premising public policy upon them — means that best-case scenarios will never come about. We shouldn’t let our initial (and often irrational) fears of new technologies dictate the future course of innovation.We can and will find constructive solutions to the hard problems posed by new technologies because we creative and resilient creatures. And, yes, some regulation will be necessary. But how and when we regulate matters profoundly. Preemptive, precautionary-based proposals are almost never the best way to start.

Finally, as I also noted during the interview with Stossel, it’s always important to consider trade-offs and opportunity costs when discussing the disruptive impact of new technologies. For example, while some fear the safety implications of private drones, we should not forget that over 30,000 people die in automobile-related accidents every year in the United States. While the number of vehicle-related deaths has been declining in recent years, that remains an astonishing number of deaths. What if a new technology existed that could help prevent a significant number of these fatalities? Certainly, “smart car” technology and fully autonomous “driverless cars” should help bring down that number significantly. But how might drones help?

Consider some of the mundane tasks that automobiles are used for today. Cars are used to go grab dinner or have someone else deliver it, to pick up medicine at a local pharmacy, to have newspapers or flowers delivered, and so on. Every time a human gets behind the wheel of an automobile to do these things the chance for injury or even death exists, even close to home. In fact, a large percentage of all accidents happen with just a few miles of the car owner’s home. A significant number of those accidents could be avoided if we were able to rely on drone-delivery of things we today use cars and trucks for.

These are just some of the things to consider as the debate over unmanned aircraft systems continues. Drones have gotten a very bad name thus far, but we should remain open-minded about their many beneficial, peaceful, and pro-consumer uses.

(For more on this issue, read this April 2013 filing to the FAA I wrote along with my Mercatus colleagues Eli Dourado and Jerry Brito.)

Much of my recent research and writing has been focused on the contrast between “permissionless innovation” (the notion that innovation should generally be allowed by default) versus its antithesis, the “precautionary principle” (the idea that new innovations should be discouraged or even disallowed until their developers can prove that they won’t cause any harms).  I have discussed this dichotomy in three recent law review articles, a couple of major agency filings, and several blog posts. Those essays are listed at the end of this post.

In this essay, I want to discuss a recent speech by Federal Trade Commission (FTC) Chairwoman Edith Ramirez and show how precautionary principle thinking is increasingly creeping into modern information technology policy discussions, prompted by the various privacy concerns surrounding “big data” and the “Internet of Things” among other information innovations and digital developments.

First, let me recap the core argument I make in my recent articles and filings. It can be summarized as follows:

• If public policy is guided at every turn by the precautionary mindset then innovation becomes impossible because of fear of the unknown. Hypothetical worst-case scenarios trump all other considerations under this mentality. Social learning and economic opportunities become far less likely under such a policy regime. In practical terms, it means fewer services, lower quality goods, higher prices, diminished economic growth, and a decline in the overall standard of living. (See this essay and this one.)
• Wisdom is born of experience, including experiences involving risk and the possibility of mistakes and accidents. Patience and a general openness to permissionless innovation represent the wise disposition toward new technologies not only because it provides breathing space for future entrepreneurialism, but also because it provides an opportunity to observe both the evolution of societal attitudes toward new technologies and how citizens adapt to them. (See this essay.)
• Not every wise ethical principle, social norm, or industry best practice automatically makes for wise public policy. If we hope to preserve a free and open society, we simply cannot convert every ethical directive or norm — no matter how sensible — into a legal directive or else the scope of human freedom and innovation will need to shrink precipitously. (See this essay.)
• The best solutions to complex social problems are organic and “bottom-up” in nature. User education and empowerment, informal household media rules, social pressure, societal norms, and targeted enforcement of existing legal norms (especially through the common law) are almost always superior to “top-down,” command-and-control regulatory edits and bureaucratic schemes of a “Mother, May I” nature. (See this essay).
• For the preceding reasons, when it comes to information technology policy, “permissionless innovation” should, as a general rule, trump “precautionary principle” thinking. To the maximum extent possible, the default position toward new forms of technological innovation should be “innovation allowed,” or what Paul Ohm has appropriately labeled the “anti-Precautionary Principle.” (See this essay.)

Again, we are today witnessing the clash of these conflicting worldviews in a fairly vivid way in many current debates about online commercial data collection, “big data,” and the so-called “Internet of Things.” For example, FTC Chairwoman Ramirez recently delivered a speech at the annual Technology Policy Institute Aspen Forum on the topic of “The Privacy Challenges of Big Data: A View from the Lifeguard’s Chair.” Ramirez made several provocative assertions and demands in the speech, but here’s the one “commandment” I really want to focus on. Claiming that “One risk is that the lure of ‘big data’ leads to the indiscriminate collection of personal information,” Chairwoman Ramirez went on to argue:

The indiscriminate collection of data violates the First Commandment of data hygiene: Thou shall not collect and hold onto personal information unnecessary to an identified purpose. Keeping data on the offchance that it might prove useful is not consistent with privacy best practices. And remember, not all data is created equally. Just as there is low quality iron ore and coal, there is low quality, unreliable data. And old data is of little value. (emphasis added)

And later in the speech she goes on to argue that “Information that is not collected in the first place can’t be misused” and then suggests a parade of horribles that will befall if such data collection is allowed at all.

The Problem with “Mother, May I”?

So here we have a rather succinct articulation of precautionary principle thinking as applied to modern data collection practices. Chairwoman Ramirez is essentially claiming that — because there are various privacy risks associated with data collection and aggregation — we must consider preemptive and potentially highly restrictive approaches to the initial collection and aggregation of data.

The problem with that logic should be fairly obvious and it was perfectly identified by the great political scientist Aaron Wildavsky in his seminal 1988 book Searching for Safety. Wildavsky warned of the dangers of the “trial without error” mentality — otherwise known as the precautionary principle approach — and he contrasted it with the trial-and-error method of evaluating risk and seeking wise solutions to it. Wildavsky argued that:

The direct implication of trial without error is obvious: If you can do nothing without knowing first how it will turn out, you cannot do anything at all. An indirect implication of trial without error is that if trying new things is made more costly, there will be fewer departures from past practice; this very lack of change may itself be dangerous in forgoing chances to reduce existing hazards. (emphasis added)

Let’s apply that lesson to Chairwoman Ramirez’s speech. When she argues that “Information that is not collected in the first place can’t be misused,” there is absolutely no doubt that her statement is true. But it is equally true that information that is not collected at all is information that might have been used to provide us with the next “killer app” or the great gadget or digital service that we cannot currently contemplate but that some innovative entrepreneur out there might be looking to develop.

Likewise, claiming that “old data is of little value” and issuing the commandment that “Thou shall not collect and hold onto personal information unnecessary to an identified purpose” reveals a rather stunning arrogance about the possibility of serendipitous data discovery: Either Chairwoman Ramirez doesn’t think it can happen or she doesn’t care if it does. But the reality is that the cornucopia of innovation information options and opportunities we have at our disposal today was driven in large part by data collection, including personal data collection. And often those innovations were not part of some initial grand design; instead they came about through the discovery of new and interesting things that could be done with data after the fact.

For example, many of the information services and digital technologies that we enjoy and take for granted today — language translation tools, mobile traffic services, digital mapping technologies, spam and fraud detection tools, instant spell-checkers, and so on — came about not necessarily because of some initial grand design but rather through innovative thinking after-the-fact about how preexisting data sets might be used in interesting new ways. As Viktor Mayer-Schonberger and Kenneth Cukier point out in their recent book, Big Data: A Revolution That Will Transform How We Live, Work, and Think, “data’s value needs to be considered in terms of all the possible ways it can be employed in the future, not simply how it is used in the present.” “In the big-data age,” they note, “data is like a magical diamond mine that keeps on giving long after its principle value has been tapped.” (p. 103-4)

In any event, if the new policy in the United States is to follow Chairwoman Ramirez’s pronouncement that “Keeping data on the offchance that it might prove useful is not consistent with privacy best practices,” then much of the information economy as we know it today will need to be shut down. At a minimum, entrepreneurs will need to start hiring a lot more lobbyists who can sit in Washington and petition the FTC or other policymakers for permission to innovate whenever they have an interesting new idea for how to use data in order to offer us a new service that was not initially collected for a previously stated purpose. Again, it’s “Mother, May I” regulation and we had better get used to a lot more of it if we go down the path that Chairwoman Ramirez is charting.

Alternative, Less-Restrictive Remedies

But here’s the biggest flaw in Chairwoman Ramirez’s reasoning: There is no need for preemptive, prophylactic, precautionary approaches when less-restrictive and potentially equally effective remedies exist.

The title of Ramirez’s speech was subtitled “A View from the Lifeguard’s Chair,” implying that her role is oversee online practices to ensure consumers are safe. That’s a noble intention, but based on some of her remarks, one is left wondering if her true intention is to just drain the information oceans instead.

But there are better ways to deal with dangerous digital waters. In my work on both online child safety and commercial data privacy, I have argued that the best answer to these complex social problems is a mix of technological controls, social pressure and, informal rules and norms, and, most importantly, education and digital literacy efforts.  And government can play an important role by helping educate and empower citizens to help prepare them for our new media environment.

That was the central finding of a blue-ribbon panel of experts convened in 2002 by the National Research Council of the National Academy of Sciences to study how best to protect children in the new, interactive, “always-on” multimedia world. Under the leadership of former U.S. Attorney General Richard Thornburgh, the group produced an amazing report entitled Youth, Pornography, and the Internet, which outlined a sweeping array of methods and technological controls for dealing with potentially objectionable media content or online dangers. Ultimately, however, the experts used a compelling metaphor to explain why education was the most important tool on which parents and policymakers should rely:

Technology—in the form of fences around pools, pool alarms, and locks—can help protect children from drowning in swimming pools. However, teaching a child to swim—and when to avoid pools—is a far safer approach than relying on locks, fences, and alarms to prevent him or her from drowning. Does this mean that parents should not buy fences, alarms, or locks? Of course not—because they do provide some benefit. But parents cannot rely exclusively on those devices to keep their children safe from drowning, and most parents recognize that a child who knows how to swim is less likely to be harmed than one who does not. Furthermore, teaching a child to swim and to exercise good judgment about bodies of water to avoid has applicability and relevance far beyond swimming pools—as any parent who takes a child to the beach can testify. (p. 224)

Regrettably, as I noted in my old book on online safety, we often fail to teach our children how to swim in the new media waters. Indeed, to extend the metaphor, it is as if we are generally adopting an approach that is more akin to just throwing kids in the deep water and waiting to see what happens. The same is true for digital privacy. We sometimes expect both kids and adults to figure out how to swim in these information currents without a little training first.

To rectify this situation, a serious media literacy and digital citizenship agenda is needed in America. Media literacy programs teach children and adults alike to think critically about media, and to better analyze and understand the messages that media providers are communicating.  I went on to argue in my old book that government should push media literacy efforts at every level of the education process. And those efforts should be accompanied by widespread public awareness campaigns to better inform parents about the parental control tools, rating systems, online safety tips, and other media control methods at their disposal.

In the three recent law review articles listed below, I extended this model to privacy and showed how this bottom-up, education and empowerment-based approach is equally applicable to all the debates we are having today about commercial data collection. And I also stressed to vital importance of personal responsibility and corporate responsibility as part of these digital citizenship efforts.

Conclusion

So, in sum, the key question going forward is: Are we going teach people how to swim, or are we going to drain the information oceans based on the fear that people could be harmed by the very existence of some deep data waters?

Chairwoman Ramirez concluded her speech by noting that, “Like the lifeguard at the beach, though, the FTC will remain vigilant to ensure that while innovation pushes forward, consumer privacy is not engulfed by that wave.” As well-intentioned as that sounds, the thrust of her remarks suggest that fear of the water is prompting this particular lifeguard to consider drastic precautionary steps to save us from the potential dangers of those waves. Needless to say, such a mentality and corresponding policy framework would have profound ramifications.

Indeed, let’s be clear about what’s at stake here. This is not about “protecting corporate profits” or Silicon Valley companies. This is about ensuring that individuals as both citizens and consumers continue to enjoy the myriad benefits that accompany an open, innovative information ecosystem. We can find better ways to address the dangers of deep data waters without draining the info-oceans. Let’s teach people how to swim in those waters and how to be responsible data stewards so that we can all continue to enjoy the many benefits of our modern data-driven economy.

 Additional Reading:

Law Review Articles:

• “The Pursuit of Privacy in a World Where Information Control is Failing” – Harvard Journal of Law & Public Policy
• “Technopanics, Threat Inflation, and the Danger of an Information Technology Precautionary Principle” – Minnesota Journal of Law, Science & Technology
• “A Framework for Benefit-Cost Analysis in Digital Privacy Debates” – George Mason University Law Review

Blog posts:

• “Who Really Believes in ‘Permissionless Innovation’?” – March 4, 2013
• “What Does It Mean to ‘Have a Conversation’ about a New Technology?”
• “Planning for Hypothetical Horribles in Tech Policy Debates,” August 6, 2013
• “On the Line between Technology Ethics vs. Technology Policy,” August 1, 2013
• “Can We Adapt to the Internet of Things?” – June 19, 2013 (IAPP Privacy perspectives blog)

Testimony / Filings:

• Senate Testimony on Privacy, Data Collection & Do Not Track – April 24, 2013
• Comments of the Mercatus Center to the FTC in Privacy & Security Implications of the Internet of Things
• Mercatus filing to FAA on commercial domestic drones

I’ve already Tweeted about it, but if you are following Internet privacy debates and have not yet had the chance to read Lauren Weinstein‘s new paper, “Do-Not-Track, Doctor Who, and a Constellation of Confusion,” it is definitely worth a look.  Weinstein, founder of the Privacy Forum, zeroes in on two related issue that I have made the focus of much of my work on this issue: (1) the fact that Do Not Track is seemingly viewed by some as a silver-bullet quick fix to online privacy concerns but will really be far more complicated in practice to enforce, and (2) that Do Not Track regulation will likely have many unintended consequences, most of which are going unexplored by proponents.

For example, Weinstein says:

Do-not-track in actuality encompasses an immensely heterogeneous mosaic of issues and considerations, not appropriately subject to simplistic approaches or “quick fix” solutions.   Approaching this area without a realistic appreciation of such facts is fraught with risks and the potential for major undesirable collateral damages to businesses, organizations, and individuals. Attempts to portray these controversies as “black or white” topics subject to rapid or in some cases even unilaterally imposed resolutions may be politically expedient, but are ultimately both childish and dangerous. […] Above all, we should endeavor to remember that tracking issues both on and off the Internet are in reality part of a complicated whole, a multifaceted  set of problems — and very importantly — potentials as well. The decisions that we make now regarding these issues will likely have far-ranging implications and effects on the Internet for many years to come, perhaps for decades.

Absolutely correct. He also argues that:

Rather than view do-not-track and tracking in general as binary choices, or even as an overly simplistic one-dimensional continuum — with “no tracking” and “tracking” at the good and evil ends of the spectrum respectively — a multidimensional and so significantly more nuanced view would seem to make a great deal better logical sense. For each of us, our comfort levels with “tracking” as it may be most broadly defined — both in Internet and non-Internet contexts — will vary widely depending on specific details and circumstances.

Quite right. I made similar arguments in my February filing to the Federal Trade Commission as part of it Do Not Track proceeding.

Weinstein also asks an important question here:

Even while some divisions of government are proselytizing for the rapid adoption of risky and overly simplistic do-not-track mechanisms that are more akin to sledgehammers than balanced control methodologies, and aimed particularly at ad personalization networks — others in government are pushing hard for vast and comprehensive data retention laws that would require ISPs and Web services to record and maintain detailed records of virtually all Web browsing, email, and other activities. … Why is there such a focus on do-not-track in the relatively innocuous ad serving sector, but often so much hypocritical disregard of government’s desire for encompassing tracking in other contexts that carry enormously larger potentials for abuses?

To be fair, however, I do think that many of the advocates of Do Not Track regulation are also focused on government access to data but I think they sometimes fail to adequately distinguish between the “enormously larger potentials for abuses” associated with government data collection and what Weinstein rightly regards as the far less serious issue of “the relatively innocuous ad serving sector.”  There is a world of difference between what government collects and uses private data to accomplish versus what the private sector does with it. As I pointed out in my latest Forbes column this week, “Governments possess unique powers the private sector lacks, such as taxation, surveillance, fines, and imprisonment.” By contrast, private companies mostly collect data to sell us a better mousetrap at a better price.  It’s hard to see how that is a “harm” in the same league with what government officials and agencies would like to do with data. In fact, that’s really a benefit to consumers.

Anyway, make sure to read Weinstein’s entire essay.  I have not yet seen any responses to it but I very much look forward to seeing what proponents of Do Not Track regulation have to say about his very sharp piece.

The comic geniuses at CollegeHumor.com have really hit the nail on the head with this musical romp through the (mostly ad-supported) web, a take-off on “Maria” from the musical West Side Story.  Besides showcasing a number of great ad-supported services, the clip really hits the nail on the head by acknowledging that “There is No Free Lunch“: The quid pro quo of advertising supports the plethora of online content and services Internet users take for granted.

Pandora, I just found a website called Pandora… Pandora! type it in and there’s music playing watch the ads and it’s almost like paying

I’m tempted to show the clip at our upcoming PFF Capitol Hill briefing on July 10: “Regulating Online Advertising: What Will it Mean for Consumers, Culture & Journalism?“

The advocates of regulation pay lip service to the importance of advertising in funding online content and services but don’t seem to understand that this quid pro quo is a fragile one:  Tipping the balance, even slightly, could have major consequences for continued online creativity and innovation.

Who is this handsome young man and why does he have “Mr. Yogato Stamped Me!!!” on his forehead? More importantly, why does he look so darn happy?

Flashback: Earlier this week, my partner Michael (pictured) and I visited Mr. Yogato, a frozen yogurt shop in Washington’s Dupont Circle neighborhood which describes itself as “the FUNNEST yogurt experience you’ll ever have.”

Apart from serving exceptionally tasty frozen yogurt and letting customers play a vintage Nintendo, Mr. Yogato is famous for the eight “Rules of Yogato,” which offer discounts if users achieve certain feats, including:

• Answering devilishly difficult trivia (10% off—or extra if you fail)
• Reciting the Stirling battlefield speech from Braveheart in a great Scottish accent (20% off)

But the best discount, which Michael does every time (unless I’m there to help identify, say, countries that end in ‘L’), is offered for wearing the Yogato stamp on your forehead. Being stamped is, of course, almost as much fun as singing along to “Mr. Roboto” if you’re lucky enough to hear that played while you’re in the shop (10% off).  But the real fun is in engaging passersby on the street about the icy-sweet joys of Yogato. It’s also, of course, probably the most effective advertising Mr. Yogato could ever want.

So, the next time you hear Adam Thierer and I talk about the benefits of advertising, especially online, just remember that while there is no free lunch (nor free frozen yogurt), there is discounted frozen yogurt.  It’s a simple, obvious quid pro quo:  10% off in exchange for spreading the Gospel of Yogato.

The most obvious example of a  quid pro quos is the use of discount cards in grocery stores: Users receive discounts in exchange for having their purchases tracked, which allows advertisers to target advertising to them and the grocery store to better manage its inventory. Online, Microsoft’s Live search engine (now Bing) pioneered the use of rewarding users with “cashback” for purchases made through the search engine.

But the more significant quid pro quo online is indirect: users receive “free” content and services in exchange for seeing advertising and sharing data about their browsing habits, which makes advertising significantly better targeted, more effective for advertisers and therefore more profitable for online content publishers and service providers. As Adam and I noted in response to the FTC’s recently-released self-regulatory guidelines for “behavioral advertising” (now likely to be superseded by pre-emptive “privacy” legislation):

The advocates of regulation pay lip service to the importance of advertising in funding online content and services but don’t seem to understand that this quid pro quo is a fragile one: Tipping the balance, even slightly, could have major consequences for continued online creativity and innovation. [FTC] Commission Harbour talks about companies competing on privacy as a “non-price dimension”-and that is clearly a positive thing. In traditional economics, there are three primary variables that are considered when discussing industry competition and efforts to regulate market structures: price, quantity, and quality. But in the context of the Internet, where digital economics have relentlessly driven prices down to zero, and where advertising support has become the only viable business model for most providers of content and services, the price variable has largely been removed from the picture. This means-unless industry could somehow find a way to make pay-per-use, pay-per-view, or subscription-based models work in the future-that regulation of online advertising would have its most dramatic impact on the quantity and quality of content and services provided. 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…. Apart from a hardcore fringe who embrace the Marxist dogma that advertising is inherently deceptive and wasteful, most participants in this debate at least pay lip service to the economic importance of online advertising. One might therefore be lulled into a false sense of complacency that “sensible” regulation (or government-led co-regulation) would surely avoid crippling this dynamo. This widespread assumption calls to mind the famous quip of Chris Patten, last British Governor of Hong Kong, who paraphrased those who dismissed his concerns about the potentially negative effects of a Chinese take-over of the British colony in 1997, as follows: “It is unimaginable that the Chinese would kill such a goose.” To this, Patten responded, “Yet we wouldn’t need the metaphor of golden eggs and geese if history weren’t full of dead geese.” The dangers of regulation to the health of the Internet are real, but the ease with which government could disrupt the economic motor of the Internet (advertising) is not widely understood-and therein lies the true danger in this debate.

I think Mr. Yogato would understand this. Let’s hope Chairman Boucher and the folks on the Hill who seem to be so adamant about regulation do, too.