Policy Brief

Introduction: From Laws toward Codes

Air travel is the safest mode of transportation, yet airplanes sometimes crash, killing or injuring scores of passengers. Cars are safer now than they have ever been, yet the Centers for Disease Control and Prevention reported there were 42,000 automobile-related fatalities in 2007 (latest data available). Drug companies spend billions of dollars making their drugs safer and more effective, but thousands of deaths or terrible side effects occur each year.

Would the world be safer or better off without air travel, without automobiles or without penicillin or heart medications? Of course not.

Regulation cannot possibly remove all risk from our daily lives. It is illegal to steal a car, but auto theft remains a problem. It is illegal to assault another human being, but it happens every day in every city. Massive oil spills break both statutory and regulatory laws, but that did not prevent the recent Gulf oil leak that caused billions of dollars in damage.

It is becoming increasingly difficult to find any areas of industry that are not heavily regulated. Whether the regulatory fiats emanate from the federal government or are more closely homegrown by state or municipal regulators, the number of regulations continues to proliferate at an alarming speed.

As the number of regulations grows, a more disconcerting trend is the type of rules that are being promulgated. Many proposed regulations take an ex ante approach to regulating an industry, rather than the previously accepted practice of ex post regulatory framework. Essentially, regulators are turning their sights on what they can predict, rather than relying on evidence that justifies a regulatory step to correct a problem in the market.

We are seeing a movement toward prophylactic regulations that do not rely on real scientific or economic evidence.

And we are seeing the emergence of regulations that reflect what might be termed a “digital precautionary principle,” where regulators are discouraging innovations in technology by assuming the cost to humans or to the environment of an innovation outweigh the benefits of the new product of service.

Key Findings

1. A precautionary principle is emerging in the digital arena.
2. Policymakers should rely on adaptability and resilience, not anticipation, to address problems in the innovation economy.
3. “Prophylactic” rules often end up causing more harm than good.
4. Federal, state and local governments are all susceptible to engaging in precautionary-like behavior.

Read the full Policy Brief here.