: Code 2.0

Chapter 18. What Declan Doesn't Get

Chapter 18. What Declan Doesn't Get

Declan McCullagh is a writer who works for Wired News. He also runs a mailing list that feeds subscribers bulletins that he decides to forward and facilitates a discussion among these members. The list was originally called Fight Censorship, and it initially attracted a large number of subscribers who were eager to organize to resist the governments efforts to censor the Net.

But Declan has converted the list to far more than a discussion of censorship. He feeds to the list other news that he imagines his subscribers will enjoy. So in addition to news about efforts to eliminate porn from the Net, Declan includes reports on FBI wiretaps, or efforts to protect privacy, or the governments efforts to enforce the nations antitrust laws. Im a subscriber; I enjoy the posts.

Declans politics are clear. Hes a smart libertarian whose first reaction to any suggestion that involves government is scorn. In one recent message, he cited a story about a British provider violating fax spam laws; this, he argued, showed that laws regulating e-mail spam are useless. In another, he criticized efforts by Reporters Without Borders to pass laws to protect free speech internationally.[1] There is one unifying theme to Declans posts: Let the Net alone. And with a sometimes self-righteous sneer, he ridicules those who question this simple, if powerful, idea.

Ive watched Declans list for some time. For a brief time, long ago, I watched the discussion part of the list as well. And throughout the years I have had the pleasure of learning from Declan, a single simple message has dominated the thread: The question is not just, Declan insists again and again, whether there are market failures that require government intervention. The question is also whether there are government failures. (As he said in a recent post about the Reporters Without Borders, Julien Pains able to identify all these apparent examples of market failure, but hes not as able to identify instances of governmentfailure.) And the consequence for Declan from asking the second is (just about always) to recommend we do nothing.

Declans question has a very good pedigree. It was the question Ronald Coase first started asking as he worked toward his Nobel Prize. Economists such as Pigou had identified goods that markets couldnt provide. That was enough for Pigou to show that governments should therefore step in. But as Coase said,

In choosing between social arrangements within the context of which individual decisions are made, we have to bear in mind that a change in the existing system which will lead to an improvement in some decisions may well lead to a worsening of others. Furthermore we have to take into account the costs involved in operating the various social arrangements (whether it be the working of a market or of a government department) as well as the costs involved in moving to a new system. In devising and choosing between social arrangements we should have regard for the total effect.[2]

Coase had a discipline to his work. That discipline was to never stop at theory. Theoretical insight is critical to progress, but testing that theory with a bit of real-world life is critical as well.

But thisis the trouble with the world of at least some libertarians. We can speculate till the cows come home about what the world would be like if our government were crafted by a gaggle of pure libertarians. There would be a government, of course. Libertarians are not anarchists. And no doubt, the consequences of such a shift are counter-intuitive. It would certainly not be as bad as statists predict; I doubt it would be as good as libertarians promise.

But the reality is that were never going to live in libertarian land. And so the question we should ask is what attitude we should bring to regulation, given we live in this world where regulation is going to happen. Should our response in that world meaning this world, and every possible world were ever going to see be to act as if we oppose all regulation on principle?

Because if this is our response, that attitude will have an effect. It wont stop all regulation, but it will stop regulation of a certain form. Or, better, its certain not to stop regulation of a different form regulation benefiting, for example, powerful special interests.

Consider an obvious example.

Economists estimate that we as an economy lose billions because of the burdens of spam. Ferris Research, for example, estimates that the current costs (including lost productivity) are between $9 and $10 per user per month. That translates into more than $9 billion per year to fight spam.[3] These costs have been borne by everyone who pays for e-mail on the Internet. They dont include the indirect costs of missing a message because it is either filtered or ignored. (Nor does this number reckon the benefit of spam, but as I wont count the benefit in the comparative example either, Ill leave that out for now.)

Economists have also tried to estimate the cost of Internet piracy of copyrighted content (excluding software) to the content industry. Some estimate that the costs are actually very low. Felix Oberholzer and Koleman Strumpf, for example, concluded that filesharing has an effect on sales statistically indistinguishable from zero.[4] Other estimates conclude there is a real loss, but not huge. In 2003, using a sophisticated model to measure the loss from P2P filesharing in 2003, David Blackburn concluded the industry lost $330 million.[5] That number is significantly below the RIAAs estimate of the total annual cost from all forms of piracy: $4.2 billion.[6]

Suffice it that these estimates are contested. But even so, in this field of contest, one thing is absolutely certain: The cost of piracy is significantly less than the cost of spam. Indeed, the total cost of spam adding consumers to corporations exceeds the total annual revenues of the recording industry.[7]

So how does this difference in harm calibrate with what Congress has done to respond to each of these two problems?

In the last ten years, Congress has passed exactly one bill to deal with the problem of spam the CAN-SPAM Act of 2003. Over the same period, Congress has passed 24 laws affecting copyright.[8] Not all of these laws, of course, are directly targeted against piracy, but they all do aim further to protect copyrighted work in a digital age.

This pattern is not an accident. In a political world that is dominated as ours is, lawmaking happens when special interests benefit. It doesnt happen when special interests oppose. And in these two instances, the lack of regulation and the plethora of regulation is explained by this point precisely. There have been 24 bills about copyright because rock stars lobbyfor them. There has been one bill about spam because the direct mailers (and many large companies) testified against them.

Now given this reality, I suggest the libertarian should recognize a third important failure that complements market and government failure: There is market failure when markets cant be expected to provide goods efficiently; theres government failure when government cant be expected to solve market failures efficiently; and theres libertarian failure when the push to do nothing will produce not no regulation at all, but regulation by the most powerful of special interests. Or in a slogan: When its wrong to push for regulation, only the wrong will get regulation.

I am not a libertarian in the sense Declan is, though I share his skepticism about government. But we cant translate skepticism into disengagement. We have a host of choices that will affect how the Internet develops and what values it will embed. The attitude that eschews government as part of those choices is not one that will stop government; it will simply stop government from making the right choices.

In my view, governments should intervene, at a minimum, when private action has negative public consequences; when shortsighted actions threaten to cause long-term harm; when failure to intervene undermines significant constitutional values and important individual rights; when a form of life emerges that may threaten values we believe to be fundamental; and when we can see that failing to intervene on the side of right will simply strengthen the interventions on the side of wrong. Such intervention must be limited; it must be engaged with all the awareness about the failures of government that right thinking sorts can muster. But action defending right should not be stopped merely because some goes wrong. When those who believe in the liberty of cyberspace, and the values that liberty promotes, refuse to engage with government about how best to preserve those liberties, that weakens liberty. Do-nothingism is not an answer; something can and should be done.

Ive argued this, but not with much hope. So central are the Declans in our political culture today that I confess I cannot see a way around them. I have sketched small steps; they seem very small. Ive described a different ideal; it seems quite alien. Ive promised that something different could be done, but not by any institution of government that I know.

The truth, I suspect, is that the Declans will win at least for now. We will treat code-based environmental disasters like the loss of privacy, like the censorship of censorware filters, like the disappearance of an intellectual commons as if they were produced by gods, not by Man. We will watch as important aspects of privacy and free speech are erased by the emerging architecture of the panopticon, and we will speak, like modern Jeffersons, about nature making it so forgetting that here, we are nature. We will in many domains of our social life come to see the Net as the product of something alien something we cannot direct because we cannot direct anything. Something instead that we must simply accept, as it invades and transforms our lives.

Some say this is an exciting time. But it is the excitement of a teenager playing chicken, his car barreling down the highway, hands held far from the steering wheel. There are choices we could make, but we pretend that there is nothing we can do. We choose to pretend; we shut our eyes. We build this nature, then we are constrained by this nature we have built.

It is the age of the ostrich. We are excited by what we cannot know. We are proud to leave things to the invisible hand. We make the hand invisible by looking the other way.

But it is not a great time, culturally, to come across revolutionary technologies. We are no more ready for this revolution than the Soviets were ready for theirs. We, like they, have been caught by a revolution. But we, unlike they, have something to lose.


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