Technology and Freedom: The Virtuous Circle

Policy Backgrounders | Government | Regulations

No. 158
Friday, January 10, 2003
by James K. Glassman

Why Political Power Threatens Technology

Consumers want the best product combinations at the lowest prices, and producers have the incentive to make these combinations in a free market. Market forces and private property will produce these results as long as states do not interfere. But states do interfere. They decide what can be made, how it is made, who can make it and where it is sold. Politicians are judged "progressive" if they behave as technocrats, guiding technology in the "right" direction. Remember President Clinton's "bridge to the 21st century"? Why did we need a bridge? We would come to the 21st century in due course, the year after the 20th century ended. A bridge indicated a structure going from one specific geographic point to another. But why build it there? And why build it at all?

Impulse to Interfere Politically.

"Technology creates uncertainties that threaten politicians who want to tax and regulate it."

The Technology brings out the worst impulses in politicians. They say they want to nurture and protect their constituents but, in fact, they fear their own irrelevancy and the uncertainties technology creates for the system in which they thrive. Arthur Schlesinger Jr., the historian who served as an adviser to President Kennedy, wrote in 1997, "The computer turns the untrammeled market into a global juggernaut crashing across frontiers, enfeebling national powers of taxation and regulation, undercutting national management of interest rates and exchange rates, widening disparities of wealth within and between nations, dragging down labor standards, degrading the environment, denying nations the shaping of their own economic destiny, accountable to no one, creating a world economy without a world polity."27

In fact, technology has done none of these things. So far, anyway, it has not enfeebled national powers of taxation and regulation, and it has improved, not degraded, the environment.28 What is important about Schlesinger's lament is not its accuracy, but its hysterical tone. Some establishment intellectuals and most politicians see technology as a threat not to the wealth, health and happiness of individuals but to their own authority.

What was the initial response of the U.S. Congress to the Internet? To try to change the rules by which sales taxes are collected and to limit Internet content through the so-called Communications Decency Act.29 Both attempts failed. But technology's political discontents are legion. What follows are two examples.

Case Study: Assault on Genetically Modified Food.

"Genetically modified foods have adverse effects and have many benefits including, vitamin delivery."

Americans have been eating genetically modified (GM) corn, potatoes and soybeans since the mid-1990s with no adverse consequences and lots of very good ones. Typically, GM plants carry genes that make them resistant to pests, weed killers and insecticides or make them grow faster and surer. In some cases, the plants can be modified to deliver important vitamins to those who eat them. Between 1994 and 1998, the European Union approved the use of nine GM plants, including varieties of corn, tobacco, chicory and soybeans. According to a European Commission report, "No peer-reviewed scientific article reporting adverse effects on human health as a result of eating GM food has appeared."30 A commission memo stated, "The safety record [of genetically modified organisms] worldwide over some 30 years has been very good with no reported accident or unanticipated event. Genetic engineering is now routinely used in many thousands of research laboratories worldwide and has resulted in many novel products and processes, including industrial enzymes and such medicines as insulin and vaccines."31

Nevertheless, four years ago, the EU slapped a moratorium on approval of all new GM organisms. Despite the fact that European Environmental Commissioner Margot Wallstrom called the moratorium "illegal and unjustified,"32 it remains in effect. Governments of the individual European countries have apparently decided to pander to Greens, who often wield power in shaky social-democratic coalitions.

Europeans led the agricultural revolutions of the past, inventing crop rotation and better plows and unlocking the mysteries of genetics. A Swiss scientist led the team that developed "golden rice," a GM breed that fights blindness and malnutrition by introducing a beta-carotene gene into rice and is now being tested in Asia and Africa.33 Currently, about 50 percent of soybeans worldwide are grown from GM seeds. The biggest enthusiasts, one U.S. government official told me, are farmers' wives, who get to see their husbands more often. Sensible environmentalists are happy too, since GM farming means bigger crop yields, which preserves land and lowers fertilizer use, keeping chemicals out of streams. Best of all, genetics makes farming easier, especially for small farmers in developing countries. They lack the resources to constantly monitor their crops and to precisely dose them with fertilizer and pesticides; with GM methods, they do not have to.

But the moratorium has halted GM farming in places like Africa. Why should Africans make an investment in GM foods if they can't sell to a prime market like Europe? Greenpeace and other extreme environmental groups have focused their efforts on Africa, spreading horror stories, trying desperately to keep the continent GM-free. So far, they are succeeding, and people may be dying as a result. As a famine spread in southern Africa last summer, 13 million people risked starvation. The U.S. pledged 490,000 metric tons of food for the drought-stricken region, about one-third of it GM corn. But the president of Zambia, under pressure from Green groups and worried that the corn might "contaminate" his country's crops and make them ineligible for export to Europe, turned down the food aid. Journalists reported that corn piled up in warehouses while people nearby were starving.34

Andrew Natsios, administrator of the U.S. Agency for International Development, blasted the European environmental romantics in a speech in Johannesburg in August. "People are scared in Zambia because all these rumors are going around," he said, "and they've been fomented by people from outside groups.... I have never seen, in my 30 years of public service, such disinformation and intellectual dishonesty. I think it's appalling. It's frightening people into thinking there is something wrong with the food, and the consequence is that it's slowing the famine relief in a very disturbing way."35

"European restrictions on biotech foods are barriers to trade from developing countries, similar to tariffs and domestic subsidies."

But the scandalous story of Zambia fits into the broad context of European resistance to GM. What's behind it? Partly romanticism and a growing aversion to sound science. Those are qualities we also find in hysteria over climate change, which has led to a policy, supported by many misguided international companies, of advocating expensive measures to limit greenhouse gases, including carbon dioxide, because they might - many decades from now - raise surface temperatures on Earth to dangerous levels. A more straightforward reason why the Europeans are blocking biotechnology is to thwart competition from the United States by erecting non-tariff trade barriers. The use of environmental arguments to prevent competition through freer trade is neither new nor is it a solely European phenomenon. In 1993, Gary S. Becker and Guity Nashat Becker observed that the same tactics were used by U.S. firms that did not want competition from Mexico. The Beckers also noted that "regulations desired by most citizens do not get enacted in developing nations controlled by dictators or cliques."36 Unfortunately, nations with long democratic traditions also block the flow of new technology through free trade, in part because matters of technology and environment are seen as the realms of experts, wherein voters cannot make the right choices.

Thanks to genetic technology, Africans and Asians could become intensely competitive with European farmers. But fearing the political power of the farm lobby (and of Greens), European politicians would rather try to placate the people of their former colonies with financial aid than buy their goods. Milton Friedman commented on the use of this particular technique regarding aid given by the United States, many years ago:

Though foreign economic aid may win us temporary is playing into our enemies' hands and should be abolished. Instead, we should concentrate on promoting worldwide economic development through means that are consonant with the American tradition itself -strengthening of free market domestic economies in the less-developed nations, the removal of obstacles to private international trade, and the fostering of a climate favorable to private international investment.37

Jocelyn Webster, a researcher with AfricaBio, a group based in Pretoria, South Africa, said at the United Nations World Summit on Sustainable Development in Johannesburg that she was "absolutely horrified at the negative tone" of summit delegates toward genetically modified foods.... In America, millions of people eat GM foods when they eat their breakfast cereal, but that kind of food is not good enough for starving Africans."

"African farmers could compete with Europeans, but fear they could not sell biotech foods in Europe."

The day I arrived at the Johannesburg conference, about 200 poor farmers from Africa and India were protesting high trade barriers - including biotech barriers - erected by Europe. "We want the freedom to grow what we want, when we want, with what technology we want, and without trade-distorting subsidies or tariffs," said Barun Mitra, an Indian quoted by Reuters.39

Ultimately, developing nations have the most to gain from the virtuous circle of freedom breeding technology and technology breeding freedom. There are certainly no cultural impediments. As Hayek wrote:

From what I have seen of the world the proportion of private persons who are prepared to try new possibilities, if they appear to them to promise better conditions, and if they are not prevented by the pressure of their fellows, is much the same everywhere. The much lamented absence of a spirit of enterprise in many of the new countries is not an unalterable characteristic of the individual inhabitants, but the consequence of restraints which existing customs and institutions place upon them. This is why it would be fatal in such societies for the collective will to be allowed to direct the efforts of individuals, instead of governmental power being confined to protecting individuals against the pressures of society.40

Case Study: Microsoft under Siege.

Microsoft Corp. is the world's largest software maker and the developer of the operating system used by most of the world's personal computers. While that firm has prospered - its founder, Bill Gates, is almost certainly the most successful technologist of the past half-century - it also has been under siege from governments acting as those institutions of restraint that Hayek wrote about. For example, a long-running lawsuit filed during the Clinton administration by the U.S. Department of Justice sought to break the company into several parts. The suit began with complaints by competitors that Microsoft was bundling an Internet browser with its computer operating system. The Internet has now become such an integral part of personal computing that the charge seems absurd, but the suit has dragged on, causing severe damage not only to Microsoft but to technology generally.41

"Intellectual property rights allow companies like Microsoft to recoup research and development cost for technological innovations."

The latest attack on Microsoft is nearly as pernicious and as dangerous to the overall development of new technology. Politicians, in league again with Microsoft competitors, are trying to encourage their governments to adopt so-called open source software. The OSS model allows software developers to use source code developed by others but then, "when the resulting software product is distributed, its creator must make the entire source code base freely available to everyone, at no additional charge, "says Craig Mundie, a Microsoft senior vice president." It is hard to see such a model working, unless governments require its use. "Two decades of experience have shown that an economic model that protects intellectual property and a business model that recoups research and development costs have shown repeatedly that they can create impressive economic benefits and distribute them very broadly," says Mundie.42

Microsoft clearly has an ax to grind, but it is wielding the ax in an important fight for technology and freedom. The opponents do not merely want to make available the option of open source software; they want to require government procurement preferences. A bill filed in the legislature in Argentina, for example, states that "all government entities will use only free programs [software] for their systems and IT equipment."43 In Italy, legislation requires that "in choosing computer programs needed to perform its activities, the Public Administration shall favor free software programs, or alternatively open source ones" and shall "give detailed reasons for choosing non-free source software."44 Some still haven't learned that free choice, competition and property rights are the foundation of technological innovation and economic growth.

Read Article as PDF