HomeBudget & Tax NewsPermissionless Innovation vs. the Precautionary Principle: Commentary

Permissionless Innovation vs. the Precautionary Principle: Commentary

Fundamentally, innovation is a response to a perceived need or possible benefit, and may be expressed as a new product, service or idea, but may also be an incremental improvement in a product, service or idea that already exists. Innovation is most usually the end result of experimentation that leads to a better outcome for one person or for many.

The elements of innovation have been written about often, that is, various descriptions of the environment conducive to innovation within a company or organization. Less attention seems to be given to the necessary environment that allows innovation to flourish, such as the legislative or regulatory landscape.

Over the last few years, the term “permissionless innovation” has gained traction when speaking of innovation policy. But what is permissionless innovation? Adam Thierer, Senior Research Fellow at Mercatus Center, who did not coin the term but who has done a great deal to popularize it, defines it thus: “Permissionless innovation refers to the notion that experimentation with new technologies and business models should generally be permitted by default. Unless a compelling case can be made that a new invention will bring serious harm to society, innovation should be allowed to continue unabated and problems, if any develop, can be addressed later.”

This describes an environment where generous boundaries permit abundant risk-taking and trial and error, but it doesn’t imply anarchy. It doesn’t mean ignoring existing laws related to property rights or health and safety. Instead, it means that innovators, inventors and creators are given the room to innovate without government prejudging a direction or outcome via regulation or legislation. This seems obvious, that for innovation to truly happen that people would need the freedom of thought and action to improve upon an existing situation or product.

In sharp contrast to permissionless innovation is the “precautionary principle.” Britannica defines the principle as an “approach in policy making that legitimizes the adoption of preventative measures to address potential risks to the public or environment associated with certain activities or policies.” This risk-adverse approach is fundamentally pessimistic, assuming that innovation frequently leads to harm. Maybe even worse, by definition this principle is an uninformed approach to policy-making. Rather than policy based on evidence of concrete potential harm, preventative regulations are enacted in anticipation of worst-case hypotheticals.

For the sake of our economy, for the promise of a better quality of life, and greater discovery, we should allow permissionless innovation unless harm can be demonstrated. And even then, such regulation should be minimal and flexible.

Originally published by  Institute for Policy Innovation. Republished with permission.

Bartlett Cleland
Bartlett Cleland
Bartlett Cleland is the Managing Director of Madery Bridge Associates, public strategy firm specializing in public policy, thought leadership, advocacy, messaging, advertising, coalition building, strategic planning, and tactical advice for corporations.

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