How Technology Increases Freedom
by House Majority Leader Dick Armey
1 Introduction
Sometimes cultural changes sneak up on us quietly. A decade ago, the "World Wide Web" did not exist. Today, you can hardly find a print, radio or television ad that doesn't have the words "dot com" somewhere in it. It seems as if, overnight, the Internet has moved from the back rooms of scientists and universities to the mainstream. In the process, it has dramatically changed society.
It was no accident. Consumers flocked to the Internet because it offered an unprecedented amount of information and convenience.
Parents could use e-mail to keep in touch with their children who were away at college. Anyone who wanted to buy a car could find information on the web to help at every step of the process, from a complete list of models and options available to tips on how to seal the best possible deal. Or, they could even buy the car itself online, all from the comfort of their home.
The web became a primary source for news, particularly after several major news stories -- stories that the traditional media refused to tell -- made it into the public spotlight after being broken on the Internet. Since then, traditional newspapers have changed their operations, often breaking a story on the web before printing it on paper.
The Internet succeeded because it offered Americans the same kind of convenience and freedom that the automobile offered our parents and grandparents. The automobile allowed individuals to go just about anywhere in the country safely and efficiently without consulting a government train or bus schedule.
It was individuals, not bureaucrats, who set the destination.
Similarly, the telephone revolutionized the flow of information in society by giving individuals the freedom to communicate with one another over long distances, at any time. It reduced dependence on an unreliable mail service schedule and, for the first time, made instant long distance transactions possible.
The Internet caught on faster than the telephone and automobile ever did. It took 38 years for the telephone to find its way into 30 percent of American households. It took 7 years for the Internet to reach as many homes.
This tremendous growth boosted the economy significantly. The rise of convenient 24-hour shopping options on the Internet resulted in a virtual gold rush on the stock market. Last year, Internet stocks accounted for more than 20 percent of the market's growth. The success of technology-oriented companies caused an unprecedented shift in our economy. Last year, Microsoft eclipsed General Electric and Wal-Mart in terms of market value. The Internet search engine Yahoo! had double the market value of Sears, and Amazon.com triple that of Goodyear.
But this was more than just wild stock market speculation. These market surges reflected a distinct change in America's culture.
By serving as a primary source for news, politics and consumer information, the Internet reduced dependence on traditional information sources like the news media and government.
Democracy thrives on well-informed citizens, and this technology gave the general public first-hand access to information never before available. In just the political realm, individual voters could keep track of their Member of Congress and judge for themselves whether the campaign rhetoric matched the voting record. Those wanting complete details on nearly every aspect of legislative activity could find it on the web.
A better informed society is a freer society.
Moreover, by providing convenience and enlarging market options, Internet technology served to increase individual economic freedom. These freedoms have proven so compelling that Americans have changed their habits to embrace them.
Consider the following:
· 81 million have access to the Internet
· 37 million sign on to the Internet daily
· 7 million bank online
Technology will continue expanding freedom and providing economic benefits so long as government doesn't get in the way.
When government bureaucrats try to design technology advances, the result is mediocre at best. For example, ten years ago the French government decided to design an information system similar to the Internet for its citizens.
The result was a proprietary and centralized system called Minitel. It allowed users to check online airline and bus schedules and perform a few online transactions. And that's about all it could do, with all the excitement and pizzazz of an old ATM machine. Today the French are still stuck with the same system, even though it is long out-of-date and offers none of the graphics and ease-of-use that made the World Wide Web a success.
Unlike the Minitel, the Internet was designed as a decentralized system from the beginning. As a result, entrepreneurs have thrived in its open environment. Although some in Washington liked to think that they created the Internet themselves, the net succeeded primarily because the scientists who created it did so without interference from Washington. Its decentralized design is a model of freedom.
Unfortunately, as the industry matures and the competitive stakes get higher, it can be easy to lose sight of the principles of freedom that have led to such success. Government solutions can be a tempting alternative to a competitive marketplace, but as they say, "if you lie down with dogs you may wake up with fleas." So far the industry has achieved its great success primarily because government has not been involved. And we know that the government is like an annoying neighbor who, once invited to the party, won't leave when it's over.
2. A Record of High-Tech Accomplishments
The Republican Congress has done a remarkable job providing an environment of freedom to allow technology entrepreneurs to succeed on their own. Our measures were designed to let the high-tech industry continue to thrive without the three biggest drags on innovation: Big Government, Trial Lawyers, and Big Labor. Although this record is quite substantial, there is room for us to build upon these accomplishments.
For example:
· We protected e-commerce with a 3-year moratorium on new Internet taxes with the Internet Tax Freedom Act. We shouldn't stop there. We should make permanent the principle that Internet commerce should be free from any special taxes.
· We also addressed the shortage of high tech workers by increasing the number of skilled immigrants allowed into the country under the H-1B program. We should further expand the program to give all skilled individuals seeking to work in our country the same freedom to achieve the American dream given to our own ancestors.
· We also worked to keep nuisance lawsuits from bringing down the high-tech industry, overturning a presidential veto to enact restrictions on "strike" lawsuits over stock prices. Similarly, we helped companies share information about preparing for the Year 2000 computer problem without worrying about that information becoming fodder for frivolous lawsuits.
· By codifying the WIPO agreement, we helped ensure that content providers are not ripped off by foreign bootleggers. We should continue to explore ways to protect intellectual property in this new environment.
· We extended the research and development tax credit so that companies would have the resources to innovate. It should be a permanent feature of the tax code until we arrive at a permanent tax reform solution, such as the flat tax. The flat tax would allow companies to write off all capital investments in the first year, a crucial incentive for growth.
· We also took the first step in deregulating the telecommunications industry, and while more needs to be done, the early results are quite tangible. For the first time, the government-granted monopoly on local phone service has been shattered and many now have the option of signing up for phone service through their cable provider. This means more choices and lower prices for consumers.
We should thank the Commerce, Judiciary and Science committees for their hard work, as well as the High Tech Advisory Group for their leadership on technology issues. But, of course, this is just the beginning.
3. An e-Contract with High-Tech America
We must build upon this solid foundation to ensure the future growth of our economy. To that end, I propose an e-Contract with the high tech community.
Our commitment is essentially this: We'll do what we can to remove the remaining vestiges of the outdated and old-fashioned regulatory structure that stifle innovation, competition, and progress if in return they do their best to succeed without seeking government intervention in the marketplace.
We in the Republican party think success comes from individuals relying on their own creativity and resources. Congress must eliminate the obstacles that block that creativity and initiative. I would like to see us address these items in the 106th Congress:
Preparing for the Year 2000
First and foremost, we have less than six months to ensure we are ready for the Year 2000 computer problem. Although we had a great victory recently in passing our common-sense Y2K liability reform measure, the Administration is still threatening a veto. We have no choice but to continue to take every step to ensure our nation's infrastructure will be ready. Unfortunately, the Administration has been asleep at the wheel, ignoring the problem -- even diverting Y2K funds to non-Y2K purposes. We do not have time to fool around. In addition, even if we are fully prepared to meet the crisis, other nations will not be. Since our economy depends in some measure on the health of the economies of other nations, we must be prepared for the consequences.
Updating Encryption Laws
We also need to rethink our laws so that our economy can adapt to technological change. When we buy something on the Internet, we do so only because we are confident that the transaction is secure and nobody will be able to steal our credit card numbers or otherwise invade our privacy. Unfortunately, current law places limitations on the encryption technology that can protect us. American companies can't compete with companies overseas because our laws forbid them developing software for export with protection that is as strong as that used in other countries.
Furthermore, our computer export laws are so antiquated a new Sony Playstation video game console might be classified as a "supercomputer" that cannot be exported to certain countries. We need to protect our national security, but this humorous example serves to make the point that our laws and regulations are in desperate need of an update.
Moving E-Commerce into the Digital Age
We should also modernize our laws to recognize that as a society we are gradually moving away from paper transactions.
Most of our laws, however, still require pen-on-paper signatures. Let's update them so that we can sign documents electronically—without any paper. We should leave it to the scientists to come up with the best way to accomplish this.
Making Government More Accessible
We must also continue our efforts to move the federal government into the digital age. When Republicans took the majority, we literally rewired the Capitol. We placed voting records and legislative information online with the Thomas web site, making this information easily available to the public for the first time ever. Before, such information was only available to lobbyists and insiders. Similarly, I would encourage all of us as Members to put our legislative initiatives and ideas online, in plain English. As an example, my Flat Tax Home Page (www.flattax.gov) provides complete details on my flat tax proposal. By putting up such information, home users will be able to easily keep up to date with our good work.
Removing Outdated Regulatory Barriers
We can also help home users enjoy high-speed access to the Internet. Several providers are offering competing ideas of how to best accomplish this. Congress can help by setting these new technologies free from the old command-and-control regulatory regime which has become increasingly obsolete. Cable, telephone, wireless, and satellite companies—and who knows what new upstart—are vying with one another to meet customer demands for speed, convenience, and access. Yet each industry has its own regulatory structure, a remnant of the days of monopoly control. We need to get these meaningless federal rules, definitions, and regulatory categories out of the way so that the new economy can continue to flourish uninhibited.
Only free competition will allow the best high-speed Internet technology to succeed.
Reigning in Reckless Federal Agencies
Unfortunately, several federal agencies have shown a desire to hinder progress on the Internet. The National Science Foundation, for example, imposed an unconstitutional tax on home page owners. We should provide a refund to every home page owner who registered his own domain name and suffered under the tax. Similarly, the FCC levied its own unconstitutional tax, the Gore Tax, on telephone, wireless and pager consumers. To add insult to injury, the FCC recently raised this tax by $1 billion.
Although the stated goals of the NSF and FCC in these cases are noble, the Constitution gives only Congress the authority to raise taxes. It is our duty to stop unaccountable bureaucrats from abusing the Constitution.
If these programs are worth funding, they certainly deserve better than funding through a backdoor, illegal tax increase by unaccountable federal agencies.
My constituents, deeply concerned about the future of the Internet, do not fail to inform me of the latest rumors about the next federal agency planning to tax, regulate, or otherwise hinder Internet freedom. The latest rumor is that the FTC will unveil new regulations on e-commerce this summer. They should not. We must remain vigilant so that Internet users will remain free to grow and innovate.
We should also be careful about allowing anti-trust law to become an excuse for bureaucratic interference with innovation and competition. When federal agencies use heavy-handed tactics to target specific companies, the real message they send to the marketplace is this: You could be next. As we have seen, the pace of innovation is so quick that today's market giant often fades into the background in a matter of months.
Our goal should be to reign in the lawyers so that we do not trade innovation for litigation in this country.
Providing Tax Relief
Of course, the success of high-tech America does not depend solely on technology issues. Reductions in the capital gains tax rate, for example, would allow companies to invest more money in their future.
A tax policy that promotes investment is key to the long-term success of our economy.
Improving Education
High-tech America only flourishes if we educate a generation of children to meet the challenge. Our children's happiness and success, and our economy's growth, requires that we make our public schools once again the best in the world. Our schools will only be improved if we make them accountable to parents.
We must offer parents the freedom to choose the best school for their children. When New York philanthropist Virginia Gilder offered scholarships to every child in Albany's worst-performing school, even the Washington Post agreed that the competition it fostered helped the children in public schools as well. "She wanted to shake up the system so that public school educators would be forced to take notice. It worked: The school board ousted the principal, brought in nine new teachers, added two assistant principals and invested in books, equipment and teacher training after years of neglect." (Washington Post, 2/21/98, Italics added for emphasis.)
This Congress will put decisions in the hands of local officials, so parents and Congress can hold them accountable. We'll work to help parents save for a college and technical school education for their children. We will give parents and local officials the freedom to find innovative solutions and get academic results.
4. Where We Go From Here
The fast pace of technological progress changes our world on a daily basis. The future holds possibilities we can't even imagine today.
Even now, we can see the once distinct categories like telephone, cable, satellite and wireless are all beginning to blend and merge. You can make a phone call over the Internet. You can get phone and Internet access from your cable company, and so on. This sort of change is good for consumers, giving them more options and better products, but it renders the current government regulatory framework obsolete.
It's the scientists, entrepreneurs and visionaries who are busy working on devices that will likely astonish us -- not the bureaucrats. As we speak, these pioneers are making it possible for us to do amazing things like download directions from the Internet while we're driving to grandma's house. New medical devices will save countless lives. Maybe we'll watch movies from the Internet instead of going to the video store. It's not clear exactly where these amazing new technologies will take us. What is clear is that we cannot rely on government to keep pace with this level of change.
Government cannot keep up because technology is more than transistors, chips and diodes. It's human ingenuity. A quick look at history illustrates this point. Several centuries ago at the battle of Agincourt the English found themselves in an apparently hopeless situation. They faced a superior foe, outnumbered five to one. Yet, instead of relying upon traditional military formations and doctrines to save the day, they looked to technology. They employed what was then a great technological advance, the longbow, in just the right way to achieve an astonishing victory that would have been impossible without technology. If King Henry had stuck with "the way things have always been done," his army would have been crushed. Instead, he allowed human ingenuity to overcome a seemingly insurmountable obstacle. It is the same human ingenuity today. Set this ingenuity free, and there's no limit to what we can attain.
Technology is truly a liberating force. In China, for instance, dissidents struggle to spread the message of democracy and freedom against a tyrannical regime. Encryption technology would allow persecuted dissidents to conceal their communications from the Chinese government. That would give them the ability both to communicate with free people around the world and also to spread democracy within the closed society of China with less fear of being detected. Used this way, encryption technology becomes a potent weapon against tyranny.
Likewise, an open policy toward trade will promote democracy and innovation across the globe. Free trade is not only vital to our technology industry, but it is also vital for improving the quality of life in less developed countries. Free trade gives those who are not yet free a taste of the amazing technological advances that are the fruit of a free society. And once they have touched freedom, they are more likely to move their country in the direction of openness and democracy.
We are living in a fantastic time. We've seen the Berlin Wall fall. We've seen the centralized bureaucracy of communism crushed under its own weight. These events are history's testament to the premise that freedom works. Tyranny, in the end, cannot stand the light of day.
The liberating effect of technology has yet to express itself fully. Only time will tell how many victories for democracy we will attribute to technology. Ultimately, it will be the consumers, entrepreneurs and risk-takers who will define the future. That's all the more reason for government to step aside and allow freedom to work.