The future of emerging technology policy will be influenced increasingly by the interplay of three interrelated trends: “innovation arbitrage,” “technological civil disobedience,” and “spontaneous private deregulation.” Those terms can be briefly defined as follows:
“Innovation arbitrage” refers to the idea that innovators can, and will with increasingly regularity, move to those jurisdictions that provide a legal and regulatory environment more hospitable to entrepreneurial activity. Just as capital now fluidly moves around the globe seeking out more friendly regulatory treatment, the same is increasingly true for innovations. And this will also play out domestically as innovators seek to play state and local governments off each other in search of some sort of competitive advantage.
“Technological civil disobedience” represents the refusal of innovators (individuals, groups, or even corporations) or consumers to obey technology-specific laws or regulations because they find them offensive, confusing, time-consuming, expensive, or perhaps just annoying and irrelevant. New technological devices and platforms are making it easier than ever for the public to openly defy (or perhaps just ignore) rules that limit their freedom to create or use modern technologies.
“Spontaneous private deregulation” can be thought of as de facto rather than the de jure elimination of traditional laws and regulations owing to a combination of rapid technological change as well the potential threat of innovation arbitrage and technological civil disobedience. In other words, many laws and regulations aren’t being formally removed from the books, but they are being made largely irrelevant by some combination of those factors. “Benign or otherwise, spontaneous deregulation is happening increasingly rapidly and in ever more industries,” noted Benjamin Edelman and Damien Geradin in a Harvard Business Reviewarticle on the phenomenon.[1]
In this essay, I want to briefly highlight how, over the course of just the past month, a single company has offered us a powerful example of how both global innovation arbitrage and technological civil disobedience—
or at least the threat thereof—might become a more prevalent feature of discussions about the governance of emerging technologies. And, in the process, that could lead to at least the partial spontaneous deregulation of certain sectors or technologies. Finally, I will discuss how this might affect technological governance more generally and accelerate the movement toward so-called “soft law” governance mechanisms as an alternative to traditional regulatory approaches. Continue reading →
“The quickest way to find out who your enemies are is to try doing something new.” Thus begins Innovation and Its Enemies, an ambitious new book by Calestous Juma that will go down as one of the decade’s most important works on innovation policy.
Juma, who is affiliated with the Harvard Kennedy School’s Belfer Center for Science and International Affairs, has written a book that is rich in history and insights about the social and economic forces and factors that have, again and again, lead various groups and individuals to oppose technological change. Juma’s extensive research documents how “technological controversies often arise from tensions between the need to innovate and the pressure to maintain continuity, social order, and stability” (p. 5) and how this tension is “one of today’s biggest policy challenges.” (p. 8)
What Juma does better than any other technology policy scholar to date is that he identifies how these tensions develop out of deep-seated psychological biases that eventually come to affect attitudes about innovations among individuals, groups, corporations, and governments. “Public perceptions about the benefits and risks of new technologies cannot be fully understood without paying attention to intuitive aspects of human psychology,” he correctly observes. (p. 24) Continue reading →
In a terrific little essay on “Local Economic Revival and The Unpredictability of Technological Innovation,” Michael Mandel, the chief economic strategist at the Progressive Policy Institute, makes several important points regarding the fundamental folly for future forecasting efforts as it pertains to new innovations. He notes, for example:
There are plenty of candidates for the “next big thing,” ranging from the Internet of Things to additive manufacturing to artificial organ factories to autonomous cars to space commerce to Elon Musk’s hyperloop. Each of these has the potential to revolutionize an industry, and to create many thousands or even millions of jobs in the process–not just for the highly-educated, but a whole range of workers.
Yet the problem–and the beauty–is that technological innovation is fundamentally unpredictable, even at close range. Consider this: The two most important innovations of the past decade, economically, have been the smartphone and fracking. The smartphone transformed the way that we communicate and hydraulic fracturing has driven down the price of energy, not to mention shifting the geopolitical balance of power.
But few saw the smartphone and fracking revolutions coming, he notes. The pundits and the press were too focused on technologies of the past. Continue reading →
On May 3rd, I’m excited to be participating in a discussion with Yale University bioethicist Wendell Wallach at the Microsoft Innovation & Policy Center in Washington, DC. (RSVP here.) Wallach and I will be discussing issues we write about in our new books, both of which focus on possible governance models for emerging technologies and the question of how much preemptive control society should exercise over new innovations.
Of all the books of technological criticism or skepticism that I’ve read in recent years—and I have read stacks of them!—
A Dangerous Master is by far the most thoughtful and interesting. I have grown accustomed to major works of technological criticism being caustic, angry affairs. Most of them are just dripping with dystopian dread and a sense of utter exasperation and outright disgust at the pace of modern technological change.
Although he is certainly concerned about a wide variety of modern technologies—drones, robotics, nanotech, and more—Wallach isn’t a purveyor of the politics of panic. There are some moments in the book when he resorts to some hyperbolic rhetoric, such as when he frets about an impending “techstorm” and the potential, as the book’s title suggests, for technology to become a “dangerous master” of humanity. For the most part, however, his approach is deeper and more dispassionate than what is found in the leading tracts of other modern techno-critics.
I am pleased to announce the release of the second edition of my book, Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom. As with the first edition, the book represents a short manifesto that condenses — and attempts to make more accessible — arguments that I have developed in various law review articles, working papers, and blog posts over the past few years. The book attempts to accomplish two major goals.
First, I attempt to show how the central fault line in almost all modern technology policy debates revolves around “the permission question,” which asks:
Must the creators of new technologies seek the blessing of public officials before they develop and deploy their innovations? How that question is answered depends on the disposition one adopts toward new inventions. Two conflicting attitudes are evident.
One disposition is known as the “precautionary principle.” Generally speaking, it refers to the belief that new innovations should be curtailed or disallowed until their developers can prove that they will not cause any harms to individuals, groups, specific entities, cultural norms, or various existing laws, norms, or traditions.
The other vision can be labeled “permissionless innovation.” It refers to the notion that experimentation with new technologies and business models should generally be permitted by default. Unless a compelling case can be made that a new invention will bring serious harm to society, innovation should be allowed to continue unabated and problems, if they develop at all, can be addressed later.
I argue that we are witnessing a grand clash of visions between these two mindsets today in almost all major technology policy discussions today. Continue reading →
U.S. Commodity Futures Trading Commission (CFTC) Commissioner J. Christopher Giancarlo delivered an amazing address this week before the Depository Trust & Clearing Corporation 2016 Blockchain Symposium. The title of his speech was “Regulators and the Blockchain: First, Do No Harm,” and it will go down as the definitive early statement about how policymakers can apply a principled, innovation-enhancing policy paradigm to distributed ledger technology (DLT) or “blockchain” applications.
“The potential applications of this technology are being widely imagined and explored in ways that will benefit market participants, consumers and governments alike,” Giancarlo noted in his address. But in order for that to happen, he said, we have to get policy right. “It is time again to remind regulators to ‘do no harm,'” he argued, and he continued on to note that
The United States’ global leadership in technological innovation of the Internet was built hand-in-hand with its enlightened “do no harm” regulatory framework. Yet, when the Internet developed in the mid-1990s, none of us could have imagined its capabilities that we take for granted today. Fortunately, policymakers had the foresight to create a regulatory environment that served as a catalyst rather than a choke point for innovation. Thanks to their forethought and restraint, Internet-based applications have revolutionized nearly every aspect of human life, created millions of jobs and increased productivity and consumer choice. Regulators must show that same forethought and restraint now [for the blockchain].
What Giancarlo is referring to is the approach that the U.S. government adopted toward the Internet and digital networks in the mid-1990s. You can think of this vision as “permissionless innovation.” As I explain in my recent book of the same title, permissionless innovation refers to the notion that we should generally be free to experiment and learn new and better ways of doing things through ongoing trial-and-error. Continue reading →
Throughout the year, I collect some of the more notable tech policy-related essays that I’ve read and then publish an end-of-year list here. (Here, for example, are my end-of-year lists from 2014 and 2013.) So, here are some of my favorite essays and editorials from 2015. (Note: They are just in chronological order. No ranking here.)
Larry Downes – “Take note Republicans and Democrats, this is what a pro-innovation platform looks like,” Washington Post, January 7. (Downes explains how governments need to adapt to accommodate and embrace new forms of technological innovation. He notes: “Here at home, the opportunity to wrap themselves in the flag of innovation is knocking for both parties, but so far there are few takers. Republicans and Democrats regularly invoke the rhetoric of innovation, entrepreneurship, and the transformative power of technology. But in reality neither party pursues policies that favor the disruptors. Instead, where lawmakers once took a largely hands-off approach to Silicon Valley, as the Internet revolution enters a new stage of industry transformation, the temptation to intervene, to usurp, to micromanage, to circumscribe the future — becomes irresistible.”) Equally excellent was Larry’s essay later in the year, “Fewer, Faster, Smarter.” (“As the technology revolution proceeds, the concept of government may return to its pre-industrial roots, setting the most basic rules of the economy and standing by as regulator of last resort when markets fail for some or all consumers over an extended period of time. Even then, the solution may simply be to tweak the incentives to encourage better behavior, rather than more full-fledged—and usually ill-fated—micromanagement of fast-changing industries.”)
Bryant Walker Smith – “Slow Down That Runaway Ethical Trolley,” CIS Blog, January 12. (Smith, a leading expert on autonomous vehicle systems, notes that, while serious ethical dilemmas will always be present with such technologies, we should not allow the perfect to be the enemy of the good. “The fundamental ethical question, in my opinion, is this: In the United States alone, tens of thousands of people die in motor vehicle crashes every year, and many more are injured. Automated vehicles have great potential to one day reduce this toll, but the path to this point will involve mistakes and crashes and fatalities. Given this stark choice, what is the proper balance between caution and urgency in bringing these systems to the market? How safe is safe enough?”)
Andrew McAfee – “Who are the humanists, and why do they dislike technology so much?” Financial Times, July 7, 2015. (A brief but brilliant exploration of the philosophical fight over differing conceptions of “humanism.” McAfee, appropriately in my opinion, calls into question technological critics who self-label themselves “humanists” and then suggest that those who believe in the benefits of technological innovation and progress are somehow opposed to humanity. In reality, of course, nothing could be further from the truth!)
Jocelyn Brewer – “Techno-Fear is Hurting Kids, Not Their Use of Digital Devices,” July 7, 2015. (A beautiful piece that makes it clear why “the Internet… is not addictive. Technology is not a drug.” Brewer continues on to make the case for avoiding fear-based messaging about Internet problems and instead adopting a more sensible approach: “Rather than trotting out interminable lists of the negative consequences of our adoption of technology lets raise awareness of how to avoid the pitfalls of not approaching this new era with solutions and proactive thinking.” Amen, sister!)
Evan Ackerman – “We Should Not Ban ‘Killer Robots,’ and Here’s Why,” IEEE Spectrum, July 29, 2015, (A thought-provoking piece about a controversial subject in which Ackerman argues that “banning the technology is not going to solve the problem if the problem is the willingness of humans to use technology for evil”)
Tim O’Reilly – “Networks and the Nature of the Firm,” Medium, August 14, 2015. (Explores the economics of the sharing economy and “the huge economic shift led by software and connectedness.”)
Joe Queenan – “America’s Need for Pointless Updates and Cat Videos,” Wall Street Journal, December 3, 2015. (“The back-to-nature, turn-off-your-cellphone movement is based on a false assumption. . . . Time not spent doing dumb stuff would otherwise be wasted doing other dumb stuff. It’s called ‘play,’ without which Jack is a dull boy. It is a variation on the old saying that nature abhors a vacuum. So nature created the Internet.”)
Dominic Basulto – “Can we just stop with all these tech dystopia stories?” Washington Post, Dec 8, 2015. (“Yes, a dystopian future is possible, but so is a utopian future. Most likely, the answer is somewhere in the middle, the way it’s been for millennia.”)
I recently finishedLearning by Doing: The Real Connection between Innovation, Wages, and Wealth, by James Bessen of the Boston University Law School. It’s a good book to check out if you are worried about whether workers will be able to weather this latest wave of technological innovation. One of the key insights of Bessen’s book is that, as with previous periods of turbulent technological change, today’s workers and businesses will obviously need find ways to adapt to rapidly-changing marketplace realities brought on by the Information Revolution, robotics, and automated systems.
That sort of adaptation takes time, but for technological revolutions to take hold and have meaningful impact on economic growth and worker conditions, it requires that large numbers of ordinary workers acquire new knowledge and skills, Bessen notes. But, “that is a slow and difficult process, and history suggests that it often requires social changes supported by accommodating institutions and culture.” (p 223) That is not a reason to resist disruptive forms of technological change, however. To the contrary, Bessen says, it is crucial to allow ongoing trial-and-error experimentation and innovation to continue precisely because it represents a learning process which helps people (and workers in particular) adapt to changing circumstances and acquire new skills to deal with them. That, in a nutshell, is “learning by doing.” As he elaborates elsewhere in the book:
Major new technologies become ‘revolutionary’ only after a long process of learning by doing and incremental improvement. Having the breakthrough idea is not enough. But learning through experience and experimentation is expensive and slow. Experimentation involves a search for productive techniques: testing and eliminating bad techniques in order to find good ones. This means that workers and equipment typically operate for extended periods at low levels of productivity using poor techniques and are able to eliminate those poor practices only when they find something better. (p. 50)
Luckily, however, history also suggests that, time and time again, that process has happened and the standard of living for workers and average citizens alike improved at the same time. Continue reading →
I wanted to draw your attention to yet another spectacular speech by Maureen K. Ohlhausen, a Commissioner with the Federal Trade Commission (FTC). I have written here before about Commissioner Ohlhausen’s outstanding speeches, but this latest one might be her best yet.
On Tuesday, Ohlhausen was speaking at U.S. Chamber of Commerce Foundation day-long event on “The Internet of Everything: Data, Networks and Opportunities.” The conference featured various keynote speakers and panels discussing, “the many ways that data and Internet connectiviting is changing the face of business and society.” (It was my honor to also be invited to deliver an address to the crowd that day.)
As with many of her other recent addresses, Commissioner Ohlhausen stressed why it is so important that policymakers “approach new technologies and new business models with regulatory humility.” Building on the work of the great Austrian economist F.A. Hayek, who won a Nobel prize in part for his work explaining the limits of our knowledge to plan societies and economies, Ohlhausen argues that: Continue reading →
On the whiteboard that hangs in my office, I have a giant matrix of technology policy issues and the various policy “threat vectors” that might end up driving regulation of particular technologies or sectors. Along with my colleagues at the Mercatus Center’s Technology Policy Program, we constantly revise this list of policy priorities and simultaneously make an (obviously quite subjective) attempt to put some weights on the potential policy severity associated with each threat of intervention. The matrix looks like this: [Sorry about the small fonts. You can click on the image to make it easier to see.]
I use 5 general policy concerns when considering the likelihood of regulatory intervention in any given area. Those policy concerns are:
privacy (reputation issues, fear of “profiling” & “discrimination,” amorphous psychological / cognitive harms);
safety (health & physical safety or, alternatively, child safety and speech / cultural concerns);
security (hacking, cybersecurity, law enforcement issues);
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology. Learn more about TLF →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.