knowledge – Technology Liberation Front

3 Questions about Progress: The Profectus Progress Roundtable

Adam Thierer — Wed, 15 Jun 2022 17:10:56 +0000

Profectus is an excellent new online magazine featuring essays and interviews on the intersection of academic literature, public policy, civilizational progress, and human flourishing. The Spring 2022 edition of the magazine features a “Progress Roundtable” in which six different scholars were asked to contribute their thoughts on three general questions:

What is progress?
What are the most significant barriers holding back further progress?
If those challenges can be overcome, what does the world look like in 50 years?

I was honored to be asked by Clay Routledge to contribute answers to those questions alongside others, including: Steven Pinker (Harvard University), Jason Crawford (Roots of Progress), Matt Clancy (Institute for Progress), Marian Tupy (HumanProgress.org), James Pethokoukis (AEI). I encourage you to jump over the roundtable and read all their excellent responses. I’ve included my answers down below:

What is progress?

Progress is the advancement of human health, happiness, and general well-being. Measures of well-being can be challenging, however, so we should consider a broad range of metrics, including: life expectancy, infant mortality, poverty measures, energy production/consumption, GDP, productivity, agricultural yields/nourishment, and access to various important goods, services, and conveniences. While each of these metrics may have limitations, taken together, they stand for something meaningful that represents a rough proxy for progress.

But we should always remember what progress means at a deeper level for every individual. Innovation and economic growth are important because they allow us to live lives of our own choosing and enjoy the fruits of a prosperous, pluralistic society. Progress “is not just bigger piles of money,” as Hans Rosling once noted. “The ultimate goal is to have the freedom to do what we want.” Accordingly, we should aim to broaden the range of opportunities available to all people to help them flourish.

What are the most significant barriers holding back further progress?

The most significant threat to continued progress is the risk of stagnation accompanying efforts to protect the status quo. As Virginia Postrel taught us in her wonderful book The Future & Its Enemies, we should reject stasis-minded thinking and instead shoot for a world of dynamism, which cherishes and protects the freedom to think and act differently.

Progress hinges upon the growth of knowledge. Knowledge comes from experience, and the most important experiences involve trial-and-error learning. Public attitudes and policies that restrict people and ideas from intermingling freely are a recipe for intellectual, social, and economic stagnation. Accordingly, when we consider public policies toward progress, we should first seek to identify and remove legal and regulatory impediments that limit risk-taking, entrepreneurialism, and technological innovation. As science writer Matt Ridley provocatively puts it, to unlock more growth and prosperity, we must first remove obstacles to “ideas having sex.”

The free movement of people and capital is essential to this process. Openness to immigration is the easiest way for a nation to expand its potential for innovation and growth. But domestic labor skills and mobility are equally important. For entrepreneurs and workers, we need to reframe the battle for progress as “the freedom to innovate” and “the right to earn a living.”

Unfortunately, many barriers exist to advancing those goals, like occupational licensing rules and permitting processes, cronyist industrial protectionist schemes, inefficient tax schemes, and many other layers of regulatory red tape. Reforming or eliminating such rules is crucial for broadening opportunities.

Finally, we need to address cultural barriers to progress. Technology and entrepreneurs often get a bad rap in the media and popular culture. Fear and pessimism dominate their narratives. We must do a better job communicating the benefits of openness to change and give people more reasons to be optimistic about a dynamic future.

If those challenges can be overcome, what does the world look like in 50 years?

I agree with Yogi Berra that “It’s tough to make predictions, especially about the future.” Nonetheless, history shows we can achieve remarkable things when we get the prerequisites for progress right and let people tap into their inherent inquisitiveness and inventiveness. Moving the needle on innovation and growth even just a little will yield compounding returns to future generations. But we should dare to dream bigger and think what progress means for each person today and in the future.

A pro-progress agenda will help us lead longer lives and significantly expand our capabilities because that is what people have always desired most. Accordingly, I believe the most significant advance of the next 50 years will be a radical increase in life expectancy and dramatic improvements in our physical and mental capabilities while we are alive.

Today’s tech critics often claim that technological innovation somehow undermines our humanity. They couldn’t be more wrong. There are few things more human than acts of invention. When we take steps to address practical human needs and wants, we enrich our lives and the lives of countless others. The future will be wonderful, so long as we are free to make it so.

Skeptical Takes on Expansive Industrial Policy Efforts

Adam Thierer — Mon, 15 Mar 2021 17:09:11 +0000

[Last updated 3/25/22]

Industrial Policy is a red-hot topic once again with many policymakers and pundits of different ideological leanings lining up to support ambitious new state planning for various sectors — especially 5G, artificial intelligence, and semiconductors. A remarkably bipartisan array of people and organizations are advocating for government to flex its muscle and begin directing more spending and decision-making in various technological areas. They all suggest some sort of big plan is needed, and it is not uncommon for these industrial policy advocates to suggest that hundreds of billions will need to be spent in pursuit of those plans.

Others disagree, however, and I’ll be using this post to catalog some of their concerns on an ongoing basis. Some of the criticisms listed here are portions of longer essays, many of which highlight other types of steps that governments can take to spur innovative activities. Industrial policy is an amorphous term with many definitions of a broad spectrum of possible proposals. Almost everyone believes in some form of industrial policy if you define the term broadly enough. But, as I argued in a September 2020 essay “On Defining ‘Industrial Policy‘,” I believe it is important to narrow the focus of the term such that we can continue to use the term in a rational way. Toward that end, I believe a proper understanding of industrial policy refers to targeted and directed efforts to plan for specific future industrial outputs and outcomes.

The collection of essays below is merely an attempt to highlight some of the general concerns about the most ambitious calls for expansive industrial policy, many of which harken back to debates I was covering in the late 1980s and early 1990s, when I first started a career in policy analysis. During that time, Japan and South Korea were the primary countries of concern cited by industrial policy advocates. Today, it is China’s growing economic standing that is fueling calls for ambitious state-led targeted investments in “strategic” sectors and technologies. To a lesser extent, grandiose European industrial policy proposals are also prompting new US counter-proposals.

All this activity is what has given rise to many of the critiques listed below. If you have suggestions for other essays I might add to this list, please feel free to pass them along. FYI: There’s no particular order here.

Scott Lincicome and Huan Zhu, “Questioning Industrial Policy: Why Government Manufacturing Plans Are Ineffective and Unnecessary,” Cato Institute Working Paper, June 16, 2021.

[I]ndustrial policy – properly defined – has an extensive and underwhelming history in the United States, featuring high costs (seen and unseen), failed objectives, and political manipulation. Surely, not every U.S. industrial policy effort has ended in disaster, but facts here and abroad argue strongly against new government efforts to boost “critical” industries and workers and thereby fix alleged market failures. Such efforts warrant intense skepticism – skepticism that today is unfortunately in short supply.

Adam Thierer, “Industrial Policy as Casino Economics,” The Hill, July 12, 2021.

While some government investments will always be necessary, policymakers engaging in casino economics means bad industrial policy bets and taxpayer money squandered on risky ventures best made by private actors. We need to keep Uncle Sam’s gambling habits in check.

Adam Thierer, “Thoughts on the America COMPETES Act: The Most Corporatist & Wasteful Industrial Policy Ever,” Technology Liberation Front, January 26, 2022.

As far as industrial policy measures go, the COMPETES Act is one of the most ambitious and expensive central planning efforts in American history. It represents the triumph of top-down, corporatist, techno-mercantilist thinking over a more sensible innovation policy rooted in bottom-up competition, entrepreneurialism, private investment, and free trade.

Adam Thierer & Connor Haaland, “Does the US Need a More Targeted Industrial Policy for AI & High-Tech?” Mercatus Center at George Mason University, Special Study, November 2021.

This paper considers how both the recent history of high-tech industrial policy efforts at the national and international level—as well as some state and local economic development efforts in the United States—might better inform the wisdom of proposed efforts for AI or other high-tech sectors. That history is spotted with some limited successes alongside a long string of costly failures. We explore the reasons for those failures and recommend that the US refocus on the policy prerequisites that helped give rise to the computing and internet revolutions: a more generalized approach to economic development rooted in light-touch regulation and taxation of emerging technology.

Samuel Gregg, “Can America Build A Broad-Based Economy?” Law & Liberty, March 1, 2022

Of course, if a government decides to put enough money and resources behind a given industrial policy, it will likely produce some results. Yet the same is true of the gambler. If she stays in the casino long enough and spends enough money, she will win a few hands of cards. But the odds are that she will also lose a great deal of money, especially if she is as inept a gambler as the government is maladroit at identifying industry trends or entrepreneurial opportunities. Moreover, just as a compulsive gambler’s behavior will have numerous negative effects on her family’s well-being, so too does industrial policy risk inflicting wider damage upon a nation’s economy and political system. The harms range from gross misallocations of resources to the rampant cronyism and rent-seeking that seems inseparable from industrial policy (which, I again note, its advocates studiously avoid discussing), to name just a few.

Phil Gramm & Mike Solon, “Peace Through Strength Requires Economic Freedom,” Wall Street Journal, March 1, 2022.

The America Competes Act is the House’s effort to outdo the Chinese Communist Party’s latest five-year plan. The 2,900-page bill would make an old Soviet commissar blush. [. . . ] America’s success in the world economy has never depended on industrial policy or government subsidies. It has come from the relative absence of government planning and subsidies. This is hardly news. The U.S. government provided support for the efforts of Samuel Langley, the greatest aviation expert of the 1890s, in his effort to make America first in powered flight. His manned Aerodrome flopped into the Potomac River. It was the Wright brothers, two unsubsidized but determined bicycle makers from Dayton, Ohio, who flew at Kitty Hawk, N.C., and changed the world.

Scott Lincicome, “Moving Fast and Breaking Things,” Capitolism, February 2, 2022.

Adam Thierer, “The Coming Industrial Policy Hangover,” The Hill, February 16, 2022.

In the rush to pass legislation, we’ve barely heard a peep about the $250-$350 billion price tag. This follows a massive splurge of recent government borrowing, which led to the U.S. national debt hitting another lamentable new record: $30 trillion. China already owns over $1 trillion of that debt, making one wonder if we’re really countering China by adopting a massive, new and unfunded industrial policy that they will end up financing indirectly.

Podcast: “What’s Wrong with Industrial Policy,” Hold These Truths with Rep. Dan Crenshaw, February 16, 2022.

Tad DeHaven and Adam Thierer, “ The Military-Industrial Complex Offers a Cautionary Tale for Industrial Policy Planning,” Discourse, March 25, 2022.

Wayne Crews, “What To Do Instead Of The America COMPETES Act,” Forbes, February 2, 2022.

All this spending and expansion of the federal government, atop which our leaders would lay the America COMPETES Act and doubtless its own accompanying guidebook, has massive, ignored regulatory effects. Trillions in government spending (”investment”) have altered and will alter the entire trajectory and competitive environment of industries engaged in large-scale enterprises and transactions. This removes vast swaths of business activity from free competitive enterprise altogether, and creates displacements and distortions such that the restoration of free enterprise becomes a near-impossible disentanglement. The result is, after 100 years of big government and seduction of and fusion with big business, the greatest endeavors—from infrastructure to artificial intelligence, from smart cities to space—now consist of “partnerships” with governments rather than free enterprise, at scales and at costs so gigantic they can only be ignored.

Adam Thierer, “‘Japan Inc.’ and Other Tales of Industrial Policy Apocalypse,” Discourse, June 28, 2021.

Perhaps the most ironic indictment of industrial policy punditry lies in the way all the earlier books and essays about Japanese planning not only failed to forecast the many flops associated with it, but also did not foresee China as a potential future economic juggernaut. [. . .] What might that tell us about the ability of experts to predict the future course of countries and economies?

Adam Thierer, “Can Government Reproduce Silicon Valley Everywhere?” Technology Liberation Front, September 12, 2021.

government efforts to artificially try to create regional innovation hubs in a top-down, technocratic fashion will almost certainly persist. As they do, some will argue that this time will be different! Perhaps, but it is more likely that the past is prologue; these new hubs will likely cause federal politicians to jockey for position to have their regions named one of the winners and get a big cut of all the new high-tech pork being served up by Washington.

Weifeng Zhong, “Beijing Can’t Make Sense of Biden’s China Strategy. Can Biden?” Washington Examiner, July 01, 2021.

America is not China, and it would be a fatal mistake to equate competing with China with imitating what China does. Doing so would risk the advantageous U.S. position as the world’s chief innovator, whose ideas are turned into products by vibrant private sectors both domestically and internationally.

Mike Watson, “Industrial Policy in the Real World,” National Affairs, Summer 2021.

Given the nature of industrial policymaking in the United States, there’s little reason to believe future attempts at industrial planning will result in a more coherent, rational, or strategic allocation of resources than they have in the past. [. . .] In short, industrial policy in the United States cannot be steered by a small group of enlightened individuals, because a small group of enlightened individuals will never be at the helm. Indeed, in some sense, there is no single “helm” to speak of.

Samuel Gregg, “Industrial Policy Mythology Confronts Economic Reality,” Law & Liberty, September 3, 2021.

If prizes in policy debates were given out for persistence, those advocating for more widespread use of industrial policy in America would be first in line. No matter how many times it is pointed out that they don’t understand the nature and workings of comparative advantage; or avoid acknowledging how industrial policy fosters rampant cronyism and corruption; or highlight what they consider examples of countries in which industrial policy has been employed successfully (only to have it demonstrated that it didn’t quite work out the way they suggested), they don’t give up.

Elizabeth Nolan Brown, “If This Is How America COMPETES, We’re Going to Lose,” Reason, January 26, 2022.

the bill can’t simply address one main issue or a few critical needs. Instead, it tries to insert the government into every aspect of all sorts of industries and markets and pretend that bureaucrats can solve complex social and cultural issues.

Chang-Tai Hsieh, “Countering Chinese Industrial Policy Is Counterproductive,” Project Syndicate, September 15, 2021.

US political leaders have long tried to counter Chinese industrial policy. And now they seem to have decided that the best way to do that is to emulate it. But their agenda betrays a profound lack of understanding of the unique challenge posed by China’s coupling of an authoritarian political regime with a dynamic market economy.

Adam Thierer, “Industrial Policy Advocates Should Learn from Don Lavoie,” Discourse, November 5, 2021.

“In light of the inherent deficiencies of central planning,” Lavoie said, “it might be argued that the U.S. should instead try to reduce current government interference with the competitive process to the absolute minimum consistent with other political goals.” It remains wise advice for today’s policymakers.

Anne O. Krueger, “America’s Muddled Industrial Policy,” CGTN, June 25, 2021.

Governments have a poor track record of identifying “winners” – be it a company or a category of technology – whereas private companies have proved better at transforming new discoveries into new products or cost savings. That is why the U.S. state traditionally has stuck to funding basic research.

Eric Boehm, “Massive Subsidies Won’t Solve the Semiconductor Supply Chain Crisis,” Reason, January 28, 2022.

Tracy C. Miller, “The Case for Limiting Government Semiconductor Subsidies,” The Hill, June 26, 2021.

Without the subsidies, firms would be more cautious about building or expanding foundries. If long-term production capacity is truly insufficient, high prices and anticipated profits give firms the right incentives to build or expand and satisfy demand at cost-covering prices.

Scott Lincicome, “The ‘Endless Frontier’ and American Industrial Policy,” Cato Institute Blog, May 26, 2021.

U.S. industrial policy has a long history of struggling to overcome political pressures, just as public choice predicts, and the EFA is no different. None of this means that all legislating is bad, or that politicians don’t at least occasionally vote in the national interest. Instead, the public choice framework simply adds another hurdle—along with things like the “knowledge problem,” seen and unseen costs, and misaligned incentives—to designing and implementing commercial policies specifically intended to beat the admittedly messy and imperfect situation that the market generates. It’s imperative that we understand these risks before supporting policies that, while they might look good on paper, could easily morph into a counterproductive boondoggle—one we’ve seen countless times with respect to U.S. industrial policy.

Daniel W. Drezner, “Is the United States capable of industrial policy in 2021?” Washington Post, June 14, 2021.

To believe that the United States can pursue a high-caliber industrial policy, however, requires assuming a more competent state than I have seen in the past decade.

Douglas Holtz-Eakin, “The Nicest Thing I Can Write About Supply Chain Policy,” The Daily Dish, June 10, 2021.

Nevertheless, the Senate just passed a provision for $50 billion to subsidize chip fabrication – something the president had requested – and the House will doubtlessly concur. That might seem like an industry victory, but wait until it realizes that the administration will assume it gives it the right to insist on union jobs, micromanage the design of chips, and dictate the pricing and distribution of the products. Good luck with that. As the definitive volume on policy analysis (Benjamin Franklin’s Poor Richard’s Almanack) put it, “He that lieth down with dogs shall rise up with fleas.”

Lipton Matthews, “Industrial Policy—a.k.a. Central Planning—Won’t Make America Great,” Mises Wire, November 5, 2021.

Although industrial policy is in vogue, the evidence suggests that it is not necessary for long-term development. Moreover, despite the popularity of industrial policy in China, America remains the world’s economic power, and by following China, it may lose this vaunted position.

Richard Beason, “Japanese Industrial Policy: An Economic Assessment,” National Foundation for American Policy, November 2021.

There is no evidence to support the claim that Japanese industrial policy during the 1955-1990 period enhanced growth rates by sector, industries with economies of scale (greater efficiency when produced in increased amounts), productivity growth or “competitiveness.” The reality of the political process and government spending priorities makes it very difficult for such policies to be effective. Furthermore, even if political pressures had not intervened, it seems questionable to suggest that government policymakers would be better than actual market participants in determining the most efficient allocation of resources to produce the best economic outcomes.

Douglas Irwin, “ Memo to the Biden administration on how to rethink industrial policy,” Peterson Institute for International Economics, October 2020.

The challenge for policymakers is to identify such industries without succumbing to the notion that every industry is vital to some public objective. For example, the goal of “economic security” is so broadly defined and open-ended that virtually every domestic producer could claim the need for government support on that basis. The risk is that ill-conceived government programs will encourage corrupt behavior in which industries benefit themselves without contributing to national welfare.

Jim Pethokoukis, “Will Biden’s embrace of industrial policy pay off?” AEI Blog, January 15, 2021.

The history of such efforts in advanced capitalist economies gives ample reason for skepticism about the effectiveness of such top-down government planning, from Japanese economic stagnation to the now-mothballed Concorde supersonic jet to France’s failed attempt to create a thriving tech sector. The Internet might seem like the exception that negates the rule, but what turned out to be a successful partnership of government and entrepreneurs didn’t arise out of some master plan from Washington. And what do even the smartest plans look like when filtered through the dodgy quality of American governance? Maybe as an excuse for cronyism and protectionism.

Adam Thierer & Connor Haaland, “Should the U.S. Copy China’s Industrial Policy?” Discourse, March 11, 2021.

America needs to embrace its already vibrant venture capital market, the benefits of basic science and prize competitions, and a light-touch regulatory approach instead of gambling taxpayer dollars on grandiose industrial policy schemes that would likely become boondoggles.

Connor Haaland & Adam Thierer, “Can European-Style Industrial Policies Create Tech Supremacy?” Discourse, February 11, 2021.

Thus far, however, the Europeans don’t have much to show for their attempts to produce home-grown tech champions. Despite highly targeted and expensive efforts to foster a domestic tech base, the EU has instead generated a string of industrial policy failures that should serve as a cautionary tale for U.S. pundits and policymakers, who seem increasingly open to more government-steered innovation efforts.

Phil Levy & Christine McDaniel, “ Does the U.S. Need a Vigorous Industrial Policy?” Discourse, February 16, 2021.

we are certainly hearing new enthusiasm these days about industrial policy. It seems to have proponents or converts on both sides of the aisle. This either means that a new consensus has emerged, or it means that the term is being used so loosely that it has lost its original meaning. I’ll go with the latter; it now means different things to different people.

Wall Street Journal columnist Greg Ip discussing why “ The traditional skepticism toward industrial policy is well deserved.”

The traditional skepticism toward industrial policy is well deserved. Once Washington starts writing checks for semiconductors, other industries may get in line with the outcome determined more by political clout than economic merit. As in shipbuilding, the targeted companies may end up in perpetual need of federal protection and unable to compete internationally

David Ignatius, “The U.S. is quietly mobilizing its economy against China,” Washington Post, March 4, 2021.

The industrial policy the AI commission recommends could unlock talent and innovation. But if officials aren’t careful, government intervention could also afflict our best companies with the dead weight and dysfunction of our broken political system. We need government to spawn brainpower, not bureaucracy.

Veronique de Rugy, “Support for Industrial Policy is Growing,” AIER, January 18, 2020.

Looking at the federal government today tells me that the problems surrounding R&D programs in the past continue today, and will continue tomorrow, because they are simply a consequence of the normal functioning of government. It is hard to wish these problems away, even in the face of the private sector’s “imperfections.” Those arguing for more funding in R&D should proceed with caution.

Ben Reinhardt on concerns about The Endless Frontier Act

This bill is proposing to give money with risk-averse restrictions to a risk-averse organization (the NSF) to be dispersed among other risk-averse organizations (Universities) into a system with increasingly risk-averse incentives. Note that I’m not saying “it’s all fubar’d lets burn it to the ground!” but I am suggesting that instead of slamming on the accelerator, we should be asking “what would a tune-up and an oil change look like instead?”

Ryan Bourne, “Do Oren Cass’s Justifications for Industrial Policy Stack Up?” Cato Commentary, August 15, 2019.

Oren Cass asserts that markets cannot generally allocate resources efficiently by industry. Yet he provides no meaningful metrics to show this is the case, nor shows why his policies would deliver better outcomes. His two main claims about the benefits of a manufacturing sector — “stable employment” and “strong productivity growth” — are directly contradictory. A plethora of evidence suggests as countries’ get richer due to automation and technological improvements, they demand relatively more services, and so the industrial sector declines in employment terms.

Scott Lincicome, “ Manufactured Crisis: ‘Deindustrialization, Free Markets, and National Security,” Cato Policy Analysis No. 907, January 27, 2021.

This skepticism—mostly absent from Washington—is indeed warranted: analyses of the U.S. manufacturing sector and the relationship between trade and national security, as well as the United States’ long and checkered history of security‐related protectionism, undermine the theoretical justifications for imposing protectionism and industrial policy in the name of national defense. Instead, open trade, freer markets, and global interdependence will in almost all cases produce better outcomes in terms of national security and, most importantly, preventing wars and other forms of armed conflict.

Matthew Lau, “Trudeau government’s ‘industrial policy’ creates all the wrong incentives,” Toronto Sun, March 16, 2021.

Why Progress Cannot Be Planned, or Even Forecast

Adam Thierer — Tue, 23 Jul 2013 13:48:36 +0000

Few modern intellectuals gave more serious thought to forecasting the future than Herman Kahn. He wrote several books and essays imagining what the future might look like. But he was also a profoundly humble man who understood the limits of forecasting the future. On that point, I am reminded of my favorite Herman Kahn quote:

History is likely to write scenarios that most observers would find implausible not only prospectively but sometimes, even in retrospect. Many sequences of events seem plausible now only because they have actually occurred; a man who knew no history might not believe any. Future events may not be drawn from the restricted list of those we have learned are possible; we should expect to go on being surprised.^{^[1]}

I have always loved that phrase, “a man who knew no history might not believe any.” Indeed, sometimes the truth (how history actually unfolds) really is stranger than fiction (or the hypothetical forecasts that came before it.)

This insight has profound ramifications for public policy and efforts to “plan progress,” something that typically ends badly. No two scholars nailed that point better in their work than Karl Popper and F.A. Hayek, two of the preeminent philosophers of science and politics of the 20^th century. Popper cogently argued that the problem with “the Utopian programme” is that “we do not possess the experimental knowledge needed for such an undertaking.”^{^[2]} “Progress by its very nature cannot be planned,” Hayek taught us, and the wiser man “is very much aware that we do not know all the answers and that he is not sure that the answers he has are certainly the right ones or even that we can find all the answers.”^{^[3]} One hundred years prior to Hayek making that insight, social philosopher Herbert Spencer explained how humans would only be truly wise once they fathomed the limits of their own knowledge:

In all directions his investigations eventually bring him face to face with the unknowable; and he ever more clearly perceives it to be the unknowable. He learns at once the greatness and the littleness of human intellect—its power in dealing with all that comes within the range of experience; its impotence in dealing with all that transcends experience. He feels more vividly than any others can feel, the utter incomprehensibleness of the simplest fact, considered in itself. He alone truly sees that absolute knowledge is impossible. He alone knows that under all things there lies an impenetrable mystery.^{^[4]}

Unfortunately, most humans suffer from what Nassim Nicholas Taleb calls “epistemic ignorance” or hubris concerning the limits of our knowledge. “We are demonstrably arrogant about what we think we know,” he says.^{^[5]} “We overestimate what we know, and underestimate uncertainty.”^{^[6]} “There are no crystal balls, and no style of thinking, no technique, no model will ever eliminate uncertainty,” argues Dan Gardner, author of Future Babble: Why Expert Predictions Are Next to Worthless. “The future will forever be shrouded in darkness. Only if we accept and embrace this fundamental fact can we hope to be prepared for the inevitable surprises that lie ahead,” Gardner notes.^{^[7]}

This is why attempts to forecast the future so often end in folly. The great Austrian school economist Israel Kirzner spoke of “the shortsightedness of those who, not recognizing the open-ended character of entrepreneurial discovery, repeatedly fall into the trap of forecasting the future against the background of today’s expectations rather than against the unknowable background of tomorrow’s discoveries.”^{^[8]} This is especially true as it pertains to technological change and change in information markets. “Anyone who predicts the technological future is sure soon to seem foolish,” noted technology scholar George Gilder. “It springs from human creativity and thus inevitably consists of surprise.”^{^[9]}

Knowledge of history and historical trends can help inform our decisions and predictions, yet they are insufficient to accurately forecast all that may come our way. “The past seldom obliges by revealing to us when wildness will break out in the future,” observes Peter L. Bernstein, author of Against the Gods: The Remarkable Story of Risk.^{^[10]}

We can relate these lessons to Internet policy and digital economics. A largely unfettered cyberspace has left digital denizens better off in terms of the information they can access as well as the goods and services from which they can choose. In true Schumpeterian fashion, “information empires” have come and gone in increasingly rapid progression.^{^[11]} There are countless “tech titans” that, for a time, seemed to rule their respective sectors only to experience a precipitous fall.^{^[12]} Indeed, if you blink your eyes in the information age, you can miss revolutions.^{^[13]}

“The challenge of disruptive innovation,” observes technology lawyer Glenn Manishin, is that “it forces market participants to rethink their premises and reimagine the business they are in. Those who get it wrong will be lost in the dustbin (or buggy whip rack) of history. Those who get it right typically enjoy a window of success until the next inflection point arrives.”^{^[14]} And the cycle Manishin describes just keeps repeating faster and faster throughout modern information sectors.

This explain why, just as planning and forecasting often fail in a macro sense, they also fail in the micro sense as industries and analysts repeatedly fail to accurately identify future trends and marketplace developments. “Markets that don’t exist can’t be analyzed,” observes Clayton M. Christensen, author of The Innovator’s Dilemma. “In dealing with disruptive technologies leading to new markets,” he finds, “researchers and business planners have consistently dismal records.”^{^[15]} Simply put, as Yogi Berra once famously quipped: “It’s tough to make predictions, especially about the future.”

The ramifications for public policy are clear. Patience and humility are key virtues since, as economist Daniel F. Spulber correctly writes, “Governments are notoriously inept at picking technology winners or steering fast-moving markets in superior directions. Understanding technology requires extensive scientific and technical knowledge. Government agencies cannot expect to replicate or improve upon private sector knowledge. Technological innovation is uncertain by its very nature because it is based on scientific discoveries. The beneﬁts of new technologies and the returns to commercial development also are uncertain.”^{^[16]}

Policymakers would be wise to heed all this advice before trying to “plan progress,” especially in highly-dynamic, rapidly-evolving technology sectors. As the old saying goes, the best-laid plans of mice and men often go awry.

[1] Herman Kahn and Anthony Wiener, The Year 2000: A Framework for Speculation on the Next Thirty-three Years (New York: Macmillan, 1967), 264-5.

[2] Karl Popper, The Poverty of Historicism, (London: Routledge, 1957, 2002), 77.

[3] Hayek, The Constitution of Liberty, 41, 406. Similarly, political scientist Vincent Ostrom has observed that, “Human beings face difficulties in dealing with a world that is open to potentials for choice but always accompanied by basic limits. There is much about the mystery of being that cannot be known by mortal human beings.” Vincent Ostrom, The Meaning of Democracy and the Vulnerability of Democracies (Ann Arbor: The University of Michigan Press, 1997), 29-30.

[4] Herbert Spencer, “Progress: Its Law and Cause,” (April 1857), republished in Essays: Scientific, Political, and Speculative (London: Williams and Norgate, 1891), available at: http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=335&chapter=12314&layout=html

[5] Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable (New York: Random House, 2007), 138.

[6] Id., 140. Similarly, Cognitive psychologist Daniel Kahneman speaks of, “Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.” Daniel Kahneman, Thinking Fast and Slow (New York: Farrar, Straus and Giroux, 2011) 201.

[7] Dan Gardner, Future Babble: Why Expert Predictions Are Next to Worthless, and You Can Do Better (New York: Dutton, 2011), 16-17.

[8] Israel Kirzner, Discovery and the Capitalist Process (University of Chicago Press, 1985), at xi.

[9] George Gilder, Wealth & Poverty, 101.

[10] Peter L. Bernstein, Against the Gods: The Remarkable Story of Risk (New York: John Wiley & Sons, Inc., 1996) 334.

[11] “Each era of computing seems to run for about a decade of total dominance by a given platform. Mainframes (1960-1970), minicomputers (1970-1980), character-based PCs (1980-1990), graphical PCs (1990-2000), notebooks (2000-2010), smart phones and tablets (2010-2020?). We could look at this in different ways like how these devices are connected but I don’t think it would make a huge difference. Now look at the dominant players in each succession – IBM (1960-1985), DEC (1965-1980), Microsoft (1987-2003), Google (2000-2010), Facebook (2007-?). That’s 25 years, 15 years, 15 years, 10 years, and how long will Facebook reign supreme? Not 15 years and I don’t think even 10. I give Facebook seven years or until 2014 to peak.” Robert Cringely, “The Decline and Fall of Facebook,” I, Cringely, July 20, 2011, http://www.cringely.com/2011/07/the-decline-and-fall-of-facebook.

[12] Adam Thierer, “Of ‘Tech Titans’ and Schumpeter’s Vision,” Forbes, August 22, 2011, http://www.forbes.com/sites/adamthierer/2011/08/22/of-tech-titans-and-schumpeters-vision.

[13] Megan Garber, “The Internet at the Dawn of Facebook,” The Atlantic, May 17, 2012, http://www.theatlantic.com/technology/archive/2012/05/the-internet-at-the-dawn-of-facebook/257342.

[14] Glenn Manishin, “Of Buggy Whips, Telephones and Disruption,” DisCo, June 25, 2012, http://www.project-disco.org/competition/of-buggy-whips-telephones-and-disruption.

[15] Clayton M. Christensen, The Innovator’s Dilemma (New York: Harper Business Essentials, 1997), xxv.

[16] Daniel F. Spulber, “Unlocking Technology: Antitrust and Innovation,” 4(4), Journal of Competition Law & Economics, 915–96, 965. (May 2008).

What is “Optimal Interoperability”? A Review of Palfrey & Gasser’s “Interop”

Adam Thierer — Mon, 11 Jun 2012 17:36:47 +0000

I’m pretty rough on all the Internet and info-tech policy books that I review. There are two reasons for that. First, the vast majority of tech policy books being written today should never have been books in the first place. Most of them would have worked just fine as long-form (magazine-length) essays. Too many authors stretch a promising thesis into a long-winded, highly repetitive narrative just to say they’ve written an entire book about a subject. Second, many info-tech policy books are poorly written or poorly argued. I’m not going to name names, but I am frequently unimpressed by the quality of many books being published today about digital technology and online policy issues.

The books of Harvard University cyberlaw scholars John Palfrey and Urs Gasser offer a welcome break from this mold. Their recent books, Born Digital: Understanding the First Generation of Digital Natives, and Interop: The Promise and Perils of Highly Interconnected Systems, are engaging and extremely well-written books that deserve to be books. There’s no wasted space or mindless filler. It’s all substantive and it’s all interesting. I encourage aspiring tech policy authors to examine their works for a model of how a book should be done.

In a 2008 review, I heaped praise on Born Digital and declared that this “fine early history of this generation serves as a starting point for any conversation about how to mentor the children of the Web.” I still recommend highly to others today. I’m going to be a bit more critical of their new book, Interop, but I assure you that it is a text you absolutely must have on your shelf if you follow digital policy debates. It’s a supremely balanced treatment of a complicated and sometimes quite contentious set of information policy issues.

In the end, however, I am concerned about the open-ended nature of the standard that Palfrey and Gasser develop to determine when government should intervene to manage or mandate interoperability between or among information systems. I’ll push back against their amorphous theory of “optimal interoperability” and offer an alternative framework that suggests patience, humility, and openness to ongoing marketplace experimentation as the primary public policy virtues that lawmakers should instead embrace.

Interop is Important, but Often Difficult & Filled with Trade-Offs

Palfrey and Gasser begin by noting that “there is no single, agreed-upon definition of interoperability” and that “there are even many views about what interop is and how it should be achieved” (p. 5). They set out to change that by developing “a normative theory identifying what we want out of all this interconnectivity” that the information age has brought us (p. 3).

Generally speaking, Palfrey and Gasser believe increased interoperability — especially among information networks and systems — is a good thing because it “provides consumers greater choice and autonomy” (p. 57), “is generally good for competition and innovation” (p. 90), and “can lead to systemic efficiencies” (p. 129).

But they wisely acknowledge that there are trade-offs, too, noting that “this growing level of interconnectedness comes at an increasingly high price” (p. 2). Whether we are talking about privacy, security, consumer choice, the state of competition, or anything else, Palfrey and Gasser argue that “the problems of too much interconnectivity present enormous challenges both for organizations and for society at large” (p. 2). Their chapter and privacy and security offers many examples, but one need only look around at their own digital existence to realize the truth of this paradox. The more interconnected our information systems become, and the more intertwined our social and economic lives become with those systems, the greater the possibility of spam, viruses, data breaches, and various types of privacy or reputational problems. Interoperability giveth and it taketh away.

When Does “the Public Interest” Demand Interoperability Regulation?

So, how do we know when increased interoperability is good for us or society? How do we strike a reasonable balance? And, most controversially, when should government intervene to tip the balance in one direction or another?

Palfrey and Gasser return to these questions repeatedly throughout the book but admit that their answers will be dissatisfying since “there is no single form or optimal amount of interoperability that will suit every circumstance” (p. 76). Thus, “most of the specifics of how to bring interop about [must] be determined on a case-by-case basis (p. 17). They elaborate:

That can feel unsatisfying. But it is an essential truth: the most interesting interop problems relate to society’s most complex and most fundamental systems. Their answers are never simple to come by, nor are they easy to implement. This characteristic of interop theory is a feature, not a bug. … The price to be paid for striving for a universal principle at the level of theory is that such a theory is full of nuances when it comes to application and practice (p. 17-18).

Fair enough. Yet, Palfrey and Gasser also make it clear they want government(s) to play an active role in ensuring optimal interoperability. They say they favor “blended approaches that draw upon the comparative advantages of the private and public sector” (p. 161), but they argue that government should feel free to tip or nudge interoperability determinations in superior directions. “If deployed with skill,” they argue, “the law can play a central role in ensuring that we get as close as possible to optimal levels of interoperability in complex systems” (p. 88).

That phrase — “optimal level of interoperability” — pops up repeatedly throughout the book. So, too, does the phrase “the public interest.” Palfrey and Gasser argue that governments must look out for “the public interest” and “optimal interoperability” since “market forces do not automatically lead to appropriate standards or to the adoption of the best available technology” (p. 167). Here they introduce two additional amorphous values that complicate the debate: “appropriate standards” and “best available technology.”

The fundamental problem this “public interest” approach to interoperability regulation is that it is no better than the “I-know-it-when-I-see-it” standard we sometimes at work in the realm of speech regulation. It’s an empty vessel, and if it is the lodestar by which policymakers make determinations about the optimal level of interoperability, then it leaves markets, innovators, and consumers subject to the arbitrary whims of what a handful of politicians or regulators think constitutes “optimal interoperability,” “appropriate standards,” and “best available technology.”

On the Limits of Knowledge

Palfrey and Gasser’s framework feels more than just “unsatisfying” in this regard; it feels downright insufficient. That’s because it is missing a major variable: the extent to which state actors are able to adequately define those terms or accurately forecast the future needs of markets or citizen-consumers.

Surprisingly, Palfrey and Gasser don’t really spend much time discussing the specific remedies the state might impose to achieve optimal interoperability. I would have liked to have seen them develop a matrix of interop options and then outline the strengths and weaknesses of each. But even absent a more detailed discussion of possible regulatory remedies, I would have settled for more concrete answers to the following questions: Why are we to assume that regulators possess the requisite knowledge needed to know when it makes sense to foreclose ongoing marketplace experimentation? And why should we trust that, by substituting their own will for that of countless other actors in the information technology marketplace, we will be left better off?

The closest Palfrey and Gasser get to defining a firm standard for when and why such state intervention is warranted comes on page 173 when they are discussing the need for the state to establish sound reasons for intervention. They argue:

The objective should not be interoperability per se but, rather, one or more public policy goal to which interoperability can lead. The goals that usually make sense are innovation and competition, but other objectives might include consumer choice, ease of use of a technology or system, diversity, and so forth (p. 173).

This is a bit better, but it still doesn’t fully grapple with the cost side of the cost-benefit calculus for intervention. Palfrey and Gasser are willing to at least acknowledge some of those problems when they remark that “the state is rarely in a position to call a winner among competing technologies” (p. 174). Moreover,

Lawmakers need to keep in view the limits of their own effectiveness when it comes to accomplishing optimal levels of interoperability. Case studies of government intervention, especially where complex information technologies are involved, show that states tend to be ill suited to determine on their own what specific technology will be the best option for the future (p. 175)

Quite right! Yet, that insight does not seem to influence their calls elsewhere in the book for regulatory activism. That’s a shame since the admonition about policymakers recognizing the “limits of their own effectiveness” should be able to help us devise some limiting principles regarding the state’s role.

Toward an Alternative Theory: Experimental, Evolutionary Interoperability

Allow me to offer a different theory of optimal interoperability that flows from these previous insights. It’s based on a more dynamic view of markets and the central importance of experimentation in the face of uncertainty. Let me just go ahead and articulate the core principles of what I will refer to as “experimental, evolutionary interoperability theory.” Then I’ll explain it in more detail

Experimental, evolutionary interoperability : The theory that ongoing marketplace experimentation with technical standards, modes of information production and dissemination, and interoperable information systems, is almost always preferable to the artificial foreclosure of this dynamic process through state action. The former allows for better learning and coping mechanisms to develop while also incentivizing the spontaneous, natural evolution of the market and market responses. The latter (regulatory foreclosure of experimentation) limits that potential.

Palfrey and Gasser would label this a “laissez-faire” theory of interoperability and oppose it since they believe “a pure laissez-faire approach to interop rarely works out well” (p. 160). But they are wrong, at least to the extent they include the sweeping modifier “rarely” to describe this model’s effectiveness. In reality, the vast majority of interoperability that occurs into today’s information economy happens in a completely natural, evolutionary fashion without any significant state intervention whatsoever. In countless small and big ways alike, interconnection and interoperability happens every day throughout society. Yes, it is true that interoperability often happens against the backdrop of a legal system that allows court action to enforce certain rights or address perceived harms, but I would not classify that as a significant direct state intervention to tip or nudge interconnection decisions in one direction or another. And when interoperability doesn’t happen naturally, there are often good reasons it doesn’t and, even if there aren’t, non-interop spawns beneficial marketplace reactions and innovations.

Experimental, evolutionary interoperability theory flows out of Schumpeterian competition theory and the related field of evolutionary economics, but it is also heavily influenced by public choice theory (which stresses the limitations of romanticized theories of politics, planning, and “public interest” regulation). This alternative theory begins by accepting the simple fact that, as Austrian economist F.A. Hayek taught us, “progress by its very nature cannot be planned.” The wiser man, Hayek noted, “is very much aware that we do not know all the answers and that he is not sure that the answers he has are certainly the right ones or even that we can find all the answers.”

Ongoing experimentation with varying business models and modalities of social and economic production allows us to see what consumer choice and trial and error experimentation yields naturally over time. Ongoing experiments with flexible, voluntary interop standards and negotiations also allows us to determine which technological standards seem to benefit consumers in the short-term while also encouraging innovators to leap-frog existing standards and platforms when they become locked-in for too long or seem sub-optimal.

In the short-term, it is entirely possible that such voluntary, evolutionary interop experiments “fail” in various ways. That is often a good thing. Failures are how individuals and a society learn to cope with change and devise systems and solutions to accommodate technological change. As Samuel Beckett once counseled: “Ever tried. Ever failed. No matter. Try Again. Fail again. Fail better.” Progress depends upon an embrace of this uncertainty and acceptance of a world of constant upheaval if we are to learn how to cope, adapt, and move forward.

In this model, technological innovation often springs from the quest for the prize of market power. Palfrey and Gasser generally reject this Schumpeterian vision of dynamic competition, but they at least do a nice job of describing it:

firms may have a stronger incentive to be innovative when low levels of interoperability promise higher or even monopoly profits. This sort of competition… creates incentives for firms to come up with entirely new generations of technologies or business methods that are proprietary (p. 121).

They reject this approach based on (1) the mistaken notion that the quest of the prize of market power ends in the attainment and preservation of that market power; and (2) the belief that policymakers possess the ability to set us on a better course through wise interventions.

In a moment, I’ll prove why that is misguided by examining a few real-world cases studies. For now, however, let’s return to Palfrey & Gasser’s central operating principle and contrast it with the vision I’ve articulated here. Recall that they argue “it is important to maintain and facilitate diversity in the marketplace. We simply want systems to work together when we want them to and to not work together when we do not.” Again, there is no standard here if one is suggesting this as the principle by which to determine when state intervention is desirable . But if one is looking at that aspirational statement as a description of the natural order of things — namely, that we do indeed “want systems to work together when we want them to and to not work together when we do not” — then that is a perfectly sound principle for understanding why state intervention should be disfavored in all but the most extreme circumstances. To reiterate: We should not allow the state to foreclose interoperability experiments because (a) those experiments have value in and of themselves, and (b) state action is likely to have myriad unintended consequences and unforeseen costs that are not easily remedied or reversed.

There are moments in the book when Palfrey and Gasser appear somewhat sympathetic to the sort of alternative “evolutionary interop” theory I have articulated here. For example, they note that:

The web is a great equalizer for technology firms. As consumers, we have come to expect that everything will work together without incident or interruption. We think it bizarre when something in the digitally networked world does not mesh with something else, perceiving whatever it is to be broken, in need of repair. This high degree of expectation is a powerful driver of interoperability. Market players are increasingly responding to this consumer demand and making these invisible links work for their customers without any government intervention” (p. 28) [italics added]

You won’t be surprised to hear that I agree wholeheartedly! Moreover, what it really proves is that ongoing marketplace experimentation and the evolution of norms and standards generally solve interoperability problems as they develop. That doesn’t mean markets are perfectly competitive or always produce perfect interoperability. But, again, why should we believe state intervention will do a better job? And isn’t it possible that intervention could negatively counter those natural instincts that Palfrey and Gasser describe about how consumers and market actors interact to make those “invisible links” work out as nicely as they do today?

Interop, Competition & Innovation: Some Cases Studies of Evolutionary Interoperability in Action

To better explain experimental, evolutionary interop theory and how it plays out in the real-world, let’s examine the complex relationship between interoperability, competition, and innovation in the information economy through the prism of three case studies: AOL and instant messaging, video game consoles, and smartphones.

AOL

America Online’s (AOL) case study is probably the most profound example of Schumpeterian creative destruction rapidly eroding the market power of a once “dominant” digital giant. Not long ago, AOL was cast as the great villain of online openness and interoperability. In fact, when Lawrence Lessig penned his acclaimed book Code in the late 1990s, AOL was supposedly set to become the corporate enslaver of cyberspace.

For a time, it was easy to see why Lessig and others were worried. Twenty five million subscribers were willing to pay $20 per month to get a guided tour of AOL’s walled garden version of the Internet. Then AOL and media titan Time Warner announced a historic mega-merger that had some predicting the rise of “new totalitarianisms” and corporate “Big Brother.”

Fearing the worst, several conditions were placed on approval of the merger by both the Federal Trade Commission and the Federal Communication Commission. These included “open access” provisions that forced Time Warner to offer the competing ISP service from the second largest ISP at that time (Earthlink) before it made AOL’s service available across its largest cable divisions. Another provision imposed by the FCC mandated interoperability of instant messaging systems based on the fear that AOL was poised to monopolize that emerging technology.

Palfrey and Gasser suggest this was a necessary and effective intervention. “The AOL IM case is another instance in which the role of government was key in establishing a more interoperable ecosystem” and they credit the FCC’s action with cutting AOL’s share of the IM (p. 68-9). That’s a huge stretch. The reality is that markets and technologies evolved around AOL’s walled garden and decimated whatever advantage the firm had in either the web portal business or instant messaging market.

First, despite all the hand-wringing and regulatory worry, AOL’s merger with Time Warner quickly went off the rails and AOL’s online “dominance” quickly evaporated. Looking back at the deal with TW, Fortune magazine senior editor Allan Sloan called it the “turkey of the decade” since it cost shareholders hundreds of billions. Second, AOL’s attempt to construct the largest walled garden ever also failed miserably as organic search and social networking flourished. Consumers showed they demanded more than the hand-held tour of cyberspace.

Finally, the hysteria about AOL’s threat to monopolize instant messaging and deny interoperability proved particularly unwarranted and also serves as a cautionary tale for those who argue regulation is needed to solve interoperability problems. At the time, well-heeled major competitors like Yahoo and Microsoft already had significant competing IM platforms, and others were rapidly developing. Interoperability among those systems was also spontaneously developing as consumers demanded greater flexibility among and within their communications systems. The development of Trillian, which allowed IM users to see all their various IM feeds at once, was an early precursor of what was to come. Today, anyone can download a free chat client like Digsby or Adium to manage multiple IM and email services from Yahoo!, Google, Facebook and just about anyone else, all within a single interface, essentially making it irrelevant which chat service friends use.

In a truly Schumpetrian sense, innovators came in and disrupted AOL’s plans to dominate instant messaging with innovative offerings that few critics or regulators would have believed possible just a decade ago. Progress happened, and nobody planned it from above. The FCC’s IM interoperability provision was quietly sunset less than three years after its inception since the evolution of technology and markets had rapidly eliminated the perceived problem. That mandate, as it turned out, wasn’t needed at all, and all it probably accomplished during its short life span was to hobble AOL’s ability to find a way to remain relevant in the increasingly competitive Web. 2.0 world.

Video game consoles

At first blush, the video game console wars might seem like the ideal case study for those who favor greater interoperability regulation. After all, in a static sense, why do we really need several competing video game platforms that prevent consumers from playing their games on more than one system? The lack of console interoperability also drives up development costs for game makers. Many of those developers would prefer to just code games for a single, universal gaming platform. Therefore, isn’t this the perfect excuse for state intervention to ensure “optimal interoperability”?

To the contrary, this is another example of why government should generally avoid intervening to try to achieve some sort of artificial optimal interoperability. This market has undergone continuous, turbulent change and witnessed remarkable pro-consumer innovation despite a lack of interoperability.

The video game console wars have raged since the late 1970s. The first generation of consoles was dominated Atari (2600), Mattel (Intellivision), and Coleco (ColecoVision). By the mid-1980s, the industry saw a new cast of characters displace the old players. Nintendo (NES), and Sega (Genesis) took the lead. Atari attempted a rebirth with its “Jaguar” console but failed miserably.

The demise of Atari’s 2600 console was particularly notable. When it debuted in 1977, the system revolutionized the home game market on its way to selling more than 30 million units. For a few years, it utterly dominated the console market and the company “rushed out games, assuming that its customers would play whatever it released,” notes New York Times reporters Sam Grobart and Ian Austen. But demand rapidly dried up as other consoles and personal computers took the lead with more powerful, flexible platforms and games. In the end, “millions of unsold games and consoles were buried in a New Mexico landfill in 1983. Warner Communications, which bought Atari in 1976 for $28 million, sold it in 1984 for no cash.”

The next generation of machines was dominated by Nintendo and Sega. But by the turn of the century, more new faces appeared and disrupted the second generation of market leaders. Sony (PlayStation) and Microsoft (Xbox) introduced powerful new consoles that continue to evolve to this day. Both consoles have already cycled through three iterations, each increasingly powerful and more functional. Sega dropped out of the console business and refocused on game development. Nintendo managed to survive with its innovative “Wii” system, but has fallen from its perch as king of the console market. Many also forget Apple’s failed run at the console business with its “Pippin” system in the late 1990s. Steve Jobs killed off the console when he returned to once again lead Apple in 1997. Ironically, just a decade later, with the rise of the iPhone and the Apple App Store, the company would emerge as a major player in the gaming market as smartphone gaming exploded.

Of course, PC gaming existed across these generations and handheld gaming devices and now smartphones are also providing competition to traditional consoles. Arcade games also existed both then and now. Thus, the video game market has always been broader than just home gaming consoles.

Nonetheless, at no time during the turbulent history of this sector have major consoles interoperated. The result has been a constant effort by major console developers to leap-frog the competition with increasingly innovative and powerful consoles and peripherals. Would Microsoft have developed the Kinect motion-sensing device if Nintendo had not previously developed their game-changing Wii motion controllers? It’s impossible to know but it would seem that non-interoperability had something to do with that beneficial development. Microsoft needed a game-changing peripheral of its own to meet the Nintendo challenge since Nintendo was not about to share its innovations with the competition. Meanwhile, Sony has developed its own motion-based “Move” system to compete Microsoft and Nintendo.

This is a highly dynamic marketplace at work. Could policymakers have determined that 3 major non-interoperable home consoles would have produced so much innovation? Would they have judged that to be too much or too little competition? Would they have been able to foresee or help bring about the disruptive competition from portable gaming devices or smartphones? What sort of interop regulation would have made that happen?

As Palfrey and Gasser suggest in their book, there really “is no single form or optimal amount of interoperability that will suit every circumstance.” The video game case study seems to prove that. Yet, their framework leaves the door open a bit wider for state meddling to determine “optimal interop.” I have little faith that state planners could have given us a more innovative video game marketplace through interop nudging. And I also worry that if the door had been open for regulators at the FCC or elsewhere to influence interoperability decisions, it might have also opened to the door to content regulation since many lawmakers have long had an appetite for video game censorship.

Smartphones

The mobile phone handset and operating system marketplace has undergone continuous change over the past 15 years and is still evolving rapidly. There are some interoperable elements, such as the ability to make connecting calls and send texts and IMs. But other parts of the smartphone ecosystem are not interoperable, such as underlying operating systems or apps and app stores.

In the midst of this mixed system of interoperable and non-interoperable elements, innovation and cut-throat competition have flourished.

When cellular telephone service first started taking off in the mid-1990s, handsets and mobile operating systems were essentially one in the same, and Nokia and Motorola dominated the sector with fairly rudimentary devices. The era of personal digital assistants (PDAs) dawned during this period, but mostly saw a series of overhyped devices, including Apple’s “Newton,” that failed to catch on. In the early 2000s, however, a host of new players and devices entered the market, many of which are still on the scene today, including LG, Sony, Samsung, Siemens, and HTC. Importantly, the sector began splitting into handsets versus operating systems (OS). Leading mobile OS makers have included: Microsoft, Palm, Symbian, BlackBerry (RIM), Apple, and Android (Google).

The sector continues to undergo rapid change and interoperability norms have evolved at the same time. Looking back, it’s hard to know whether increased interoperability would have helped or hurt the state of competition and innovation.

Consider Palm, Blackberry, and Microsoft which all limited interoperability with other systems in various ways. Palm smartphones were wildly popular for a brief time and brought many innovations to the marketplace, for example. Palm underwent many ownership and management changes, however, and rapidly faded from the scene. After buying Palm in 2010, HP announced it would use its webOS platform in a variety of new products. That effort failed, however, and HP instead announced it would transition webOS to an open source software development mode.

Similarly, RIM’s BlackBerry was thought to be the dominant smartphone device for a time, but it has recently been decimated. BlackBerry’s rollercoaster ride has left it “trying to avoid the hall of fallen giants” in the words of an early 2012 New York Times headline. The company once commanded more than half of the American smartphone market but now has under 10 percent, and that number continues to fall.

Microsoft also had a huge lead in licensing its Windows Mobile OS to high-end smartphone handset makers until Apple and Android disrupted its business. It’s hard to believe now, but just a few years ago the idea of Apple or Google being serious contenders in the smartphone business was greeted with suspicion, even scorn by popular handset makers such as Nokia and Motorola. This serves as another classic example of those with a static snapshot mentality disregarding the potential for new entry and technological disruption. Just a few years later, Nokia’s profits and market share have plummeted and a struggling Motorola was purchased by Google. Meanwhile, again, Palm seems dead, BlackBerry is dying, and Microsoft is struggling to win back market share it has lost to Apple and Google in this arena.

It would seem logical to conclude that the ebbs and flows of interoperable and non-interoperable elements of the smartphone world have created a turbulent but vibrantly innovative sector. Has the lack of interoperable operating systems or apps and apps stores hurt smartphone consumers? It’s hard to see how. Mandating interoperability at either level could lead to an OS or app store monopoly, most likely for Apple if such a policy were pursued today.

While Apple has had great success and earned endless kudos for their slick, user-friendly innovations from consumers and tech wonks alike, some critics decry their proprietary business model and more “controlled” user experience. Apple tightly controls almost every level of production of its iPhone smartphone and iPad tablet. Interoperability with competing systems, standards, or technologies is limited in many ways. Is that bad? Some critics think so, suggesting that greater “openness” — presumably in the form of greater device or program interoperability — is needed. But so what? Consumers seem extremely happy with Apple devices. Moreover, well-heeled rivals like Google (Android) and Microsoft continue to innovate at a healthy clip and offer consumers a decidedly different user experience. As with video games consoles, non-interop has had some important dynamic effects and advantages for consumers. It’s hard to know what “optimal interoperability” would even look like in the modern smartphone marketplace and how it would be achieved, but it’s equally hard to believe that consumers would be significantly better off if regulators were trying to achieve it through top-down mandates on such a dynamic, fast-moving market. [For more on this topic, see my 2011 book chapter, “The Case for Internet Optimism, Part 2 – Saving the Net From Its Supporters,” from the book, The Next Digital Decade.]

Case Study Summary & Analysis

These case studies suggest that defining “optimal interoperability” is a pipe dream. In some cases, consumers demanded a certain amount interoperability and they got it. But it seems equally obvious that they did not demand perfect interoperability in every case. Few consumers are tripping over their own feet in a mad rush to toss out their XBoxs or iPhones just because they are not perfectly interoperable. On the other hand, since the days of the old “walled garden” hell of AOL, CompuServe, Prodigy, and so on, it would seem that information technology markets are growing more “open” in other ways. You can’t completely lock-down a user’s online experience and expect to win their business over the long haul.

Palfrey and Gasser make that point quite nicely in the book:

Increasingly, though, businesses are seeing the merits of strategies based on openness. A growing number of businesses are pursuing models that incorporate interoperability as a core principle. More and more firms, especially in the information business, are shedding their proprietary approaches in favor of interoperability at multiple levels. The goal is not to be charitable to competitors or customers, of course, but to maximize returns over time by building an ecosystem with others that holds greater promise than the go-it-alone approach (p. 149).

Quite right, but let’s not pretend that any mass market information platforms or systems will ever be perfectly “open” or interoperable. There will always be some limitations on how such systems are used or shared. And that’s just fine once you embrace a more flexible theory of evolutionary interoperability. Ongoing experiments will get us to a better place.

Conclusion: Let Interop Experiments Continue!

So, let me wrap up by restating my alternative theory of optimal interoperability as succinctly as possible: When in doubt, ongoing, bottom-up, dynamic experimentation will almost always yield better answers than arbitrary intervention and top-down planning. Again, that is not to say that all interoperability experiments will leave society better off in the short-term. Some interoperability experiments and resulting market norms or outcomes can create challenging dilemmas for individuals and institutions. There may be short-term spells of “market power,” for example, and some standards may get locked in longer than some of us think makes sense. If, however, we have faith in humans to solve problems with information and technology, then still more experimentation — not state intervention — is the answer. And that is especially true once you accept the fact that those seeking to intervene have very limited knowledge of all the relevant facts needed to even make wise decisions about the future course of technology markets or information systems.

Some will find my alternative theory of optimal interoperability no more satisfying than Palfrey and Gasser’s since they may find the experimental interop framework too inflexible when it comes to state action. Whereas the frustration with Palfrey and Gasser’s theory will likely flow from their failure to define a coherent standard for when intervention is warranted, my approach solves that problem by suggesting we should largely abandon the endeavor and instead let ongoing market experiments solve interop problems over time. For me, we would need to find ourselves in a veritable whole-world-is-about-to-go-to-hell sort of moment before I could go along with state intervention to tip the interop scales in one direction or another. And, generally speaking, this is exactly the sort of thing that antitrust laws are supposed to address after a clear showing of harm to consumer welfare. Stated differently, to the extent any state intervention to address interoperability can be justified, ex post antitrust remedies should almost always trump ex ante regulatory meddling.

This alternative vision of evolutionary, experimental interoperability will be rejected by those who believe the state has the ability to wisely intervene and nudge markets to achieve “optimal interoperability” through some sort of Goldilocks principle that can supposedly get it just right. For those of us who have doubts about the likelihood of such sagacious state action — especially for fast-paced information sectors — the benefits of ongoing marketplace experimentation far outweigh the costs of letting those experiments run their course.

Regardless, we should be thankful that John Palfrey and Urs Gasser have provided us with a book that so perfectly frames what should be a very interesting ongoing debate over these issues. I encourage everyone to pick up a copy of Interop so you can join us in this important discussion.

Additional Reading:

the official book site
buy the book on Amazon or Barnes & Noble
Follow the authors on Twitter: @JPalfrey & @UGasser
a video of their Harvard book launch follows:

The Case for Internet Optimism, Part 1: Saving the Net From Its Detractors

Adam Thierer — Mon, 31 Jan 2011 16:43:30 +0000

Here’s the first of two essays I’ve recently penned making “The Case for Internet Optimism.” This essay was included in the book, The Next Digital Decade: Essays on the Future of the Internet (2011), which was edited by Berin Szoka and Adam Marcus of TechFreedom. In these essays, I identify two schools of Internet pessimism: (1) “Net Skeptics,” who are pessimistic about the Internet improving the lot of mankind; and (2) “Net Lovers,” who appreciate the benefits the Net brings society but who fear those benefits are disappearing, or that the Net or openness are dying. (Regular readers of this blog will be familiar with these themes since I sketched them out in previous essays here such as, “Are You an Internet Optimist or Pessimist?” and “Two Schools of Internet Pessimism.”) The second essay is here.

This essay focuses on the first variant of Internet pessimism, which is rooted in general skepticism about the supposed benefits of cyberspace, digital technologies, and information abundance. The proponents of this pessimistic view often wax nostalgic about some supposed “good ‘ol days” when life was much better (although they can’t seem to agree when those were). At a minimum, they want us to slow down and think twice about life in the Information Age and how it’s personally affecting each of us. Occasionally, however, this pessimism borders on neo-Ludditism, with some proponents recommending steps to curtail what they feel is the destructive impact of the Net or digital technologies on culture or the economy. I identify the leading exponents of this view of Internet pessimism and their major works. I trace their technological pessimism back to Plato but argue that their pessimism is largely unwarranted. Humans are more resilient than pessimists care to admit and we learn how to adapt to technological change and assimilate new tools into our lives over time. Moreover, were we really better off in the scarcity era when we were collectively suffering from information poverty? Generally speaking, despite the challenges it presents society, information abundance is a better dilemma to be facing than information poverty. Nonetheless, I argue, we should not underestimate or belittle the disruptive impacts associated with the Information Revolution. But we need to find ways to better cope with turbulent change in a dynamist fashion instead of attempting to roll back the clock on progress or recapture “the good ‘ol days,” which actually weren’t all that good.

Down below, I have embedded the entire chapter in a Scribd reader, but the essay can also be found on the TechFreedom website for the book as well as on SSRN. I have also includes two updated tables that appeared in my old “optimists vs. pessimists” essay. The first lists some of the leading Internet optimists and pessimists and their books. The second table outlines some of the major lines of disagreement between these two camps and I divided those disagreements into (1) Cultural / Social beliefs vs. (2) Economic / Business beliefs.

The Case for Internet Optimism Part 1 – Saving the Net From Its Detractors (Adam Thierer) http://d1.scribdassets.com/ScribdViewer.swf

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Theuthian Technophiles ( “The Internet Optimists”)

Thamusian Technophobes ( “The Internet Pessimists”)

Nicholas Negroponte, Being Digital (1995)
Kevin Kelly, Out of Control: The New Biology of Machines, Social Systems, and the Economic World (1995)
Virginia Postrel, The Future and Its Enemies (1998)
James Surowiecki, The Wisdom of Crowds (2004)
Chris Anderson, The Long Tail: Why the Future of Business is Selling Less of More (2006)
Steven Johnson, Everything Bad is Good For You (2006)
Glenn Reynolds, An Army of Davids: How Markets and Technology Empower Ordinary People to Beat Big Media, Big Government, and Other Goliaths (2006)
Yochai Benkler, The Wealth of Networks: How Social Production Transforms Markets and Freedom (2006)
Clay Shirky, Here Comes Everybody: The Power of Organizing without Organizations (2008)
Don Tapscott & Anthony D. Williams, Wikinomics: How Mass Collaboration Changes Everything (2008)
Jeff Howe, Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business (2008)
Tyler Cowen, Create Your Own Economy: The Path to Prosperity in a Disordered World (2009)
Dennis Baron, A Better Pencil: Readers, Writers, and the Digital Revolution (2009)
Jeff Jarvis, What Would Google Do ? (2009)
Clay Shirky, Cognitive Surplus: Creativity and Generosity in a Connected Age (2010)
Nick Bilton, I Live in the Future & Here’s How It Works (2010)
Kevin Kelly, What Technology Wants (2010)

Neil Postman, Technopoly: The Surrender of Culture to Technology (1993)
Sven Birkerts, The Gutenberg Elegies: The Fate of Reading in an Electronic Age (1994)
Clifford Stoll, High-Tech Heretic: Reflections of a Computer Contrarian (1999)
Cass Sunstein, Republic.com (2001)
Todd Gitlin, Media Unlimited: How the Torment of Images and Sounds Overwhelms Our Lives (2002)
Todd Oppenheimer, The Flickering Mind: Saving Education from the False Promise of Technology (2003)
Andrew Keen, The Cult of the Amateur: How Today’s Internet is Killing our Culture (2007)
Steve Talbott, Devices of the Soul: Battling for Our Selves in an Age of Machines‎ (2007)
Nick Carr, The Big Switch: Rewiring the World, from Edison to Google (2008)
Lee Siegel, Against the Machine: Being Human in the Age of the Electronic Mob (2008)
Mark Bauerlein, The Dumbest Generation: How the Digital Age Stupefies Young Americans and Jeopardizes Our Future (2008)
Mark Helprin, Digital Barbarism: A Writer’s Manifesto (2009)
Maggie Jackson, Distracted: The Erosion of Attention and the Coming Dark Age (2009)
John Freeman, The Tyranny of E-Mail: The Four-Thousand-Year Journey to Your Inbox (2009)
Jaron Lanier, You Are Not a Gadget (2010)
Nick Carr, The Shallows: What the Internet Is Doing to Our Brains (2010)
William Powers, Hamlet’s BlackBerry: A Practical Philosophy for Building a Good Life in the Digital Age (2010)

Optimists	Pessimists
*Cultural / Social beliefs*
Net is participatory	Net is polarizing
Net facilitates personalization (welcome of “Daily Me” that digital tech allows)	Net facilitates fragmentation (fear of the “Daily Me”)
“a global village”	balkanization and fears of “mob rule”
heterogeneity / encourages diversity of thought and expression	homogeneity / Net leads to close-mindedness
allows self-actualization	diminishes personhood
Net a tool of liberation & empowerment	Net a tool of frequent misuse & abuse
Net can help educate the masses	dumbs down the masses
anonymous communication encourages vibrant debate + whistleblowing (a net good)	anonymity debases culture & leads to lack of accountability
welcome information abundance; believe it will create new opportunities for learning	concern about information overload; esp. impact on learning & reading

*Economic / Business beliefs*
benefits of “Free” (increasing importance of “gift economy”)	costs of “Free” (“free” = threat to quality & business models)
mass collaboration is generally more important	individual effort is generally more important
embrace of “amateur” creativity	superiority of “professionalism”
stress importance of “open systems” of production	stress importance of “proprietary” models of production
“wiki” model = wisdom of crowds; benefits of crowdsourcing	“wiki” model = stupidity of crowds; collective intelligence is oxymoron; + “sharecropper” concern about exploitation of free labor

Theuthian Technophiles ( “The Internet Optimists”)

Thamusian Technophobes ( “The Internet Pessimists”)

· Nicholas Negroponte, Being Digital (1995)

· Kevin Kelly, Out of Control: The New Biology of Machines, Social Systems, and the Economic World (1995)

· Virginia Postrel, The Future and Its Enemies (1998)

· James Surowiecki, The Wisdom of Crowds (2004)

· Chris Anderson, The Long Tail: Why the Future of Business is Selling Less of More (2006)

· Steven Johnson, Everything Bad is Good For You (2006)

· Glenn Reynolds, An Army of Davids: How Markets and Technology Empower Ordinary People to Beat Big Media, Big Government, and Other Goliaths (2006)

· Yochai Benkler, The Wealth of Networks: How Social Production Transforms Markets and Freedom (2006)

· Clay Shirky, Here Comes Everybody: The Power of Organizing without Organizations (2008)

· Don Tapscott & Anthony D. Williams, Wikinomics: How Mass Collaboration Changes Everything (2008)

· Jeff Howe, Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business (2008)

· Tyler Cowen, Create Your Own Economy: The Path to Prosperity in a Disordered World (2009)

· Dennis Baron, A Better Pencil: Readers, Writers, and the Digital Revolution (2009)

· Jeff Jarvis, What Would Google Do ? (2009)

· Clay Shirky, Cognitive Surplus: Creativity and Generosity in a Connected Age (2010)

· Nick Bilton, I Live in the Future & Here’s How It Works (2010)

· Kevin Kelly, What Technology Wants (2010)

· Neil Postman, Technopoly: The Surrender of Culture to Technology (1993)

· Sven Birkerts, The Gutenberg Elegies: The Fate of Reading in an Electronic Age (1994)

· Clifford Stoll, High-Tech Heretic: Reflections of a Computer Contrarian (1999)

· Cass Sunstein, Republic.com (2001)

· Todd Gitlin, Media Unlimited: How the Torment of Images and Sounds Overwhelms Our Lives (2002)

· Todd Oppenheimer, The Flickering Mind: Saving Education from the False Promise of Technology (2003)

· Andrew Keen, The Cult of the Amateur: How Today’s Internet is Killing our Culture (2007)

· Steve Talbott, Devices of the Soul: Battling for Our Selves in an Age of Machines‎ (2007)

· Nick Carr, The Big Switch: Rewiring the World, from Edison to Google (2008)

· Lee Siegel, Against the Machine: Being Human in the Age of the Electronic Mob (2008)

· Mark Bauerlein, The Dumbest Generation: How the Digital Age Stupefies Young Americans and Jeopardizes Our Future (2008)

· Mark Helprin, Digital Barbarism: A Writer’s Manifesto (2009)

· Maggie Jackson, Distracted: The Erosion of Attention and the Coming Dark Age (2009)

· John Freeman, The Tyranny of E-Mail: The Four-Thousand-Year Journey to Your Inbox (2009)

· Jaron Lanier, You Are Not a Gadget (2010)

· Nick Carr, The Shallows: What the Internet Is Doing to Our Brains (2010)

· William Powers, Hamlet’s BlackBerry: A Practical Philosophy for Building a Good Life in the Digital Age (2010)

Are You An Internet Optimist or Pessimist? The Great Debate over Technology’s Impact on Society

Adam Thierer — Sun, 31 Jan 2010 18:47:50 +0000

[I’ve been working on an outline for a book I hope to write surveying technological skepticism throughout history. I first started thinking about this topic two years when I noticed that a great number of recent books about Internet policy could generally be grouped into one of two camps: Internet optimists vs. Internet pessimists. I subsequently penned an essay on the subject that generated a fair bit of attention. So, I figured I must be on to something, and the more Net policy books I read, the more I realized that the divisions between these two camps were growing wider and increasingly heated. Thus, I thought I would share this very rough draft (much of it still in outline form) of the opening chapter of that book I want to write about this great intellectual war over the impact of technology on society. I invite reader input. Update Jan. 2011: I finally published a full-length essay on this topic. You can find it here. ]

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The impact of technological change on culture, learning, and morality has long been the subject of intense debate, and every technological revolution brings out a fresh crop of both pessimists and pollyannas. Indeed, a familiar cycle has repeat itself throughout history whenever new modes of production (from mechanized agriculture to assembly-line production), means of transportation (water, rail, road, or air), energy production processes (steam, electric, nuclear), medical breakthroughs (vaccination, surgery, cloning), or communications techniques (telegraph, telephone, radio, television) have appeared on the scene.

The cycle goes something like this. A new technology appears. Those who fear the sweeping changes brought about by this technology see a sky that is about to fall. These “techno-pessimists” predict the death of the old order (which, ironically, is often a previous generation’s hotly-debated technology that others wanted slowed or stopped). Embracing this new technology, they fear, will result in the overthrow of traditions, beliefs, values, institutions, business models, and much else they hold sacred.

The pollyannas, by contrast, look out at the unfolding landscape and see mostly rainbows in the air. Theirs is a rose-colored world in which the technological revolution du jour is seen as improving the general lot of mankind and bringing about a better order. If something has to give, then the old ways be damned! For such “techno-optimists,” progress means some norms and institutions must adapt—perhaps even disappear—for society to continue its march forward.

Our current Information Revolution is no different. It too has its share of techno-pessimists and techno-optimists. Indeed, before most of us had even heard of the Internet, people were already fighting about it—or at least debating what the rise of the Information Age meant for our culture, society, and economy.

Web 1.0 Fight: Postman vs. Negroponte

In his 1992 anti-technology screed Technopoly: The Surrender of Culture to Technology, the late social critic Neil Postman greeted the unfolding Information Age with a combination of skepticism and scorn. Indeed, Postman’s book was a near-perfect articulation of the techo-pessimist’s creed. “Information has become a form of garbage,” he claimed, “not only incapable of answering the most fundamental human questions but barely useful in providing coherent direction to the solution of even mundane problems.” If left unchecked, Postman argued, America’s new technopoly—“the submission of all forms of cultural life to the sovereignty of technique and technology”—would destroy “the vital sources of our humanity” and lead to “a culture without a moral foundation” by undermining “certain mental processes and social relations that make human life worth living.”

Postman opened his polemic with the well-known allegorical tale from Plato’s Phaedrus about the dangers of the written word. Postman reminded us how King Thamus responded to the god Theuth, who boasted of how his invention of writing would improve the wisdom and memory of the masses relative to the oral tradition of learning. King Thamus shot back, “the discoverer of an art is not the best judge of the good or harm which will accrue to those who practice it.” King Thamus then passed judgment himself about the impact of writing on society, saying he feared that the people “will receive a quantity of information without proper instruction, and in consequence be thought very knowledgeable when they are for the most part quite ignorant.”

And so Postman—fancying himself a bit of a modern King Thamus—cast judgment on today’s comparable technological advances and those who would glorify them:

we are currently surrounded by throngs of zealous Theuths, one-eyed prophets who see only what new technologies can do and are incapable of imagining what they will undo. We might call such people Technophiles. They gaze on technology as a lover does on his beloved, seeing it as without blemish and entertaining no apprehension for the future. They are therefore dangerous and to be approached cautiously. … If one is to err, it is better to err on the side of Thamusian skepticism.

Nicholas Negroponte begged to differ. An unapologetic Theuthian technophile, the former director of the MIT Media Lab responded on behalf of the techno-optimists in 1995 with his prescient polemic, Being Digital. It was a paean to the Information Age, for which he served as one of the first high prophets—with Wired magazine’s back page frequently serving as his pulpit during the many years he served as a regular columnist.

Appropriately enough, the epilogue of Negroponte’s Being Digital was entitled “An Age of Optimism” and, like the rest of the book, it stood in stark contrast to Postman’s pessimistic worldview. Although Negroponte conceded that technology indeed had a “dark side” in that it could destroy much of the old older, he believed that was inevitable, but also not cause for much concern. “Like a force of nature, the digital age cannot be denied or stopped,” he insisted, and we must learn to appreciate the ways “digital technology can be a natural force drawing people into greater world harmony.” (This sort of techno-determism is a theme we would see on display in many of the works by other Internet optimists that followed in Negroponte’s footsteps.)

To Postman’s persistent claim that America’s technopoly lacked a moral compass, Negroponte again conceded the point but took the glass-is-half-full view: “Computers are not moral; they cannot resolve complex issues like the rights to life and to death. But being digital, nevertheless, does give much cause for optimism.” His defense of the digital age rested on the “four very powerful qualities that will result in its ultimate triumph: decentralizing, globalizing, harmonizing, and empowering.” Gazing into his techno-crystal ball in 1995, Negroponte forecast the ways in which those qualities would revolutionize society:

The access, the mobility, and the ability to effect change are what will make the future so different from the present. The information superhighway may be mostly hype today, but it is an understatement about tomorrow. It will exist beyond people’s wildest predictions. As children appropriate a global information resource, and as they discover that only adults need learner’s permits, we are bound to find new hope and dignity in places where very little existed before.

In many ways, that’s the world we occupy today; a world of unprecedented media abundance and unlimited communications and connectivity opportunities.

But the great debate about the impact of digitization and information abundance would not end with Postman and Negroponte. Theirs would only be Act I in a drama that continues to unfold, and it is growing more heated and complex with each new character that comes on the stage.

Web War II

The disciples of Postman and Negroponte are a colorful, diverse lot. The players in Act II of this drama occupy many diverse professions—journalists, technologists, business consultants, sociologists, economists, lawyers, etc.—and they are disagreeing even more vehemently and vociferously about the impact of the Internet and digital technologies than Postman and Negroponte did.

In Exhibit 1, I have listed the Internet optimists and pessimists and list their key works.

Theuthian Technophiles (aka “The Internet Optimists”)	Thamusian Technophobes (aka “The Internet Pessimists”)
Nicholas Negroponte, *Being Digital*	Neil Postman, *Technopoly: The Surrender of Culture to Technology*
Virginia Postrel, *The Future and Its Enemies*	Andrew Keen, The Cult of the Amateur: How Today’s Internet is Killing our Culture
James Surowiecki, *The Wisdom of Crowds*	Lee Siegel, Against the Machine: Being Human in the Age of the Electronic Mob
Clay Shirky, Here Comes Everybody: The Power of Organizing without Organizations and Cognitive Surplus: Creativity and Generosity in a Connected Age	Nick Carr, The Big Switch: Rewiring the World, from Edison to Google and *The Shallows: What the Internet Is Doing to Our Brains*
Yochai Benkler, The Wealth of Networks: How Social Production Transforms Markets and Freedom	Mark Helprin, Digital Barbarism: A Writer’s Manifesto
Chris Anderson, *The Long Tail: Why the Future of Business is Selling Less of More*	Cass Sunstein, *Republic.com*
Kevin Kelly,Out of Control: The New Biology of Machines, Social Systems, and the Economic World	Todd Gitlin, *Media Unlimited: How the Torment of Images and Sounds Overwhelms Our Lives*
Jeff Howe, *Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business*	Mark Bauerlein, *The Dumbest Generation: How the Digital Age Stupefies Young Americans and Jeopardizes Our Future (Or, Don’t Trust Anyone Under 30)*
Don Tapscott & Anthony D. Williams, Wikinomics: How Mass Collaboration Changes Everything	Steve Talbott, *Devices of the Soul: Battling for Our Selves in an Age of Machines‎*
Jeff Jarvis, *What Would Google Do*	John Freeman, The Tyranny of E-Mail: The Four-Thousand-Year Journey to Your Inbox
Tyler Cowen, Create Your Own Economy: The Path to Prosperity in a Disordered World	Jaron Lanier, *You Are Not a Gadget*
Dennis Baron, *A Better Pencil: Readers, Writers, and the Digital Revolution*	David Trend, The End of Reading: From Gutenberg to Grand Theft Auto

In Exhibit 2, I have sketched out the major lines of disagreement between these two camps and divided those disagreements into (1) Cultural / Social beliefs vs. (2) Economic / Business beliefs.

Optimists	Pessimists
*Cultural / Social beliefs*
Net is participatory	Net is polarizing
Net facilitates personalization (welcome of “Daily Me” that digital tech allows)	Net facilitates fragmentation (fear of the “Daily Me”)
“a global village”	balkanization and fears of “mob rule”
heterogeneity / encourages diversity of thought and expression	homogeneity / Net leads to close-mindedness
allows self-actualization	diminishes personhood
Net a tool of liberation & empowerment	Net a tool of frequent misuse & abuse
believe Net can help educate	fear dumbing-down of masses
anonymous communication is a net good; encourages vibrant debate + whistleblowing	fear of anonymity; say it debases culture & leads to lack of accountability
welcome information abundance; believe it will create new opportunities for learning	concern about information overload; esp. impact on learning & reading

*Economic / Business beliefs*
benefits of “Free” (increasing importance of “gift economy”)	costs of “Free” (“free” = threat to quality & business models)
mass collaboration is generally more important	individual effort is generally more important
embrace of “amateur” creativity	superiority of “professionalism”
superiority of “open systems” of production	superiority of “proprietary” models of production
“wiki” model = wisdom of crowds; benefits of crowdsourcing	“wiki” model = stupidity of crowds; collective intelligence is oxymoron; + “Sharecropper” concern @ exploiting free labor

When you boil it all down, there are two major points of contention between the optimists and pessimists:

The impact of technology on learning & culture & the role of experts vs. amateurs in that process.
The promise—or perils—of personalization.

The Debate over Learning & Culture

Internet optimists and pessimists have engaged in heated debates over role of amateur production and benefits of abundant media

pessimists fear impact of Net and “cult of amateur” on “professional” media

without “enforceable scarcity” and protection for the “enlightened class,” the pessimists wonder how “high quality” news or “high art” will get funded and disseminated; and they worry about the decline of authority & truth

optimists argue that new modes of production (namely peer-production) will be an adequate (if not superior) alternative
- or they believe new business models will evolve to support professional media

but pessimists argue that all the new choices are largely false choices
- participatory democracy all bunk (“mob rule” and rumor mill mongering)
- just more force-fed commercial propaganda; concerns about advertising
- also worry about “digital sharecropping” where small group of elites make money off backs of free labor

optimists counter that Web 2.0 offers real choices and voices
- optimists argue that many (perhaps most) aren’t in it for the money
- they do it for love of knowledge & “free culture”

pessimists argue that “free” culture isn’t free at all; often just parasitic copying / piracy
- could have profound ramifications for future of news, journalism, “high culture”
- fear loss of trusted intermediaries & authorities
- could “dumb down” the masses

the centrality of Wikipedia to the discussion serves as a microcosm of the entire debate
- does Wikipedia mark the decline of authority?
- what is “truth,” the pessimists ask? [“truthiness” fear, a la S. Colbert & Manjoo]
- who and what can be trusted if everyone is considered an authority?
- on the other hand, what if it works (at least reasonably well)?
- what does that tell us about peer production / crowdsourcing?

The Debate over the Promise or Perils of Personalization

both optimists and pessimists agree that Net & Web 2.0 is leading to more “personalized” media experience
- but they vehemently disagree on whether that is good or bad
- what will it mean for participatory democracy?

pessimists fear Negroponte’s “Daily Me” (i.e., hyper-personalization) leads to:
- homogenization
- close-mindedness
- an online echo-chamber
- overload of choices + just more corporate brainwashing

optimists counter that personalization leads to:
- heterogeneity / chance for everyone to be heard
- openness
- exposure to new thinking and opinions
- abundance of choices = diversity of thought / participation
in the extreme, some pessimists fear the “mechanization of the soul” and the “surrender to the machine”

while that may sound a bit over the top, it doesn’t help that some optimists speak of the noosphere & “global consciousness” and seem to long for the eventual singularity

Who’s Got It Right?

On balance, I believe the optimists generally have the better of the argument today
But pessimists make many fair points that deserve to be taken seriously; they just need a more reasonable articulation of (some of) those concerns
The better approach is what I call “pragmatic optimism,” which attempts to rid the optimist paradigm of its kookier, pollyannish thinking while also taking into account some of the very legitimate concerns raised by the pessimists, but rejecting its Luddite fringe in the process.

Thoughts on the Pessimists…

First and foremost, the pessimists need better spokespersons! Or, they at least need a more moderated, less hysterical tone when addressing concerns raised by technological progress (many of which are quite legitimate).

It’s often difficult to take the pessimists seriously when they persist with their seeming outright hostility to most forms of technological progress / change. Every one of them claim they are not a Luddite, and often I believe them. But the tone of some of their writing, and the thrust of some of their recommendations, have clear Luddite tendencies.

Moreover, their endless name-calling and derision for the digital generation is, at times, just as insulting and immature as they “mob” they repeatedly castigate in their works. Too often, their criticism devolves into philosophical snobbery and blatant elitism. Constantly looking down their noses at digital natives and all “amateur” production doesn’t help them win any converts.

It’s quite shocking how the pessimists have almost nothing good to say about Wikipedia and demonize it endlessly. Much the same goes for open source and other collaborative efforts. They don’t appear willing to accept the possibility of any benefits coming from collective efforts. And they wrongly treat the rise of collective / collaborative efforts as a zero-sum game; they seem to imagine it represents a net loss of individual effort & “personhood.” That simply doesn’t follow.

Most importantly, the pessimists need to come to grips with the Information Revolution and offer more constructive and practical solutions to legitimately difficult transitional problems created by disintermediating influences of the digital technologies and Net.

The nostalgia the pessimists typically espouse for the past is a common refrain of cultural and technological critics who fear that the “good ‘ol days” are behind us and the current good-for-nothing generation and their new-fangled gadgets are steering us straight into a moral abyss. The truth typically proves less cataclysmic, of course. The great thing about humans is that we adapt better than other creatures. When it comes to technological change, resiliency is hard-wired into our genes. We learn how to use the new tools that are given to us and gradually assimilate them into our lives and culture. Indeed, we have lived through more radical revolutions than the Information Revolution. We can adapt and learn to live with some of the legitimate difficulties & downsides of the Information Age.

The pessimists are at their best when highlighting the very legitimate concerns about the challenges that accompany technological change, including the impact of the digital revolution on “professional” media and the decline of authority among trusted experts and intermediaries.
- we absolutely don’t want to lose all that
- there are real benefits associated with it
- and we need to find a way to fund “professional” media / art going forward

But, practically speaking, what would the pessimists have us do if we can’t mitigate these problems? Would they roll back the clock with burdensome restrictions? As Ben Casnocha noted recently: “the wind at the backs of all techno-optimists … [is] the forward momentum of technological development. You cannot turn back the clock. It is impossible to envision a future where there is less information and fewer people on social networks. It is very possible to envision increasing abundance along with better filters to manage it. The most constructive contributions to the debate, then, heed Moore’s Law in the broadest sense and offer specific suggestions for how to harness the change for the better.” That’s what many pessimists have failed to do in their works.

Thoughts on the Optimists…

The optimists currently have the better of the debate as the abundance of Web 2.0 riches is generally benefiting culture / society.

Relative to the past it is almost impossible to see how one could argue society has not benefited from the Internet and new digital technologies. The Digital Revolution has greatly empowered masses and offered them more informational inputs.

An age of abundance is certainly preferable to an age of information scarcity!

But optimists need to be less Pollyanna-ish and avoid becoming the “technopolists” (or digital utopians) that Postman feared were taking over our society
- Way too much Rousseauian romanticism at work in some optimist writings. All this talk of the Net “remaking man” or human nature is pure rubbish.
- Not all change is good change; the optimists need to be mature enough to understand and address the occasional downsides of digital life without dismissing the critics.
- And they need to acknowledge that sometimes the wisdom of crowds really can = the stupidity of crowds (when does collective intelligence devolve into herd mentality?) And all this crazy talk of “the hive mind” and the “noosphere” must end. Some of optimists sound like they long for life in The Matrix; bring on the Singularity! That’s when you know an optimists has crossed over into the realm of quixotic techno-utopianism.

Optimists often overplay the benefits of collective intelligence, collaboration, and the role of amateur production. They need to frame Wiki / peer-production models as a complement to professional media, not a replacement for it.
- Could The New York Times really be cobbled together by amateurs each day?
- Why aren’t there any really compelling open source video games?
- There is a big difference between “remix culture” and “rip-off culture”
- “The Long Tail” is not “the future of all business”; but it is an increasingly important part of it, and it is wonderful that it is so much more accessible than it was in the past.
- Will we really be better off if all professionals & intermediaries disappear? Optimists play the “old media just don’t get it” card too often and snobbishly dismiss all their concerns and efforts to reinvent themselves

Optimists need to place technological progress in context and appreciate that, as Postman argued, there are some moral dimensions to technological progress that deserve attention.

Of course, on the other hand, some of those moral consequences are profoundly positive, which the pessimists usually fail to appreciate or even acknowledge.

Conclusion: Toward “Pragmatic Optimism”

Generally speaking, I believe the optimists currently have the better of the debate. It is impossible for me to believe that we were better off in an era of information poverty & un-empowered masses.

But there’s a kernel of truth to what the pessimists predict about how the passing of the old order leaving society without some things that might be worth preserving. And they are certainly correct that each of us should think about how to better balance new technologies and assimilate them into our lives.

The sensible middle ground position is “pragmatic optimism”: We should embrace the amazing technological changes at work in today’s Information Age but do so with a healthy dose of humility and appreciation for the disruptive impact and pace of that change. [See my “Pragmatic (Internet) Optimist’s Creed” below]

We need to think about how to mitigate the negative impacts associated with technological change without adopting the paranoid tone or Luddite-ish recommendations of the pessimists.

And it is important for us to personally exercise some personal restraint in terms of the role technology plays in our life. While pessimists from Plato and Postman certainly went too far, there is a kernel of truth to their claim that, taken to an extreme, technology can have a negative impact on life and learning. We need to focus on the Aristotelian mean. We must avoid neo-Luddite calls for a return to “the good ‘ol days” on the one hand, while also rejecting techno-utiopian Pollyanna-ism on the other

Regardless, the old Theuth-Thamus debate about the relationship between technological change and its impact on culture and society will continue to rage. There is no chance this debate will die down anytime soon. And just wait till virtual reality goes mainstream! Oh brother, now that is going to be a lively debate. I might turn into a Thamusian once I find my son playing a virtual gangster or pimp in “Grand Theft Auto 12: The Immersive Experience.”

Nonetheless, generally speaking, I remain quite bullish about the prospects for technology to generally improve the human condition.

The Pragmatic (Internet) Optimist’s Creed

by Adam Thierer

I believe that the Internet and digital technologies are reshaping our culture, economy, and society in most ways for the better, but not without some serious heartburn along the way.

I believe that the world of information abundance that has dawned is vastly superior to the world of information poverty that we just left. But I also understand that not all information is equal and that that the rise of abundance raises concerns about information overload, objectionable content, and the role of “authority” and “truth.”

I believe the era of traditional Mass Media is coming to an end, but “professional” media institutions and creators continue to play a vital role in the creation, aggregation, and dissemination of news, information, culture, and entertainment. The Internet, however, will force gut-wrenching changes on traditional media institutions and some of the more traditionally vital ones (ex: daily local newspapers) will struggle to re-invent themselves, or may wither away entirely. And while I believe that “professional” journalism faces very serious challenges from the rise of the Internet and user-generated content, but I also believe that hybrid forms of news-gathering and reporting are offering society exciting new ways to learn about the world around them.

I believe Wikipedia is an amazing example of collection action / intelligence at work, but I also understand it is not without flaws and limitations. I believe Wikipedia is a wonderful complement, but not a complete substitute, for other media and information sources and inputs.

I believe that free and open source software (FOSS) has produced enormous social / economic benefits, but I do not believe that FOSS (or “wiki” models) will replace all proprietary business models or methods. Each model or mode of production has its place and purpose and they will continue to co-exist going forward, albeit in serious tension at times.

I believe the Long Tail is a powerful phenomenon, but not “the future of all business.” It is now a more important part of the future of business, but not the entirety of it. But it is wonderful that it is more accessible than ever and that we have found ways to monetize it to benefit less well know creators and innovators.

I believe there is a difference between “remix culture” and “ripoff culture.” Remix culture generally enhances and extends culture and creativity. Blatant content piracy, on the other hand, can discourage the creative efforts of the citizenry and deprive some of society’s most gifted creators of the incentive to produce culturally beneficial works. Likewise, hacking, circumvention, and reverse-engineering all play an important and legitimate role in our new digital economy, but one need not accept the legitimacy of those activities when conducted for nefarious purposes (think identity theft or chip-modding to facilitate video game piracy.)

I believe that the Internet has empowered the masses and created a world of “pro-sumers” that gives every man, woman, and child a soapbox on which to speak to the world. But that does not mean that all of them will have something interesting to say, and I won’t praise user-generated content as a good in and of itself. It’s quality, not volume, that counts.

I believe that the Internet’s empowering nature has changed much about society and culture, but I do not believe in the romanticism some espouse about how the Net “remaking man” or changing human nature in any fundamental way. The Internet does not liberate us from all earthly constraints and it cannot magically solve all of civilization’s problems.

I believe that the Internet is reinvigorating deliberative democracy and giving us increased exposure to a breathtaking diversity of views previously inaccessible. On the other hand, I understand that some will often seek out only those views that reinforce their pre-existing biases.

I believe in the liberating power of freedom of speech and expression, and appreciate that the Internet and the rise of user-generated content has given us a world of unprecedented information and cultural riches. I also understand, however, that unrestricted freedom of speech and expression permits an increase in the prevalence of objectionable, even loathsome, speech and content. On net, however, (excuse the pun) the Internet is the most important medium of human communication and expression yet.

In sum, there are more reasons to be optimistic than pessimistic about the Internet and its role in shaping our lives, culture, economy, and society. But that doesn’t mean it will be all roses going forward.

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Additional Reading (from me):

Additional Reading (from others):

Plato on writing
Cyberspace and Information Overload (by Tim Lee)
Michiko Kakutani essay in the New York Times, “Texts Without Contexts”
Andrew McAfee’s terrific essay “I Know I’m Not the Only Internet Optimist…” from his blog
the great PBS documentary about these issues: “Digital Nation: Life on the Virtual Frontier” (+ my thoughts on the film)
a video from a Family Online Safety Institute event about the PBS documentary that features a discussion about Internet optimism vs. pessimism
Gordon Crovitz of The Wall Street Journal asks “Is Technology Good or Bad?”
Peggy Noonan of The Wall Street Journal argues that “Information Overload is Nothing New“
“Technology Sabbaths and Other Strategies for the Digitized World,” by Michael Sacasas
“Are We Too Plugged In? Distracted vs. Enhanced Minds“, by Aaron Saenz at the Singularity Hub blog

and here’s a great video from 1995 featuring the late Neil Postman with his pessimistic take on cyberspace..

Also, courtesy of the Brain Pickings blog, check out this amazing 1972 documentary based on Alvin Toffler’s famous 1970 book, Future Shock. It perfectly foreshadowed so many of today’s technology policy debates.