What is Giving Compass?
We connect donors to learning resources and ways to support community-led solutions. Learn more about us.
Giving Compass' Take:
• Harold Furchtgott-Roth's testimony before the Joint Economic Committee emphasizes the importance of clear property rights, light regulation, and competition for progressing information technology in the United States.
• To what extent and in what ways can internet regulation help the development of information technology?
• Find out why education leaders are calling for the restoration of net neutrality.
New information technologies contributed not just to global economic welfare but to American economic growth as well. By my calculations, the information sector in the United States disproportionately contributed to economic growth in the United States, accounting for 19% of GDP growth from 1997-2002 and 9% of GDP growth from 2002- 2007, substantially greater than its less-than-4% share of GDP. Of course, much of the benefit of innovation in the information sector is not fully captured in GDP calculations because of the rapid and substantial changes in the nature of information services.
What made the information sector in the United States over the past generation different? Consider what Amazon, Apple, Google, Facebook, and Microsoft and scores of smaller companies have in common. They were all founded in America, and they all benefitted from three conditions that changed in the information sector in America in the past thirty years: clearer property rights in the information sector.
Clearer property rights:
Property rights are at the core of most well-functioning economic systems. They certainly are at the core of improvements in the information sector. We can see them in clearer property rights for licensed spectrum, unlicensed spectrum, and intellectual property for software.
A lighter regulatory touch:
Despite many problems associated with the combination of powers, the FCC began in the 1980s and 1990s to see itself as trying to get out of the way of new 10 technologies. In a series of rulemakings, the FCC consistently relaxed various regulations of telecommunications services. So too did various state regulatory commissions.
Competition
Competition in American markets is primarily protected by antitrust law. Both the Department of Justice and the Federal Trade Commission have been active in markets in the information sector to protect the American consumer. The competitive environment in the United States facilitated the expansion of the information sector.
These misguided efforts limit the prospects of the information sector in other countries. It would be naive to assume that these attacks on the information sector in other countries also do not spillover effects: they harm innovation in America; they reduce our economic growth. We should not imitate the bad policies abroad.