tv Technology Innovation and Regulation CSPAN April 14, 2012 9:35pm-11:40pm EDT
iraq and put 60,000 people in afghanistan, we could have defeated taliban. by decreasing our troop strength, they are back. i think they will always be back. again, religion is involved. i do not feel that, in these types of wars, we can win any of them. >> so what is the question? [laughter] >> do you feel that in fighting the stuff of wars, like in iraq where religion is involved, can we ever change the nature even when the war is over? the shiites and sunnis have been fighting each other for several years. >> if you were 22 now and wearing the uniform that the men and women are wearing their now, you would not sound very different from any of them.
i will rely on someone else's words. a photographer who lost his legs and afghanistan. i had gone to iraq in 2006. we were laying around one night and we had sleeping bags. he said, you know, we're just a passing the storm -- a passing dust storm. i think he believed it could i think a lot of people do. how do you fight a war in a place like this? it is a lot different than the wars fought in your time, where it was countries we were fighting against. if there had not been iraq, we
would have defeated the taliban once and for all -- i think that, if we had not gone into iraq, afghanistan would have been different. would we have defeated the caliban once and for all? i don't think so. -- defeated the taliban once and for all? i don't think so. this gets to what are you trying to do? this is a whole conversation. i would not give a silver bullet to a question like that. i would say don't sit on a hornet's nest in the first place and then you will not sit around wondering why your having a bad day. [laughter] >> i would like to propose a round of applause. [applause]
thank you all for coming. >> next, a forum on regulating technology and innovation. after that come another chance to see a conversation on journalism with the 2012 winners of the george polk award. >> tomorrow, political blotter craig crawford. and previews of the april 24 primary. former ambassador to korea, christopher hill, discusses north korea's failed missile launch. and lincoln scholar harold
holzer talks about investigating lincoln. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> earlier this year, congress debated two goals to defeat all my piracy. the issues of regulating technology and innovation were discussed recently at stanford university law school. you will hear from facebook general counsel head, the founder of safehouse, and two who represent in intellectual property disputes. were trying to recruit somebody at one point from a law school out east, in the boston area, and i said to the person who works in this area that, of course, you should come here
because this is the center of the universe for everything that you care about and there are so many important things are happening. not that there wasn't anything happening anywhere else, but to come here is like staying in a small town in scotland rather than going to manchester or london during the revolutionary war. you have to make a decision. do you stay in boston or do you go to the new capital and joined the government? if your farsighted, you go to the new capital and become john adams and a major historical figure remembered two hundred 50 years later. if you're sam adams, you decide to stay in boston and you become a view. [laughter] what government does and can do that will enhance or impede the growth of technological innovation and invention is obviously something that is hugely important. that is what the panel will
discuss. i will quickly introduce everybody and then just pose a question and give everybody about 10 minutes to talk about it and then we will turn it over to you. i will do this in alphabetical order. i will start with richard epstein. he is a pivotal figure in the legal academy and scholarship. he has been the major scholar into many fields to list, but includes sports, administrative law, constitutional law, and more. speaking as someone who was his student, he is a great teacher and mentor. by way of background, he earned his bachelor's from colombia in 64 and then got a bachelor's in jurisprudence in oxford and yale. he did not get his supreme court clerkship.
when asked which of the opinions did he disagree with and she said when you begin? [laughter] richard is also one of the rare academics who made the transition to becoming a public intellectual. his versatility or maybe i should say gumption is shown by being on this panel. next, to my immediate left, your right, is the executive director of the fair youth project. that is a project that we started about six years ago that
is designed to the clarify and expand the boundaries of fair use and copyright. thune came with a really strong background. he was a 1997 graduate of harvard law school. then he joined bingaman caution. he has won a number of important cases against the likes of the joyce estate and yoko ono -- it did not matter what side we were taking as long as he beat yoko. [laughter] he argued with less success at the supreme court this year. he has repeatedly been recognized as one of the top lawyers anin the country.
next, at the far end of the table, he is the william h. neukom professor of law and the director of the stanford program in science and technology. he earned his be a hearing stanford in 1988. he clerked for dorothy nelson in the ninth circuit. he moved to stanford in 2005. it is difficult to introduce mark in brief. question that he is the leading academic in the field of patents. but he may also be the leading practitioner in the field as well. while publishing seven books and a two-volume treatise and 22 full articles, he has a healthy practice, having argued callous cases in the district
courts and courts of appeal. the list of awards that mark has earned over the years go too long to read. just think of every award is given to lawyers that you might want to earn some day. mark has received it. a number of them on multiple occasions. [laughter] at the far end here, peter teel, also needs no introduction. he is the head of a hedge fund. as i suspect most of you know, he is much much more. he earned his b.a. and jd in stamford. he is original in all respects. as a kid, he was the highest ranked chess player in the united states. while he was at stanford, he founded the stanford review at a time when there was little in that way for conservative voices for students. he spent a short time at credit suisse, but then co-founded
paypal. he has an astonishing i for -- astonishing eye for success. most recently, he has the fellowship for young entrepreneurs, which is for young people who may be better served not going to college than doing so. he teaches an occasional class at the law school. he teaches at the law school as often as i can persuade him to take the time to do so. basically, it is the world according to peter teal. and i don't care what he does. [laughter] seriously. the ideas that come if you have
a law school and you can put extraordinarily mines and from the people and give them a chance to interact, that is a good thing for them. that is why we try to get peter to teach as often as we can. lastly, speaking of people who are at the heart of the information and technology revolution, the vice president, general counsel, and secretary of facebook. he earned his b.a. from harvard in 1990, followed by a year in france and then a j.d. from the university of chicago in 1994. he was a lawyer at kirkland and ellis, although he moved to aol time warner in 2001 as associate general counsel. then he became the general counsel of a will time-warner in europe. he was chief of staff to attorney general gonzales pin he returned to kirkland following
the end of the administration and joined facebook in 2008, where he currently is. with that, let me open this up. i will just pose a question and give their but a chance to talk but little bit about the issues that we're dealing with. and then we will start of the better prepared -- and then we will start alphabetically. how, if at all, should government regulate intellectual and technology? >> thank you very much for giving me the first chance to do this. i will start with the question and then give an answer to the question slightly refrained. there is a powerful question about figuring out the regulation, but there is a lot
of regulation that do not get you involved with the regulatory state. the question is exactly what kind of regulation is desirable? the first point is that every system of law needs a system of regulation, even in purely competitive markets. you have to establish property rights, the statute of fraud in order to make this thing go. you have to have taxes and so forth to support it. the key features under these circumstances is the point of the system of regulation. i reverse engineering, fortifying a competitive market.
i don't think that there's anybody who can quarrel with the fact of regulation in these areas were treated as a sign of regulation in the regulatory state. what happens when we come to technologies that there are two important field i will discuss and each of the require some deviation or at least some modification of the earlier position. the two systems you will refer to are in fact the intellectual property system, which for these purposes is copyright and patent, and the other turns out to be the network industries that have to do with railroads and communications and so on. the issue is what makes these things special? when the kinds of regulations we will welcome and what are the kinds of regulations that are part of the regulatory state that we ought to be concerned about? with the intellectual property act, which is so clear is that it is not simply enough to allow people to take first possession
physically property and announce that they own it. so we start out with the patent act and the copyright act. what makes these statutes, at least in large measure, the kind of long-term success? neither of these are meant to be technologically forcing in their domain. the law gives you a system whereby come if you file first or invent first, there is a battle as to which these things actually matter. then there will be an examination if the patent will be valid. if it is protected -- which allows you the ability to sell a license to this thing, which is the power of this position associated with these kinds of rights. by virtue of the fact that you
have a decentralized system in which anyone can start to play the game, the only real question that you want to have with respect to the system is how it is that you make it as efficacious as possible. in dealing with this thing, i think the 1952 patent act, the act before the godforsaken american and dense that, it did a pretty good job in trying to figure out what kind of subject matters were eligible for patent protection, what level would events over previous things in order to get the protection and so on down the line. there were certainly controversial features about this system appeared in the ebay case, which weakened the injunction release question, i think in general, those sorts of negatives with respect of the operation. the thing that most fear with respect to copyright is that there will be a variety of mistakes. one is that you can lengthen
their terms unduly. think that is a real risk. but you can make the system convoluted and so forth that you no longer understand its actual boundary. this would have the laggard in complicated revision, which is a huge mistake. it also requires a fragmentation of patents where they start to get very special treatment. in the robustness of the older system, that is correct. on copyright, again, you need to have some system of registration. but you do not need a system of examination and the two systems of why we parted grounds on that -- the question of durability of intellectual property is subject to genuine tension because copyright patents for software are generally short lived things. and for a shakespearean sonnet, they need to be longer. you should be very careful about this.
for the most part, we tried to keep to the privatized model. the more we can basically analogize the traditional forms of property, the better we will be. when you move to the other side of the one with respect to the question of how we deal with technology in the network industry, for a whole variety of reasons, this has always been the dominant and correct position about when you're dealing with institutions that have a monopoly elements that cannot form a truly competitive types of situations. you must have some system of government regulation. the question is what form of system would be inappropriate. the choice of methods can make a huge difference. i will give one example of the kind of regulation which came a little too soon and created trillions of dollars in losses because it managed to get the wrong solution. i'm talking about the 1996 telecommunications act good to the extent that you're trying to figure it had to run one of
these systems, i fear fundamental postulate is that the carriers will remain forever and have monopoly power, you have to allow one company to buy network elements from another and you have managed to capture the elements of the essential technology in 1996. but by 1998, it was quite clear that the implicit assumption of that, the dominance of the exclusive power the local exchange carriers, were wrong. and when you allowed the garment to force the sale of network elements at bargain prices, you create all sorts of distortions in that market, which come in the end, helped nobody. these of the things you have to worry about. what is the form of regulation that you want? in that case, the mistake was, instead of having the government supervise interconnection agreement, which could have been relatively easy, they went to the system of forced exchange which dominated. what happens in this a particular age is that the decline of the local monopolies
and these exchange characters ends up with the system when the and becomes a possible cut the arrangement. instead of trying to force people to interconnect, you could let people build out of the tens of networks. in the course of using this particular networks, they can enter into competition, one to another. in many case -- with a lot of these networks, which are designed to transmit huge forms of data and so forth. the question is what is the purpose system of regulation? the fundamental postulate that you would want to adopt in cases of this sort are as follows. if you can conceive of a way in which new technology allows for the facility in creation of competitive network, it is no longer a monolith -- monopolistic society and let people determine the competition of the traffic that the takeover the network.
this means that, if these alternative networks are available, the last thing you want to do is impose any kind of network neutrality requirement on these systems because that becomes a very funny kind of transfer from the people who put the pikes together -- who put pipes together and those who want to transfer content over. the cost of providing it is relatively low. there is not much to be lost by having a system. if it turns out that it is not .hin there while it would start to put limitations on the maximum account -- there are capacity constraints because, if they make the pipes larger, there people who find larger things to
send or the pipes. no one thought of sending hundreds of movies or the pipes in 1990. but now you have bigger pipes, the company will come. what you would like to be able to do is give higher valued services and higher prices so that the network and the other side cancer to organize itself. the difficulty that you get in running one of these things is that you have to first into the question if this is something that looks remotely like a true industry and if to carriers are willing to say yes and that the dominant strategy in this particular area is not to have heavy-handed government regulation, which sets prices and mandates and so forth. that will make the technology industry look like the health care industry where you have mandatory services. what you want is the opposite. try to find ways in which you can expand the opportunities of entry so you can reduce the
number of opportunities or needs to have direct kinds of control. in effect, the way in which this particular charge will be adjudicated in the next generation will determine, for better or for worse, whether or not this nation or other nations will be able to keep up the energetic rise. anytime you regulate the stuff on the guys who are the pops, will you help the content providers to some extent and retard someone the other side. i think you need to figure out which is the optimal way to disrupt the kind of interaction and i do not think we want to go to a regulatory state. >> thank you. >> tony, same question to you. how should the government think about regulating technological progress? >> a couple of general observations and a couple of specific examples. number one, technology can
benefit tremendously from government involvement. but if you think about it just in terms of regulation, you obscure some important points. when you start talking about the framework of regulation, you run into the paradigm where technology is the primal good. and what will the government do to restrict your use of that technology? to get back to the network that matters most around here. it became a platform in this piece of infrastructure that laid a groundwork for innovation that nobody could have possibly for seen in the 1960's an 1970's. nobody could have predicted the
well that would have created or the innovation that it was going to help foster. once the internet grows up, you have problems. so the question there is whether and to what extent it will let the people who own the infrastructure adopt practices that are going to favor or disfavor certain types of data applications, content or certain users. mistakes that are particularly high because that is where we decide whether the internet will remain an open platform for new people innervate -- you have a radical disruptions. t make -- let incumbents make the rules, you will not get the innovations he will see. whether they have permission or not. when it comes to network neutrality and innovation, i ask is there a good market solution
there. i do not think there is. i think that is a good place where the government intervenes. its role there is to really regulate to keep the structure open so that new entrants can come and and you have room for new innovation that is not limited by what we already see on the internet. if you take a different question that the internet poses, one of privacy, you have a different question and answer. the question there is whether you will regulate what information websites will collect and how they can use it. there i see a much bigger potential for market-based solutions. you can think about disclosure, competition in whether it is a technology or the development of applications that are better or worse at protecting your privacy. there are barriers to it. the intermission costs are high for users. i think a lot of users do not fully understand some of the
privacy implication of the collection. it is difficult for them to make trade-offs and the balance that a market solution will require but it is possible to imagine. what we see here with the do not track proposal we saw from the white house in the past few weeks, i think you see what is in some ways the worst possible way. the so-called proposal is much more like we will let some people trapped and other people not track. the problem being that it utterly confuses consumers. if you have regulations that ostensibly prohibit tracking but permit tons and tons of tracking, i think what you end up with is you lull the consumer into a false sense of security our complacency. i think that is an example where
regulation can really foul up what might otherwise be a perfectly plausible market solution. government regulation is often at its worst when it takes on this pervasive and permanent oversight function. what i would say is if you believe technology is a public -- will be under produced, there is a symbiosis between innovators and the government. the right model might look something more like seed funding than permanent oversight. government is at its best when it cultivates technology and then get out of the way. sometimes getting out of the way means not just the government getting out of the way but playing a role to make sure that incumbents also do not stand in the way of new inventions and innovations that is going to gr technology -- grow
technology even further. >> i want to answer these questions. >> i am hoping i can get you to ground us a little more in thing that had been happening so we can get less of stats. a lot of this comes from conversations i have had with mark. you have often talked about the way in which there has been a regulatory turn in ip enforcement with sopa, pipa, and government encouraged efforts to monitored and so on. then the debate of network neutrality reflects the same spirit being a little more -- what you make of all that? can we address some conclusions about getting government to regulate when we want and not regulate when we do not want? >> i think there is a consensus
so far on the panel that it starts from the idea that technologies used to flourish where market entry is free. if people are free to come up with a new idea that is completely different than anybody has done before and launch it into the marketplace, we get a lot of benefit to repeople make a lot of money and we change the world. so what we do not want from government is a mother may i regulatory regime. if we have a regulatory regime that says i need permission to get into the market to do this new thing, then we have a problem. then we are relying on the government and not the innovator. the one thing i want to at -- add, i think richard would sign on to this. we also do not want a private
individual who has a mother may i control over market entry. the problem is not just that governments might get to decide as gatekeepers who enters the market but also that particular incumbents can have an incentive to impose the restrictions if they have the ability to do so. it is important to remember because it quite often gets lost in the rhetoric about some of these debates. it is not the case that private decision making -- it is the case that market decisionmaking is generally efficient, larsen because a bunch of stupid -- largely because a bunch of stupid repeople who make the wrong decisions get thrown out by those who make the right decisions. there has to be a market that is competitive. if we have a mother may i regulatory regime either government or in combat imposed, we will not get that.
so i will get to the specific examples that are raised. intellectual property i think it's hard from this perspective because you can look at intellectual property and say it is a property regime, something around which parties can freely contract. property regimes if the end of the tarriance we think are good. -- if we are libertarian, we think are good. government restrictions on what people can do in a marketplace are bad and so libertarians ought to think they are bad. the problem is it is both. we can allow the spread of new ideas and it is a government regulatory intervention in the marketplace designed to restrict in certain stamps -- circumstances what people can
do. what i think we have seen intellectual property, copyright and patent, do is turn towards the regulatory side of intellectual property. and away from the free and open licensing. you see that if you look at the statutes. if you look at the copyright statute as it existed in 1975 and compared it to the one that exists today, i think it is four or five times as long. there are large slots of the section that our regulations. they said compulsory licenses, determine what you can do and so on. it is moving in that direction. most of the main provisions have been common law in their orientation. the new patent statute is a step towards regulatory fees. but i think we see it not only in the statutory framework but
in the way in which the law is being applied. in copyright law, after 15 years or so in which government more or less, sometimes by being physically restrained, kept its hands off the internet, we see greater and greater efforts pushed by copyright owners to try to impose regulations on what it is that people can do online. because the copyright owners are concerned there is a lot of infringement online. rather then sued for copyright infringement, the move has been instead to say let's decide whether or not you can put your website up at all. the government can seize and shut down in this country for matted 50 internet domain names and all of -- without ever getting an adversary hearing or a court order that says there's any copyright infringement. .hat is a regulation to
suddenly you're not in business because the government has decided your web site is not appropriate. we have seen efforts by the government and private parties to push technology mandates. your web site will be permissible only if you adopt certain types of filtering technologies to strip out improper material. in those cases, i think we're moving away from my regime in which people are free to put what they want on the internet and toward a regime in which we try to impose the regulation. we see something similar -- similar in patent law. here i know i will disagree with richard. at the law is supposed to increase innovation. the goal of the system is encourage innovation by giving innovators economic rewards. it should worry us that our fastest developing, most innovative industries, the once
generating the most new innovations and money, by and large eight patents. did you practice -- hate patents. they view patents not as a benefit of innovation. larsen because they innovate in a world in which they are not restricted by the law. when the law shows up, it shows up to limit what they can do, not to encourage them or help them get economic benefits. in the information technology industry and software industries where there are lots of patents and most of the losses are currently filed, the most innovative companies will tell you patents are largely a problem for them. the people filing those patents seats are either those who are not in the market at all for the people who are on the market decline. they are yahoo -- yahoo asserting against facebook this
week. the industries that really do need that the production -- protection, pharmaceutical technologies, need that protection because they are regulated industries. the reason we have to have strong patent in the pharmaceutical industry is because the government says you cannot loss a pharmaceutical product until 10 years of review have gone through and u.s. at $900 million. now you have to have some ways to get that money back. we guarantee you information from competition for some substantial. time -- period of time. once you take the regulatory system for granted, it might r. might not be a good thing. you are then stuck with some need for a patent system like that but it is far from ideal. it has moved us in every al- otari term. it is about -- in a regulatory
term. the other piece of what he asked me is about that for neutrality. thinking about this mother may i from mark makes network neutrality a heart problem. it is -- a hard problem. it is government regulation in the service of not letting people stand as gate keepers to prevent market entry. the internet works precisely because if you have a new idea, all you have to do is write code and put it on the network and no one can stop you from doing it. we do not want to lose that. there are powerful people who want to coast -- impose limits on those principles, by and large incumbents, particularly in the transmission industry.
that said, i am also a bit nervous about the idea that the government will get it right if the government sets a series of rules designed to make sure this openness continues. i think the hard tradeoff we are left with in this regulatory turn in some sense is the extent to which we impose structural limitations. we keep saying if you're in this market, you cannot be vertically integrated into the other market. or impose a simple wright line rules even though they're inefficient at some level. -- right line rules even though they are an efficient at some level. you can charge different prices but you cannot discriminate against who you are charging. if we do not adopt those kinds of rules, the alternative may
be either from the government or from powerful incumbents who do not have cigna began market checks on them -- significant checks on them. >> thank you. [applause] >> we will turn to peter. i want to ask a more specific question, building off of what we have talked about so far. you have spoken quite a bit on innovation and technology and the death of innovation in certain industries. there is a lot of innovation that has happened and is still happening in the technology and computers based. you talk about other areas where it is not happening so much anymore -- transportation, agriculture. the question is, why not? is there something different
about technology or are we doing something wrong? >> i think the question is a different one to answer. perhaps it is a good starting point to talk about what. we are in a world in which we are no longer living in a technology accelerating debt -- civilization. i dig the end of rapid technological progress to the late 1960's. -- i date the end of rapid technological progress to the late 1960's. i think there is an important exception with the computers, the internet and financial innovation. we had a lot of innovation in the last 40 years. finances, probably less going forward. but i think it is worth reflecting on how all the other
areas have slowed down and this is everything from transportation to energy, biotechnology, agro tech. on and on down the line. the most liberal version to question, are we moving faster, is the transportation question. if you think about every decade from 1500 on, the basic measure of how you determine -- it culminated up to the concorde, the commission in 2003. travel speed are back to around 1960 levels when you include the low-tech airport security. the official reason for the slowdown in transportation has to do with high energy costs which points to a greater
failure in energy innovation. we have never recovered from the oil shocks of 1973. oil prices today are current -- higher than they were in the late 1970's. clean track has basically become a toxic word for many investment in the silicon valley. you look at the other -- the nuclear industry was dead decade before fukushima. if you look at warren buffett, perhaps the savviest investor of our time, his single biggest holding is in the u.s. railroad industry which is basically a massive bet that the transportation energy consumption patterns of the 21st century will involve returns to the 19th century. 40% of which is transported on
rail is kohl -- coal. so he is basically making a bet that we will go back to coal and railroads. i think there are a lot of reasons to think that is the basic trend you are on. the crisis of energy has brought an end to a general commodity prices. it was a famous but in 1980 looking at the basket of commodities, how they will perform over a decade. simon won the bet in that decade. we're basically living in an increasingly mel tuesday in world -- malthusian world. the green revolution increased worldwide food production during the mighting 50's. it is massively accessory -- accelerated in recent decades.
busey and events going on, it gives you a different perspective. -- when you see the events going on, and gives a different perspective. the green revolution is often attributed the information age we are living in and how twitter is helping connect the world. i think it has to be seen as a direct result of massive technological failure triggered by food prices risen by 50% to 100% in recent years. if this happen when desperate people become more hungry than scared. biotechnology, there should be tremendous progress there. we see this pattern of significant failure. about one-third as many drugs in the fda trials today as there were 15 years ago. the big pharmaceutical companies have started sparring the scientists who of not been able to get things approved a
debt and increasing state regulations. -- in an increasing state of regulations. something like 40% of the people who are age 65 have stages of dementia. something like this can be repeated in many areas. if you ask people whether they believe we are living in a technologically accelerated titillation -- civilization, most people no longer think that is the case. that forces us to cause question to this narrative. there has been important exceptions in computers and finance. this tale of the two worlds -- a lot of progress and everything else were things were badly
stalled. computers and finance were fairly lightly regulated in the last 40 years and everything else was very heavily regulated. the world of stuff is heavily regulated. would people say we need more engineers in the united states, you have to start with technology. almost everybody you did and that -- who went into engineering did very badly in the last few years. it was a bad decision when i was at stanford for engineers -- the rocket scientist went to war on wall streork on wall street becy were not allowed to build rockets. and so on down the line. [applause]
i think there are many variables that might have come together. my own sense is that we have to think about the very heavy regulatory differential between these areas. this is been a big driver of the heavy environmental mentality that has driven the regulation of the world of stuff to rid the world has progressed because it has been relatively unregulated. if he thought of a company like thing the -- zynga with its game of farmville and said we have to take that to fda approval before they can produce the game. go straight to the phase two and phase 3 trials and check for efficacy and safety. is it safe for people to use? and then you have to have a test
for efficacy. does it improve your brain functioning? if it does not do that, you cannot do it and you change one line of code, you have to start all over from scratch. and he would not have a video game industry in this country. or any sort of entertainment industry if you have that. i think there has been a catastrophic set of government policies that have basically destroyed most of the technological innovation. we see this in the economy where there are stagnant wages that have been flat since 1973. it broke and political system -- ke and political systems. it finds it much harder to have everybody come out ahead because
there is no way to craft such a compromise. that is the basic understanding of what has happened. we had been in denial about this. it has manifested itself in a series of destructive bubbles. i personally think that even the idea of science as a public good is not quite [unintelligible] the government played a big will in destroying signs as well. we had some very talented scientists in the early 20th sentry. in the 1930's and 1940's, the government gave the talented scientists a lot of money and give them -- have them produce more. the single biggest thing reproduce with a nuclear bomb. i think it would be interesting to see what people on the left think of that as the single illustration of government
funded science. "the new york times" op ed after hiroshima on 1945 made similar arguments to science being a public good. i am quoting it now -- there are people who believe size should be a private matter. have a lot of answering to do because they army has been able to give a great invention to the world. this contribution had been made in three short years whereas scientists working there -- working on their own would perhaps take half a century to work on the progress. the problem on the tail end of it, science becomes politicized. you basically have scientists who have to fight each other to get government money. just like the idea of a philosopher being different from scientists idea that
are politicians are an oxymoron. when you politicize science, you end up destroying it all together. we have 100 times as many scientists as we did in 1920. productivity per scientist is perhaps less than 1% of what it was then. it would be helpful to have a very comprehensive discussion as to how we get out of this situation. the first step is to a knowledge that we are finding ourselves -- we have basically been in the desert for something like 40 years. if you want to get out, you have to acknowledge your in one and not in some sort of intensive forest. [applause] >> i would be curious to get
your perspective as someone who is on the trenches of all these questions in the multimedia tent. let's step back to where we started. in your case on government regulation and it's the fact on what you're trying to do with technology. >> i love having this guy on our board because it makes for some of the most interesting board meetings possible as you can imagine. some of these principles coming into play. it is great to be here, by the way. peter and i are in the minority. anyway,i think i agree with mark
and a lot of what people have said. i will not take too much time here. a practicalo geive reflection. the question as i saw in the program was something along the lines of does technical -- an ecological progress require guidance? i think not, other than with a basic rule of law. apart from that, we get into problems when government, whether through lettish -- through legislation or regulation applies industry specific and sector specific rules. contract disputes are fine.
those are issues we deal with all the time. antitrust, that regime is applicable to many industries and can solve an issue like net neutrality. or private mother may i situations as markell was saying. that is the main problem when you get legislation regulation that tries to go the next step and go to specific. from a company's perspective and not just facebook but everybody in the valley -- working on some of the telecom act stuff in the mid 90s, companies must deal
with the reality in america and the world today about a robust regulatory state and from work. that is the reality. on the practical level, i would be with peter urging extreme caution among regulators in the computer and internet sectors today. if you things come to mind that our real challenges for regulators and reasons why resorting to general principles of law, antitrust being the example, as the better way to approach these problems. what is the slow pace of regulations. he alluded to theis with the zynga example. and software these days -- you think about -- i worked at aol time warner and you think about the way they used to ship
products. there were more discreet shipments. today there are code pushes every day. the code are written every single day. new products are rolled out. it is very hard for some people in different parts of the company to fully understand what exactly is going on with a product. most of this is irrelevant, it is background and irrelevant to users to read when you have to be very in the weeds to understand this. it is almost impossible for regulators to get a good grasp on this. i think that is different from even 10 years ago. engineers are working on it constantly and adopting an attitude of lets put it out
there and make it better instead of waiting to ship an aol 3.2 does. -- disk. said the complexity of the ever- changing nature today is a reason for even more caution than normal. there is also unintended consequences. my favorite example of this is the video privacy protection act of the late 1980's that netflix is now pushing. this is a statute enacted in the wake of the board hearings -- borrick hearings. some reporter from independent paper went to his local video store hoping to find some interesting rentals and paid the
five -- a declared $5 kohl will find something salacious and of course he did not. -- the clerk $5 hopinh g to find something salacious and of course he did not. to publicize those unless he gets advanced intent from the user. move forward to today. no one is going to video stores. reid hastings -- reed hastings had that recognition that nobody is getting dvds to their house anymore. people like to date -- to do
things on facebook and netflix, learning what their friends are renting on the web sites. if larry says i want to rent films from netflix and tell my friends what i'm watching because i think these are great, the problem is we and blockbuster and netflix have been hit with class action lawsuits. the air saying if a user clicks yes i want to participate, that is technically a violation. my favorite example of how quickly a law that is targeted at this can become obsolete and fresh tree new development. this would help the studios market their films and gain traction and excitement about
their films. and the statute is scaring people. so that is an example of the unintended consequences. i understand that regulatory caps have been around forever but i think it is more complex today. every company, even facebook, we are trying to defend yourself against legislation your competitor might be pushing or regulation. all of those are reasons for the shortcomings. i would strongly support what tony said about market-based
solutions in the privacy rahman -- the are available more so than others today. in our sector alone, for the of people have come after us and tried to position themselves as great alternatives to us on a privacy level. on the basis that they provide better privacy protection. i think that is the right solution to that. social networks and the advance of technology generally have made consumers more able to protect their interests on things like privacy today. users, consumers are able to criticize, organize, complain and punish companies for actual problems with actual bad experiences rather than theoretically bad experiences. pat had this thing the other
day. back to be publicized and out there on all of the blogs within hours and the ceo will apologize and change course curry quickly. -- very quickly. another point i would make is critical to any riddick -- regulatory state is a judicial review. i think that is something -- it is interesting to me thinking about the importance and difference in agencies like the whos are a routinely challenge.
other agencies are rarely challenged. the sec -- some of the chamber of commerce attacks. that has been beneficial to them. that aggressive challenge and robust judicial review makes the agency better ultimately. the sec keep trying and they keep losing some of these but little by little, they are getting better. i think that the view is very -- review is very important. you can understand why no one wants to challenge an sec rule.
they fear what the next step will be. ftc, there is a similar scarcity of challenge. i think effective judicial review is an important piece. and international harmonization. we operate essentially in every country except dictatorships. we would love to operate their but we're blocked by the countries in question. we are forced to deal with a myriad of hundreds of countries rules addressing the same general area. that is a major check on innovation. >> thank you. we have a question. >> i have a million questions which i will happily ask.
let's let the panelists talked to each other for a moment. >> i want to make a comment about what mark said. the battle over the internet stuff, it may turn out to be monopolistic but it may become more competitive and dynamic element is what inclines me towards regulation. i thought this was a panel about technology and the high-tech industry. but i have had the misfortune of teaching environmental law and the fda law. the level of public in it -- ignorance is simply too much. what pam said earlier on, just get over, i cannot get over it syri. [applause] let me give a specific story as to why. when the fda was founded in
1906, it cannot regulate the manufacture drugs within the state. it got that power in 1938. peter was talking about progress. i will talk about insulin as one of these particular things. insulin was invented by a man who can only be described as a lunatic. he eventually got the support of a great company at the time. this is the progress -- he figured out in a dream what to do. he was relegated to a basement laboratory. every system he made, he managed to screw up. he finally got the formula and promptly forgot it. nonetheless, from the time he first got this idea to the time that insulin was on the market, it was less than three years. the first and people who took it, most of them died. by the time they got to 1930, it was in widespread general use. let me mention what the chief --
what the treatment for it was. a woman was down to 49 pounds at the age of 15 when they finally got insulin to her. it was like lazarus rising from the dead. she lived until 73, started to gain weight, married, had several children and managed to sell at minister. the fda had only one rule to play in the story. would they try to get your ethanol to do the isolation, it was barred by prohibition and it took the rockefeller family to get influence to do this. they thought it would do just as well as ethanol. the basic position on dynamic production is that one invention that took three years
contributed more to human beings and their welfare then every single advance with respect to diabetes in the 90 or so years following. those of all the very important but in order of magnitude difference. would you have to do in technology is understand that the first generation get a huge gain and the next time, at 10 times as much. the fda has kill that cycle. because of this notion that it will protect people from the only things that can save them and because they come with the view that unless you can prove to our satisfaction that individuals cannot make a judgment. here is what -- a justice wrote an elegant opinion which says people do not have a right to use a drug which passes a phase one title. the question was whether he can read the fda by giving it the
power to control trivial activities and the voluntary networks of private organizations will give you 10 times as much information on an updated basis. this is essentially one of the longstanding public disgraces which causes huge losses with respect to innovation, huge amounts of suffering. requires companies to say apps and nothing -- absolutely nothing. and patients go against the professionals. that is what is at stake in the larger issue about regulation. unless we fix that thing up with the fda, the epa and so forth, we are confined essentially to long-term mediocrity. the rest of the world as a little better than we are on some issues and worse on others. but this is the central issue of our time. we have locked ourselves in,
carrying through with this fiendish regulatory program where everybody knows best for what individuals should do accept the individuals themselves. my late mother in law -- by the time she figured out a health problem, knew more about the disease than most of the physicians who treated her. one of the things that you do when you stop this kind of information is all this knowledge that comes from the accumulation of the system going upward is killed in favor of a bunch of bureaucrats. this is what we have to fight about. the individual mandate -- what really matters is the long-term follow-up technology. to pam, i cannot forget about it. thank you. [applause] >> go-ahead.
>> this ties into peter's question. he talked about some of the problems we have had in innovation and what he called the what. the why story -- peter suggests the problem as regulation and richard picked up directly. not here to defend the fda. i think that richard may be right on this although i will note that there are some compelling stories on the other side that got the fda involved in the first place. the trade-off -- [unintelligible] i think there are circumstances
in which decisions that individuals may have significant effects on other people in the world. whether small pox or the like, there are circumstances where we care how individual decisions affect everyone else. the broader question, i agree that the fda has made innovati andion in the -- innovation in the drug industry harder. how can we map this slow down in a formally innovative sector to regulatory sclerosis? i am not sure that is necessarily there. there are things we want to know. one is -- we do have substantial acceptance. -- exceptions.
it is a bleak picture that peter painted. but if you look at the computer and financial world, there is a lot of value and the wealth created here that was on a manageable -- unimaginable 40 years ago. we have had productivity gains in lots of industries that seem like they're not innovative industries, whether the steel industry or anything else largely because we have had computer innovation. we are innovating maybe in other areas as well. we have seemingly interesting movement in robotics, nano materials. 10 years from now maybe we will say that was the dawn of the space era. something we all have thought has been dead but may be waking up. there are two other points on the why question that give me pause.
the time frame that peter identifies as when innovation stopped is largely speaking the time frame in not which regulates and started getting really heavy and the government started getting involved in our life. for the most part, it has been the opposite. the reagan revolution try to back away from too much regulation and while i do not think we have in fact reduce the size of government in any meaningful way, it does not seem like there is a linear relationship between amount of regulation and slowdown in these industries. the final point is a regulation is a national thing. technology presumably is not. one thing that is worth asking is, where are all the other
countries that we might expect to be picking up the slack? you can tell similar stories for some of those countries. but i remember in the mid 1980's when everybody in the country was convinced that by 2000, we will all have to speak japanese because japan will be eating our lunch. they're driving technological change, the u.s. is falling behind and it will be disaster. now they say the same thing about china. maybe that will be to 20 years from now, maybe not. if the store is regulatory, you have to do a fair bit of questioning about why different countries with different regulatory regimes do not seem to be innovating in places that we are not. >> let me give a few answers to the questions he raised. the basic dichotomy as well of
this versus world of stuff. stuff was regulated by the epa. i believe that was founded in 1970. i think that would be the signal -- a single issue i would fly. -- flag. i think the fda became relentlessly more onerous as the decades past. major inflection point with the fda. all sorts of other areas we can point to where the load went up quite a bit. i was not debating about tax policy. in my opinion, we are at a point were marginal tax rates are not the most important thing to read if you were to reduce tax rates marginally, that does not solve the problem. you need to construct hundreds
of new nuclear reactors in this country very quickly. i would not mind having slightly higher taxes if i could have the freedom to spend the other money on things up like to spend it on. i am living in a country where the effective tax rate is 100%. i am not allowed to spend any of my money on innovative drugs, supersonic private jets and on and on down the line. i would say -- i think there was an important slowdown that took place around that time. you can map it onto a series of other things that shifted culturally, from science fiction as a literary john recollect. technology is described as things that are dangerous are do not work. when was the last positive sci- fi movie?
we need to take this issue very seriously. the measurement question of how we measure this thing is hard. i suggest an economic measure. there has been deceleration in wages. the international question is interesting. there are good reasons to hope we will head towards a more multi polar world. but the reality is that most of the world is not really need to innovate. the emerging markets are poor countries and they can do well just by talking things that work. that is basically what the developing world is doing. it is becoming developed. it is convergence theory of globalization to r. he should open a mcdonald's in china. the only place for people need to innovate in the developed world is japan, europe, the west, all of which suffer from a
heavy regulatory load. we are not living in a world of hundreds of countries where people are free to do what they can. i think the shift in the language from first world and third world which is the way the dichotomy existed in the 1960's to a developing world is another illustration of this technology slowdown. first world versus third world is agnostic on the question of globalization but positive on technological innovation. development is bullish on globalization and bearish on technology. the developed countries are those countries were by definition nothing new can happen. >> i have to resist. this is quick. it relates to the longer-term flow of innovation. not so much about the why are the what but the what to do. it occurred to me that the
teapot a great innovation that peter talked-about -- epoch of great innovation that peter talked-about -- the internet, nuclear bombs, there is a substantial amount of government investment there. you can say is become politicized but can become de- politicize or does the government does withdraw entirely? there is a distinction between investment and regulation carri. you cultivate, and best and then get out of the way. what i want to think about is whether the problem is we spent so much money doing regulation badly. that we wasted the money we might be able to use to invest sensibly and poisoned everybody's reaction to any government involvement whatsoever. if you spend too much time
focusing on how bad a condition can be which it very well can be and often is, there are other rules for government to play in investment. i think they tend to eclipse what i think is some potential for a positive role to play by the government -- deregulation but not deinvestment. >> if you have questions, now would be the time to start lining up. >> one sentence on the point. i am inclined to that view as well, that the government has positive things to do although i will note that the government expenditures in science and technology are by and large in the industry's where we do not seem to be seeing substantial innovation. the government spends lots of money in medical,
pharmaceutical, alternative energy and so forth. not in software for internet research. >> that is because they have to offset the difficulties on the regulatory side. the book you should read -- he got it right. the one sentence version, we run into the patent system. otherwise do with it what you will. that i think is what you have said. that is the way i best understand it. the question is how much of it comes private, how much of the public. what is interesting, since that time, as you look at public investments, they have all shifted from basic
infrastructure to transfer pains. the switch over is just enormous. most of the innovation programs on infrastructure and disguised programs that get other things built. the damage done, we have yet to live down. >> let me make one last point on the question manifest and multiplied. >> on the question of whether government can do something positive on the technology and science area by investing, it strikes me that it depends a great deal on who is in the government to do that. if you look at the people in the u.s. house and senate, by the generous count, about 35 of them have a background in science and
technology. the rest were living in the dark ages. i think that, if you want to have a technocratic government, you need one has fewer lawyers and it as a basic first cut. [applause] and we have a very interesting instance with the whole clean solindralure any cylind failure. the substantive question, does the son sex the work, it seems like nobody has any -- does the science actually work, it seems like nobody has any of that. it is a question that seems to
be beneath and above both peoples' dignity to think about. as a libertarian, i have no problem with lawyers being in government. but you're a little person who believes that government should be driving science, then you should have some powerful form of action for having government heavily dominated by scientists and technocrats. >> i am curious about seeing so many silicon valley firms supporting it neutrality. i wonder about this because i cannot understand the limiting principle of free said that the the telco's are a
monopoly. maybe we should force people to get a on face the impaired how can we have a limiting -- on facebook. how can we have a limiting net neutrality? but b>> in a matter of weeks, ty will become life magazine and everybody will to away at the sides and take pieces and so forth. when mci basically decided to enter into business against the
bill a step toward monopoly, they created a lot of shipment of information from st. louis to chicago. these guys did not need the network interconnect committee and they wanted high level security. once they were able to break off and the subsidy system that was created by the old network of began to crack down. therefore, we have to prevent this break off from taking place. that is one of the problems you get with the medical mandate. if you actually understand how the government dignifieidentifis -- etition >> mci did do exactly what richard said. they created a dedicated line.
you would make a local call in st. louis. they would pass it to chicago and they would make a local college chicago. at&t found out about this and they started to shut down all of mci's local numbers because they did like the competition. the way mci managed to survive was to file a lawsuit against at&t saying that there was a monopoly. if our justification is just that this is a monopoly and therefore we should regulated, it is hard to distinguish that from google or facebook or a number of other things. i think you need a conceptual justification that is a little bit more directed at difficulty of entry. if you're to distinguish the two, it has to be on the question of something structural about the telecommunications infrastructure and the network
of people have created that makes it difficult for some it to come in and enter if you're doing something and efficient. -- something inefficient. we have people who have less control over the network and we need to worry less about it. i am not persuaded we're there yet because all of those possible means of communication depend on government licensure at one stage or another. you have to get the spectrum from a government for the wire permission from the government. in the world in which we had 10 different ways -- my phone call to go for me to you, i would not worry about it. >> i think there's a lot to what you're saying could think
there's less unanimity among silicon valley people on that neutrality. i think the industry got a little down the road before thinking through some of the issues that you raised youhear e team prepared. -- that you raised here that would seem apparent. >> there is not necessarily agreement. there is a compelling book called "the unit, architecture and innovation -- the internet, architecture and innovation." it goes a little bit beyond the
correction to antitrust laws. >> we have been having this debate that net neutrality for close to 15 years. the innovation seems pretty healthy. i think the kitchenette neutrality impaired -- the case for net neutrality improve the seams better now than before. >> we are just about to impose net neutrality realistic, but we never did. because of that, people are afraid to exercise it. >> university of michigan. i would like to view the rest of the panel's opinion on this. given that both lawyers and judges don't have technical background, can they make good technological regulation that if not, should we encourage technological pioneers to enter
politics? >> right now, you have steven chu. [applause] you need people who understand the sound principles. if you get a guy who is a technology which iwiz. peter is qualified to serving congress because he has also been in business. >> so you want more lawyers in congress. >> no, i want people to understand the business of government is about. i don't care what the label is, i care about them knowing something. the amount knowledge that he
managed to accumulate in 14 years in college can be described in a single digit -- zero. >> let's go over here. >> i appreciate your willingness to say regulation may be should come down, but maybe investors should be stepped up. my problem is who is doing the investment? a bad economist looks at what is seen and a good economist looks at what is on scene. but when the government invests, hit is not treating wells. it is having to steal the welfare mothers who would actually create it in other places before -- still the wealth from others who actually created in other places. i feel like the fast pace -- i
would trust mr. tilt to allocate resources to keep up with technological progress. >> you should not leave it all to the market and you should not leave it all to the government. that would be a disaster. my point is that there are certain public companies that i think the government may play an important role in some businesses -- in some instances. as far as stealing money, the government does not steal money to provide for national defense. the answer to lots of bad regulation being to throw up your hands and deregulate everything, i think not. there are instances of bad regulation that we need to fix and deregulation is part of the story. >> the right way to think about it, it seems to me, is this.
our research -- are research universities valuable? >> they take government money and use it to do basic research that a private company will lead to because it is a 20-year pay off, if anything, down line. there may be ways to do that without government funding if you can find some other cross subsidy. if we are to charge tuition high enough -- should government be competing with private enterprise to fund research? no. are there areas of science that i don't think the market will generate research into the level that we might actually benefit from? yes. >> if you! look at it, there is real evidence on this on how the -- if you actually look at it, there is real evidence on this.
it turned out, for the most part, they did quite well. when you do big signs, you cannot use that. you have to figure it where you use $3 billion to put a reactor in some place to another. at this time, it turns out that it is effective delegation against the illinois delegation. you need government guys -- on the university side, since the technology is too expensive, is figure out how it is you can pool joint ventures. the session, -- essentially, they had each of the university's pay for a fraction of the pot.
the system because the highway and the pods become the cars. now you have joint financing for the public good. you do not have to be a complete cynic of the government support. this is a guy who organized sides in world war ii. they knew what they were doing. there is no reason we cannot learn from this today. >> i am a 3l in the evening division in springfield, massachusetts. mr. teel annunciated a very interesting dichotomy, the world of high finance and energy of in which you have light garment regulation and great results.
and you have heavy regulation and poor results. have you fit the world that works? either use the technology into that theory -- you consider it to be highly regulated? how would you change the regulatory scheme to make it better, more productive, etc.? >> of would be in favor of going back to the 1950's-1960's level of regulation in the world of stuff. even if you were in favor of government doing things, there are many cases where the government regulations are stopping the government from being able to do things it would like to do. i had a conversation a few years ago with people in the obama administration on why the -- on
the stimulus bill and why they could not build any infrastructure. they wanted to build clean technology windmills east of chicago. but no windmills could be built. the high-speed rail in california cannot be built because you have zoning rules. it is important for us to understand that there is no regulation, like regular session, and sort of moderate and heavy and insane and many of these things on the spectrum. we do not need to ask all the pure libertarian questions about should we have privatized nuclear weapons program and should reprivatize roads. we don't need to deal with those problems.
>> i don't know that i have much to add. but the world of bits is certainly less regulated. >> there is something about the world of books were you have to realize that it is a cautionary tale. we had these geese laying all of these golden age in technology and the geese have been killed and what is the computer use? goose?puter deuc
it is the only thing that is left. everything else has been killed off. >> i think pete is wrong about one thing and i will tell you why. the environmental regulation, to some extent, is different from many others. you're concerned about things that were actionable. whatever you want to think about the health care levels of innovation in 1950's, san marino is now one of the things that you praise. the thing about the clean air act and the environmental regulation that, you cannot answer the question by saying pro or against. one of the huge blunders that they all make, which is the thought that their grandfather all technology and they would regulate new technology. this is the fundamentally most expensive word in the environmental protection act. it completely disrupted the
transmission cycle from old to new transition pared down regulation on new stuff was horrible and the biggest area of litigation under the new statute was what kind of modification to keep over here it you don't allow new stuff to come in under the old things. they replicated common-law rules in which damage was created by externality. it was punished because it was dexter. it did not matter if it was a new or an old plant. rabbit dannon order magnitude. but when you? we do regulate, there is no substitute for knowing what is going on inside an industry --
but when you do regulate, there is no substitute for knowing what is going on inside and industry. every area you care to talk about is fatally flawed in the way they decide to put this together. it turned out not to be a two- year issue, but a 40-year issue. >> going into the two industries, computers and finance, the financial industry, in the lack of regulation, created systematic risk. is it simply restrictions on innovation or are there broader risks? and to the point of rule-based regulatory system, given the slight mismatch between the way
regulation is passed and technology is built, how can legislation be developed that is flexible enough to address some of the issues we talked about and others that will arise in the future? >> i think this is a very hard problem. anytime you have to interview -- and you cannot avoid intervening at some level -- to me, by and large, and i believe this is in one with which richard was same -- gee, we're just agreeing all the time -- it seems to me that we're generally speaking better served with common-law and flexible rules than the tells -- than detailed legislative
sets the parameters because congress can get them wrong because they have a vested interest in doing particular things that might not be efficient. and in part because they just don't change. for example, in the patent system, i have argued along with dan burke that the way we need to account for the very different characteristics of the pharmaceutical and biotechnology industry and the information technology industry is not by passing legislation that is specifically tailored to each of them, but by having general rules that the court can actually apply with some sensitivity to the needs of different circumstances. >> the key illustration on that is on adjunctive release. the common-law rule was to delay innovation. you have this mosaic in the business, the thing that is patented, we give you six months
in which you pay a royalty. as a classic illustration. you do that for him, but you don't do that to a guy you want to infringe on lipitor. >> on your first question, it seems to me that -- we are starting to see that there were two mechanisms by which we tried to regulate the internet industry. one is hollywood, which has a very powerful lobbying machine that is pushing very hard to try to restrict the freedom of the internet precisely because they view that as a real danger point for them because a lot of the stuff that crosses the internet is pirated. it does not go away with the defeat of sopa and pipa. it will be back. the other thing that people pay less attention to is a harder problem because you have to worry about it at some level, it is never security.
the real nightmare story for computer regulation is some serious the destructive infrastructural attack that takes out something critical, either the airline network or the electric grid or something of that nature, and not just that it is destructive in its own right, but computers are largely unregulated area that goes away. >> my name is henry nickel. a number of you have touched upon this issue of the global marketplace. i was wondering if you could comment on the creeping danger of harmonizing with foreign law and expanding federal regulation. speak specifically of recent controversies that relate to european demands that the u.s. demand a data privacy regime
like one that exists in europe. is this a danger? what is the magnitude? and how can we reconcile these types of demands from foreign governments that we expand our regulatory regime? >> when you talk about harmonization, what you actually see is not so much harmonization, but rationing off. it is a one-way ration again and again and again. in the copyright sphere, when you see a move from the united states with domestic copyright policy and move into the bern convention, you see the minimum standards of protection. so every country has to provide at least this much, but it is free to regulate more and more and more. the imbalance that occurs there is that you protect more and more, but would you leave out are the safety valves that are designed to make sure that the regulations don't go so far as to kill the golden goose.
in copyright, that is creativity and expression. you give copyright and you give limited rights, but you leave the safety valves that allows people to use the material. those of the protections that are supposed to protect critically important public speech rights. harmonization is a recipe for eroding the basic balance that we have worked for many years to construct. >> by having harmonization, they allowed the department of agriculture to nationalize production and create cartels. what happens in europe is that the wrecking of the markets by harmonization has created 30% to 40% unemployment in various
places. when you have a common market that is open, that is the big part. if you have the protective barriers to keep everybody else out. that is what has happened in the american agricultural law. and labor, the productivity goes down whereas the technological improvements in agriculture got on this war against tmo's and other things. the american labor, you go back to the 37 decisions. national cartels are very efficient and harmonization becomes a cynicism for cartelization. >> on the internet in particular, it does not obey national boundaries. general harmonization on good ideas is usually a good thing.
harmonization of bad things is usually a bad thing. work on the't internet because a big part is of being those boundaries. my worry is that the alternative to some level of or less regional marginalization is the koblenz of would use -- is the equivalents of what he is talking about. >> i agree to some sense. i don't like international governments, international bodies on the other hand -- if you're a new net business, you are presented with a nightmarish set of rules, state- by-state rules in some areas. when we ran paypal, we had to find ways to comply with money
regulator rules in all 50 states. that was probably harder than if you have a single one. it is a complicated question about which is better. >> another report by the ftc announced market failure and they want more government included in setting this. i will mention to you one fact. all of these different standard setting organizations, the one good set of antitrust rules is that -- it is a classical
station -- it is a classic illustration where they did it they in the 1990's where are about to do it wrong with the new legislation. >> the danger of harmonization, technology cannot help push back. we have users in some many different countries. they do not embrace the american version of free speech. they do not have the first amendment. we're not worry about pakistan. but countries like france and germany, on not see content, for example, rules were established that, even though you -- on not content, for example,
whorl's were established. the content that is posted in sweden that is blocked in pakistan. >> there are many versions of harmonization. the conflict of laws is that governments require substantive harmonization. it is different than the national government. at the international level, it is a highly different issue. >> with technology being the
last area without significantly broad regulation, in light of the failure and the controversy surrounding sopa and pipa regulating the technology area, have you think the technology sector will ultimately be regulated? through government or market forces or a combination of the two? >> cred question. >> i have an answer. [laughter] >> this may be our last chance to disagree. >> i will try to disagree with you. the pace of innovation, the more that you constantly change the product, the more difficult it is for people on the outside have to take it over. with television and -- with telephones and electricity, then you can have regulations systems, such as those that develops between 1880 and 1940.
so long as you enervate, your relatively safe. if you slow down and you start to regulate, you will never be able to speed up. >> the future is very sensitive to initial conditions. you get the positive feedback that goes quickly enough and the technology outpaces the political system and continue to see acceleration and that is what has happened thus far in the computer area. are you can imagine the case with the political system dampening down things and you end up with monopoly-like industries and you have arguments like utilities that should be regulated more heavily. because you have a positive feedback between technology and politics, which ever one goes faster will dominate.
you can imagine radically different equilibrium in the future. we can have a world that is completely static or you can have one where progress starts to reaccelerate. >> it comes back to what i referred to as the mother-me-i regime. in the regulatory world where i have to seek permission, if i cannot build until the government says yes, i cannot do x or y, you will not help run it. technology will not outrun politics in that world. in a world in which i can build it and we can do a bunch of things and if i can run fast enough that the world starts to see the benefit, it turns out to
be harder and harder to regulate those benefits away. we see that again and again in copyright and new media technology where, if i can get back my technology of the scale fast enough, the copyright owners who want to shut it down won't be able to. tivo makes it big enough and fast enough that even though the copyright owners really want it not to be able to shut down tivo, they cannot sue tivo today. it is implausible as a matter of regulation. >> what you do is you in bed a commercial in the show. >> or you major commercial better. >> in the super bowl, people prefer it.
>> i am lost to and from georgetown. one of the things that my friends and i have been considering during this internet piracy debate is the increasing globalization of media. in particular, movies and television shows that have different distribution seeds in different countries. this question is for the panel at large. i know that i have friends who, for example, down loaded "downtown abbey" that was shown in the u.k. three months before it was here. and there are shows that will never be shown here.
how can corporations work on that? how can regulations work on that? that is something -- i mean, personally, distribution is simplified. we would be more than willing to pay for something. >> this is critically important. if hollywood possible on the internet is make sure it does not interfere with their eight- year distribution model where it can only go to hulu between week 5 and month 3, then it has to come back off and it has to be in red box only 20 days thereafter, that is going away and it should go away. this is arbitraged via the internet and it is a good thing.
there is a piracy problem out there. we need to think about how to solve that problem. but the proper way to solve that problem is not a bunch of new laws. we have a bunch of copyright laws already. adding sopa and pipa is not a good thing. with hollywood needs is a new business model that takes an advantage of the whole world. the music industry's dirty to get there. a dozen years ago, -- the music industry is getting there. a dozen years ago, it was stopping it. the ideas to find ways to make money in this digital world because we have lots of people who have access to lots more things that they would never have seen because it is only allowed in the u.k.
and that sort of thing. >> i have a slight disagreement. i do not think that we need to tell firms that they have an inefficient business model. there is a deep problem in the law that carries over to this. the private right of action against the admitted wrongdoers is very difficult to enforce. so you want another action against somebody that is always overbroad. if you're in a department house and some mullis you -- if you're in an apartment house and somebody molests you and you cannot find the suspect, you sue the apartment house. that is a very hard problem to solve. co