Opinion

How Will We Rewrite the Old Rules to Keep Up With Economic Innovation?

The American economy is in the midst of a dramatic transformation. And regulators must begin updating the old playbooks to ensure consumers and communities are prepared for technologies that are reshaping our entire economy.

In a short period of time, e-commerce and on-demand platforms have revolutionized the delivery of goods and services. Autonomous vehicles and drones are on the verge of upending travel, transportation and logistics. Search engines, social media and other digital platforms continue to grab advertising market share and play an increasing role in shaping consumer behavior, culture and society. Artificial intelligence and automation promise newfound efficiencies.

But while consumers are the beneficiaries of these incredible developments, the seismic shift occurring in our economy also brings about drawbacks and unintended consequences. Quite simply, the technology and economic marketplace is moving so fast that the government and regulatory function of the “traditional economy” cannot keep up.

For instance, many online sales are not taxed in the same manner as in-store sales. This has contributed to the explosive growth of e-commerce but presents challenges for future state tax revenues. The “gig economy” has created new markets out of thin air for entrepreneurial workers, but also is drawing more workers into the independent contractor ranks — meaning they may lack health care, a retirement plan or other workplace benefits like paid leave.

And while autonomous vehicles could bring unparalleled efficiency to transportation and reduce emissions, they may displace some of the largest workforces in the country, including truck drivers and bus operators.

Lawmakers and regulators are just scratching the surface of the changes necessary to account for these innovations. For instance, the Highly Automated Vehicle Testing and Deployment Act — which is currently being discussed on Capitol Hill — seeks to establish a national framework for autonomous vehicles.

This is a positive step in the right direction, but a host of questions still remain. If autonomous vehicles dominate the roadways, what will that mean for other forms of transportation, such as rail? As efficiencies increase and gas tax revenues plummet, will we need to replace them, or will we not need them? What about safety and insurance considerations?

In the coming years, Americans must force a public discussion about the costs and benefits related to the “internet of things” and the “future of work” and decide if — or how — we update an antiquated laws and regulations to match a new, tech-driven economy. That process will test what we value — the behavior we incentivize or disincentivize through regulations and laws — as well as what we deem worthy of public investment.

The approaching challenges for governments are obvious. But they also present historic opportunities to modernize and streamline tax and regulatory schemes that can shed unnecessary barriers to competition and efficiency while fostering innovation and growth. Perhaps most importantly, the challenge before us provides an opportunity to reassess the value of almost everything. As we update the old rules, smart governance will necessitate moving beyond bumper sticker policy solutions.

No matter how many innovations we make to the superhighway of commerce, we still need equally as innovative guardrails to keep pace and ensure certain protections are in place. It’s easy to forget that a big part of the exorbitant fares we paid for cabs (largely put out of business by Uber or Lyft) went into construction of convention centers, airport terminals, entertainment venues and other urban infrastructure. And another chunk of those inflated fares went to background checks on the drivers to ensure passenger safety.

Therein lies the rub. How do we disrupt industries to the benefit of consumers while maintaining important consumer protections and funding for public goods? What is the right regulatory framework that adequately protects consumers, provides a level playing field promoting healthy and honest competition but doesn’t stifle innovation?

The answers aren’t easy, but seeking them is necessary. If we really hope to maximize the benefits of new technologies, then it will be necessary to mitigate or balance the negative impacts. Today’s policymakers live in a challenging time that will stretch the capabilities of local, state and federal government. But getting it right will pave the way for the next generation.

 

Joe Rinzel is a spokesperson for Americans for a Modern Economy, a consumer advocacy group focused on modernizing antiquated regulations and laws governing the U.S. economy.

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