The Half-Life of Policy Rationales: How New Technology Affects Old Policy Issues

by Fred E. Foldvary (Editor), Daniel B. Klein (Editor)

The Half-Life of Policy Rationales argues that the appropriateness of policy depends on the state of technology, and that the justifications for many public policies are dissolving as technology advances. As new detection and metering technologies are being developed for highways, parking, and auto emissions, and information becomes more accessible and user-friendly, this volume argues that quality and safety are better handled by the private sector. As for public utilities, new means of producing and delivering electricity, water, postal, and telephone services dissolve the old natural-monopolies rationales of the government.
This volume includes essays on marine resources, lighthouses, highways, parking, auto emissions, consumer product safety, money and banking, medical licensing, electricity, water delivery, postal service, community governance, and endangered species. The editors have mobilized the hands-on knowledge of field experts to develop theories about technology and public policy. The Half-Life of Policy Rationales will be of interest to readers in public policy, technology, property rights, and economics.

Genres: Economics

276 pages, Paperback

First published May 3, 2003

Reviews

[Paul Sand · Rating 3 out of 5]

[Imported automatically from my blog. Some formatting there may not have translated here.]

Another recommendation from Adam Thierer's bookshelf collection of the works having "the greatest influence on my thinking about technological innovation / progress." It's a publication from Cato, a collection of articles on a common theme: do the old, well-known arguments for governmental provision/heavy regulation of (some) goods and services still apply in the modern age (if they ever did)? As you might expect, from Cato, the answer is "mostly not". We might not have our flying cars, but we do have a vast array of innovative tools at hand that our forefathers lacked.

The articles are mostly written for a policy-wonk audience, somewhat advanced at times for a dilettante like me. I may have skimmed over, for example, the section discussing the use of anaerobic digestion in dealing with water impurities. But overall, there are a lot of observations and ideas here.

One downside: the book is twenty years old. A generation of technology had yet to be developed, and it shows in some of the discussions.

One chapter deals with the classic public-good example: lighthouses. As it turns out, lighthouses were never the pure public good their publicity implied. Tolls were often successfully collected by their non-government owners. Yet the general provision of navigational aids for watercraft (and aircraft, for that matter) is still mostly a government-owned and operated service. Does it have to be? No.

Other public-good-related chapters discuss fishery management, protection of the "airshed", handling of automotive traffic, and urban parking.

There's the "government must regulate X" argument; that's examined in chapters discussing free banking, medical licensing, and general "consumer protection" agencies. The article on banking really shows its age, since it was written pre-bitcoin. And (by the way) the case for medical licensing was never very good. It was criticized harshly back in 1962 in Milton Friedman's Capitalism and Freedom.

There's also the "natural monopoly" argument. This is examined, and found wanting, in three areas: electricity generation and distribution, provision of water to homes and businesses, and (everyone's favorite) the United States Postal Service.

And a couple chapters deal with other topics: protecting endangered species and an (oddball but interesting) argument for providing housing development as leased land, instead of ownership. (The lessee is more like a shopowner in a mall than a feudal lord.)

All in all, interesting, but I'd maybe recommend perusing more recent back issues of Reason or the Cato website for more recent developments.

[Waldemar Ingdahl · Rating 4 out of 5]

The Half-Life of Policy Rationales, edited by Daniel B. Klein and Fred E. Foldvary, is an insightful anthology that examines how government intervention rationales diminish over time as technological advancements reshape society. The authors argue that each policy rationale has a “half-life” determined by the pace of innovation.

The book remains relevant today. Its central question—how should we navigate the societal transformations brought about by technological progress?—is increasingly urgent in an era of rapid change.

The book, divided into three sections, explores key themes. The first addresses commons management, showing how innovations like metering technologies have enabled better resource allocation. The second focuses on quality assurance, highlighting how the internet has empowered consumers by reducing information costs. The third critiques the “natural monopoly” argument, demonstrating how localized utilities and advancements in water and electricity systems challenge traditional monopolistic structures.

The book’s foresight is remarkable, predicting trends like the decline of postal services and the disruption of traditional banking by digital currencies. Yet, it cautions against the “nirvana fallacy,” urging readers to evaluate what technology ought to change within current systems, rather than just expecting perfection from it.

While largely accessible, some sections delve deeply into technical details, which can make parts of the text more challenging to follow. However, they do not detract significantly from the book’s overall impact.

The anthology also humanizes markets, framing them as reflections of individual choices rather than abstract mechanisms, making the analysis relatable and thought-provoking.

Ultimately, The Half-Life of Policy Rationales is an essential read for anyone interested in the intersections of policy, markets, and technology. Its insights equip readers to critically assess the role of innovation in shaping the future.

[Frank Stein · Rating 2 out of 5]

The premise of this book is interesting, and, I think, fundamentally sound. It argues that many political interventions premised on a "market failure" rationale themselves fail when one takes into account the possibility of technological innovation. The argument that a market requires correction implicitly assumes that it is stable, when in fact it is impossible to predict how new disruptions will break up old equilibria, as they almost inevitably have in the past. Regulation to correct for the market in that case often ends up calcifying existing arrangements, and preventing the kind of innovations that would have helped a market evolve.

The problem is that many articles presented in this book do little to prove the argument, and instead assume it as given and then try to show how technology breaks down the case for many current interventions, such as a government post office, electrical grid, or highway system. Curiously, this makes the book itself have a short half-life. Published in 2003, it is hardly revelatory today to read about things like multispace parking meters or universal electronic tolling and how those could help privatize roadways. Showing more examples of how this technological/regulatory dynamic actually worked in the past would have better demonstrated the point (how about the famous almost 20 year antitrust case against IBM, just as it was losing market share to Apple and others?) The only really historical investigation, exposing the false rationale behind the lighthouse as an example of a classic "public good" (in Britain they were originally constructed with fees paid per ship landing in nearby docks), was already done much better by the Nobel award winning Ronald Coase back in 1974. Why repeat it?

A few anecdotes, like how the Consumer Products Safety Commission was mainly intended to use information to inform the market but instead became a regulatory empire builder, even after studies showed it had almost no effect on injuries and its recalls had significant costs to companies, are informative. Many discussions, however, seem to be there just for different types of techno-junkies; say, those curious about the nature of distillation in water supply systems, or on identifying ownership of individual fish through genetic coding. On the whole, its probably not worth the time.