Why Permissionless Innovation Drives Progress

TL;DR

Permissionless innovation means allowing experimentation by default, then addressing demonstrated harms with targeted rules when necessary. Adam Thierer argues that this approach enabled internet growth in the United States, while precautionary regulation can suppress investment and experimentation. Existing contract, property, tort, and common law can often manage harms without requiring innovators to obtain advance approval.

Transcript

Hi, everyone. Welcome to the A6&C podcast. I am Sonal, and I'm here today with Adam Thierer, who is a senior researcher at the Mercatus Center at George Mason University, who has long focused... He's actually been in the public policy world for over 25 years, focusing on, um, technology and innovation and policy. That's right. Um, thanks. Welcome, ... Read More

Key Insights

• Permissionless innovation is the freedom to experiment and learn through continuing trial and error without obtaining advance approval. It accepts change, disruption, risk-taking, and failure as parts of innovation rather than treating every uncertain outcome as a reason to prevent experimentation.
• Innovation should be allowed by default until opponents establish a compelling case for intervention. Thierer argues that hypothetical concerns alone are insufficient, while risks that are immediate, grave, catastrophic, or otherwise serious may justify laws targeted at the demonstrated problem.
• Technological concerns generally fall into five groups: privacy, safety, security, economic disruption, and intellectual property. Each category can motivate precautionary policies that require permission before experimentation, but the existence of concern does not automatically establish that broad preemptive regulation is necessary.
• Adaptation is a recurring response to technological disruption. Cameras initially created concern because people could photograph others without permission, yet society gradually adjusted, cameras became widely purchased, and photography became an important part of human experience rather than remaining an unacceptable novelty.
• The commercial internet in the United States illustrates permissionless innovation in practice. A bipartisan policy vision supported open development, market leadership, voluntary contracts, and simple responses to specific problems after they arose, creating favorable conditions for experimentation and globally recognized companies.
• European internet policy illustrates the risks of a precautionary model in Thierer's argument. Heavy top-down data directives and privacy rules made investment and innovation more difficult, contributing to a contrast between Europe's limited roster of major internet innovators and prominent American companies.
• Existing law can address many technology-related harms without industry-specific preapproval. Contract law, property law, torts, and common law remedies remain available when restrictive regulatory controls are relaxed, so permissionless innovation does not require abandoning rules or accepting anarchy.
• Software companies increasingly enter physical sectors already governed by restrictive agencies. Innovators working around aviation, communications, food, or drugs must understand existing law, hear policymakers' concerns, and demonstrate that they are addressing those concerns while advocating for room to experiment.

Questions & Answers

Q: What is permissionless innovation?

Permissionless innovation is the freedom to experiment, take risks, and learn through continuing trial and error without first securing permission or an official blessing. It includes openness to disruption, change, and possible failure. Under this approach, innovation proceeds by default, while policymakers intervene when sufficiently serious harms provide a compelling reason for targeted legal action.

Q: Why should innovation come before regulation?

Innovation should generally come before regulation because every new technology creates some risk, uncertainty, or disruption, but experimentation can also produce substantial benefits. If policy is based primarily on hypothetical worst-case scenarios, beneficial outcomes may never emerge. Regulation remains appropriate when credible harms become serious enough, but intervention should address specific problems rather than prohibit experimentation in advance.

Q: What risks can justify regulating new technology?

The discussion groups concerns about new technology into privacy, safety, security, economic disruption, and intellectual property. Any of these concerns can support intervention when advocates demonstrate that the danger is serious, immediate, grave, catastrophic, or otherwise compelling. The preferred response is a targeted measure proportionate to the problem, not an overarching precautionary system imposed merely because uncertainty exists.

Q: How did permissionless innovation help the internet grow?

The United States encouraged commercial internet development through a bipartisan vision associated largely with the Clinton administration. That approach favored open development, market leadership, and voluntary contractual relationships. When problems appeared, policy was supposed to remain simple, minimalist, and focused on those problems after the fact. Thierer identifies this framework as a central driver of internet experimentation and company formation.

Q: Why does Thierer contrast United States and European internet policy?

Thierer presents the two regions as a real-world policy comparison. He argues that European data directives and privacy rules imposed a heavy top-down framework that made investment and innovation difficult. The United States instead permitted broader experimentation and produced internet companies recognized around the world. He attributes this contrast to different policy defaults rather than treating it as accidental.

Q: Does permissionless innovation mean eliminating all laws?

Permissionless innovation does not mean eliminating law or accepting anarchy. Even if heavy preemptive regulatory controls are relaxed, contract law, property law, torts, and common law remedies remain available. These established legal tools can address injuries and disputes created by drones and other technologies, allowing accountability without forcing every innovator to secure specialized government approval before experimenting.

Q: How does the history of cameras support permissionless innovation?

Cameras demonstrate how society can adapt to disruptive technology. The ability to photograph someone without permission initially appeared socially and economically unsettling because it enabled conduct that had previously been unthinkable. Over time, people adjusted their expectations, purchased cameras themselves, and made photography part of ordinary human experience. The example shows why initial anxiety does not always require prohibition.

Q: How should startups work with technology regulators?

Startups entering regulated sectors should understand the existing body of law and listen seriously to policymakers' concerns. Regulators often want assurance that innovators have heard issues involving privacy, safety, security, or economic effects and are addressing them in some fashion. Entrepreneurs can acknowledge those concerns while showing how existing legal remedies or focused responses may work without broad preemptive restrictions.

Summary & Key Takeaways

• Permissionless innovation gives people the freedom to experiment, take risks, learn through trial and error, and sometimes fail without first obtaining official approval. The approach treats innovation as the policy default unless opponents demonstrate that a risk is sufficiently immediate, grave, or catastrophic to justify targeted government intervention.

• The United States applied this model to the commercial internet through a bipartisan policy vision emphasizing markets, voluntary contractual relationships, open development, and minimalist responses to specific problems. Thierer contrasts that approach with European data and privacy directives, which he argues discouraged investment and the emergence of globally recognized internet companies.

• As software expands into regulated physical industries, entrepreneurs increasingly encounter agencies governing aviation, communications, food, and drugs. Thierer advises innovators to listen to policymakers and address their concerns while recognizing that relaxing preemptive regulation does not eliminate legal accountability. Contract, property, tort, and common law remedies can continue governing harmful conduct.