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).
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
5. What should the default
position be in debates
over innovation policy?
Precautionary Principle?
or
Permissionless Innovation?
4
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. 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
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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. 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. Can & should we extend the
permissionless innovation framework?
9
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. How Did This US-EU Tech Imbalance Develop?
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US tech firms are giant and are household names across
the globe.
15. 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
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16. 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
17. What Drives the Fear Surrounding
Technological Change?
Or, why so many favor the precautionary principle…
16
18. 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)
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22. 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”
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24. 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.
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25. There Can Be No Reward without Risk
The “risks of avoiding all risks” can be profound!
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26. 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
27. 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
28. 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.”
29. 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.
31. 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
32. 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
33. 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
34. 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
35. Custom-made insulin pumps
Parents hacked existing devices w/ open-source code to help
their children cope with diabetes. Criminals?
34
36. 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)
37. 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.”
38. 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
39. Tesla & “Autopilot”
Did Elon Musk break the law by giving us “Autopilot” (semi-
autonomous driving capabilities) via an over-the-air upgrade?
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40. 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”)
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“a blockchain is actually a form of
governance and that is what makes it
such a potentially radical idea.”
-- Tyler Cowen
42. 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)
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44. “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
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45. 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”
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46. 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”
47. “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
48. 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.
49. • 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.”
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“Going Forward” Ideas to Protect Future Innovators
•• {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
