
Innovation’s Dependence on Regulation - jk4930
http://www.wired.com/2015/05/silicon-valley-letting-go-techie-island-fantasies/
======
kriro
The article focuses heavily on government regulation which makes me feel like
it subconsciously paints a picture of "those evil capitalists trying to escape
regulation...haha fail". In the light of recent mass surveillance revelations
I think less government is still very much a valuable goal to strive for.

The counterexamples regarding infrastructure are a bit too tongue in cheek for
me, too. The point about the legal system makes sense on the surface but only
if contrasted with no legal system at all. Pretty much all "freedom utopias"
I'm aware of are heavily based on a strong belief in property rights and
private contracts.

~~~
Brakenshire
How can you enforce property rights and private contracts without a state? You
have a contract with the richest person in the local area (aka the man with
the largest army / aka the local warlord). How do you ensure he pays when he
is liable to pay? Moreover, how do you ensure he doesn't just kidnap you, and
force you to work for him for free?

~~~
praxeologist
While states dominate history, private law has proven successful. You could
see the Law Merchant throughout Europe as one example or medieval Iceland,
where civil order was maintained for longer than the US has existed so far, as
another.

[https://en.wikipedia.org/wiki/Lex_mercatoria](https://en.wikipedia.org/wiki/Lex_mercatoria)

[https://mises.org/library/medieval-iceland-and-absence-
gover...](https://mises.org/library/medieval-iceland-and-absence-government)

Regarding your other concerns see points 8 & 6 here:

[http://c4ss.org/content/13612](http://c4ss.org/content/13612)

While I have some differences with this author, you could consider this video
as well:

[https://www.youtube.com/watch?v=jTYkdEU_B4o](https://www.youtube.com/watch?v=jTYkdEU_B4o)

~~~
Brakenshire
> You could see the Law Merchant throughout Europe as one example

That is not an example of justice in the absence of the state. All the
principal trading cities were governed, whether as city states (Venice), as
quasi-independent city states within a federated league (Lubeck, Hamburg, and
the other Hanseatic States) or as cities within national kingdoms (London,
Ipswich and other cities under the English crown). It is an example of states
agreeing to standardized laws to attract traders and provide a solid basis for
ongoing trade.

From the Merchant of Venice:

 _The duke cannot deny the course of law._

 _For the commodity that strangers have_

 _With us in Venice, if it be denied,_

 _Will much impeach the justice of his state._

 _Since that the trade and profit of the city_

 _Consisteth of all nations._

The presence of common merchant law does not mean the absense of a state.

~~~
praxeologist
I said private law, not purely anarchic examples. I could give more anarchic
ones if you liked but it's revisionist history so you'd have to do a good bit
of reading to really discuss it.

Iceland is an example of polycentric law fairly close to what anarcho-
capitalists advocate. You didn't really address that or the other points.

The first big difference between the Lex Mercatoria and present-day law is the
source being jurisprudence and not bureaucratic legislation. The second would
be cases being torts with an identifiable victim versus today's with
victimless "crimes against society".

For why legislation is awful and for a hint at solutions under an eminently
human system of law in a free society see these:

[https://www.mises.org/sites/default/files/11_2_5_0.pdf](https://www.mises.org/sites/default/files/11_2_5_0.pdf)

[http://www.walterblock.com/wp-
content/uploads/publications/b...](http://www.walterblock.com/wp-
content/uploads/publications/block_radical-libertarianism-rp.pdf)

------
gusmd
> Some of the most explosive tech companies today benefit intensely from
> various pockets of regulation: Spotify and Netflix[...]; Lyft and Uber
> [...]; Stripe, Square, and even much of Mr. Thiel’s early success at PayPal
> [...]. And don’t forget the Internet itself [...]

All his examples are bogus/fallacies.

> without copyright law, for instance, no one would pay for those services

If copyright law did not exist and people did not pay for the artists, artists
would have no incentive to compose/perform/record/distribute their work. That
would create the incentive for people to pay for those services. As lawl
pointed out, people already pay for these services for their convenience.

> ever been to a country without paved roads?

The private sector would happily pave the entire world. Road pavement is not
something only the government can do. We have numerous examples of roads built
by the private sector (private toll roads, anyone?).

> without SEC regulations to limit our financial losses on identity theft, who
> would so freely hand out their credit card information?

The same people who would use a credit card in the first place.

> And don’t forget the Internet itself, which began as a scientific
> communications network started by the government.

Really? How can you predict it would not be created in some other form by the
private sector?

~~~
shit_parade2
All of human history contradicts you. Music has been and will be made
irrespective of 20th century notions of copyright.

------
Animats
As I pointed out the last time this came up, it's been tried at least four
times, with projects that got far enough to have people on an offshore
construct.[1] All failed.

There is, of course, one huge success - Hong Kong. It's a collection of
islands and a peninsula that run under a much more liberal set of rules than
its parent nation.

There are various "special economic zones" around the world, in about 25
countries.[2] They're usually intended for export-oriented industries. India
has had the most success with this concept.

The closest thing the US has to this is the Reedy Creek Improvement District,
which is the legal arrangement which makes Disney almost a government around
Disney World in Florida.

Note that neither Uber nor Airbnb would benefit from being on an island.

[1]
[http://en.wikipedia.org/wiki/Micronation](http://en.wikipedia.org/wiki/Micronation)
[2]
[https://en.wikipedia.org/wiki/Special_economic_zone](https://en.wikipedia.org/wiki/Special_economic_zone)

------
oskarth
> “Why do people feel perfectly comfortable forming a startup when they know
> that 90 percent of them fail? Because they know that corporate laws and
> bankruptcy laws protect them from personal liability. They know that they
> won’t lose their house if the company goes bust.”

This is a intellectually dishonest statement. Even if you had no laws you
would still be able to find investors willing to invest in an company, with
the understanding that it could fail. The very concept of "personal liability"
only makes sense inside a regulated society.

Hypothetically speaking, living in a everything-goes society, it's true you
might get killed or have your house burned down - but that's only if you are
bad at PR, communicating expectations, or self-defense.

In fact, a lot of people did just this earlier in history. The main reason
startups are more successful now is because of the leverage technology
provides. That and the fact that, for the most part, government/bandits don't
take the money you get for creating wealth. Stability plays some role too, but
there has been plenty of stable societies that didn't have anything resembling
startups, and a lot of startups thrive in macro-economically unstable
climates.

EDIT: Of course, the above hypothetical scenario is not prescriptive, i.e.
it's not desirable. It's simply an extreme example that illustrates why Mr.
Regulator's statements are wrong and intellectually dishonest.

~~~
nemo
"that's only if you are bad at PR and communicating expectations, or self-
defense."

Without the stability of rule of law in a reasonably regulated state, self-
defense is incredibly difficult in the modern world, with modern technology
allowing for sniper shots at greater than a kilometer. The illusion of
security is simple, but actual security is not. Most normal people would
rather live in a society where they didn't have to worry about PR,
communicating expectation, and careful security with the knowledge that the
more they had the greater the risk of mortal peril. Not that I wouldn't mind
some people trying it somewhere to illustrate the failings of simple-minded
idealism graphically as Marxists did, so long as it was a small-scale human
failure.

------
lawl
> _Spotify and Netflix (without copyright law, for instance, no one would pay
> for those services);_

Really? People already decide to pay for it instead of pirating it, because
it's more convinient, not because they're scared of breaking the law.

~~~
ghaff
However, in the absence of copyright, presumably it would be much easier to
download quality content (assuming for the purposes of the hypothetical that
all the content had been made in the first place) given that, for example,
Napster v1 would be perfectly legal. Storage and bandwidth still need to be
paid for of course and there might be a market for services that curated and
served up free music and movies but the price would presumably have to be less
than a subscription for Spotify or Netflix.

~~~
gusmd
In that hypothetical scenario, why would starving artists continue
distributing their work? They would simply look for another job that paid the
bills.

I for one choose to believe that people mostly want to support the artists,
hence the popularity of said services.

~~~
ghaff
Most wouldn't. And the vast majority of films certainly wouldn't be made if
they had to depend on donations.

>I for one choose to believe that people mostly want to support the artists,
hence the popularity of said services.

I think that's very optimistic of you. In a world where you had a Netflix and
a "Cheapflix" that was a quarter the monthly price because it (legally) didn't
pay for any of its content but was otherwise identical to the Netflix of that
world, I'm pretty sure the vast majority of people would go with the less
expensive option.

~~~
gusmd
You might be right. However, anedoctally, most of my friends are paying for
Spotify Premium and Netflix even when torrent downloads are just around the
corner. And these are not rich people with money to spare; these are grad
students or a few recent graduates on a budget like myself.

So I still believe that people would rather go legal and support the artists
when they have the option.

------
BjoernKW
> Dempsey argues there should be greater recognition of the extent to which
> startups benefit from government infrastructure. "I can guarantee that if
> you don’t have a legal structure you will not have innovation," he says.
> "Instead you will have chaos."

I'd say that one doesn't necessarily imply the other. It's possible to agree
on a legal framework (code of conduct, how contracts are enforced etc.)
without government infrastructure. Government infrastructure on the other hand
doesn't necessarily imply a well-structured, consistent legal system. Just ask
any entrepreneur in any country about the intricacies and inconsistencies of
local tax laws. Common law by its very nature is complex and often
contradictory.

------
WalterBright
Interestingly, the software industry is the least regulated industry I can
think of, and the most rapidly evolving. I wouldn't be quick to dismiss the
correlation.

The D programming language tools are also developed under the Boost license,
which is pretty much a rejection of copyright protection.

------
zw123456
The first thing that came to my mind when I saw this man made island in
international waters was that someone can just get a boat and a few armed men
and rob the place. I agree with all the complaints about government
surveillance, intrusion and so on, but the one thing that they do provide that
would be sort of important for a place like that is protection. So then they
would have to raise money for an army to protect themselves... next thing you
know you are paying taxes for the military...and so on and son, you get the
idea, you are right back where you started.

~~~
JoshTriplett
That doesn't need to be a slippery slope. It's possible to _stop_ after
constructing the amount of government needed to solve that problem.

~~~
davidgerard
In several thousand years' history, can you list examples where this has
occurred?

~~~
JoshTriplett
Stopping? Not for all of history, but for significant periods of time during
the formation of a new government, before it eventually grows out of control.

But sadly, yes, it was meant more as a theoretical possibility rather than one
anyone has actually pulled off.

------
declan
I'm sorry to say (as someone who has worked at Wired two different times) that
this is not one of Wired's most convincing pieces.

First, the pro-seasteading folks are not "letting go" \-- as far as I can
tell, they're in it for the long haul and have said for the better part of a
decade that they intend to take small steps to learn about the engineering
requirements for a blue-water seastead. Here are articles I wrote on the topic
when they were saying that back in 2009: [http://www.cbsnews.com/news/next-
frontier-seasteading-the-oc...](http://www.cbsnews.com/news/next-frontier-
seasteading-the-oceans/) [http://www.cbsnews.com/news/seasteaders-take-first-
step-towa...](http://www.cbsnews.com/news/seasteaders-take-first-step-toward-
colonizing-the-oceans/)

Second, the reporter talks about startups "benefit[ing]" from regulation. But
it doesn't mention how government agencies have targeted drones, genetic tests
(23andMe), 3D printing (DD), Uber and Lyft (in some states), Tesla (dealer
sales), Airbnb (in some cities), Bitcoin (FinCEN), etc. The reporter mentions
Spotify and Netflix as companies that benefit from regulation, which is false;
they benefit from _copyright law_. The thing is you can have copyright law
without FCC/SEC-style top-down rate-setting regulation (US copyright law
predated the FCC/SEC by over a century).

Third, the reporter mentions Balaji Srinivasan of Andreessen Horowitz, but
neglects to say whether he changed his mind and is "letting go." I heard
Srinivasan speak three days ago in Palo Alto, and I suspect he hasn't. The
reporter quotes YC's own Sam Altman as speaking dismissively about
seasteading, but never said he's changed his mind (as far as I know Altman
always held that opinion). You might as well quote Democrats talking about
Hillary Clinton one day and Republicans the next and claim Americans are
"letting go" of that presidential candidate.

Maybe seasteads will never happen, maybe the darknet will never be robust,
maybe we'll never get to Mars, and maybe there's a case to be made that
Silicon Valley is "letting go" of these dreams. But this article failed to
make it.

------
Roboprog
Nice resort model. Where are the gun emplacements to fend off the pirates?

The article also neglected to mention another difference between, say,
California and Texas: employers don't own your every stray thought in
California. Hard to get smart people to work for you under dumb conditions.

What, you don't want to come work in Petopia??? (or whatever it was in the
"Family Guy" episode where the dad finds out he has the right to make his
house into its own country)

------
alricb
Building a nation is hard, much like building a software stack; you have to
stand on tons of infrastructure to be able to make it work, and the
underpinnings often aren't pretty and/or efficient. Look at the mess that most
TCP/IP stacks are, and at some of the more baroque forms of administration you
find out there, like those old livestock rights they have in the City of
London.

------
davidgerard
Fake title. Actual title is "Silicon Valley Is Letting Go of Its Techie Island
Fantasies".

------
redblacktree
A bit off topic, but that image looks a bit like the board game Carcassonne.

