Technology & Innovation

On The Edge of the Future: Permissionless Innovation and Technology Policy

May 14, 2016

“Why is innovation important?” This deceptively simple question sparked a wide-ranging and fruitful discussion last week in Washington, DC, as the Charles Koch Institute brought together a panel of technology policy experts to talk to a sold-out crowd about the future of innovation. The conversation, moderated by the Institute’s senior research and policy analyst Eric Alston, covered a variety of topics, including driverless cars, the sharing economy, and the potentially outdated regulatory framework used by governments in responding to new technologies.

Adam Thierer, senior research fellow at the Mercatus Center at George Mason University and author of Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom, began the evening by discussing the importance of innovation to the economy: “It does more with less, and does it better.” Thierer explained that though technological innovation has been linked to three-fourths of post-World War II growth, pre-emptive regulations could hinder more growth in the future. “Innovation should be a market-driven arena. … When you have old regimes in control, they permeate every sector of the economy.”

Michael Petricone, senior vice president of government affairs for the Consumer Technology Association, agreed. “Policy matters,” Petricone told the audience. “Just think of all the technology we use every day and how much of that originates outside of the United States.” Petricone also argued that from a historical perspective, the success of the technology sector in the United States was no accident, but the result of “a series of correct policy decisions, including free speech.” The time for the next good policy decision is now approaching, he argued, as driverless cars become more of a reality and have the potential to drastically improve car safety. “It is a moral obligation for us to make this happen,” Petricone said.

For Berin Szoka, president of Tech Freedom, innovation isn’t just about technological advances, but also how we share information and form new ways for the world to operate. Pointing to the sharing economy and businesses like Uber, Lyft, and Airbnb, Szoka argued that when social norms are upended by creative destruction, “we adjust quite quickly.” Alston agreed, arguing that while “the traditional eight-hour workday and employee don’t fit this model,” people are drawn to this innovative workforce nonetheless.

But do regulatory frameworks for these businesses follow suit? “There are two different regulatory approaches to technology,” Szoka said. “One says you must know how everything will play out in advance, and the other is more flexible.” The reason to prefer more flexible frameworks, he argued, is some technology carries greater impact than its counterparts. That’s not considered in the government’s current approach, however. “Everything is heavily regulated, even if there aren’t formal regulations,” Szoka said. “It’s a false paradigm.”

Maura Corbett, CEO and founder of the Glen Echo Group, saw a middle ground. “Regulation and innovation don’t need to be zero-sum,” she said. “If we make people pick, we haven’t educated them enough.” Corbett later contended that “the key to innovation policy is competition policy,” and that outdated regulatory frameworks served as an impediment to tech-savvy entrepreneurs. “One area where we do suck at innovating is policymaking,” Corbett said.

Government’s outdated treatment of innovation was a common theme throughout the evening, as other panelists agreed with Corbett’s assessment. “The old rationale for regulation was consumer protection, but the sharing economy is about sharing information,” Petricone said. For Theirer, competition policy “should focus on expanding entry into the technological space.”

One such way to achieve that expansion, Alston argued, is to encourage spontaneous, “disruptive deregulation,” which would allow society to capitalize on the “immense welfare benefits” offered by permissionless innovation. After all, he argued, “that’s the very essence of innovation: to provide solutions.”

With its unique potential to impact both the economy and culture, technological innovation remains a crucial component of advancing a free society. The Charles Koch Foundation therefore invites research proposals for projects that seek to further understand the potential for innovation to help improve people’s lives.