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Andrea O’Sullivan: Let’s fully embrace ‘permissionless innovation’

Florida has a great opportunity to lead on innovation.

What’s the difference between countries that host the world’s cutting-edge technology companies and those who have none? It’s not random chance.

Decades of experience with technological development illustrate that governments that embrace a laissez-faire attitude toward innovation reap more breakthrough companies than those who regulate them out of existence.

It seems obvious, but the insight that freedom yields competitiveness is one that many advanced economies have failed to internalize.

Consider the European Union (EU). Although its member states are among the wealthiest and most well educated in the world, you can probably count the number of tech companies they have produced on one hand.

The EU lags in technology partly because it has taken a largely precautionary legal stance toward innovation. Until a technology can be proven appropriately “safe” or “equitable” or “necessary” to a subjective body of regulators, it will be limited or even banned by regulations.

Compare this to the United States, which allows technologies to largely be “born free” from burdensome regulation.

The Framework for Global Electronic Commerce of 1997 outlined our posture of “permissionless innovation” in law. Among its principles are that “the private sector should lead,” “government should avoid undue restrictions on electronic commerce,” and where government regulation is needed, it should be to provide a “predictable, minimalist, consistent and simple legal environment for commerce.”

No wonder Silicon Valley took off here.

The principles that promote technological innovation on the national level also apply to states. States that take a welcoming posture toward tinkering and experimentation will attract tinkerers and experimenters to their borders. States that attack innovation will see less of it.

Florida has a great opportunity to lead on innovation. Our state is already very attractive to business. We have a low and reasonable tax level, responsible regulations, and a large and talented workforce. And who can compete with our beautiful beaches?

Our legislature took a bold step in the 2020 legislative session by passing the FinTech Regulatory Sandbox reform — a concept that will not only help with attracting new businesses but will also aid our economic recovery from the COVID-19 pandemic.

Florida can and should take the next step forward and clarify our pro-innovation posture in law. The legislature could adopt an appropriate vision statement similar to the Framework for Global Electronic Commerce on the state level. Not only would this guide future policymaking, it would be a strong signal to entrepreneurs that Florida welcomes innovators and visionaries.

Next, we must clear out the legal deadwood. Florida should implement some form of regulatory review. In many cases, the rules on the books that constrain innovators are irrelevant, outdated, or unneeded. Yet still they remain, blocking progress. The legislature could appoint an independent body of analysts to scrutinize our regulatory code and identify which should be pruned. Like federal base realignment and closure (BRAC) commissions, such independent regulatory review boards would be free from special interest and political pressure, which frees them to make decisions truly in the public interest.

Finally, Florida should be proactive about updating our regulations to stay in line with new technological realities. Sometimes, it is unclear how the rules on the books for analog technologies will apply to new disruptions.

For example, certain financial and money transmission regulations may make more sense for traditional banks than for cryptocurrency businesses. Or rules that govern how small aircraft can fly may fit awkwardly on new developments in drone and air-taxi technologies.

Florida should not wait for innovation to be quashed before updating our laws. Rather, policymakers should continue to be forward-looking and identify where existing laws may hurt developing technologies and update them appropriately.

There are so many exciting technologies at our fingertips. Telemedicine, autonomous transit, artificial intelligence, cryptocurrency, and virtual reality are just a few of the developments that we can see now. Who knows what else lurks in the imagination of the next Steve Jobs.

Some technologies may ultimately fail to deliver. But they should fail on their own merits, not because an ill-thought regulation killed them off before they had the chance to try.

The Center for Technology and Innovation at The James Madison Institute is dedicated to exploring just how Florida can best embrace permissionless innovation through policy and welcome technological development.

With the right policy vision, Florida can become a global leader and attract the most innovative minds in the world. The high-tech future is within our grasp; we just need to get bad policy out of the way.

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Andrea O’Sullivan is the director of the Center for Tech and Innovation at The James Madison Institute.

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