We may not think about it much, because technology is so ubiquitous. But Americans are living in a golden age of technology. Every day there are new apps on our smartphones. Every year there are new platforms to allow us to share stories, information, and photos.
The innovation is happening because high tech and internet companies compete in a competitive free market. If they aren’t racing ahead, they are falling behind.
Older, more established industries tend to move more slowly, because the federal government has usually imposed heavy regulations on them, supposedly to protect consumers. What these regs actually do, though, is make it more difficult for newcomers to compete. For example, one study found that the energy industry, the automaking industry, and the banking industry are the most regulated in the country. They are also noted for being dominated by a few giant corporations; it is difficult for a newcomer to comply with all the existing regulations.
It’s also not surprising that these industries are also uncreative. The only innovation in these industries happens when high tech companies get involved. For example, the new technology of fracking revolutionized the drilling industry. A generation of electric vehicles is changing the auto industry. Direct deposit apps for smart phones were a rare banking innovation. All those ideas took root in high tech companies, which have mostly been allowed to compete and thrive in a free market with only minimal federal regulation.
“The system is broken,” claimed Caitriona Fitzgerald, deputy director at the Electronic Privacy Information Center. “Technology companies have too much power, and consumers too little.”
But that is getting things completely backward. Consumers have all the power. They make or break tech companies every day by selecting what products to use and what products to stop using. In this environment, companies can rise and fall in months or years, as when users logged off AOL and clicked away from MySpace. Consumers are fickle. They don’t care what company makes the products they use. They just want the best, most convenient products and services. This creates an endless race to the top where a new product is always displacing the last. Note that your children don’t use the same messaging apps you do.
Congress’ most likely attack on free markets is the American Innovation and Choice Online Act. That bipartisan bill would insert unelected federal bureaucrats into the decionsmaking of our nation’s most successful technology companies. This bill is an expansion of antitrust law to take control of some decision making in these companies is nothing short of warmed over socialism. In the end the consumers will get hurt.
The bill is a progressive dream with provisions empowering the Federal Trade Commission (FTC) and Department of Justice to become decision makers on what companies can and cannot do with regard to vertical integration. The end result will be the destruction of innovation and true free market competition. Ironically, the results are contrary to the goals of antitrust law which is to preserve fair markets. This expansion of antitrust law will give government a competitive advantage and more partisan control over these companies depending on who is running the federal government at the time.
Meanwhile, while Congress pretends to work to protect consumers, the price of high tech services keep falling while the price of everything else goes up. Most apps are free to download and use. Consumers enjoy free photo sharing and free communication. Meanwhile, established (and regulated) products like gasoline and cars have never been more expensive. The next time you fill up, ask whether federal regulation of “big oil” helps or harms consumers. And more regulatory punishment in those industries is on the way.
Washington wants to do for “high tech” what it has done for older, established industries. It’s a bad bargain. Let’s not fall for it.