Fall 2019 | Number 62
Moving Beyond the Possible The James Madison Institute Trusted Solutions for a Better Florida
Founded in 1987 by Dr. J. Stanley Marshall, The James Madison Institute is a non-partisan policy center dedicated to advancing the free-market principles of limited government, individual liberty, and personal responsibility.
BOARD OF DIRECTORS CHAIRMAN Jeffrey V. Swain Tallahassee PRESIDENT & CEO J. Robert McClure III, Ph.D. Tallahassee VICE CHAIRMAN Glen T. Blauch Naples Allan G. Bense Panama City Jacob F. Bryan IV Jacksonville Timothy M. Cerio Tallahassee Robert H. Gidel Sr. Sarasota John F. Kirtley Tampa Lisa A. Schultz Orlando Joe S. York Ponte Vedra Beach
RESEARCH ADVISORY COUNCIL OF THE JAMES MADISON INSTITUTE Dr. Michael Bond University of Arizona Jack Chambless Valencia College Dr. Marshall DeRosa Florida Atlantic University Dr. Dino Falaschetti Mercatus Center at George Mason University Elizabeth Price Foley, J.D. Florida International University College of Law Dr. James Gwartney Florida State University Dr. Randall Holcombe Florida State University Robert Poole Reason Foundation Peter Schweizer Government Accountability Institute Dr. Sam Staley DeVoe L. Moore Center at Florida State University James M. Taylor, J.D. Heartland Institute Dr. J. Antonio Villamil Washington Economics Group
INSTITUTE STAFF Rebecca Liner Executive Vice President Logan Elizabeth Padgett Director of Communications & Public Affairs Jill Mattox Foundation Grants Manager William R. Mattox, Jr. Director of the J. Stanley Marshall Center for Educational Options Sal Nuzzo Vice President of Policy Brittany Yazdanpanah Director of Events and Logistics Tanja Clendinen Database Manager
CONTACT US Mail The James Madison Institute The Columns 100 North Duval Street Tallahassee, FL 32301 Phone 850-386-3131 Email [email protected] Website www.jamesmadison.org
The Journal is provided to select members of The James Madison Institute, to members of the Legislature, and to others who affect public policy in Florida. The Journal is intended to keep Floridians informed about their government, to advance practical policy solutions, to stimulate civil discussion of major issues, and to recognize individuals who exemplify civic responsibility, character, and service to others. Opinions expressed in The Journal are those of the authors and do not necessarily reflect the views of The James Madison Institute, its staff, or its Board of Directors. All rights reserved. ©Fall 2019
PUBLISHER J. Robert McClure III, Ph.D. President & CEO of The James Madison Institute EDITOR Sal Nuzzo Vice President of Policy The Journal of The James Madison Institute Fall 2019 | Number 62
FORWARD Florida on the Forefront SENATOR JEFFREY BRANDES ...... 3 How we can use our success in economic policy to address the advent of technology and innovation in the Sunshine State.
ARTICLES Innovation Is Our Story SAL NUZZO ...... 5 Florida has incubated and currently possesses all the right ingredients to become a global innovation hub. The question is, will we?
Planning for the Sudden CHRIS EMMANUEL ...... 8 Examining large-scale data, machine learning, and Moore’s Law in the context of regulatory policy and Florida’s innovation economy.
Market-based Policies for Broadband in Florida DR. MARK JAMISON...... 12 Examining the ways in which policy makers can address gaps in broadband deployment in Florida and remain consistent in market principles.
Soft Law and Emerging Technology in the States JENNIFER HUDDLESTON...... 19 Examining how law and regulatory systems can work in tandem to aid innovation and protect consumers.
Breaking Up “Big Tech” – a Bad Idea VITTORIO NASTASI ...... 25 Five reasons why applying antitrust law to technology firms would be bad policy.
The Future of Commercial Space Exploration and Florida DR. ADRIAN MOORE ...... 30 How can the state that houses NASA turn to free-market principles and make Florida an incubator for future innovation in the heavens?
www.jamesmadison.org | 1 Less Yang, More ‘Yen’ WILLIAM MATTOX ...... 36 Innovating education delivery systems and the possibilities ahead, based on a unique idea from one of the Presidential contenders.
Facing the Future of Facial Recognition BILLY EASLEY ...... 42 With the increased use of facial recognition software by both commercial and government organizations, how can policymakers thread the needle, protect the public, and promote free markets?
Disinformation and the “Deepfake” HARITH KHAWAJA AND CHRISTOPHER KOOPMAN...... 48 Technological advances available to everyone have created a landscape where visual information can be easily manipulated. How can or should we develop policy to help protect against nefarious actors?
Permissionless Innovation and Insurance Markets JORDAN REIMSCHISEL...... 52 With the advent and widespread use of genetic testing on a direct-to-consumer level, government can choose to ignore, embrace, or regulate. The policy choices made today will impact markets tomorrow.
ISO Standards – Promoting American Innovation in a Global Economy BARTLETT CLELAND...... 57 Examining the history of, and future needs for, US engagement in global innovation standards.
How Florida Hit the Gas on Self-Driving Car Development MARC SCRIBNER...... 62 An in-depth discussion with one of the lead policymakers behind the drive to make Florida the global leader in autonomous vehicle innovation.
BOOK REVIEWS Big Business: A Love Letter to an American Anti-Hero by Tyler Cowen Reviewed by CAMILLE VAZQUEZ...... 69
A Torch Kept Lit, Great Lives of the Twentieth Century by James Rosen Reviewed by MARY BEBOUT...... 72
2 | The Journal, Fall 2019 Florida at the Forefront Senator Jeffrey Brandes FLORIDA SENATOR, DISTRICT 24
have the honor of representing much prosperous state possible, and to create a of the Tampa Bay area in the Florida climate to provide the most opportunity for Senate as I am one of 40 members hardworking citizens to flourish. Iof the Senate and one of 160 members Over the next decade, roughly five representing the most dynamic state in the million new residents will move to Florida, U.S. Each day presents new challenges, new bringing the state’s population to nearly 25 opportunities, and on occasion new threats. million. The growth Florida is experiencing Our job as members of the Legislature is to is driven by shifting national demographics, represent those who send us to Tallahassee, the economic climate created here, and the to set policy goals to make Florida the most catastrophic policy and fiscal decisions of
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other states. As Milton Freedman said, examples of the legislature’s lead occurred in “People vote with their feet.” Florida has this past session with the development and become a home for economic freedom. deployment of transformational technology From 1997-2017, more than $185 billion in called SunTrax, a world class transportation adjusted gross income has migrated from R&D facility, connected with and located high-tax states to Florida. next to Florida Polytechnic University. While each of us elected come into We possess all the elements to be a office with diverse backgrounds, none of us global leader in the 21st century economy are policy experts in every issue with which – the entire playing field has been set in our we are tasked. I am grateful to organizations favor, through the setting of conservative like JMI who work alongside policymakers free-market principles. Florida continues and provide platforms for thoughtful policy to set the standard for disciplined fiscal discussions across the state. My legislative responsibility, highly ranked by the Mercatus colleagues and I, with the help of JMI’s Center at George Mason University. By world-class research, continue to build on almost all metrics, our state government Florida’s economic successes as we prepare is leaner, more efficient, and with greater for upcoming sessions. accountability and transparency than any While we must deal with the policy other state in the nation. challenges of the day and address real- Florida’s policy leadership in these and time issues, we must also be cognizant of other areas has developed thoughtfully emerging technologies. More and more, this over the years and is largely driven by means ensuring that our great state can serve two prominent components: we have had as a hub for technology and innovation. the ability to sustain a shared vision over No other aspect of life will determine legislative cycles and have had champions, the future prosperity of Floridians more both in legislative leaders and passionate than our ability to adapt to, embrace, and advocates, that have driven bold policy cultivate innovation and technological despite a term-limited legislature. advances. Florida policymakers must focus The Florida Legislature is focused on on maximizing our options for the future. keeping Florida at the forefront. We are With top-ranked public universities blessed to call this great state home and my and a K-12 system climbing in the national legislative colleagues and I are fortunate rankings, we lead the nation in education to work with JMI and other groups that policy, focusing on accountability educate and enlighten the champions of the while offering the most school choice options past, present, and future. in the country. As the state’s population and Senator Jeff Brandes represents the need for ever-more efficient commerce Floridians of District 24 in the Tampa Bay/ grows, the legislature is embracing next- St. Petersburg area generation mobility with technological innovations in automated, electric, and connected vehicles. Just one of several
4 | The Journal, Fall 2019 Innovation Is Our Story Sal Nuzzo VICE PRESIDENT OF POLICY
have the privilege of getting to travel things will be five, ten, or 20 years from now. across the country for JMI, speaking I was a high school freshman at a boarding to groups small and large about how school in Wallingford, Connecticut in 1989. Iconservative economic principles ultimately On the first day of orientation each year I are the best policy course for states to achieve stood in front of a clunky black and white the greatest amount of prosperity for all 35mm camera to take a snapshot for a book citizens. No matter the subject – healthcare, that was circulated to all students as a quick education, entrepreneurialism, criminal way of getting acquainted with kids who justice, environment, etc. – the common came from all corners of the globe. The name thread across all policy areas is that of of the book was, I kid not, the “Facebook.” innovation. The idea that the way things are Almost 30 years later, my high school now will inevitably be surpassed by the way classmates continue to share memories,
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including our Facebook portraits, in our my many talks around the country, I often private group, yes…on Facebook. discuss the case of the 1982 graduating class at Miami’s Palmetto High School. On graduation day, the class valedictorian gave a relatively typical graduation speech. However, toward the end of that speech he made a bold claim – that he would change the world. Not that his class would, not that his generation would, but that he would change the world. And like so many other graduates of Florida high schools in the early ‘80s, he promptly left the state to seek out his path in life. He eventually landed, of all places, in Washington State. Florida lost him, and so many others Thank you, Frank Parent, for the reminder of how I like him. We lost him because of the lack never exited the “geek phase” of economic opportunity at the time and a (valid) perception that Florida was not the There is a running joke that “10 years beacon for technology and innovation. But ago the rules were don’t meet a stranger what is so spectacular about this one Miami off the Internet, and don’t get in a car with high school grad? Only that 12 years after someone you don’t know. Today you order his graduation speech, that Palmetto High yourself a stranger to get in the car with off valedictorian founded a small book shop the Internet.” Technology and innovation using a relatively new innovation called expand at exponential, rather than linear, the Internet, named it after a river in South rates. The phone I use to watch videos America, and today Jeff Bezos is currently commemorating the 50th anniversary of worth north of $165 BILLION depending the first moon launch contains 100,000 times more power than the computers that actually sent the first rocket to the moon. And it fits in my pocket. Technology and innovation do not know a political party, a philosophical ideology, or an ethnicity. Individually and collectively, it is imperative for us to leverage both technology and innovation for our benefit. Or run the inevitable risk of getting left behind. Florida is currently recognizing this, but that hasn’t always been the case. In
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on market fluctuations. And Florida lost We now find ourselves at the launchpad. him. To Washington State. Our climate is ripe to create a state in which We didn’t have to. And we don’t have to capital, risk, and innovation set the tone lose the next one. for global advances. We have done this in Fiscal conservatives, among which I small business development, in agricultural count myself, often point to the past 20 production, in tourism, in international years of our state’s economic trajectory, in trade, in military infrastructure, and across which Florida consistently has one of the the horizon of industries. The question we best business climates in the United States. now must answer is, 50 years from now – Our education system is improving through what will our story of this century be? Will public school reforms and the expansion innovation be our story? Will we lead the of school choice, our state government way, or watch as progress passes us by? has one of the most efficient and effective It is against this setting that we seek to operations in the entire country, and over propel Florida forward. With all of this on the past 20 years – more than $185 billion the horizon, we are pleased to present to in annual income has migrated from states you this issue of The Journal. like Illinois, New Jersey, and Connecticut to Florida. In the Spirit of Liberty and Freedom, So, where does all of this intersect with innovation? Innovation is capital-intensive, and risk requires investment. Capital and investment flows tend to follow the path of greatest efficiency and where the markets lead them. While we often try to juxtapose Florida to California by way of regulations, Sal Nuzzo taxes, and quality of life, there is a telling Vice President of Policy statistic that illustrates the road ahead for The James Madison Institute Florida. In 2017, Florida had its greatest year ever for venture capital investment – more than $2 billion for the year. California captured more than that by the end of January, alone. In the first quarter of 2017, California attracted more venture capital than Florida had in the previous five years. That venture capital drives risk – it is the fertilizer of innovation. And despite all the challenges and roadblocks in its business climate, California is still light years ahead of Florida in this metric.
www.jamesmadison.org | 7 Planning for the Sudden Christopher Emmanuel
radually, then suddenly.” infrastructure, particularly when planning That’s the answer that Ernest for autonomous and connected vehicles. Hemingway’s character in These transportation technologies have “G“The Sun Also Rises” gives in response to the exciting potential to change our society a question about how he went bankrupt. for the better, and each of them has already That curt reply could also easily describe been proven reliable in certain cases around how so many smart and established policies certain uses. Over the next few years, we are being challenged and changed by rapid should expect the market to grow, the technological innovation. I have seen technology to mature, and the business use firsthand how emerging technologies have case to strengthen. During this “gradually” shifted the conversation around Florida’s phase, it is imperative for policymakers and
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commentators to understand the broad Some have calculated that there are more trends of technology in order to properly feasible Go combinations than there are plan for the future. It is even more important atoms in the observable universe. It is nearly for Florida because of the commanding impossible to have the same game twice. leadership position our state has taken in Perhaps naively, I was not too worried accepting and encouraging innovation. when the computer program Deep Blue The three technological trends most beat the world champion Gary Kasprov in important to take into consideration are the Chess. After all, I was a nerd who spent my rise of big data, the continuation of Moore’s childhood playing chess and the computer Law, and machine learning. Big data is program routinely beat me game after the easiest to understand and the most game. But the computer programmers who commonly understood; essentially it is just wrote those engines had the ability to study the accumulation of a massive amount of the notation of famous games played in the information that may be (but many times is centuries beforehand to adjust their coding. not) helpful for making decisions. Moore’s Deep Blue, in a way, stood on the shoulders Law describes the exponential growth in of nerdy, but human, giants.1 computer processing power as measured When Google’s machine learning by transistor capacity, which has reliably algorithm Alpha Go played the world doubled about every 18 months for nearly champion Lee Sedol, it was different. The 50 years. Such incredibly fast growth means program was left alone with the rules of the that a computer three years from now will road and then rapidly taught itself the basics, be roughly four times as powerful, and in then the strategy by essentially playing itself six years, sixteen times as powerful. billions of times with minor adjustments. So, we have massive amounts of both After the first few hours of this statistical data and computing power, with both reasoning, it played at roughly the same increasing rapidly. The last trend, machine level as a child, with remarkably similar learning, can make the other two much strategies. Then, after a few hours, it went more useful. Machine learning is the use of through the variations that modern Go large computing power to create statistical players study. Finally, Alpha Go surpassed analyses that gradually improve without the grandmasters completely, playing being programmed. To better understand combinations that we cannot completely how this works, any good paper on the explain. These combinations were more topic takes this next detour into the ancient statistically correct than anything a human Chinese board game, Go. could ever play. Alpha Go proved it by While Go has been considered the consistently beating Mr. Li, the greatest Eastern equivalent of chess, that metaphor player ever, in these exposition matches. is not quite right. Chess is a closed system, These are interesting facts, but why with only 64 squares and a limited amount of are these three trends important to robot- possible moves. Go, on the other hand, has driven cars? For starters, they point almost an infinite number of possibilities. to the conclusion that the underlying
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technological capacity is not a question of controlled by humans and those things if it will be reached, but when. Secondly, that are, well, just things. For most of legal our society has already made numerous history, humans did not compete with decisions around human-driven cars which synthetic objects over the exact same task. will need to be revisited when robots take the But for autonomous vehicles, the product wheel. Take liability for example. Generally is doing the same thing that the driver speaking, negligence, especially when we is doing, and today is doing so at a level are talking within the automotive context, comparable to, and in some cases better is based on the reasonable person standard. than, a typical driver. Our regulatory and That means that an individual’s actions are judicial systems may soon be laying down compared against what a reasonable person the wrong incentives. Once autonomous would do under similar circumstances. vehicles are demonstratively safer than Product liability is strict liability; our legal human-operated ones, shouldn’t it be a system does not care how something broke policy preference to encourage automation or how it got to where it is, but only if it in this context when it could save so many happened and if someone was injured. Ipso lives? To be clear, I am not suggesting that locator, the thing speaks for itself. we are at that point yet. But either way, This works fairly well when there’s a with rapidly increasing automotive data, clear divide between those things that are a doubling of capacity every 18 months,
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and computer programs that can do autonomous vehicle deployments. If we increasingly more complicated analyses, continue down this path, Florida can expect we are going to get there soon. Perhaps it many more in the years to come. With is time to consider something else, maybe this kind of forethought and responsible something like a reasonable robot standard planning, changes can move from gradual where computers are not judged against the to sudden, but not take us by surprise. perfect but the possible.2 Chris Emmanuel is a Policy Director What I do know for certain is that with the Florida Chamber of Commerce. we need to be planning for these future developments now, and Florida is leading the way. The Florida Chamber of Commerce has started down this path with its program Autonomous Florida, with the goal of making Florida the autonomous capital of North America. Governor Ron DeSantis is References embracing transportation technology while 1 Larry Greenemeier, “20 Years after Deep Blue: How focusing on safety across our roadways, AI Has Advanced Since Conquering Chess.” Scientific American. (June 2, 2017) available at https://www. signing important legislation like House scientificamerican.com/article/20-years-after-deep-blue- Bill 311 which is arguably one of the most how-ai-has-advanced-since-conquering-chess/ 2 See Ryan Abbott, “The Reasonable Computer: Disrupting pro-business regulations in the country. the Paradigm of Tort Liability.” George Washington Law Florida can now proudly boast six public Review, Vol. 86, No. 1, 2018
www.jamesmadison.org | 11 Market-based Policies for Broadband in Florida Mark Jamison
igital information is growing in intelligence will significantly change the importance. E-commerce made way they do business by 2024. (PWC 2019) up 10 percent of US retail sales in Participation in the emerging digital D2018, up nearly 70 percent over five years economy requires the use of broadband earlier. (Statista 2019) Business-to-business communications networks. This seems to e-commerce in the US totaled more than naturally lead policy makers and sector $1 trillion in 2018 (Digital Commerce 360 regulators to look for ways that government 2019) and PWC Global reports that 80 officials can promote broadband growth. percent of US CEOs expect that artificial President Trump is championing the US
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becoming a world leader in the newest and mobile technologies, such as 4G LTE mobile communications technology, (fourth generation long term evolution), called 5G. (Mihalcik 2019) Federal which is what most mobile networks in Communications Commission (FCC) the US use. Traditionally, policy makers Chairman Ajit Pai recently announced focused on fixed access in the belief that it his intention to improve how the agency was superior to mobile access. determines where broadband is available. According to FCC data, Florida (Robuck 2019) The city of Tallahassee, benchmarks competitively against the Florida recently launched a study of internet contiguous states of Alabama, Georgia, and access within its boundaries. (Etters 2019) South Carolina. Table 1 shows the percent For Florida, this attention to broadband of people in each state without access to begs two questions. Is there a deficiency of fixed broadband for the years 2014, 2016, broadband in Florida, i.e., a broadband gap? and 2017. Florida had greater access than If there is, what steps if any should Florida nearby states each year, with only 3.8 percent take to fill the gap? of the population not having access to fixed This article analyzes broadband broadband in 2018. The same pattern holds availability in Florida and what is needed to assess whether the current Figure 1. Percent Total Population without Acess level of deployment of broadband to Fixed Broadband by State, 2014-2017 networks is appropriate, and concludes 25% s s e with strategies that Florida could use c c
20%
t to address the gap, if there is one, and u o h t i makes suggestions for what might be 15% n o i t
the most appropriate course of action. a l
u 10% p o
f o
I. The State of Broadband in Florida t
n 5% e c Broadband gaps are generally r e measured in terms of access and 0% Alabama Florida Georgia South Carolina subscription. Access means that networks are physically available, and Figure 2. Percent Rural Population without Access to Fixed Broadband by State, 2014-2017 subscription means that individuals 45% s
s 40% actually purchase network services. e c c
35% Both measures are expressed as t u o
h 30% t percent of households or percent of i
n 25% o population. For brevity, let’s focus on i t a
l 20% u
access. p o
15%
There are two basic technologies f o
t 10% n used for people to access broadband e c
r 5% e networks: Fixed technologies, such 0% as coaxial cable and fiber optics, Alabama Florida Georgia South Carolina
Source: FCC (2016, 2018, 2019)
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for broadband in rural areas, where a little However, the pattern isn’t universal. Per more than 22 percent of Florida’s rural capita income in Walton County – a low- population did not have access to fixed deployment county –is comparable to broadband. But as Figure 2 shows, rural that in high-deployment counties. Indeed, broadband deployment in Georgia is nearly population density appears to have greater on par with that in Florida. influence over broadband deployment than Even though Floridians fare well on does per capita income in Figure 3. average compared to their counterparts This relationship breaks down in Figure in neighboring states, there are wide 4, which focuses just on low-deployment discrepancies in broadband access across counties. Income seems to matter little as Florida. According to the FCC’s best counties tend to cluster around the $20,000 estimates, all Floridians in 13 counties had per capita level without having an apparent access to fixed broadband 2018. In contrast, effect on deployment. The counties with 0.8 percent of the residents of Dixie County greater deployment (represented by had access, and less than 50 percent of larger circles) are located at both the high Floridians in six additional counties had end and the low end of the population access. (FCC 2019) density scale. So are counties with less Why do Florida counties differ so widely deployment (represented by smaller in broadband penetration? Per capita income and population Figure 3. Fixed Broadband Density for Low Deployment and High Deployment Florida Counties, 2018 density can explain some of the $50,000 differences, but not all. Figure 3 $45,000 Above 95% Below 80% $40,000 7 shows fixed broadband density 1
$35,000
, for Florida counties in 2018. e $30,000 m o c
The lighter circles represent n $25,000 I
a t
i $20,000 the counties that have greater p a
$15,000
r than 95 percent deployment, e
$10,000 and the darker circles represent $5,000 $0 counties with less than 85 -500 0 500 1000 1500 2000 2500 3000 3500 4000 4500 percent deployment. The sizes opulation Density ersons per S uare Mile Source: FCC (2019) of the circles show the relative Figure 4. Fixed Broadband Density for deployment densities. The Low Deployment Florida Counties, 2018 vertical axis shows per capita $40,000 $35,000 income and the horizontal $30,000 axis shows population density. $25,000 In general, high-deployment $20,000 counties have greater $15,000 $10,000 population density and higher $5,000
$0 per capita income than do 0 10 20 21 22 23 24 25 26 lower-deployment counties. opulation Density ersons per S uare Mile Source: FCC (2019)
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circles). So, while rural counties have less 1-4 consist of smart subsidy zones, true broadband deployment per person than access gaps, and market efficiency gaps. do urban counties, population density The latter appears misnamed as it does not does not explain differences between low- result from a failure in markets, but rather deployment counties. represents a service reach that could be While Figures 1-4 may give the achieved in a fully liberalized and efficient appearance of broadband gaps, they do not market that lacks government barriers to tell the whole story: That 20 percent of rural competition. Such barriers might include Floridians do not have broadband access barriers to rights of way, franchise fees, does not mean that this is a gap that should and required government permissions for be filled. Two other analyses are needed service and/or facilities. This gap can be for such a conclusion: What is the nature bridged through private markets if non- of the gap? Does government action pass a economic barriers are removed. (ITU 2010) cost-benefit test? Neither analysis appears Once the smart subsidy zones and to have been conducted in the US, even true access gaps are clearly identified, though government has been subsidizing then it is important to assess the costs and telecommunications deployment for over benefits of attempting to fill them. For 40 years. example, the FCC spent over $42 billion from 2012 through 2016 on its programs II. The Economics of Broadband Gaps for rural telecommunications, low income International best practice for telecommunications, schools and libraries identifying and assessing broadband subsidies, and rural health care programs. gaps is to: (1) provide subsidies only This $42 billion benefited the service where unsubsidized broadband is not providers and some customers, but it came commercially viable and (2) distinguish at a cost. If, for example, the households between areas that need help with startup that funded the $42 billion had spent that costs and areas that need help with ongoing money themselves, they might have spent expenses. (ITU 2010) Best practice begins an additional $16 billion on housing, $4 with identifying smart subsidy and true billion on health care, and $672 million access gap zones. The smart subsidy on education among other important zone is those rural or high-cost areas and items (assuming their additional spending low-income population groups for whom was in proportion to how they spent their service is not commercially viable absent household incomes in 2015), according to a one-time subsidy for initial investment. data from the Bureau of Labor Statistics. An The true access gap consists of similar economically sound decision on whether areas but with the added requirement that government should divert citizens’ incomes service isn’t commercially viable without an to fill broadband gaps should be based on an ongoing subsidy for operating expenses and assessment that these personal expenditures maintenance. are less valuable than broadband that Gaps such as those identified in Figures appears to lack commercial viability.
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III. The Economics of Filling Some The centerpiece of any Florida-specific Broadband Gaps program should be the FCC’s system of If government action to fill a broadband auctions and subsidy caps with specific gap passes a rigorous cost-benefit analysis, federal rollout commitments. If Florida the most effective means for filling the wants faster rollouts or greater broadband gap is to have private operators compete speeds in some areas than what the FCC for subsidies through a reverse auction. A targets, Florida would have two options. reverse auction in this case is an auction in One option would be to add funds to the which the bidding starts at the maximum FCC’s system prior to an auction so that a subsidy the government is willing to provide single auction could be performed using the and then private operators bid down the state’s more aggressive broadband targets, subsidy amount. Competition for subsidies and the FCC and Florida would split the ensures (as much as is possible) that tax subsidy commitment. dollars are not wasted. Competition within If the federal auction has already a market tends to give the best results occurred, or if the area was simply under for customers, but this competition isn’t a subsidy cap, Florida could work with feasible in smart subsidy and true access gap the FCC to either run a second auction or zones. Consequently, the next best solution add a subsidy supplement for additional is competition for the market, an approach broadband. This would be difficult because pioneered by Chile and Peru more than 20 the winner of the FCC auction would have years ago. In this process, the regulatory an advantage over rivals, and because authority auctions the subsidy to the lowest estimating subsidy needs absent an auction bidder, similar to the process the FCC is difficult. Florida and the FCC would need created for its Connect America Fund Phase to work carefully in establishing the subsidy II in 2014. Also, to ensure that tax dollars the state would pay. are not wasted, no subsidy is provided Florida policy makers might be tempted until services are actually delivered. to choose a third path, namely the status Fortunately, the FCC is conducting quo of simply sending money to incumbent extensive work in line with the approaches telecommunications providers. If policy described above. If Florida policy makers makers choose this path, the FCC should conduct their own gap and cost-benefit have a one-subsidy policy: If any state or assessments and believe that Florida federal agency provides a subsidy that in taxpayers should subsidize broadband any way duplicates the FCC subsidy, then over and above what subsidies the FCC is the FCC would deduct that subsidy amount providing, it would be important to design from its commitment to the recipient a Florida system that complements the broadband providers. federal system.
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IV. Conclusion entities might have created. If true access Providing a market-based approach for gaps or smart subsidy gaps exist, then addressing broadband gaps in Florida is any gap policies that pass a cost-benefit inherently complex. If Florida is to pursue test should center on complementing the filling broadband gaps, it should begin by work the FCC is doing to use competitive carefully identifying to what extent any processes. observed broadband gaps result from Dr. Mark Jamison is director and Gunter market participants simply needing time to Professor for the Public Utility Research deploy networks or uneconomic barriers to Center at the University of Florida, and investment. Such gaps can be addressed by a Visiting Scholar with the American removing whatever barriers governmental Enterprise Institute.
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References
Bureau of Labor Statistics. 2015. “Consumer Expenditure Survey,” https://www.bls.gov/cex/2015/combined/income. pdf (accessed July 16, 2019). Digital Commerce 360. 2019. “2019 B2B U.S. Ecommerce Market Report.” https://www.digitalcommerce360. com/2019/03/22/b2b-ecommerce-sales-surpass-1-trillion- with-more-growth-to-come/ (accessed July 10, 2019). Etters, Karl. 2019. “Commission negates municipal broadband study, forms working group to study internet access.” Tallahassee Democrat https://www.tallahassee.com/story/ news/2019/03/27/tallahassee-broadband-internet-study- not-buried-yet/3294388002/ (accessed July 16, 2019). Federal Communications Commission. 2016. “2016 Broadband Progress Report.” https://www.fcc.gov/reports-research/ reports/broadband-progress-reports/2016-broadband- progress-report (accessed July 16, 2019). Federal Communications Commission. 2017. Universal Service Monitoring Report 2017. https://www.fcc.gov/sites/default/ files/2017_universal_service_monitoring_report.pdf (accessed July 16, 2019). Federal Communications Commission. 2018. “2018 Broadband Deployment Report.” https://www.fcc.gov/reports- research/reports/broadband-progress-reports/2018- broadband-deployment-report (accessed July 16, 2019). Federal Communications Commission. 2019. “2019 Broadband Deployment Report.” https://www.fcc.gov/reports- research/reports/broadband-progress-reports/2019- broadband-deployment-report (accessed July 16, 2019). International Telecommunications Union. 2010. ICT Regulation Toolkit. http://www.ictregulationtoolkit.org/index (accessed July 16, 2019). Mihalcik, Carrie. 2019. “Trump says US will lead in 5G ‘very shortly/’” CNET https://www.cnet.com/news/trump-says- us-will-lead-in-5g-very-shortly/ (accessed July 16, 2019). PWC Global. 2019. “22nd Annual Global CEO Survey.” https:// www.pwc.com/gx/en/ceo-agenda/ceosurvey/2019/us (accessed July 10, 2019). Robuck, Mike. 2019. “FCC’s Pai proposes new order to gather better broadband mapping data.” Fierce Telecom https:// www.fiercetelecom.com/regulatory/fcc-s-pai-proposes- new-order-to-gather-better-broadband-mapping-data (accessed July 16, 2019). Statista. 2019. “E-commerce share of total retail sales in United States from 2013 to 2021.” https://www.statista.com/ statistics/379112/e-commerce-share-of-retail-sales-in-us/ (accessed July 10, 2019).
18 | The Journal, Fall 2019 Soft Law and Emerging Technology in the States Jennifer Huddleston
echnological innovation is moving without undue restrictions but, other faster than ever before, and society times, the pacing problem can prevent is adopting new technologies at technological adoption and innovation. Ta quicker and quicker pace. Still, policy So the question is, how can policymakers solutions continue to move at largely enable innovation and encourage new the same pace they always have. This is technologies when traditional policymaking commonly known as the “pacing problem.” seems unable to keep up? In some cases, this disconnect can serve as As Ryan Hagemann, Adam Thierer, and a benefit that allows technology to emerge I document in a recent law review article,
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policymakers are turning to less formal and also require a degree of regulatory humility more flexible policymaking tools, which we that recognizes imperfect knowledge and refer to as “soft law,” to handle a wide variety solutions. Regulators must be willing of emerging technologies from autonomous to think beyond potential worst-case vehicles and drones to advanced medical scenarios and consider the benefits brought technologies and 3D printing.1 While our by positive use cases as well. paper focused on the use of soft law at the While agencies seem to be using these U.S. federal level, soft law mechanisms are new tools more and more, particularly also used as a tool for technology policy at with regard to emerging technologies, it is the state and local level.2 difficult to know exactly how many “soft In this essay, drawing on my paper with law” actions have been undertaken. As Hagemann and Thierer, I will introduce the Clyde Wayne Crews’ work on “regulatory concept of soft law and its use as a type of dark matter” points out, the sub-regulatory policy solution for fast-moving, emerging and amorphous nature of such policy technologies. Next, I will provide examples tools can make it difficult to truly count or of how states have utilized these soft law quantify their impact.5 Yet, there are several mechanisms. Then I will conclude by notable examples at both the state and detailing some of the concerns regarding federal level of soft law acting as a policy the potential abuse of soft law as well as solution for emerging technologies where possible ways to mitigate some of these traditional hard law has been ineffective. concerns. New technologies pose challenges to existing regulatory functions in several ways. What is Soft Law? Notably, as discussed in the introduction, Rules and regulations that guide and the pace of technological innovation often govern a policy area are no longer as clear- leaves existing policy tools struggling to cut as they once were. Increasingly, a wide adapt. This lack of adaptation will become range of policies are made not through a problem due to its propensity to allow for the more formal processes of legislation static, and often quickly outdated, rules that and regulation, but by sub-regulatory could prevent innovation. But the pacing actions like non-binding guidance, problem is not the only reason for the multistakeholder processes, sandboxing, or emergence of soft law mechanisms. There the establishment of informal norms.3 These are other reasons it has become a preferred soft law mechanisms exist on a spectrum of tool for dealing with emerging technologies. formality and provide a range of certainty.4 Many technologies blend or defy In many cases, these tools can serve existing categories, forcing policymakers as a way of signaling that regulators will to take a new look at policy solutions allow an innovation to continue to develop, that may require a more flexible and while also providing both regulators and adaptive approach. Technologies are also innovators much-needed flexibility during increasingly able to seek out more favorable this development process. But such actions regulatory regimes6 or act first and seek
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policy approval later.7 Sometimes the policy innovation is “presumed innocent” and reaction to such disruption has been swifter permitted until it is proven harmful.11 In and stricter as policymakers react to this many states, allowing autonomous vehicle evasion. This has played out particularly testing and creating a system for their with regard to the sharing economy and operation and deployment is done through micromobility devices. formal legislation, rulemaking, or executive While technological disruption free orders.12 Pennsylvania, however, has taken from any regulation may at times seem ideal a more soft law focused approach.13 This to advocates of free markets, technologies approach establishes a degree of certainty rarely stay unregulated. Soft law can provide and encourages innovators and regulators a pragmatic solution that is less restrictive to work together to determine best practices than formal, traditional regulation. In doing while retaining flexibility as the technology so, it can offer certainty, clarity, legitimacy, evolves.14 While this approach has many and accountability to both innovators benefits over more traditional regulatory and regulators while remaining adaptive approaches, it still raises concerns about and allowing trust to develop between enforceability.15 Still, such an approach consumers, innovators, and regulators can be a highly beneficial alternative when for new technologies.8 Soft law is far from states encounter difficulties in traditional perfect, but examining its usage in various regulatory processes that could impede forms for emerging technology can also important innovations. reveal its usefulness as a policy tool. The recent micro-mobility trend, particularly the emergence of dockless Examples of Soft Law in Action electric scooters, also provides examples of States and localities experiment with soft law in some localities. While some cities soft law mechanisms in various ways for have banned the scooters outright over many emerging technologies. Recent concerns, other local governments have examples include less restrictive ways of taken a variety of more flexible approaches, regulating the testing and deployment of including launching sandbox-style pilot autonomous vehicles, sandboxes to allow programs or other more adaptive policy new financial products, and various soft law responses.16 While in many cases scooter tools in the deployment of micro-mobility launches have resembled previous sharing devices like scooters.9 economy transportation platforms like Uber Currently, states have deployed a and Lyft, these collaborative agreements wide range of regulatory regimes when it with companies allow policymakers and comes to the development and testing of innovators to develop norms and terms autonomous vehicles. They range from of use for factors such as parking, use of highly restrictive, as in California, to more rights of way and sidewalks, and safety.17 permissive, as in Florida.10 Innovators are These agreements, unlike flat-out bans, typically drawn to states that employ a more encourage collaboration. This allows permissive regulatory approach in which innovative entrepreneurs to respond to a
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city’s needs while also addressing legitimate Mitigating the Problems of Soft Law concerns held by regulators. They also While soft law has probably been signal that policymakers are open to new, beneficial as a governing mechanism for innovative ideas and willing to work with emerging technologies when compared these emerging transportation options in a to clunky and static traditional hard law flexible way rather than simply regulating mechanisms, it still raises concerns. If them away.18 the potentials for soft law abuse are fully Finance is typically one of the realized and substantively considered before most regulated industries, but FinTech, it is pursued, then, ideally, good governance blockchain, and other emerging would be able to mitigate these risks while technologies could solve many problems maximizing its benefits. in providing financial services. However, Perhaps the most obvious risk is that soft issues arise as these innovations often fall law could merely allow the administrative outside of traditional categories and can state to grow larger while imposing even be closed off by pre-existing regulations. fewer checks on power than more formal Now, however, some states are working regulatory mechanisms. This is a legitimate collaboratively with these innovators via concern and highlights why substantive sandboxes that allow products to launch checks are necessary to ensure that soft law and test without certain regulatory burdens does not devolve into soft despotism.22 The that might deter or prohibit innovation.19 courts can play a unique role in checking Like many soft law options, these testing agency power and insuring those impacted grounds are not free from concerns. As my have a means of redress when agency colleague Brian Knight describes, positive action, via either soft or hard law, crosses sandboxes use such innovative regulatory the line. In many ways, states have taken the mechanisms in a way that protects lead in allowing courts to scrutinize agency consumers and benefits the public.20 They actions in a truly thorough manner. While also maintain an accessible and voluntary the federal courts provide varying levels of regulatory option for innovators so that deference to administrative agencies under more solutions will be able to enter the existing precedents23, some states have market and provide new options that might removed agency deference while others have otherwise been unavailable.21 never adopted such requirements in the These are not the only ways that first place.24 For example, in 2018, Florida policymakers are using soft law to respond voters passed an amendment that ended to emerging technologies, but they provide the state’s judicial deference to state agency some good examples of the beneficial ways interpretations.25 In freeing courts from states are taking a flexible approach that can such requirements, these states also provide allow innovation to flourish. an example of what might happen on the federal level if deference was weakened or removed.
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Of course, not all concerns relate to Conclusion the role of the administrative state. As Technology is rapidly changing and my Mercatus colleague Brian Knight developing, and the regulatory response to has pointed out in his work on FinTech it should as well. In many cases, particularly sandboxes, soft law that prioritizes one at a state level, policymakers, recognizing firm over another has the risk of becoming the benefits of disruptive innovation, anti-competitive rather than expanding the have embraced a more flexible regulatory market via new innovations.26 Such a risk approach via soft law. Rather than seeking is not limited to FinTech but can occur in to keep pace via static regulation that risks any scenario where the benefits created by either being too late to prevent harms soft law are limited to a specific number or so stringent as to prevent innovation, of players. For example, a similar example a soft law approach requires a degree of could be observed in limiting the number of regulatory humility that can create a more companies able to participate in a dockless balanced regulatory framework in a time of scooter pilot program. Policymakers can rapid change. There are certainly concerns mitigate such concerns by allowing this surrounding how soft law, like many other regulatory flexibility to be accessed by policy tools, could be abused. However, all innovators who meet a basic set of substantive checks from both the other qualifications and not privileging those branches of government and the structure who participate in the program by labeling of the policies themselves can help mitigate them a “good firm.”27 those risks while maximizing the potential In many cases, if soft law proves to be benefits that could be gained from this successful, the response would not be to approach. mandate additional regulatory requirements Jennifer Huddleston is a Research but to assess broader deregulatory Fellow at the Mercatus Center at George possibilities for more traditional players in Mason University and a Senior Fellow with the industry.28 Ideally, soft law might be The James Madison Institute’s Center for coupled with broader regulatory reform Technology and Innovation. actions to rein in the administrative state and its power.29 This would help mitigate concerns about overregulation. Additionally, the assumption should not be that a successful use of soft law always requires more formal regulation, but also that it could show examples of where existing regulations may prove to be unnecessary in traditionally-regulated industries.30
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References
1 Ryan Hagemann, Jennifer Huddleston Skees, and Adam 13 Huddleston and Thierer, supra note 2. Thierer, Soft Law for Hard Problems: The Governance of 14 Id. Emerging Technologies in an Uncertain Future, 17 Colo. 15 Id. Tech. L.J. 37 (2018). 16 See Rasheq Zarif and Derek M. Pankratz, Small is 2 See Jennifer Huddleston and Adam Thierer, Pennsylvania’s Beautiful: Making Micromobility Work for Citizens, Innovative Approach to Regulating Innovation, The Cities, and Service Providers, Deloitte, Apr. 15, 2019, Bridge, Sep. 5, 2018, https://www.mercatus.org/bridge/ https://www2.deloitte.com/insights/us/en/focus/future- commentary/pennsylvanias-innovative-approach- of-mobility/micro-mobility-is-the-future-of-urban- regulating-innovation. transportation.html 3 Hagemann, Huddleston Skees, and Thierer, supra note 1 at 17 For an example of such an approach see, e.g., Bird, 79-96. Lime Sign Agreement Regulating E-Scooter Operations 4 Id. at 97-119. in Bloomington, News Release, Nov. 15, 2018, https:// 5 Clyde Wayne Crews, Jr., Ten Thousand Commandments, bloomington.in.gov/news/2018/11/15/3758 https://cei.org/sites/default/files/10KC2019.pdf 18 Jennifer Huddleston, What the Scooter Wars Tell Us, 6 Adam Thierer, Innovation Arbitrage, Technological Inside Sources, Sep. 20, 2018, https://www.insidesources. Civil Disobedience, & Spontaneous Deregulation, Dec. 7, com/what-the-scooter-wars-tell-us/. 2016, https://medium.com/tech-liberation/innovation- 19 See Daniel Press, Arizona Becomes First State to Establish arbitrage-technological-civil-disobedience-spontaneous- FinTech Sandbox, Mar. 24, 2018, https://cei.org/blog/ deregulation-eb90da50f1e2 arizona-becomes-first-state-establish-fintech-sandbox 7 Adam Thierer, Evasive Entrepreneurialism and 20 Brian Knight, How to Build a Good Regulatory Sandbox: Technological Civil Disobedience: Basic Definitions, Tech Four Principles to Help Policymakers Get it Right, The Liberation Front, Jul. 10, 2018, https://techliberation. Bridge, Apr. 17, 2019, https://www.mercatus.org/bridge/ com/2018/07/10/evasive-entrepreneurialism-and- commentary/how-build-good-regulatory-sandbox technological-civil-disobedience-basic-definitions/ 21 Id. 8 Hagemann, Huddleston Skees, and Thierer, supra note 1, 22 See Huddleston supra note 9. at 79-96. 23 See Jennifer Huddleston, Has the “Auer” Glass Run Out 9 Jennifer Huddleston, Is Soft Law the Solution for Tech for Judicial Deference?, The Bridge, Apr. 10, 2019, https:// Policy Problems?, The Hill, Mar. 18, 2019, https://thehill. www.mercatus.org/bridge/commentary/has-auer-glass- com/opinion/technology/434497-is-soft-law-the-solution- run-out-judicial-deference for-tech-policy-problems 24 Mark Chenoweth, Florida Voters Join Chevron Revolt and 10 See Jennifer Huddleston, How States Give a Green Light Strike a Blow Against Judicial Bias, The Federalist Society, to Driverless Cars and What Comes Next, James Madison Nov. 12, 2018, https://fedsoc.org/commentary/blog-posts/ Institute, May 8, 2019, https://www.jamesmadison.org/ florida-voters-join-chevron-revolt-and-strike-a-blow- how-states-give-a-green-light-to-driverless-cars-and-what- against-judicial-bias comes-next/ 25 Id. 11 See Adam Thierer, Converting Permissionless Innovation 26 Knight, supra note 20. Into Public Policy: 3 Reforms, Nov. 29, 2017, https:// 27 Id. readplaintext.com/converting-permissionless-innovation- 28 See Thierer, supra note 11. into-public-policy-3-reforms-8268fd2f3d71 29 See Patrick McLaughlin, Regulatory Accumulation: The 12 Autonomous Vehicles: Self-Driving Vehicles Enacted Problem and Solutions, Mercatus Center Policy Spotlight Legislation, National Conference of State Legislatures, Mar. (September 2017), https://www.mercatus.org/publications/ 19, 2019, http://www.ncsl.org/research/transportation/ regulatory-accumulation-problem-and-solutions. autonomous-vehicles-self-driving-vehicles-enacted- 30 See Thierer, supra note 11. legislation.aspx
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Breaking Up “Big Tech” – a Bad Idea Vittorio Nastasi
here is no doubt that our laws have Warren released a proposal to break up failed to keep pace with technological “Big Tech” as part of her 2020 presidential innovation. In addressing these campaign. Meanwhile, Republicans in Tshortcomings, our eyes should be on Congress have vocalized concerns over the future and the seemingly endless censorship by social media companies. opportunities for innovation that lie ahead. Senator Ted Cruz recently stated that “by any Yet, politicians on both sides of the aisle are standard measure, the big tech companies looking to the past, channeling trust-busting are larger and more powerful than Standard sentiments from the Progressive Era. Oil was when it was broken up … and if we Most prominently, Senator Elizabeth have tech companies using their monopoly
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to censor political speech, I think that raises levels—all in one easy-to-read box. Below real antitrust issues.” While monopolies that, on the same page of results, are links and oligopolies are true examples of market to competitors like TripAdvisor, Yelp, and failures, those terms simply don’t describe OpenTable. It is hard to argue that this is what’s going on with Big Tech today. harmful to consumers or severely limits To be sure, companies like Google and competition. Results like this make Google Facebook have experienced tremendous more convenient, and competing services growth over the past few decades. Since its are certainly better off than in a world founding in 1998, Google has expanded without search engines. Moreover, Google to employ nearly 100,000 workers, and search is a free service because it generates Facebook—from its humble origins in a revenue from advertisements. Warren’s college dorm room—now reaches over 2.3 proposal would require Google to separate active monthly users. Together, these two its search functions from its other services companies and their subsidiaries account including maps, reviews, advertisements.2 for over 70 percent of all web traffic.1 The result: less helpful search that you’d This impressive growth has led many have to pay for—that’s hard to sell as better to conclude that the Big Tech firms are for consumers. anticompetitive, but their growth has been driven by consumer preferences rather than 2. Acquisitions are good for innovation special protections. In fact, proposals like Start-ups are often swallowed by larger Senator Warren’s call to break up firms like firms in an effort to limit competition. Google and Facebook only open the door Facebook and Google, for example, to further cronyism and rent-seeking. Here have acquired a combined total of 362 are 5 reasons why these proposals just don’t companies—many of which were potential make sense: competitors.3 However, these acquisitions also make innovation feasible. Many small 1. Tech firms provide a number of firms lack the capital to bring their ideas services, but that doesn’t make them to market while larger firms have the scale anti-competitive and resources to absorb the costs associated There are many search engines to with research and development. In effect, choose from, but Google is overwhelmingly acquisitions shift risks from smaller firms the most popular because it’s better than the to larger firms who can afford short-term competition. A major complaint in Warren’s losses.4 If, as Warren suggests, large firms proposal is alleged anti-competitive actions were prohibited from making acquisitions, by Google such as prioritizing its own many innovative ideas would never see the services in search results. For example, if light of day. The Department of Justice and you search “restaurants,” the first result Federal Trade Commission already have will be a Google-sponsored map of nearby the power to prevent mergers that would locations with other information like significantly reduce competition. Impeding reviews, hours of operation, and price mergers without strong evidence of anti-
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competitive effects would only decrease the collection and invasions of privacy, but it expected payoff for start-up investors and isn’t clear that breaking up the big firms reduce the incentive to form new businesses. would mitigate these problems.6 Greater On the other hand, allowing reasonable competition among smaller firms would acquisitions to take place encourages new create incentives to use our data in more business formation, allowing innovations profitable ways while limiting firms’ ability to reach consumers more quickly and at a to invest in security. Some regulation may be lower cost—a win-win. necessary to limit inappropriate uses of user data, but most current proposals miss the 3. Big firms are better for data security mark. It is critical that whatever legislation and privacy arises to address privacy concerns not One advantage to scale is greater be so restrictive that it prohibits future ability to invest in security. In fact, the big innovation. tech firms spend billions on developing new forms of encryption to protect user 4. Social media is good for free speech – data. There is even competition among even in the face of “de-platforming” firms to provide better security because Think about a time before the internet consumers demand it.5 Of course, there and large social media platforms. If you are genuine concerns about excessive data wanted to express your opinions to a
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convenient. Otherwise, we risk setting a dangerous precedent. Proponents of intervention argue that dominant platforms like Facebook are so ubiquitous that they are necessary to modern life and should be treated like utilities. While competition among various platforms is different than in traditional markets, plenty of alternatives exist. Facebook CEO Mark Zuckerberg recently testified in front of Congress and his exchange with Senator Lindsey Graham illustrates this point well:
Sen. Graham: Is there real competition you face? Because car companies face a lot of competition. If they make a iStock / kobbydagan defective car, it gets out in the world, people stop buying that car—they buy another one. Is wide audience, your choices were limited. there an alternative to Facebook in the You could submit an opinion piece to a private sector?” newspaper, but your opinion would be scrutinized by an editorial board, compete Zuckerberg: “Yes Senator, the average with other submissions, and—most American uses eight different apps to likely—be rejected. Today, there are endless communicate with their friends and stay in accusations of censorship on the part of touch with people—ranging from texting social media platforms like Facebook and apps to email to…” Twitter, but it is hard to argue that speech is restricted relative to any other point in Sen. Graham: “Which is the same history. Sure, guidelines for acceptable service you provide?” posts can be vague and content is removed with questionable justification, but private Zuckerberg: “Well, we provide a number businesses should be allowed to remain of different services” private—even when it isn’t politically
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Sen. Graham: “Is Twitter the same as reducing the incentive to innovate. Large what you do?” market shares—when they result from market-based competition—are subject to Zuckerberg: “It overlaps with a portion changes in consumer preferences. When of what we do.” bureaucrats dictate outcomes, cronyism, rent-seeking, and corruption are almost Sen. Graham: “You don’t think you have sure to follow. The best way to avoid a monopoly?” monopoly power and encourage innovation is to leave consumers in charge by allowing Zuckerberg: “It certainly doesn’t feel like the market to operate freely. that to me.” Vittorio Nastasi is a Policy Analyst with the Reason Foundation. 5. More regulation really means more cronyism and less innovation The growing tech industry may be filled with uncertainty, but the effects of regulatory encroachment are well known. References Oversight sounds good at first but, over time, “mission creep” expands authority 1 https://www.newsweek.com/facebook-google-internet- and regulatory bodies become empowered traffic-net-neutrality-monopoly-699286 2 https://medium.com/@teamwarren/heres-how-we-can- to pick winners and losers. The appeal break-up-big-tech-9ad9e0da324c of wielding government authority is too 3 https://www.nytimes.com/interactive/2019/06/07/ opinion/google-facebook-mergers-acquisitions-antitrust. attractive for large firms to avoid. Before html?mtrref=www.google.com long, millions of dollars are spent on 4 https://www.progressivepolicy.org/issues/economy/ innovation-by-acquisition-new-dynamics-of-high-tech- lobbying and other unproductive activities competition-2/ instead of generating value for consumers. 5 https://www.geekwire.com/2019/privacy-becomes-selling- point-tech-companies-apple-microsoft-leading-way/ Regulations will tend to favor politically 6 https://itif.org/publications/2019/04/10/breaking-big-tech- connected firms, stifling competition and would-not-make-consumer-data-more-secure
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The Future of Commercial Space Technology and Florida Dr. Adrian Moore
ome to the leading space operations Florida must remain competitive as a launch site of Cape Canaveral, Florida and operations site. Florida’s pro-business has always been a major player in environment with no state personal income HU.S. space endeavors. SpacePort Florida is tax is a good start, but to understand how already an attractive base for commercial else Florida can position itself competitively, space development and launches. The it’s important to see where commercial burgeoning private space industry’s development in space is headed. A recent commercial development of space means Reason Foundation study argues for
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rethinking NASA, government and private These endeavors—as well as our industry roles in space development current use of space for communication, to trigger the most advancement, and navigation, defense, etc.—argue for a financial sustainability from where current change in our approach to space from technology stands.1 the current exploration paradigm to one NASA has contracted with the private of commercialization. Transportation sector for innovation and cost savings, but infrastructure will create the environment it continues to use the same antiquated for private players to develop space-based and constraining structure that was first industries that use commerce to greatly developed for exploring space. This carries increase quality of life and decrease cost of an opportunity cost that slows the private living. sector’s plans to harness space’s many viable materials and properties, compared to the The basic infrastructure needed should pace it could attain with a more market- be attainable in 10 to 20 years within the friendly approach. Such activities could same budget currently appropriated to help solve Earth’s most pressing problems NASA, with the following features: and foster a commercial space industry that • Fuel depots (essentially gas stations) sustains itself financially. in an appropriate orbit • Fuel (from water) and water itself Many space-based activities have • A shuttle for travel to the lunar commercial potential. For example: surface • tapping space-based clean energy • Lunar facilities, for resupply and sources water and aluminum mining for • mining asteroids for useful raw construction in space materials • Orbital facility complex • developing safe venues for scientific experiments While this list sounds ambitious, • upcycling/sequestering hazardous it is technologically feasible currently. but valuable debris currently in space It would allow the private sector to • tapping sources of water already develop pragmatic use for space’s assets in space, to decouple into oxygen much faster than government provision and hydrogen for space fuels and by creating a sustainable market-based oxidizers, and to provide radiation economy in space. The current structure shielding mass ties space development to conflicting • using the low-gravity, low- political requirements and fails to fund temperature and other properties of projects adequately, making for suboptimal space for many activities, including decisions by managers, administrators, manufacturing and research and politicians. In contrast, changing to a commerce paradigm, in which government funds infrastructure, lays the foundation
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for a sustainably-funded space industry. framework in which to operate that defines In a commerce-based approach, much and defends property rights, and research like we have with the seas and airspace, the that leads to more diverse space activities. private sector develops the space industry That allows commerce and private endeavor and NASA and other government parties to flourish. buy transport and other key services, such as on-orbit facilities, as customers of the Commercialization Creates private providers. NASA has already begun A Self-Sustaining Space Industry buying some space transportation in this Launch companies have created a manner, just as we currently do with other profitable service focusing on occasional transportation systems. Extending this good launches of very high-value payloads start and making it more consistent is the at very high prices. For example, the only way, within the current NASA budget, geosynchronous orbital position for that leads to comprehensive advancement telecommunications is so valuable that in space. even our current highly inefficient way of Given a functioning transportation accessing it is profitable. infrastructure, as the private sector develops SpaceX’s Falcon 9 launch success at space industry, government’s role changes one-third the price of a traditional NASA- to fostering that industry. This means a legal contracted launch demonstrates private-
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FIGURE ES1: TIMELINE FOR TRANSITION TO PRIVATE SPACE PARADIGM Primarily Private Private/Public (advanced purchase, anchor tenancy, etc.) Traditional Government Contracts
FY 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Launch *Falcon Heavy New Glenn SLS BFR (? ?) On Orbit Infrastructure ISS Private Habitat (e.g. Bigelow Inflatable) with anchor tenancy (?) with orbital facilities ( ? ) (some purely private) LEO-GEO, LEO-LLO Shuttles LEO-GEO, GEO Satellites (for LEO assembly of GEO satellites, delivery LEO-LLO Shuttles (support -/ Lunar Base) **Fuel Depot at L2 Can be supported by LEO-LLO Shuttle Lunar Infrastructure LLO - Lunar Lander Lunar Base Lunar Ice Mine / Fuel Factory (pilot) Asteroid Recon / Retrieval / Utilization Recon Retrieval / Use
*Falcon Heavy has been in service since 2018 **Technologies for a fuel depot at L2 are proven feasible but development has not begun. sector capability to fulfill many current A compromise solution might be to push NASA functions at a fraction of the for increased spending on commercial cost. Such achievement frees up NASA service purchase, while SLS proceeds to to concentrate on its core research and flight status, since the SLS will run out of exploration missions in space and allows surplus Shuttle engines by the early 2020s. the private sector to invest in self-sustaining Changing to a commercial approach space-based industry. Developing the also allows for efficiencies such as mass industry depends on a certain amount production of equipment and standardized of infrastructure, which can pay for itself designs that can carry cargo or humans with by freeing up funds currently used for few modifications—which is much cheaper NASA’s SLS (Space Launch System)/Orion and more effective than what we do now. No program. matter how much money Congress sinks This redistribution of current NASA into status-quo space activities now, utility funding is the key to paradigm change, will continue to decline, making funding although there are political problems increasingly ineffective, and keeping the with terminating the current SLS/Orion U.S. space program confined. The first step program in closely contested states, like in progress is systemic change, beginning Florida, in the 2020 presidential elections. with policy change. Every single change
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that makes space operations more like for commercial, scientific and military airline operations bears fruit in lower costs, pursuits—without increasing NASA’s space and those changes in turn trigger further activity budget. By redirecting funds, space reduction in costs. infrastructure would likely be available by the mid-late 2020s. Triggering Large-Scale The potential exponential cost Advancement In Space Without reduction and technological advancement Additional Federal Funding of such a paradigm shift cannot be Private sector launch allows the market precisely quantified. This is especially to exploit every available efficiency to true in a frontier-like space, where we develop the cheapest, most effective means have only begun to identify caches of of space travel. When NASA becomes a resources and uses of physical and material paying customer of such transportation, properties of space. The graph gives rough it fosters the development of simpler and timeline estimates based on our current vastly cheaper launch and vessels, which technological capability, knowledge of are now the most expensive, difficult and space resources and current costs, with complicated part of space activity. With firm estimates in the near future—through cheaper launch comes more launch—for about 2025, when infrastructure would the same or less cost. be complete enough to support a fully With NASA as an anchor tenant on a commercial space industry. From that privately contracted space station, funding point, estimates are less firm, as depicted by is available for infrastructure such as the graph’s dotted lines, as we cannot know orbital facilities, which expands current which technologies will dominate and space activities and makes them better which additional resources and efficiencies and cheaper to accomplish. Much like will proliferate. New ideas will be tested, what the move to railroads did for U.S. and many will fail. Some companies will exploration and settlement of the American fold, and others rise with new perspectives. West, transportation infrastructure Such a pattern and outcome are consistent levers progress in all sectors, usable with past technology leaps and acquisition
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of frontiers. But we know from history that technologies, might want. These include transportation infrastructure catalyzes specific changes like converting current economic advancement, and that industries single-use rocket facilities to those geared are created and sustained through private toward frequent reusable rocket launches, investment and commerce. as well as broad changes like tort reforms Private actors and market forces have necessary for companies to be willing to take already slashed the costs of accessing controlled risks without fear of unreasonable space, reducing costs for not only NASA, liability, retaining and growing a labor but also civilian (mostly satellite) and pool highly skilled in new technologies, military space transport as well. These cost limiting business regulations that might reductions, especially for classified military stifle innovation, and maintaining efficient applications, cannot be quantified within the transportation/shipping capability for current available budget breakdowns, but materials and workers. are likely to follow similar cost reductions Dr. Adrian Moore is the Vice President of to NASA’s. As with other transportation Reason Foundation. industries, increasing efficiencies continue to drive down costs, but order of magnitude efficiencies come with infrastructure that can sustain an industry, as we have seen with shipping and rail industries and even with Antarctic exploration. The way forward for space shifts to an approach based on our current reality of new private launch capability at a fraction of the cost of government procurement. References To remain competitive in a more privatized space economy, legacy space 1 Jeff Greason and James C. Bennet, The Economics of Space: An Industry Ready to Launch, Reason Foundation, states like Florida should consider what June 2019, https://reason.org/policy-study/the-economics- private industry, at current and anticipated of-space/
www.jamesmadison.org | 35 The “Yen” And Yang Of Transforming Education How to Turn Outdated Shopping Centers into Innovative Learning Centers By William Mattox
arkhorse presidential campaigns peculiar policy proposals – including one are often distinguished by their that looks strangely out of place on the quixotic policy ideas. And Andrew agenda of an aspirant for federal office. DYang’s long-shot bid to become the 2020 It’s called “The American Mall Act,” and Democratic nominee is certainly no it would create a $6 billion national fund to exception. help struggling shopping malls all over the In his effort to win over new “Yang country. Specifically, Yang’s fund would seek Gang” supporters, the 44 year-old education to help malls innovate to “attract businesses, entrepreneur has proposed a plethora of schools, organizations, and entrepreneurs
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to find new uses for their buildings and education today – such as overcrowding commercial spaces.” problems in areas with high population “Malls used to be a hub for socialization growth. Even more significantly, and commerce in many American repurposed learning malls could help communities,” Yang notes. But as facilitate the rise of an alternative paradigm e-commerce continues to take over more for how Americans think about education and more of the retail market, many malls – a paradigm of highly-individualized are losing customers. In fact, Credit Suisse learning that is vastly superior to the big- projects that 25 percent of U.S. shopping box model of K-12 schooling commonly malls will close by 2022. Accordingly, Yang seen in America today. believes “these giant spaces need to be revitalized in order to spur investment in An End to “Undifferentiated the local economy and to combat suburban Big-Box Education” and urban blight.” Education analyst Grant Lichtman, Yang’s proposal is fraught with author of the book “Moving the Rock,” constitutional and jurisdictional problems. argues that “the tsunami of retail closures For starters, shopping mall revitalization may well be a canary in the coal mine of is not among the enumerated powers of ‘big-box’ education.” Lichtman notes that the federal government. And no branch the disruption of the retail marketplace of government – at any level – really ought is being driven by e-companies that offer to be in the business of creating special more than just the convenience of shopping slush funds that favor specific commercial online. These e-companies use big data and ventures. digital personal assistants “that know what Still, there is much to like about we need or might want even before we do.” the notion of repurposing abandoned “These future-focused consumer shopping centers for productive use in the modalities are pretty much the opposite 21st Century digital economy (provided of the big-box stores that try to stock it is a private market initiative rather than everything for everyone – at enormous a public sector one). And the goal of expense in space, inventory, and people,” such repurposing shouldn’t be primarily he says. Instead, these digital companies nostalgic – to preserve the favorite teen offer consumers product offerings tailored hangout of former “mall rats” like Marty to each individual’s particular needs or McFly (Michael J. Fox’s character in “Back preferences. to the Future”). Rather, one major goal of Lichtman believes “the parallels to mall repurposing should be to help future undifferentiated, big-box education are teenagers (and their younger siblings) just too clear to miss” and that schools that attain an even better education than the one continue to operate with a big-box mindset McFly received at Hill Valley High School. “are in trouble, even if many do not see the Indeed, “schooling malls” could help warning signs.” address some very practical needs in Yet, interestingly, even though digital
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education software can now perform some is largely transactional and the value of amazing and individualized functions (like personal interaction quite low). identifying and addressing a particular Thus, the future of education ought student’s learning gaps), Lichtman does not to be dominated by big-box schools not believe that digital education ought to that offer systemized one-size-fits-all replace certain aspects of traditional, brick- instruction for the masses without the and-mortar schooling. “Education is not individualized learning opportunities that retail,” he says. “Learning is both relational students increasingly want and need. But and transactional; and, of the two, the neither should K-12 education become relational is more important for long-term the sole province of digital companies deeper learning.” delivering highly individualized, self-paced Lichtman believes education often is learning content to students online. more akin to shopping for a tailored article For big-box education typically offers of clothing (where “fit” is highly important students relational learning without and having a personal relationship with the individualized “fit.” And digital education provider is often quite valuable) rather than typically offers students individualized “fit” shopping for a canned good or some other without relational learning. standardized product (where the exchange What is needed, then, is a highly
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adaptable “hybrid” model of K-12 education into learning centers, these same market that seeks to offer students the best possible dynamics very likely would occur. Large “blend” of relational and remote learning, schools offering a wide array of courses in recognizing the different needs and interests all the core subject areas would serve as of different students. Such a model would education mall “anchors.” (For example, give parents the opportunity to choose a the Tallahassee Mall currently has a charter single provider – or multiple providers – for school operating in its space.) At the same their child’s education. And such a model, time, small educational enterprises typically ideally, would make it possible for students specializing in a single field of study where to do much of this learning under the same they have considerable expertise (foreign roof. language, lab science, music education, Which brings us back to the learning shop class, etc.) would occupy “boutique” mall of the future. spaces that vary in size. Like traditional mall shoppers, students What a Repurposed Mall would avail themselves of the learning Directory Might Offer mall’s offerings based on their varying needs Historically, when people have gone to (as determined by their parents). Some major shopping malls, they’ve found a wide students would become veritable “learning variety of retail outlets there. According mall rats” and spend as much time at their to the International Council of Shopping local learning center as they currently do Centers (ICSC), the typical regional mall in traditional schools. Other students, has at least two “anchor” department stores perhaps especially those taking advantage that take up at least half of the mall’s overall of online offerings at home, would come to retail space and another 40+ specialty the learning center less frequently and/or stores that divide the rest of the space. spend fewer hours when they get there. These smaller, “boutique” stores typically The point is, repurposed learning specialize in a specific area of merchandise centers would offer parents the opportunity (toys, women’s clothing, men’s clothing, to do in education what parents have always shoes, hats, jewelry, health and beauty done when shopping for other goods and supplies, greeting cards, housewares, services – compare prices, look for the best sporting goods, etc.), often competing with “fit,” take advantage of exceptional values, one or more of the anchors. and determine when to buy “generic” and Indeed, shopping malls illustrate the when to “splurge” on some boutique offering value of both cooperation and competition that is of particular interest or need. in the marketplace, since mall merchants Put another way, repurposed learning simultaneously work together (to attract centers would offer parents the opportunity shoppers to their mall) and compete against to find the best blend of learning one another (in product lines they hold in opportunities for their child. Rather than common). having to choose between two less-than- If shopping centers were repurposed ideal extremes – standardized “big-box”
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schooling or remote online learning – they’d In order to make this transformation be able to fashion the best plan for meeting possible, state policymakers would need to their child’s specific learning needs. redirect the monies they currently allocate to education suppliers (school districts) The Need for an Alternative and allocate them instead to education Education Currency consumers (parents). While this may sound However appealing one may find like a radical move to facilitate an uncertain turning outdated shopping centers into outcome, it’s important to recognize that innovative learning centers, there is one our supplier-based system of financing obvious obstacle to this idea that would education is the primary reason public need to be overcome by state policymakers. education in America is so heavily tilted in (Yes, Mr. Yang, there is a role for government favor of big-box, one-size-fits-all offerings here – but it’s not what you think.) and against boutique, differentiated
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offerings tailored to the unique needs of marketplace – some as “anchor” providers individual students. that bear a resemblance to existing schools, So long as education suppliers have and many as “specialty” providers that offer a financial pipeline that is divorced from families and students the opportunity to individual consumer interests and needs, “go deeper” in an area of particular need or we’ll continue to have an education system interest. that caters to the interests of central planners. Less Yang, More “Yen” Which is to say that we’ll continue to have In conclusion, Democratic presidential a system that seeks to maximize one-size- candidate Andrew Yang deserves credit for fits-all standardization and to minimize calling attention to the need for outdated individualized customization. shopping centers to be turned into Thus, even if it did not lead to the innovative learning centers. But for this emergence of a single learning mall, there appealing vision to become a reality, we’ll still would be merit to converting our need less Yang and more “yen” (to borrow system of education finance from one that the currency term). allocates monies to suppliers to one that That is, we’ll need for policymakers provides “flexible scholarship accounts” for to deviate from Yang’s reliance on central parents to govern. And such a move would planners in the federal government to hardly be radical. mastermind this transformation. We’ll In fact, Florida already offers parents need, instead, for state policymakers to of special-needs children access to per- redirect existing education resources into pupil flexible scholarship accounts via the per-pupil flexible scholarship accounts Gardiner Scholarship. These accounts that parents can utilize to meet the specific function, in many ways, as an “alternative needs of their particular children through a currency” with which parents can purchase wide array of anchor, boutique, and online a wide array of educational goods and educational offerings. services. And any unused monies can be William Mattox is the director of JMI’s saved for future use on a child’s education, Marshall Center for Educational Options. giving parents an incentive to seek the highest possible quality at the lowest possible price. Universalizing these flexible scholarship accounts undoubtedly would draw lots of education entrepreneurs into the
www.jamesmadison.org | 41 Facing the Future of Facial Recognition Billy Easley
magine walking up to the automatic When the Seattle Times interviewed doors of your local convenience store patrons of the store, many of them were only to find that, instead of opening, uncomfortable with the use of facial Ithis time they remained tightly shut. This recognition technology. They argued that happened at a local Takoma, Washington it was a privacy violation to be subjected convenience store earlier this year when to facial recognition without giving their the store started a facial recognition pilot consent or even being notified that they program that compared images of known were under surveillance. In response, the shoplifters to individuals who attempted store put up a sign stating that anyone who to enter. If the store’s camera and artificial wanted to enter would have to abide by the intelligence matched an approaching facial recognition requirement. When the individual with its database of facial images, criticism continued to build, the company the doors would not open. argued that their use of this technology
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was based on safety concerns for both violated those requirements; and (3) require their employees and consumers (in 2017, a violation to have resulted in harm before over 400 people were killed in retail stores, it can be prosecuted. These three principles according to The D&D Daily, a retail trade will ensure that regulations will protect publication). privacy without sacrificing technological The experience of this Takoma innovation. community is a small-scale illustration of Lawmakers, communities, and privacy an incoming national conversation about advocates have generally focused their commercial use of facial recognition skepticism about this technology on state technology. And these conversations will and federal government use of facial only become more commonplace as larger recognition, rather than commercial use, retail stores, like Target and Walmart, are and for good reason - when a convenience already using similar technology to track store uses facial recognition technology, inventory and to prevent criminal activity. the worst it can do is bar you from Apple’s iPhone X allows users to unlock entering. When the government uses facial their cell phone by looking at their phone recognition, it can use that data as the basis instead of inputting a password. Security to detain you or to deny you certain benefits companies are using facial recognition or privileges. technology because it’s more reliable and less Federal law enforcement agencies, cumbersome than the traditional password including the Department of Homeland system. The American public benefits Security and Immigration and Customs from the rollout of facial and biometric Enforcement, have already started to deploy devices through increased convenience and facial recognition tools to supplement their enhanced security. However, it’s natural for activities, but there are no comprehensive consumers to feel anxious about this new regulations guiding their use. States have technological innovation and to question also entered into agreements with federal its purpose. Lawmakers can respond entities to incorporate facial recognition to these fears by educating the public technology into state law enforcement about the benefits of this rapidly evolving functions. The growing use of this technology. They should also avoid banning technology resulted in Congress holding the collection and use of biometric data. two hearings where lawmakers on the House Adopting such a top-down approach would of Representative’s Oversight Committee strangle the development of innovative shared a bipartisan desire to create explicit, uses of this technology. Instead, lawmakers limiting guidelines on data collection. should consider passing laws that: (1) Days after the committee’s first hearing, require notice and consent from consumers privacy advocates, including the American before biometric data can be used for Civil Liberties Union, asked Congress to specific purposes, excluding security impose a moratorium on the gathering of purposes; (2) allow state attorneys general facial recognition data by federal agencies to sue if they determine companies have until regulations were signed into law.
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In the midst of a contentious political laws, including Alaska, Connecticut, environment, reining in government use Massachusetts, Michigan, Montana, New of facial recognition is a rare bipartisan Hampshire, and New York. There are some issue that could result in legislation being critical differences between these laws and enacted. state legislators should find them instructive States legislatures have been far more as they determine what types of regulations focused on regulating commercial, rather should govern facial recognition policy. than governmental, collection and use of For instance, Illinois’s BIPA was the biometric data. Biometric identifiers include very first to be signed into law and also a multitude of data points beyond facial the only one to include a private cause of recognition, including fingerprints, retina action. Under the law, an Illinois resident scans, or even an individual’s voice. These can sue if they believe their biometric data regulations, called Biometric Information was collected or used in ways that violated Privacy Acts (BIPAs), govern the collection the law; for instance, if Apple didn’t receive and use of an individual’s biometric consent from an individual before taking a identifiers by commercial entities. face geometry scan for the iPhone X’s Face These BIPA laws usually have six ID system. Illinois’s law requires that an components: First, they require any individual must prove that they have been individual, corporation, or organization “aggrieved” by a violation before they can that obtains biometric data to receive be compensated under its BIPA. However, written, affirmative consent before they the Illinois legislature did not offer any can collect an individual’s data. Second, guidance about what conduct rises to they require companies to disclose for what the level of harm. As a result, consumers purposes they’re gathering the biometric have sued companies for clear technical data and how long they will maintain it. violations of the law even if they weren’t Third, they impose a reasonable standard actually harmed. The result was a flood of of care upon any company that obtains litigation from plaintiffs and inconsistent biometric data, which creates a new legal court decisions regarding what types of duty to protect the information. Fourth, legal claims violated Illinois’s BIPA. they require biometric data to be destroyed Howe v. Speed-way, Rivera v. Google, after a period of time. Fifth, they bar Vigil v. Take-Two Interactive, and Monroy companies from selling biometric data to v. Shutterfly are all examples of cases where third parties unless an individual gives their federal judges struggled to answer the same consent. Finally, they create enforcement question: if a company failed to receive provisions, which usually means granting affirmative consent from a consumer before the state attorney general authority to sue collecting their biometric data, but there companies that violate the law. was no clear evidence of harm, should the Three states have already passed BIPAs: plaintiff still be awarded civil damages? In Illinois, Washington, and Texas. A number other words, is the collection of biometric of states are also considering similar data, by itself, harmful to a consumer? In
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Rivera, Google’s Photo feature used facial who is at their front door does not allow recognition to identify individuals who that service in the state of Illinois out of an were uploaded by users, which is similar abundance of caution. Other services that to Facebook’s feature allowing users to use voice recognition are also not offered in recognize mutual friends in their photos. the state. Two people who were tagged in Google’s Illinois offers the clearest lessons for state Photo feature sued the company but legislators considering similar regulations: acknowledged that they had not suffered first, biometric data policies should any financial harm. The court eventually focus on regulating activity that harms decided to dismiss the case due to lack consumers, instead of broadly restricting of harm, but no company would want to the collection of data. The public should expose themselves to dozens of similar know when their data is being monetized cases and legal liability. or shared to third parties without their This unstable legal and regulatory permission. Washington’s law reflects this market has already had a negative impact principle by only regulating the collection on Illinois’s business environment and and use of biometric data if it is gathered caused companies to not offer certain for a “commercial purpose.” Washington’s services in the state. For example, Nest, BIPA defines commercial purpose as “a a doorbell-camera service that can use purpose in furtherance of the sale, lease, facial recognition to inform homeowners or distribution of biometric data to third
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parties for the purpose of marketing goods Second, state legislators should and services which are unrelated to the empower state attorneys general to initial transaction in which a person first prosecute violations of biometric laws. As gains possession of an individual’s biometric noted above, Illinois is the only state that identifier.” This focus on the purpose of the allowed for private causes of action. Both data collection also allows policymakers to Texas and Washington legislators declined explicitly allow biometric collection that to include similar provisions. benefits consumers, like data gathered for Finally, biometric regulations should security purposes. For instance, Nest allows only allow for litigation if there is a for facial recognition services in the state of reasonable likelihood that a violation Washington because the state’s BIPA has a resulted in actual harm. It is a long-standing security carveout. principle of American law that a case
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cannot move forward unless a plaintiff can commercial use of biometric data. They prove that they have standing. Put simply, should focus on ensuring that consumers that means an individual must prove to a are notified and give their consent before court they have been impacted or injured biometric data can be collected based on by the defendant’s actions before a case can the purpose of the collection, with specific proceed. The Supreme Court emphasized exemptions for security purposes. They the importance of this requirement in 2016 should allow for state attorneys generals to when it reversed the Ninth Circuit Court sue for violations of the law. They should of Appeals for not requiring a plaintiff to also require that plaintiffs prove that they demonstrate what concrete injury they had suffered actual harm before a case can move suffered before deciding the case. Standing forward. If state lawmakers adopt these requirements are necessary because they principles, they can protect the privacy separate the wheat from the chaff; courts of their constituents without harming can use them to filter out cases where no one American innovation. can point to an actual harm and therefore Billy Easley is a Senior Policy Analyst there can be no real remedy. with Americans for Prosperity, a part of the Commercial facial recognition laws Stand Together Network present a difficult task for lawmakers. They must respond to constituent fears about the collection of their data without unduly restricting technological innovation or punishing companies for conduct that doesn’t harm consumers. It may not be sufficient for lawmakers and businesses to point out the commercial benefits to consumers, which include increased convenience and security. There may need to be targeted regulation of biometric data collection that responds to reasonable concerns about how this data is used. These regulations should be narrowly written and not include broad restrictions or bans on
www.jamesmadison.org | 47 Disinformation and the “Deepfake” Harith Khawaja and Christopher Koopman
his past May, a video of Mark platforms, users, and policymakers trying Zuckerberg declaring that he to understand how to sort fact from fiction owned billions of people’s stolen on the Internet. Tdata was posted on Instagram, a platform One concern is that these videos could owned by Facebook.1 The video was portray individuals doing or saying things fake. Using complicated data processing they never did in an effort to spark unjustified methods to alter publicly available footage controversy. For example, presidential of Zuckerberg, researchers manipulated candidates or the President might appear in the video to put words in Zuckerberg’s places they never were, engaging in illegal mouth. This is just the latest example of activities. Police officers may be depicted the new challenge facing social media as shooting unarmed individuals while
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shouting slurs. Videos could show Muslims with no technical experience to create at a local mosque celebrating ISIS, an event pornographic videos of people they know that could possibly stoke violence against just by uploading a few photos.6 In one that community.2 Or even doomsday recent case, a $50 application available situations in which newscasters announce for Windows and Linux machines called the start of a nonexistent nuclear war.3 “DeepNude” allowed users to undress a Another concern is that while these photo of a woman with a single click.7 After doctored videos are still easy to spot as fake some backlash, the app was taken down. now, it is becoming increasingly harder to And critics point out that deepfakes have do so. Standard video editing techniques been repeatedly used to threaten, blackmail can, at minimum, insert new objects, alter and slander women, and to establish the pitch of people’s voices, or change colors. dominance over their bodies, especially The technology behind these “deepfakes” by representing them in non-consensual (the term given to these “fake” videos videos.8 generated by algorithms called “deep” These concerns may seem strong neural networks) allows programmers to enough for policymakers to do something, superimpose faces and voices in real-time, but why hasn’t anything been done about or even generate entire videos or audio files deepfakes? For one thing, to ban deepfakes from scratch.4 As a result, the doctored is to ban the technology that’s used to content is often indistinguishable from an create them. The algorithmic basis for authentic video. deepfakes can be assembled using open- This has a two-fold implication. First, source software toolkits developed and viewers are fooled into believing that maintained by Google and Facebook, like false content is real. Second, with the Tensorflow and PyTorch. When it comes proliferation of deepfakes, viewers may down to feeding these algorithms the data be less willing to believe in real content they need, programmers can obtain audio, because they would simply dismiss it as a video, and pictures online, for little to deepfake. The resulting atmosphere is one no cost. For reference, the first deepfake where people can no longer believe what porn creators used Google image search, they see. stock photos, and YouTube videos to train While many of the concerns about their algorithms.9 As deepfake technology deepfakes involve worries about the becomes more and more accessible, it future, these fake videos are already becomes increasingly harder — perhaps affecting real people. Since 2017, fabricated impossible — to ban deepfakes altogether. pornographic videos with the faces of Banning deepfakes would also forgo celebrities like Scarlett Johansson, Maisie the positive uses of the technology. The Williams, Taylor Swift, Aubrey Plaza, and algorithms behind doctored videos have Gal Gadot have been created and uploaded also been used to create language processing to online platforms like Reddit.5 Standalone systems like Alexa and Siri, music in the spirit apps have been released that enable users of Bach, and art that has been auctioned at
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Christie’s.10 They have brought movie stars deepfakes. Once a video is identified as like Peter Cushing back from the dead to such, efforts can then be made to inform feature in film sequels.11 And they are being viewers. This, however, is a difficult task. used to generate high-resolution images to Some argue that deepfakes can be improve the accuracy of algorithms used in spotted with the naked eye. By examining a the healthcare industry.12 Generated video video closely enough, and by concentrating could potentially be used in schools to teach on features like the perimeter of people’s history — imagine being transported back to faces and background colors, experts can World War I — and create images of extinct identify whether or not it is fake.16 The species that could promote conservation idea is that doctored videos often have purposes. By banning deepfakes out of fear, irregularities in color, sound, pixelation and we risk losing the benefits. content. By detecting these irregularities, So how else can we effectively moderate we could expose deepfakes. how deepfakes are used? One suggestion While this might be a successful short- has been to strip the legal immunity online term approach, it is not going to always platforms have under federal law.13 By work. As we mention above, the quality of making platforms liable for user-posted deepfakes produced continues to improve. content, the argument goes, platforms Over time, these irregularities will become would be incentivized to remove harmful less and less frequent. Experts have content like deepfake porn, which would predicted that, within a year, deepfakes make the online world safer for everyone.14 will become visually undetectable by Yet, this argument may end up humans.17 Beyond that point, fake and having more costs than benefits. The real will become indistinguishable. This Electronic Frontier Foundation, for troublesome thought has prompted example, has described section 230 of the researchers to develop technologies that Communications Decency Act (which could do the identification for us. The US created the immunity that online platforms Department of Defense’s Advanced Projects enjoy) as “perhaps the most influential law Research Agency (DARPA, which built the to protect the kind of innovation that has precursor to the modern internet), has spent allowed the Internet to thrive since 1996.”15 millions of dollars toward this end. Their The promise of immunity from liability has “media forensics” approach has endowed allowed Facebook, Twitter, YouTube, Yelp researchers to develop algorithms that can and other startups to take off, and is why identify telltale signs of media manipulation the Internet ecosystem has been so dynamic much more accurately than the human eye.18 and competitive. Amending this protection Research into this approach is ongoing but in the name of stifling deepfakes could deal shows promise; one experiment achieved a far-reaching blow to the Internet. up to 92% accuracy.19 This is not to say that nothing could be Deepfake videos raise hard questions done. And perhaps efforts should be less with no straightforward answers, especially focused on banning and more on identifying related to how to regulate them. The first
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step for effective moderation, however, is References increased public awareness. Policymakers 1 Cole, “This Deepfake of Mark Zuckerberg Tests Facebook’s should take the necessary steps to get Fake Video Policies.” themselves acquainted with the issues 2 Chesney and Citron, “Deep Fakes.” 3 Cook, “Deepfake Videos And The Threat Of Not Knowing surrounding the virality of deepfakes and the Wh at’s R e a l .” immense personal and institutional threats 4 Chesney and Citron, “Deep Fakes.” 5 Cole, “AI-Assisted Fake Porn Is Here and We’re All Fucked they pose. On this front, there has been - VICE.” some activity. This summer, the US House 6 Cole, “We Are Truly Fucked.” 7 Cole, “This Horrifying App Undresses a Photo of Any of Representatives held the first hearing on Woman With a Single Click.” deepfakes. While these efforts continue, it is 8 Cole, “Deepfakes Were Created As a Way to Own Women’s Bodies—We Can’t Forget That.” important that we take a balanced approach 9 Cole, “AI-Assisted Fake Porn Is Here and We’re All Fucked that allows for the benefits of the technology - VICE.” 10 “Is Artificial Intelligence Set to Become Art’s next used to create deepfakes to emerge while Medium?” seeking to mitigate the harms that could 11 Itzkoff, “How ‘Rogue One’ Brought Back Familiar Faces.” 12 Hao, “A New Way to Use the AI behind Deepfakes Could occur as a result of fabricated content. Only Improve Cancer Diagnosis.” then can we begin to provide real solutions 13 47 USC § 230 (2019). 14 Cook, “Here’s What It’s Like To See Yourself In A Deepfake to deepfakes. Porn Video.” Harith Khawaja is a Technology and 15 “Section 230 of the Communications Decency Act.” 16 Hu, “It Is Your Duty to Learn How to Spot Deepfake Policy Intern with the Center for Growth Videos.” and Opportunity. Christopher Koopman is 17 Summerville, “‘Deepfakes’ Trigger a Race to Fight Manipulated Photos and Videos.” the Senior Director of Strategy and Research 18 Robitzski, “DARPA Spent $68 Million on Technology to for the Center for Growth and Opportunity Spot Deepfakes.” 19 Knight, “A New Deepfake Detection Tool Should Keep and Adjunct Director of JMI’s Center for World Leaders Safe—for Now.” Technology and Innovation.
www.jamesmadison.org | 51 Permissionless Innovation in Insurance Markets Jordan Reimschisel
e live in an uncertain world, insurance company must, with some degree prone to tragedies during what of accuracy, determine how much risk seems like the worst possible is associated with a group of individuals Wtimes. Thus, since the earliest-known undertaking a certain activity, and then societies, humans have sought ways to charge each of those individuals a rate that mitigate these uncertainties. Insurance is will adequately cover the anticipated losses. one such highly effective tool. The calculations and decision-making Insurance practice consists of two processes that go into this task can be main parts: underwriting and rating. An incredibly complex.
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In general, the more information the innovation will cause serious, irreparable insurance company can access, the more harm to society should innovation be efficiently the company can distribute inhibited by regulation. the risk it is assuming. For example, life insurance companies already consider Use of Genetic Testing in information about an applicant’s occupation Insurance Markets and hobbies, as well as family and personal Over the last two decades, the cost health history when writing a policy. It is of sequencing a genome has fallen at an critical to the long-term financial health of astonishing pace. Thus, genetic testing an insurance company to develop policies is now affordable for most consumers. using as much accurate information as An entire industry has sprouted up to possible. offer individuals a DNA evaluation on Thus, outright bans on the types of everything from ethnic heritage to nutrition information insurance companies can access recommendations. Several companies in are concerning. A much better approach is this industry, like 23andMe, have become to carefully consider the likely risks and household names. benefits of allowing insurance companies Innovation in this field has already access to certain types of information and profoundly impacted medicine. to adopt a permissionless innovation stance Genetic testing is now serving to tailor towards the issue. pharmaceutical prescriptions to individual patients, detect serious diseases like cancer Permissionless Innovation earlier, and help prospective parents Scholar Adam Thierer lays out the avoid bearing children afflicted with life- permissionless innovation framework in threatening diseases. his book of the same name by contrasting The future looks even brighter in this it with the prevailing attitude known field. Eventually, physicians may be able as the precautionary principle. Under a to sequence any individual at birth and precautionary model, “New innovations determine, with reasonable accuracy, his or should be curtailed or disallowed until her susceptibility to a host of diseases along their developers can prove that they will with the most effective treatments for these not cause any harm to individuals, groups, likelihoods. specific entities, cultural norms, or various Such information would be as valuable existing laws, norms, or traditions.” to insurance underwriters as it is to Permissionless innovation flips that physicians. Understanding an applicant’s approach on its head and alternatively likely medical risks and what kinds of “refers to the notion that experimentation treatments for which they may be a good with new technologies and business models candidate can help the underwriter to should generally be permitted by default.” create a well-tailored policy that fits that Only when an opponent can compellingly individual applicant. convince policymakers that a new
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Genetic Information entire lifespan of the policy. Nondiscrimination Act These differences make it imperative The federal government has already that life and LTC insurers accurately placed limitations on what information calculate the risks associated with each some types of insurers can access. The applicant. Failure to do so could result Genetic Information Nondiscrimination in the assumption of too much risk and Act (GINA) prohibits health insurers from inadequate finances to cover policyholders. using genetic information to make decisions about eligibility, premiums, contribution Extending GINA to Life and amounts, or coverage terms. Additionally, LTC Insurers Is Problematic forty-eight states have similar prohibitions Recently, scholars suggested extending against the use of genetic information in GINA’s prohibition on the use of genetic test health insurance. results to life and LTC insurers. Concerns GINA does not apply to life insurance ranged from discrimination against those companies or long-term care (LTC) who receive unfavorable test results to the insurance companies. This makes sense possibility that requiring genetic testing when considering the difference between to obtain life or LTC insurance would their policies and health insurance policies. discourage individuals from seeking out Health insurance reimburses third-party potentially life-saving testing. providers for medical procedures. Often While these are valid concerns, a ban on these are routine procedures costing in the use of genetic test results may also have the thousands of dollars or less, rather unintended consequences. than in the hundreds of thousands. Both Primarily, a complete prohibition on life insurance and LTC insurance protect the use of such test results would limit against the death of a provider and chronic insurance companies’ ability to offer medical conditions respectively, in turn innovative pricing schemes. Without such demanding hefty payments. a ban, insurance companies could offer Additionally, health insurance was premium discounts to applicants who made mandatory by the Affordable Care submit genetic test results predicting a Act. Anyone who does not purchase health relatively healthy life, free from genetic insurance is penalized, though that penalty markers for such diseases as breast cancer is now assessed at zero dollars due to a or Parkinson’s. Insurance companies could provision in the most recent change to tax even offer couples considering starting a law. Life insurance and LTC insurance are family the kinds of policies they can open in entirely voluntary products sold on the their future child’s name at low premiums if private market. the couple submits results showing they are Finally, health insurance premiums are not carriers for any life-threatening diseases. reassessed every year, while life insurance Such policies would relate to car insurance and LTC insurance policies are usually companies reducing the premiums of structured to have flat premiums for the individuals who demonstrate that they are
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safe drivers. However, companies could not reliable information, they should be limited offer such policies with a complete ban on to soliciting genetic tests that have been the use of genetic tests in place. ordered by a physician in a clinical setting. Additionally, if such prohibitions are Generally, these types of tests have been enacted at a state level, the first state to pass evaluated for analytical validity, clinical such a ban would be at a disadvantage due to validity, and clinical usefulness. Further, adverse selection. Individuals who uncover physicians and the laboratories where they the potential for contracting cancer in practice are required by law to adhere to their future may travel to the state with the strict privacy standards when handling ban in order to open a policy. This would genetic data. create information asymmetry, skewed to Additionally, state policymakers could the applicant. If this health risk does not consider policies similar to the protections appear in traditional sources of information enshrined in the Health Insurance (health history, family history, and medical Portability and Accountability Act (HIPAA). records), then the insurance company HIPAA restricts with whom covered entities would not be able to properly account for (health insurers, health care providers, the risk they are undertaking by insuring and health care clearinghouses) can share the applicant. The likely result would either protected information, and requires that be more expensive premiums for all those covered entities enact safeguards to ensure insured, or long-term financial instability. that such information is not improperly shared. Currently, life and LTC insurers Other Options are not covered by HIPAA. Requiring such While a complete ban on the use of insurers to protect the genetic test results genetic test results is ill-advised, allowing they receive from applicants in harmony their use without any regulation whatsoever with HIPAA can further protect applicants’ may also be imprudent. However, there are privacy. steps that can be taken to mitigate these Finally, policy makers should avoid the risks short of an absolute prohibition. temptation to implement an outright and Limits should be set on the kinds of blanket prohibition on insurers denying genetic tests that insurance companies may coverage based on genetic test results. While solicit. Due to the falling price of genetic at first glance such a policy would appear sequencing, the genetic testing industry to protect against perceived unfair genetic has exploded. There are now more than discrimination, if insurers are forced to fifty direct-to-consumer (DTC) testing kits cover all applicants regardless of actuarial available on the market, as well as traditional standing, they would be forced to charge testing performed in a clinical setting. higher prices that adequately account However, there are concerns regarding the for the increased risk of these applicants. privacy practices of these DTC companies Such a ban led to the triple-digit premium and the accuracy of the tests they sell. To increases in the implementation of the guarantee insurers are using the most Affordable Care Act. If insurers cannot
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charge higher prices to riskier individuals, seeking insurance policies. A ban could the long-term fiscal health of the insurer limit the opportunities for consumers to will be compromised. save money through innovative pricing schemes and cause unnecessarily-inflated Conclusion premiums. These higher prices would limit Insurance is a complex business that the ability of those most vulnerable to obtain relies on enough accurate information to protection against life’s uncertainties. adequately account for an applicant’s risks. However, adopting an attitude of As genetic testing continues to evolve permissionless innovation and allowing and become more precise, it will be an insurance companies to use genetic increasingly valuable tool for insurers. information within reasonable limits could Prohibitions on the use of this open these valuable products up to more information would inhibit innovation in the consumers and result in protection and insurance business and could threaten the peace of mind for many more. long-term financial health of the industry. Jordan Reimschisel is a J.D. candidate at More importantly, barring genetic Saint Louis University School of Law testing results would impact consumers
56 | The Journal, Fall 2019 ISO Standards – Promoting American Innovation in a Global Economy Bartlett Cleland
ot all national policy is made in Organization for Standardization. the U.S. Congress or in the state The International Organization for legislatures. Critical economic Standardization, or ISO, was founded in Ndecisions do not all emanate from US 1946 as a new international organization counties or cities, and not even from global “to facilitate the international coordination capitols. Some very consequential public and unification of industrial standards.” policy challenges are found in international To date it has published tens of thousands bodies where few would even think to of standards covering virtually all parts look. One such body is the International of manufacturing and technology. Such
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standards are generally a good thing, as assurance system. The standard had its they help consumers to understand the beginnings in World War II. The British quality and safety of products and services. Ministry of Defense took measures to reduce Businesses also benefit as these standards the mistakes, and the inevitable accidents, help to increase productivity and reduce resulting in the manufacturing of munitions. costs. But understanding how these Around the same time, the U.S. Department standards are developed and by whom is of Defense, notably the Air Force and the critical to understanding the importance Navy, published procurement standards of the “right” standards being created, and that required those who were supplying the to understanding the critical debate now military to comply with quality assurance underway. requirements focused on the management At ISO, the standards are developed of procedures rather than the actual by experts from manufacturing. around the world By the 1970s, in the particular the need for quality subject area where assurance beyond the standards will the military was be applied. The obvious, and a benefit is that a great British standards deal of knowledge body published the and expertise pours first management into the creation of systems quality the standard. But standard. This the creation of the standard, which “wrong” standard, greatly resembled one that does not the Ministry of reflect what is Defense standards, already under way replaced various in industry, can cause industry to have to standards and methods for quality control reimagine their processes and controls, across all industries in the UK. Meanwhile, thus costing time and money. The challenge the US came to dominate the manufacturing is to develop standards that avoid forcing a world, so companies were mainly sourcing remaking of industry to fit into some new from each other in the US. More poignantly, model. As a case in point, ISO 9000 forced the real competition for US companies exactly that result in the US. were other US companies. The need to Introduced in the later 1980s, the ISO comply with global standardization became 9000 series of standards created guidelines less important, and as a result the US and requirements for the operation of began trailing away from statistical quality quality management systems, to define, assurance. establish, and maintain an effective quality As global trade and sourcing of materials
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and services from around the world twice as many companies that were ISO boomed in the 1980s, the need for a global 9000 certified and Germany had as many standard became obvious. The old British as the US, despite both countries and their work was burnished and issued as a British, economies being much smaller. European, and ultimately as the ISO 9000, Why is this important? Why would US standard. The globalization of the standard industry care if it was certified under this caught the US somewhat flat footed. As standard or not? As with most standards, the Europe unified around the standard, the value is in customers understanding what American National Standards Institute they are receiving, a fundamental quality began a long, and losing battle to adjust the in both products and services. Moreover, in standard to fit the way that US companies the case of global standards customers are were already doing business. Once ISO assured that the same standards are used as 9000 was approved and became a globally a basis of comparison globally, as opposed accepted standard, the US had to change to trying to understand how various how it did business to be able to compete standards from various countries might globally, and incur the costs to conforming compare. Specifically, ISO 9000 stood as a to a different way of manufacturing and proxy for quality in products and services. providing services. The US had to catch up Hence ISO 9000-compliant companies with Europe. Even by 1999 the UK still had gained a marketplace advantage.
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In what seems a flashback to the ISO that guarantees that everyone is speaking 9000 debate, the same challenge is playing the same language. Additionally, these out today with ISO 279, ultimately to standards will enable collaboration and become the ISO 56000 series, a newly- development of innovations. Critically, developing standard that will act as a new they will also provide a means for bringing proxy for quality. These standards are being successful innovations to market and developed to provide assurance in the field providing assurance to the consumer. of innovation management. And, again, the The goal is to support innovation in question is what vision of innovation will organizations. Decisions will be made be the guide. around intellectual property, audits, The ISO 56000 series of standards assessments, idea management and even will provide a means for organizations to definitions and terminology. share their best practices in innovation Much like those who did not see management amongst each other in a way the international standard for quality
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manufacturing coming, there are those But their way of innovation, the processes, who argue that benchmarking and approaches and thinking could be devalued standardizing works against innovation. if the “wrong” approach to innovation They lack a fundamental understanding of becomes the global standard. Oddly, but the value and use of innovation. Sometimes following the historic pattern, US company they mistake creativity for innovation. But, representation at the global standards more broadly, perhaps 20 percent of an setting meetings is minimal, with the US in organization’s innovative edge is accounted general having the lowest participation of for by something difficult to replicate such any country. Robust representation at the as culture or creativity, but the other 80 global standards setting meetings by US percent is likely subject to standardization. companies, government and academia is a This 80 percent is where standardization will minimum requirement for the protection prove valuable. Regardless, as time moves of innovation done the right way. on industry, military and government Some of our global competition is broadly will begin to require vendors who investing heavily in making sure their view have innovation management systems that of innovation wins as a global standard. can interface with other similar systems Countries like China are aggressively globally. pushing their own interest in the Where government entities are development of innovation standards. concerned, the push will not just be global The US must engage fully from across but also local, as state and municipal disciplines, from industry to local, and from governments desire to deliver world- state and federal government to academia. class services, and to make sure that those To miss a beat in the race to greater with whom they work are benchmarked innovation today will have drastically to a global standard. Such benchmarking worse consequences for US industry than provides another needed tool to guard it did in the 1990s. As more and more of against wasting taxpayer money on systems, our nation’s wealth and success is grounded products or services that do not perform as in intellectual property and innovation the expected. results could be dire for our economy and for The foundations of modern innovation US citizens. Not all national policy is made management have already been developed where we think, and yet the implications and deployed here in the US. Silicon Valley can be just as far reaching if not more so. is one example, but so are places like Austin, Bartlett D. Cleland is the Executive Brooklyn, Boston, The Research Triangle in Director of the Innovation Economy Institute. North Carolina or Florida’s Space Coast.
www.jamesmadison.org | 61 How Florida Hit the Gas on Self-Driving Car Development Marc Scribner
rlando, Florida was not widely The annual conference is the largest known to the public as a hub of global meeting for those working on automotive innovation. But in July, issues related to road vehicle automation, Omore than 1,000 researchers and developers commonly lumped together by the media joined throngs of tourists at a large under the banner of self-driving cars. The conference hotel for the 2019 Automated meeting is usually held in San Francisco Vehicles Symposium, just two miles from near the many startups launched over The Most Magical Place on Earth. the last several years to develop these
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technologies. Some understandably asked, task holds great promise both for enhancing “Why Florida?” Conference organizers and safety and increasing mobility. attendees knew the answers to that question Labor costs generally account for and a lot of them start with a specific Florida around 75 percent of transportation state legislator. operating costs, so providing taxi-style, On the morning of July 16, Senator door-to-door transportation could become Jeff Brandes (R-St. Petersburg) welcomed attainable to the poor and disabled who attendees and described how he came to presently must often rely on slow and be one of the most recognizable policy inflexible public transportation. And that’s advocates for automated vehicle technology only on the passenger side. in the country. There are numerous opportunities to “I was first elected in 2010 and was transform the American trucking industry, captivated by this idea that there was one which moves $10 trillion worth of goods big idea in every area of public policy, and each year. I wanted to figure out what that is,” Sen. Yet, outside a small group of futurists Brandes told the crowd. “And so, I went to and wonks, it was difficult to find others what I thought was the single best source who would take these prospects seriously. of knowledge for new ideas for legislators: “I was captivated,” Sen. Brandes TED Talks.” continued at the Automated Vehicles Sen. Brandes explained how the now- Symposium. “I watched it over and over famous 2010 video of former Stanford and over again just trying to understand the computer scientist and Google self- implications of what that meant. I went to driving car project leader Sebastian Thrun my legislative aide and I said, ‘Look, I really speaking before an audience in Brussels want to run a bill on self-driving cars.’ And first sparked his interest in discovering he said, ‘Jeff, you’re crazy. It’s 2010. Nobody how automated vehicles would transform is going to talk to you about self-driving mobility and society. Since then, he has cars. Nobody in the country is talking sponsored legislation to support testing about this. They will just laugh you out of and commercial operations. In the 2019 the room.’ So, I did what any good legislator legislative session, a bill authored by Sen. would do: I got a new legislative aide who Brandes establishing a first-in-the-nation was not nearly as good at talking me out of automated vehicle validation process to be ideas.” led by insurers became law. Sen. Brandes proved to be correct. Today, the United States observes Major technology companies, venture approximately 37,000 annual traffic fatalities capitalists, and traditional automotive firms each year and the National Highway Traffic have invested tens of billions of dollars into Safety Administration estimates that this suite of technologies since then, with approximately 94 percent of crashes are the promise of far safer, more affordable, the result of human error. The prospect of and more accessible automobility on removing human beings from the driving the horizon.
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Governments are now getting into the We’ve now seen how far the industry game, with more than a dozen active policy has come from that point—when it was the projects currently active at the federal clandestinely put-together Toyota Prius— level and more than three dozen states to today, where we’re seeing purpose-built with automated vehicle policies on the vehicles designed to drive in a natural way. books. And thanks to Sen. Brandes’s It’s pretty incredible to see that develop. And foresight, Florida’s legislature and then we see the number of deployments Department of Transportation have become that are occurring here in Florida. policy influencers across the country and the world. Marc Scribner: Florida presents some I sat down with Sen. Brandes at the unique opportunities for these purpose-built 2019 Automated Vehicles Symposium in vehicles. There seems to be great potential Orlando to understand more about his for low-speed, low-mass, geographically- outlook on automated vehicles and why restricted golf carts being able to serve Florida presents unique opportunities for Florida’s major retirement communities these emerging technologies. What follows and other kinds of settings where you may is a condensed form of our interview, lightly not be talking about highway vehicles. edited for clarity. Sen. Jeff Brandes: Florida has the entire Marc Scribner: You were a new member range of options. If you compare it to ski of the legislature when you introduced your slopes, we have everything from the green first automated vehicle bill in 2011. Were circle to the double black diamond and some of your colleagues a little surprised everything in between. The opportunity that this was what you wanted to sink your for you to do that in a common regulatory teeth into? environment with a Department of Transportation and Department of Sen. Jeff Brandes: I actually had to call Highway Safety that understand the in a favor to get a Senate sponsor because I promising nature of automated vehicles, as couldn’t find a senator who would sponsor well as a legislature that’s supportive of this it. It was so early on, was just so new, and we technology, is exciting. were talking about just testing back then. There’s a business case that we think But it gave us the opportunity to introduce works in a state with 21 million people— the topic. And then with the commitment the third largest state—that’s going to grow of Google at the time to bring the vehicles— to 25 million people in the next 10 to 15 they brought them twice—and allow years. We had 126 million tourists last year. legislators to take a ride in the vehicle, Now add the opportunity to introduce them that experience helped a lot. It’s hard to to this new market as well and get them imagine that back in 2011, I was driving to experience the technology firsthand, on I-10 at 70 miles per hour in a highly- and we think all of those things play to automated car. Florida’s strengths.
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Marc Scribner: Detroit isn’t in Florida. approval that the technology is safe enough Silicon Valley isn’t in Florida. But Florida to deploy. That’s the key takeaway from the has been out front on these policy issues and new Florida law. has become certainly the hub in the region We also have to be focused on R&D. and one of the major hubs in the United Many of the problems that states are facing States. You’ve introduced a considerable around distracted driving, tired driving, amount of legislation through the years and around just human error in general are have been continuously updating Florida’s largely technology problems that are going legal framework to keep up with the latest to require technology solutions in order to iterations of the technology. What do you make progress. So, how do we help facilitate think other states can learn from Florida? technology solutions to the problems that we’re facing? Sen. Jeff Brandes: Other states can learn Florida roads are fairly challenging. We to simplify their process. You can protect have some of the highest pedestrian and consumers with insurance. That’s what it’s bicyclist fatalities in the country in any given there for. But ultimately the insurer needs year. That’s largely related to weather, and to to be the Good Housekeeping seal of the population of tourists that come here.
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But that combination is deadly on Florida’s Sen. Jeff Brandes: The federal roads. We need technology solutions to government has a very different role than help alleviate that. Part of it is street design. the states do as it relates to this technology. Part of it is technology in the vehicle. That Frankly, the states are just not prepared to has to play a role. deal with multiple players operating in their states. You can see how long it takes the feds Marc Scribner: Relatedly, with your to investigate one accident when it occurs new law, insurers are taking the lead and to produce reports. States are generally on validation within the framework not designed to do in-depth code reviews that’s established, which makes sense as for these types of occurrences. insurers have skin in the game. But on But the federal government is charged the federal level, the National Highway with overall vehicle safety and performance Traffic Safety Administration has yet to measures for those vehicles, so I think they actually promulgate the kind of safety and need to continue to work through these performance rules that NHTSA generally issues but not to rush. Don’t rush to put deals with and legislation failed in the last something out. Instead, focus on things Congress to speed up this lengthy process. that maximize our options for the future. What do you think the federal government We don’t know where this technology is can learn from Florida’s experience? going. We need to make sure we allow for
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the growth of this technology. Florida does comfortable in the vehicles and allow you that through setting a reasonable insurance to explore and do other things. I think that’s standard, but I think the feds need to take a a better use of your time. slow and cautious approach to regulation. Marc Scribner: I think another Florida Marc Scribner: You were one of the early invention, or at least something that’s been state legislators to get involved in automated copied elsewhere, is the Tampa approach to vehicle policy and you’ve got a lot under automated vehicle surveys. They actually your belt now. What are some lessons that did before and after surveys rather than just you personally have learned moving into cold-calling random people to ask them this uncharted policy area and having to about how they feel about self-driving cars. figure things out for the first time? So, they asked what their perception of automated vehicles is before and after they Sen. Jeff Brandes: I think the key is experienced riding in one. And unlike a lot definitions matter. How you lay out the of online and telephone polling of random foundational framework in the definitions people who have never experienced one, ultimately is kind of the blood that flows the results show that people are far more through the entire set of legislation. So, comfortable with the concept after they’ve focus on your definitions, whether that’s actually experienced a ride in an automated SAE International [formerly the Society vehicle. This goes to your point about getting of Automotive Engineers] definitions or people in vehicles, yes? Being grounded in something outside the SAE definitions that reality? may be more generic than the standard SAE definitions. That helps. Sen. Jeff Brandes: I think that’s a piece. The other thing is you have to get The other thing is we have to rethink legislators in vehicles. You have to get our cities. We have to begin to have people to experience it. I always tell people conversations about pickup and drop-off that the first minute of riding in a self- zones. We need to rethink parking, whether driving car tends to be scary. The next five that’s rethinking how we’re building you’re interested. And then you’re bored the parking garages so they can be convertible rest of the time. in the future, or changing rules to offer less parking as we add these modes. Marc Scribner: And that’s where you You should also think about Uber and want them to be: boredom. Lyft really as the canary in the coalmine for how we will operate in the future. So, how Sen. Jeff Brandes: Well, boredom, but do we begin to build our cities around that? that also means we’ve got to be focused If we see how Uber and Lyft are beginning to on things inside the vehicle too—the affect restaurants, hotels, and airports in our technologies inside the vehicle. But I think communities where they’re fully saturated, what we want is people to feel safe and we need to be thinking of that and focusing
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on those investments of a long-term nature see us pivot and have the focus on making that maximize our options. So, the question sure we get it right for electrification. is, do you invest in a light rail system today if That and continuing to educate our cities you believe that ultimately in 10 years from as to how they can be redesigned and now you can have a self-driving vehicle take redeveloped. We’re starting to see this, as you from point to point? It may not make major developers are developing more sense to make that $40 million per mile rail drop-off zones, more pickup zones, more investment. convertible parking garages where it allows them to grow their buildings down over Marc Scribner: When you’re investing time. Those are all incredibly important under uncertainty, I think people would conversations to have. say exactly that on the need to keeping our But ultimately, the two challenges we options open. have in the state of Florida are affordable housing and transportation. How does this Sen. Jeff Brandes: We’re in this time technology change the paradigm for those between the lightning and the thunder. We two questions? If ultimately we’re moving need to recognize that we know something toward a more self-driving world, we need big is going to happen. And I think we’re to recognize there will be decades of a going to see more transportation changes hybrid scenario with both human-driven in the next 10 years than we’ve seen in the and self-driving vehicles. We only turn over last 50, with the world getting more shared, about 6 percent of the U.S. auto fleet in any electric, and self-driving options. Florida given year. It’s going to take decades for us needs to be at the forefront, at least on to make this transition. policy, in all three of those areas. But we need to be thinking about how we’re planning for the future today because Marc Scribner: So, what’s next for your buildings are going to have a 75-year Florida? lifespan. So, the buildings you’re building today, most of their lives will be in an Sen. Jeff Brandes: I will tell you I think autonomous world. How do we begin to we’ve got the best law in the country as it rethink our cities for that paradigm shift? relates to the sharing economy and Uber Marc Scribner is a senior fellow at and Lyft and ridesharing. I think we’ve got the Competitive Enterprise Institute in the best law in the country as it relates to Washington, D.C. self-driving vehicles. I think you’re going to
68 | The Journal, Fall 2019 BOOK REVIEW Big Business: A Love Letter to an American Anti-Hero By Tyler Cowen 2019 ST. MARTIN’S PRESS, 249 PAGES Reviewed by Camille Vazquez
yler Cowen’s latest book, “Big general director of the Mercatus Center, Business: A Love Letter to an adjunct scholar for the Cato Institute, American Anti-Hero,” is both timely author, columnist, and much more. “Big Tand approachable. A book of this caliber Business” came as a response to recent is to be expected from Cowen, given his alarming polls showing, among other wealth of knowledge and experience, which things, that 51 percent of young people do includes serving as an economics professor not support capitalism and, unsurprisingly, at George Mason University, chairman and similar numbers carry across different
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first, we should lower our standards for judging their morality, and second, these businesses should strive to be more socially responsible. To begin, Cowen raises the point that were it not for the innovation from businesses, we would be without the technology for many forms of transportation and utilities, pharmaceuticals, clothing, food, communication devices, and access to online information. Additionally, businesses provide countless jobs and salaries that allow us to purchase what we need. The idea that businesses act as our great providers is instrumental to leading Cowen into his second argument, which is that there is an inherent cognitive dissonance between our need for businesses and our negative perception of them. Cowen explains that the root of this cognitive dissonance stems from our tendency to anthropomorphize businesses, thus creating a false perception that demographics. His intent was to dispel businesses are persons, who will adhere to myths that have spread about greedy CEOs a strict moral code. Subsequently, we are and corrupt tech companies, while also disappointed when they inevitably fall short reminding Americans of all that businesses of our expectations. Cowen explains that have done for our country, such as providing businesses are made up of flawed people Americans with most of their “stuff,” and “the propensity of business to commit countless jobs, and innovation that moves fraud is essentially just an extension of the our country forward. The crux of Cowen’s propensity of people to commit fraud.” love letter lies in his twofold solution He continues to say that even if we were for remedying this cognitive dissonance correct in holding these businesses up to between our need for these big businesses moral codes like ours, we must recognize and our malevolent perceptions of them: that we too fall short and just as often. For
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example, a 2002 study from the University same businesses. First, we should be more of Massachusetts found that 60 percent of appreciative of businesses and recognize adults will lie at least once during a ten- that we are unfairly anthropomorphizing minute conversation. To go even further, them and holding them to strict moral Cowen argues that “big business has by codes that even we cannot consistently necessity […] become one of the most uphold. Second, big businesses should effective institutions for limiting the be more socially responsible. This dual- extent of fraud,” particularly due to digital ended solution can help us to “believe in communication raising “the price for American business as something that, at corporate dishonesty.” Cowen implores us its best, represents many of humankind’s to appreciate the role that business plays in highest values.” improving our lives and recognize that not Tyler Cowen’s “Big Business: A Love only are we unfairly anthropomorphizing Letter to an American Anti-Hero” is a big businesses, but we are unfairly holding compelling appeal to facts and reason during them up to a standard that even we cannot a time when hot-blooded narratives seem always fulfill. to dominate the day. He expertly supports Likewise, Cowen charges big businesses his arguments by carefully balancing his with the challenge to be more socially commendation of all the good that big responsible. If businesses took advantage businesses have done for our society with of the huge role that they play in our the gentle exposure of the hypocrisy of society, they could reduce crony capitalism individuals within our society. His charging while also “[boosting] both business and of both individuals and big businesses social profits including prosperity and to change their perceptions and actions liberty” all without the need for the type offers a refreshing closure to his book. of excessive government regulation that Cowen reminds us that this formidable leads to monopolies. Cowen believes problem is not without a solution—and a that big businesses should strive to be straightforward one at that. “fundamentally ethical enterprise[s].” Reviewer Camille Vazquez is a third-year Throughout his book, Cowen does law student at the Florida State University a great job zeroing in on the reasons why College of Law. big businesses are so disliked. He offers great solutions for the American people to reconcile the cognitive dissonance between their need for big businesses and their negative perception of these
www.jamesmadison.org | 71 BOOK REVIEW A Torch Kept Lit, Great Lives of the Twentieth Century by James Rosen 2016 CROWN FORUM, 336 PAGES Reviewed by Mary Bebout
ohn F. Kennedy, concluded William F. which are included in “A Torch Kept Lit, Buckley, Jr., in his eulogy of Number 35, Great Lives of the Twentieth Century,” wanted Americans to keep the torch lit; edited by James Rosen, and published by Jto work – according to their own lights – Crown Forum, a subsidiary of Penguin so that the United States remained strong Random House. and free. Buckley penned two tributes to Buckley and JFK were handsome, President Kennedy for the magazine he yacht-loving Catholics who shared great founded, The National Review, both of passion for the country despite disparate
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visions for its future. JFK, the Harvard grad background information. Readers realize from Massachusetts, confounded Buckley the equalizing effect of his military service with his ability to seem conservative whilst and that his professional career launched amassing a liberal voting log. Buckley, the at the CIA. The collection contains at Connecticuter, author of “God and Man at least a half-dozen obituaries about spies Yale,” and architect of modern American and spymasters. Readers are reminded of conservatism, remained unbeguiled. Buckley’s ill-fated run for mayor of New Nonetheless, Buckley acknowledged both York and are introduced to those with the fairy-tale nature of JFK’s presidency whom he sailed the globe or frequented his and its monstrous end. JFK possessed Swiss chalet for sophisticated apres ski. universal charm; his “personal radiance Evident throughout is Buckley’s wit, warmed the whole nation.” Buckley civility and trademark cheerfulness. Many praised JFK’s “courage, dignity, fortitude, of his dearest friends were card-carrying toughmindedness, independence,” but liberals. Buckley held no litmus test for pointed out the dissension his policies friendship. For decades he and Alistair caused on the left as well as the right. Cooke lunched regularly at the Carlyle. Buckley adhered to his credo that while His transideological alliance with Norman one’s personal weaknesses should be buried with the body, a public figure’s positions on civic issues must stand eternally exposed. The collection of 52 eulogies is organized by theme beginning with presidents, extending to statesmen, family members, friends, and finally, foes. Buckley wrote about Jackie Onassis, Elvis, Vladimir Horowitz, John Kenneth Galbraith, Johnny Carson, David Niven, Eleanor Roosevelt, Truman Capote, Golda Meir, John Lennon and Diana, Princess of Wales. Buckley expressed bitter disappointment with Eisenhower and Churchill for what they failed to accomplish. He ripped Nixon and Johnson alike. He worshipped patrician wife, Pat, and his father, a Texas-born self- made oilman. He heralded classical pianist and harpsichordist, Rosalyn Tureck, “the greatest living interpreter” of Johann Sebastian Bach. He hissed about Alger Hiss. Buckley’s essays are flooded with reflections and introduced with pertinent
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Mailer sparked in Chicago at a sold-out enjoyed by readers no matter their political debate over American right-wing politics. perspective. Certainly, Buckley fulfilled his And Abe Rosenthal, the Pulitzer Prize- father’s wish that he become a courteous, winning executive editor of the New York hard-working, God-fearing conservative. Times, invited Buckley to join a small club The book offers a glimpse of Buckley, the of “decisive voices in American journalism” man, as he fulfilled his role as “the principal to meet for lunch five to six times a year. obituarist” for the National Review. “A Torch Kept Lit” is a refresher course Mary Bebout is an attorney with Dean in cultural events over a half-century to be Mead & Dunbar in Tallahassee.
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