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Sunsetting Technology Regulation: Applying Moore's Law to Washington

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There are many laws governing America’s information technology marketplace, and many more are proposed each day. When layers of unnecessary and inefficient red tape bind the communications, media, and Internet sectors, it stifles innovation, investment, and the global competitiveness of our tech industries. Consumers are harmed by such excessive regulation because it limits choice and discourages new forms of innovation and competition.

Reforming or rescinding misguided regulation is never easy, but to the extent that there is one quick fix to the problem it comes down to sunsetting high-tech rules on a regular timetable.

Keep in mind, the most important law that governs today’s tech sector wasn’t implemented by Washington policymakers. In fact, it wasn’t enacted at all. It’s “Moore’s Law,” the principle named after Intel co-founder Gordon E. Moore who first observed that, generally speaking, the processing power of computers doubles roughly every 18 months while prices remain fairly constant.

Moore’s Law has been a relentless regulator of markets and has helped keep the power of “tech titans” in check better than any Beltway regulator ever could. As I’ve documented in this column before, we now live in Joseph Schumpeter’s economy. Cascading waves of continuous change, or what Schumpeter called the “perennial gales of creative destruction,” reverberate all around us in the tech economy. Innovative risk-takers are constantly shaking things up and displacing yesterday’s lumbering, lethargic giants.

In markets built largely upon binary code and governed by Moore’s Law, the pace and nature of change has become hyper-Schumpeterian: unrelenting and utterly unpredictable. Just ask some of the players that have been largely left in the dust, including AOL, AltaVista, MySpace, Palm, and others.

Analog era laws are also struggling to keep up with this turbulent change, and new proposals don’t fare much better. “Emerging technologies change at the speed of Moore’s Law, leaving statutes that try to define them by their technical features quickly out of date,” observes fellow Forbes contributor Larry Downes in his excellent book, The Laws of Disruption. But that doesn’t stop well-intentioned policymakers from trying. “Lawmakers have also too often heeded the siren call to do something, anything, to prove that digital life is not a lawless frontier,” Downes notes. “But legislating ahead of the technology helps no one and often leaves behind rules that trap those who were doing nothing wrong.”

Once we recognize the power of Moore’s Law to naturally regulate markets—and the corresponding danger of leaving Washington’s laws on the books too long—it should be clear why it is essential to align America’s legal and regulatory policies with the realities of modern tech markets.

One way policymakers could do so is by applying Moore’s Law to all current and future laws and regulations through two simple principles:

  • Principle #1 - Every new technology proposal should include a provision sunsetting the law or regulation 18 months after enactment. Policymakers can always reenact the rule if they believe it is still sensible.
  • Principle #2 - Reopen all existing technology laws and regulations and reassess their worth. If no compelling reason for their continued existence can be identified and substantiated, those laws or rules should be repealed within 18 months. If a rationale for continuing existing laws and regs can be identified, the rule can be re-implemented and Principle #1 applied to it.

What should be the test for determining when technology laws and regulations are retained? That bar should be fairly high. Conjectural harms and boogeyman scenarios can’t be used in defense of new rules or the reenactment of old ones. Policymakers must conduct a robust cost-benefit analysis of all tech rules and then offer a clear showing of tangible harm or actual market failure before enactment or reenactment of any policy.

But there should be a default presumption against top-down, heavy-handed, anticipatory regulatory solutions in this arena. Such a “precautionary principle” mentality for high-tech markets would decimate digital innovation and technological progress because fear of the unknown or hypothetical worst-case scenarios would trump all other considerations and lead to more and more law.

To be clear, this does not mean that all regulation ends. It just means it is held to a much higher standard and that lawmakers and bureaucrats should be required to constantly reassess the wisdom of their decisions in the fast-moving field of high-technology.

And don’t forget that antitrust laws remain in place and the Federal Trade Commission continues to possess the most sweeping consumer protection law ever enacted with Section 5 of the FTC Act. It gives the agency broad authority to police “unfair and deceptive” practices in this and other sectors.

Meanwhile, Congress is currently considering “The Federal Communications Process Reform Act,” (H.R. 3309), which attempts to improve transparency and accountability at the Federal Communications Commission. It’s a noble first-step toward getting arbitrary FCC regulation under control, but it falls short of the sort of serious reform and safeguards that are necessary.

Only by demanding that regulations be sunset on a regular timetable can we keep government power in check and ensure unnecessary and outdated regulations don’t derail America’s high-tech economy.