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An overview of the future of innovation policy and what governance vision will drive it -- the precautionary principle or permissionless innovation. (By Adam Thierer, Senior Research Fellow, Mercatus Center at George Mason University).

An overview of the future of innovation policy and what governance vision will drive it -- the precautionary principle or permissionless innovation. (By Adam Thierer, Senior Research Fellow, Mercatus Center at George Mason University).

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The Future of Innovation of Policy - Adam Thierer - Mercatus Center

  1. 1. THE FUTURE OF TECHNOLOGY POLICY Adam Thierer Last updated April 2022
  2. 2. What Policy Will Govern the Future?
  3. 3. Transportation Supersonic Space Micro-mobility Virtual / Aug. Reality 3-D Printing & Additive Manuf. AI & Robotics Smart cars Drones Sharing Economy Crypto Bitcoin Dark markets Advanced Health Mobile medical apps Biohacking / Embeddables Genetic issues Personalized medicine Food modification 3D-printed devices Internet of Things Wearable Tech Smart Homes Smart Cities Industrial Internet 2 Emerging technologies in the crosshairs
  4. 4. 3 2016 2020
  5. 5. What should the default position be in debates over innovation policy? Precautionary Principle? or Permissionless Innovation? 4
  6. 6. “Permissionless Innovation” = the general freedom to experiment & learn through trial-and-error • openness to change, disruption, risk-taking • avoids prior restraints on innovation • give entrepreneurs more green lights than red ones • innovation innocent until proven guilty • also called: • “the innovation principle” • “the proactionary principle” • “freedom to innovate” 5
  7. 7. The “Precautionary Principle” = crafting public policies to control or limit new innovations until their creators can prove that they won’t cause any harms. • “better to be safe than sorry” mentality • gives entrepreneurs the red light • preemptive policy restraints on innovation • innovation basically guilty until proven innocent 6
  8. 8. The Conflict of Visions over Innovation Policy Innovation should be free-wheeling must be carefully guided Priority Spontaneity / experimentation Stability / equilibrium Risk adaptation is preferred anticipation is preferred Solutions Reactive (ex post) bottom-up remedies Preemptive (ex ante) top-down controls/solutions Presumption “innocent until proven guilty” “guilty until proven innocent” Ethos “Nothing ventured, nothing gained” “Better to be safe than sorry” 7
  9. 9. Where we set our innovation default makes a big difference Better to start with the green light, not red Top-down (ex ante) Solutions Bottom-up (ex post) Solutions 8 Start here with the green light ! Competition Contracts Property rights Social norms Learning / Coping Self-regulation Best practices Education steps Transparency Consumer protection Sandboxes “Soft law” Licensing Permits Other mandates Restrictive defaults Nudges Product bans Entry barriers Cronyist regs State ownership Censorship Permissionless Innovation Precautionary Principle
  10. 10. Can & should we extend the permissionless innovation framework? 9
  11. 11. Does Permissionless Innovation Work? Consider computing & digital revolution 10 • Permissionless innovation has driven the explosion of digital entreprenuerialism over past 2 decades, especially in the U.S. • No one needed a license or permission to launch the great technological innovations of the digital age – PCs, Net, servers, email, storage, websites, smartphones • VCs and talented immigrants flocked to US • US-based firms became household names across globe • But Europe adopted precautionary approach & its tech sector floundered  A powerful real-world natural experiment in comparative governance systems
  12. 12. How Did This US-EU Tech Imbalance Develop? 11 US tech firms are giant and are household names across the globe.
  13. 13. Where Are Europe’s Tech Innovators? 12
  14. 14. What’s good for cyberspace is good for meatspace We need same general policy approach to other sectors and technologies, whether based on bits (digital economy) or atoms (industrial economy). Our policy default should be Innovation Allowed 14
  15. 15. 15 Technologies That are “Born Free” Will Have an Easier Time than Those “Born in Regulatory Captivity” “Born Captive” (lots of law / existing agencies) • Driverless cars (DOT) • Medical tech / genetics (FDA) • Food tech (FDA, Ag.) • Commercial drones (FAA) • Supersonic & Space (FAA) • Financial services “Born Free” (fewer laws / agencies) • Most online services • Smartphone apps • Social networks • 3D Printing • Virtual Reality / AR • General robotics • Artificial intelligence
  16. 16. What Drives the Fear Surrounding Technological Change? Or, why so many favor the precautionary principle… 16
  17. 17. Leading Rationales for Precautionary Regulation of Emerging Tech 1) Privacy / Psychological • reputation issues, fear of “profiling” & “discrimination” • amorphous psychological / cognitive harms 2) Safety • Health & physical safety; youth safety 3) Security • Hacking, cybersecurity, law enforcement issues 4) Economic • Automation, job dislocation, sectoral disruptions; antitrust 5) Existential Risk • End-of-days scenarios (think robots or AI killing us) 17
  18. 18. 18 Technopanic dominates academic writing
  19. 19. 19 Technopanic dominates news headlines
  20. 20. 20 Technopanic dominates pop culture
  21. 21. What “Techno-pessimists” are saying • Innovation = “cult of convenience”; burdens us with “illusion of choice”; companies “just selling us stuff we don’t need” • Information technology is killing us through: “data smog,” “information anxiety,” “digital barbarism,” or “digital vertigo” • Technology undermines our humanism; is “re-engineering humanity”; we’re entering a “world without mind” or “mindlessness” • Technology (especially AI) is “a dangerous master” to be feared and resisted because it poses an “existential threat” to future of humanity • “It’s OK to Be a Luddite”: We need a “radical project of social transformation” that would evolve into a full-blown “degrowth movement” 21
  22. 22. But What’s Wrong with the Precautionary Principle? 22
  23. 23. The problem with the precautionary principle If we spend all our time living in constant fear of worst-case scenarios—and premising public policy upon such fears—it means that many best-case scenarios will never come about. Wisdom and progress are born from experience, including experiences that involve risk and the possibility of occasional mistakes and failures. 23
  24. 24. There Can Be No Reward without Risk The “risks of avoiding all risks” can be profound! 24
  25. 25. Specific problems with precautionary restraints on the freedom to innovate • Undermines right to earn a living & worker opportunities • Diminishes entrepreneurialism & competition • Slows economic growth • Creates stagnant markets; potential cronyism • Potential loss of global competitive advantage • Higher prices & fewer choices for consumers • Lower overall standard of living 25
  26. 26. When Might Precautionary Controls Make Sense? • Luckily, most innovations don’t raise immediate, irreversible, or catastrophic risks. • But when that case can be made, some form of “anticipatory governance” may be needed. 26
  27. 27. What happens when people use “technologies of freedom” to make permissionless innovation a reality? Answer: We see the rise of more and more “evasive entrepreneurs.”
  28. 28. 28 Evasive entrepreneurs Innovators who do not always conform to social or legal norms, or who set out to intentionally challenge and change the law through their innovative activities. Technologies of freedom Devices and platforms that let citizens openly defy (or just ignore) public policies that limit their liberty or freedom to innovate.
  29. 29. What should we do about these lawbreakers? 29
  30. 30. What should we do about citizens using tech & working together to repair infrastructure when governments fail to? “Pothole vigilantes” Image: Wall Street Journal, Jim Bachor 30
  31. 31. Drones at weddings If you take wedding party photo with a drone, are you a criminal? Does it depend on whether you do it for money?? Image: Jeffrey House Photography, https://www.jeffreyhousephotography.com/blog/drone-wedding-photography 31
  32. 32. 3D-Printed orthodontics 23-year old Amos Dudley used a 3D printer to make his own braces. Did he violate FDA regs? What if he would have taught others how to do it themselves? Or sold them? Image: The Telegraph 32
  33. 33. 3D-printed prosthetic limbs “e-NABLE” volunteers use open-source blueprints & 3D printers to give kids free prosthetic limbs. FDA violation? Image: “Enabling the Future,” http://enablingthefuture.org/about 33
  34. 34. Custom-made insulin pumps Parents hacked existing devices w/ open-source code to help their children cope with diabetes. Criminals? 34
  35. 35. Post-COVID Responses Evasive entrepreneurs kicked into high gear following lockdowns, despite questionable legality 35 • People started making DIY face masks & protective shields • Hospitals put out calls to public to help build ventilator parts using 3D printers • Breweries started making hand sanitizers • A 17‐​year‐​old used his coding skills to build one of the most popular coronavirus‐​tracking websites (https://ncov2019.live)
  36. 36. 36 “Cottage Food” Entrepreneurs Average Americans whipping up delicious meals and treats in their own homes for others. Need a license? ... county officials told cooks the meals were "misdemeanors, punishable by jail time.”
  37. 37. Uber & “de Blasio mode” in NYC What happens when you recode a smartphone app to encourage local citizens to rebel against a big city major? Images: TechCrunch, Wired 37
  38. 38. Tesla & “Autopilot” Did Elon Musk break the law by giving us “Autopilot” (semi- autonomous driving capabilities) via an over-the-air upgrade? 38
  39. 39. Bitcoin, Blockchain & Cryptocurrencies • Bitcoin began in 2009 with an act of technological civil disobedience when the unknown programmer Satoshi Nakamoto freely gave the idea on the world • Bitcoin and blockchain technology poses unique challenges for a wide variety of tax and regulatory policies and systems. • Related: decentralized, distributed marketplaces (OpenBazaar, “darknets”) 39 “a blockchain is actually a form of governance and that is what makes it such a potentially radical idea.” -- Tyler Cowen
  40. 40. Is “evasive” behavior defensible? 40
  41. 41. Defending Evasive Entrepreneurs We should tolerate a certain amount of evasive entrepreneurialism because it can: 1. expand the range of life-enriching innovations available to society; 2. help citizens pursue lives of their own choosing—both as creators looking for the freedom to earn a living, and as consumers looking to discover and enjoy important new goods and services; and, 3. provide a meaningful, ongoing check on government policies and programs that all too often have outlived their usefulness or simply defy common sense. • innovative acts can be viewed as mini-rebellions or marginal revolts • can act as a sort of relief valve or circuit breaker to counteract negative pressures in the system before things break down completely • But… sometimes evasiveness goes too far and results in fraudulent or risky behavior that must be sanctioned (ex: Theranos) 41
  42. 42. WHAT’S NEXT FOR EMERGING TECH & PUBLIC POLICY? 42
  43. 43. “Techlash” Intensifying State activity: – Many digital privacy bills passing or pending – Some state attempts to regulate social media policies – New proposals for drones, driverless cars & gig economy – Efforts to impose new digital taxes Congress: – Renewed interest in expansive antitrust enforcement for tech companies – Dozens of bills to modify Sec. 230 (altering liability norms for digital platforms) – Efforts to regulate AI & robotics preemptively + new agencies 43
  44. 44. Proposals to Regulate AI / Robotics New Proposed Laws • Algorithmic Accountability Act • Artificial Intelligence Initiative Act • Future of Artificial Intelligence Act • Advancing Artificial Intelligence Research Act • National AI Research Resource Task Force Act New Proposed Agencies • Federal Robotics Commission • AI Control Council • National Algorithmic Technology Safety Admin. • National Technology Strategy Agency • “FDA for Algorithms” 44
  45. 45. The “Pacing Problem” Challenges Policy (sometimes) The growing gap between the ever-expanding frontier of technological possibilities and the ability of governments to keep up with the pace of change. 45 Pace of Change Time Technological Change Political Change “Pacing Problem”
  46. 46. “Soft law” on the rise for emerging tech = Informal, collaborative, experimental & constantly evolving governance mechanisms • Guidance documents • “Sandboxes” (informal consultations) & soft nudges • Multistakeholder processes • Agency workshops & reports • Best practices & codes of conduct • Industry self-regulation, co-regulation & other collaborative efforts Soft law has become the dominant modus operandi for modern technological governance, at least in the United States. • driverless cars, mobile medical applications, the Internet of Things, biometrics, nanotech, biotech, 3D printing, bitcoin, online advertising, and more 46
  47. 47. Case study: Soft law for AVs Our “rules of the road” for AVs aren’t rules at all! Congress won’t act, so soft law fills the void.
  48. 48. • The Innovator’s Presumption: Treat new innovators as “innocent until proven guilty” & switch burden of proof to opponents of change. – ”Any person or party (including a regulatory authority) who opposes a new technology or service shall have the burden to demonstrate that such proposal is inconsistent with the public interest.” • The Sunsetting Imperative: Proactively establish time limits on any new rules that are established. – ”Any existing or newly imposed technology regulation should include a provision sunsetting the law or regulation within two years.” • The Parity Provision: “Level the playing field” in the direction of more freedom, not more regulation. – ”Any operator offering a similarly situated product or service should be regulated no more stringently than its least regulated competitor.” 48 “Going Forward” Ideas to Protect Future Innovators
  49. 49. ADAM THIERER athierer@mercatus.gmu.edu 49
  50. 50. Read These Great Books on Innovation & Progress

Editor's Notes

  • Thank you for inviting me to talk with you today.

  • •• {REWARD INNOVATION}
    - Fed govt continues to fund innovation
    - But how?
    - Currently, bureaucrats guess who will be the next
    Steve Jobs
    - Alternative, reward the next Steve Jobs after-the-fact
    - My suggestions made it into the bill
  • ×