The Consumer Electronics Show’s Lessons On The Separation Of State And Technology

While most of the country endured the polar vortex this week, the annual tech vortex known as the 2014 Consumer Electronics Show took over Las Vegas.

I took a pre-Show tour of the International CES floor Monday, and witnessed what media had already deemed the hot and buzzworthy: wearable computing, robotics, the “Internet of Everything” (largely smart home doo-dads and “cyborg” implements) and truly seismic mobile trends like the automobile wars between Google's GOOG -0.52% Android vs. Apple's AAPL -0.78%  iOS operating systems.

And 3D printing. Can’t forget 3D printing. In fact MakerBot CEO Bre Pettis will keynote the CEA Leaders In Technology Dinner I’m attending.

Creative destruction rages; that’s what innovation is all about. Even counting the curved TV screens, which confuse me.

The technological geniuses here help pull America’s economic wagon, but ill-conceived or predatory interventions from the Federal Trade Commission, the Federal Communication Commission and over 50 other departments and agencies could mangle things.

They’ve done it in the past:

The recent wave of financial regulations makes it harder to raise capital and even saddled firms with “conflict minerals” reporting mandates. No one yet can say how small tech companies will manage to contend with Obamacare.

Here are other speedbumps, some discussed in panels this week.

Privacy Regulation: 

The Internet we have has never been the right one for you if privacy is your top value. But privacy mandates could undermine the “Internet of Everything” promise.

Confidentiality is a value in the world of commerce; it’s  a form of competitive wealth in its own right, and markets create wealth.

Expecting solutions from the same government that brought us the Transportation Safety Administration’s nudie scanners, defends the National Security Administration’s PanOpticon, and periodically pines for a National ID Card is more twisted than the curved TVs out here.

Government should enforce evolving information sharing contracts, not dictate  sharing terms. And frankly if it doesn’t cease blurring databases voluntarily amassed in the commercial sector with its compulsory databases, nothing else much matters.

Gadget Freedom: 

Ham-handed bans on electronic gadgets and phone calls on airliners and automobiles could interrupt innovations that make everyone better off. So will restrictions on mobile services like Uber and Lyft.

I fear unmanned drone and self-driving car policy will morph into a breed of public-utility style regulation.

With roads primarily government-owned, and with Washington and tech utopians ever-infatuated with overarching regulation like Internet neutrality mandates, blanket cybersecurity rules and an infrastructure bank, I’m not yet optimistic and foresee cronyism.

Antitrust Regulation: 

Attempts to dictate pricing and access terms for somebody else’s property have always affected tech: instant messaging, the Windows desktop, iTunes exclusivity, the Google search, IBM’s right to exclusively license its operating system, XM-Sirius, AT&T/T-Mobile, and on and on.

Conditions imposed before “allowing” firms to merge result in company and industry structures that would not exist under free enterprise

Things move on “Internet time” and smokestack-era antitrust should be avoided. But antitrust regulation transfers wealth and lends itself to cronyism and exploitation, so it will continue undermining  innovation, prosperity and consumer welfare.

Energy and Environmental Mandates: 

Costly environmental restrictions on everything from Edison’s incandescent bulb to cellphone “e-waste” will expand. And green energy mandates while we can’t even build one pipeline when we should be building several undermine energy efficiency, cheaper manufacturing and hiring.

Intellectual Property Uncertainties: 

Fifteen years after Napster and 17 after, panics and spasms over intellectual property and patent abuses that undermine fair use and innovation will persist; but at the same time policy must guard against  inappropriate compulsory licensing of technology and the reality of the need to appreciate intangible wealth. Certainly gotta get this one right before everybody’s 3D printing Fords and Toyotas.

And More: 

Other threats to tech innovation include international pressures that could undermine Internet freedom, federal technology subsidies with unforeseen federal strings attached, and barriers to employer access to skilled foreign workers.

Another is failure to optimally deploy electromagnetic spectrum. Alas, resources owned by government prior to the Progressive Era remain trapped in governmental hands and mired in artificial scarcity; see environmental policy, energy, and highways, above.

In contrast to all this, I embrace a philosophy of separation of state and technology.

Nobody’s perfect, but the advantage laissez-faire (properly understood) has over regulators is substantial. Misbehaving tech companies answer to competitors, business partners, shareholders, consumers (who are shareholders themselves), VCs and Wall Street, advertisers, the media, and whatever the next big thing is.

In 2013, regulators issued 3,659 rules. Congress should freeze regulations and purge decades of old ones. Meanwhile a congressional vote on $100 million-plus new regulations before they are binding is important too.

What the technology sector and consumers need is not regulation and subsidies, but to be left alone.

Apple peaked at a market cap of over $500 billion; here’s to the first $1 trillion tech company, a richer and fairer America, and an even bigger CES vortex.