May 3, 2016

Don't Let Government Stifle the next Tech Revolution

Adam Thierer

Senior Research Fellow
Summary

America’s information technology innovators have taken a commanding global lead at the dawn of the Digital Age for a simple reason: They didn’t need anyone’s blessing to launch the next great gadget or service.

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America’s information technology innovators have taken a commanding global lead at the dawn of the Digital Age for a simple reason: They didn’t need anyone’s blessing to launch the next great gadget or service. This simple idea — sometimes called “permissionless innovation” — can also power the next generation of disruptive technologies, if policymakers are willing to simply allow it. If they don’t, those creative minds will flock elsewhere in search of the freedom to innovate, and America’s economic vitality and global competitiveness will suffer.

It’s easy to take for granted all of the amazing digital devices and Internet-based services that we have at our disposal today, even though many of them didn’t even exist a decade ago. The smartphones and social networking services that millions of us consider essential to our daily existence today weren’t with us back then. Likewise, “sharing economy” operators like Uber and Airbnb were still years away.

Permissionless innovation was the secret sauce that fueled the explosive growth of these services and companies. That’s why America’s information technology companies — Apple, Google, Facebook, Amazon, Microsoft, eBay, etc. — are now household names around the globe.

But we’re not done! Exciting new technologies are poised for potentially explosive growth, including: driverless cars, consumer drones, robotics, 3D printers, virtual reality, wearable tech and smart homes. These technologies offer many life-enriching — even life-saving — possibilities. Driverless cars, for example, could significantly reduce the staggering death toll on our nation’s roads. 3D-printed prosthetics and wearable fitness or medical devices could lead to massive health care improvements at greatly reduced cost. And smart home technology could improve energy efficiency while saving us money.

The question, however, is whether policymakers are ready to once again embrace permissionless innovation for these sectors to unleash their full potential. Unfortunately, many of these technologies are threatened either by archaic regulatory regimes or entirely new mandates, usually proposed in the name of protecting privacy, safety, security or old business models.

Innovators who make driverless cars, commercial drones and smart medical devices, for example, face mountains of pre-existing regulatory red tape imposed by bureaucracies such as the National Highway Traffic Safety Administration, Federal Aviation Administration and Food and Drug Administration, respectively. After the FDA recently ordered 23andMe to stop marketing its at-home $99 genetic analysis kit to Americans, U.K. policymakers opened their doors to the company and its innovations. Meanwhile, foot-dragging by the FAA and NHTSA on drones and driverless cars has led some innovators to set up their testing facilities overseas instead of in the United States.

Other rules are proposed to prevent the economic disruption of certain sectors or professions. The backlash to Uber and ride-sharing services by some states is a good example. Even for largely unregulated technologies — such as robotics, 3D printing and virtual reality — academic critics are already busy proposing new regulatory regimes and potential bureaucracies including a “Federal Robotics Commission.”

While well-intentioned, public policies that take a highly preemptive, precautionary approach to new innovations come at a very steep price: We’ll never discover new and better ways of doing things and improving the human condition unless we allow for a certain amount of risk-taking. Progress and prosperity — in both an economic and social sense — are born of experience, including experiences that involve risk and the possibility of occasional mistakes and failures.

If, by contrast, we spend all our time focusing on worst-case scenarios and basing public policy on them, that means the best-case scenarios will never come about. Unless a compelling case can be made that a new invention will bring serious harm to society, innovation should generally continue unabated. The burden of proof rests on those who favor precautionary regulation to explain why government should prevent ongoing experimentation with new ways of doing things.

That doesn’t mean we should turn a blind eye to the potential risks associated with new technologies, but we need smarter approaches than the top-down, command-and-control regulatory edits and bureaucratic schemes of the past.

If and when problems develop, there are many less burdensome ways to address them than through regulations of a “Mother, May I?” (i.e., permissioned) nature. Education and empowerment, social pressure, societal norms, voluntary self-regulation, developer best practices and targeted enforcement of existing legal norms — especially through the common law — are almost always the better way to go. These solutions tend to be bottom-up, collaborative and flexible. That makes them more appropriate for today’s fast-moving technologies while simultaneously leaving plenty of breathing room for ongoing innovation and the possibility of societal adaption as average citizens develop a variety of coping mechanisms, new social norms or other creative fixes.

If we fail to embrace permissionless innovation for these new technologies, however, the result will be fewer services, higher prices, diminished economic growth and a decline in our overall standard of living. If America wants its high-tech sectors to remain the envy of the world, we need our default policy to continue to be “innovation allowed.”