Congress Urged to Butt Out of Tech Sector

Let Freedom Reign!

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 communications negotiations.

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 DVD's…

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 the USA.

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 would listen…

Jim Bray's technology columns are distributed by the TechnoFILE and Mochila Syndicates. Copyright Jim Bray.