Urged to Butt Out of Tech Sector
by Jim Bray
"Two, Four, Six, Eight - Fight the Urge to Regulate!"
That's the rousing cheer coming from The Competitive Enterprise Institute,
a free enterprise-boosting think tank.
The CEI's "Tech Briefing 2001" is a wide-ranging set of policy
recommendations on technological issues that basically boils down to "Let
the Market Decide." Available online from the organization's Web
site at http://www.cei.org/Hightech/tech_briefing_book.html, the document
is offered as a research tool for congressional staffers working on tech
topics for their elected masters.
Among its 20 chapters on topics ranging from reforming the Federal Communications
Commission to Internet Access for the disabled is some excellent analysis
of the state of the tech sector in the United States, written in plain
English that's understandable to the non-technical among us.
One recommendation that's sure to ruffle the feathers of "big government"
types is the one to mostly eliminate the FCC. The gang at the CEI claim
the FCC has a tendency toward "mission creep," a common bureaucratic
ill in which such organizations keep discovering more and more areas in
which to insert themselves regardless of their original mandate.
CEI's preferred cure is to limit the FCC to being more of a registry
of "rights to use spectrum" (basically overseeing the distribution
of broadcast and data bandwidth) and a place to deal with international
This may not seem like something that would touch the average American
citizen, but in a subtle way it really is. If you buy the institute's
case, the FCC costs businesses and consumers money by causing delays and
uncertainty among tech innovators, costs that are inevitably passed on
to the eventual consumers as higher prices. By trimming the FCC's wings,
the group argues, the real innovators would be more free to really innovate
and the consuming public would be free to choose which innovations they
want and which ones they don't.
I tend to agree, though one possible downside to such freedom is standards
or format wars. We've seen these before, whether it was VHS vs. beta VCR's,
Windows vs. Macintosh computers, or what have you. The upside of such
wars is that a standard generally emerges (VHS and Windows came through
in the free marketplace), but only after thousands or millions of consumers
end up stuck with technological toys that are out of the mainstream (have
you tried renting a beta videocassette recently?).
The industry appears to be learning, however, and now shows a tendency
to come up with standards on its own without government "help."
For example, there's only one standard for the DVD players that are being
sold today, and that's good: consumers can buy a DVD player without worrying
that it'll be a white elephant next year.
Let's hope the electronics industry remembers this when it comes to recordable
Then there's the issue of research and development grants, also known
by some as a type of "corporate welfare." The Institute quite
correctly points out that the government has no business picking winners
and losers in the private sector, but that by subsidizing some companies
instead of others this is exactly what it's doing. CEI proposes getting
rid of such grant programs, replacing them with tax incentives for research
and development that, while not a perfect solution, at least levels the
playing field somewhat by making such incentives available to any company
that spends its own money - rather than taxpayers' - on R&D.
Such a policy also encourages efficiency and self-sufficiency, which
is also good.
Internet taxation is another area where the Institute recommends government
restraint. This is particularly timely right now, since the current Internet
Tax Freedom Act (1998) expires this October and Congress will undoubtedly
be tempted to stick its nose into it.
The CEI argues that, while States understandably salivate over obtaining
a piece of the online sales pie, it would amount to "taxation without
representation" and should be fought the same way the founding fathers
battled British tax policy leading up to the Revolutionary War that created
There's a lot more to the report, but you get the drift: government should
take a deep breath, step back, and think twice before getting involved
in technological issues. Other issues, too, if you ask me (and you didn't).
Now, if only the bureaucrats and their big government-advocating buddies
Jim Bray's technology columns are distributed by the TechnoFILE and Mochila Syndicates. Copyright Jim Bray.