Is ‘soft law’ the solution for tech policy problems?

It took almost 50 years for half of U.S. households to have a telephone, but only five years with cell phones. Newer technologies are adopted faster than ever before. With innovation rapidly changing a wide array of industries from transportation to medicine to communication, how can public policy keep up?

Indeed, policy makers struggle to create regulatory frameworks that can maintain pace with rapid technological changes. In many cases, this prevents short-sighted (or just plain bad) policies that could limit future technology. In other cases, it prevents technology from reaching its full potential due to regulatory uncertainty or outdated red tape. “Soft law” can provide solutions that allow innovation to continue to improve our lives.

Soft law is an amorphous and hard-to-define term. As Ryan Hagemann, Adam Thierer, and I discuss in a forthcoming law review article, it largely refers to the various policy mechanisms that agencies use to provide a more flexible and adaptable approach to emerging technologies than traditional legislation and regulation can. {mosads}

These can include: multi-stakeholder groups where various stakeholders come together to address issues and ideal policies; informal norms that clarify expectations but may lack enforcement power; “sandboxing,” where innovators and regulators meet and collaborate to discuss concerns and develop solutions prior to launching a disruptive product; and non-binding guidance that can provide clarity regarding how an agency may be thinking about an issue. 

For example, rather than immediately seeking to regulate new tech, policy makers can work with concerned citizens and innovators behind emerging products like driverless cars, FinTech, or 3-D printed prosthetics. Together they can arrive at solutions that allow innovation to continue while still balancing concerns about consumer safety.

Various state and federal agencies have embraced this approach. Under Scott Gottlieb, the Food and Drug Administration used soft law to maintain a flexible approach to many rapidly evolving technologies.

Innovation, while a bumpy process, makes our lives better and safer. In a Pew Research poll, over 40 percent of respondents (far more than any other category) said that technology had done the most to improve Americans’ lives over the past 50 years. As recent work by Thierer and our colleague James Broughel shows, technological innovation has a positive impact on economic growth, standards of living, and overall well-being in the long-term, even if it’s disruptive in the short-term.

Soft law continues that tradition. Its flexibility helps today’s technologies continue to evolve without overly rigid standards that limit the path of innovation or lock a creative industry into a single, government-backed approach.

This is true today more than ever, thanks to emerging tech like driverless cars, which hold the potential to revolutionize our lives for the better — as long as regulations do not get in the way. Over 37,000 people in the United States die in car crashes each year. If widely adopted, driverless cars could reduce these deaths by over 90 percent, according to a study by consulting firm McKinsey & Co.{mossecondads}

Recognizing driverless cars’ life-saving potential, the Department of Transportation and many states have taken a soft law approach by providing non-binding guidelines. This provides a level of certainty to both innovators and consumers about the future regulatory environment and commitment to passenger safety. Pennsylvania’s approach to driverless cars relies heavily on a guidance framework with the flexibility to evolve with the tech and work with innovators to solve problems as they arise.

In other policy areas, Arizona created the first state-level sandbox for financial technology. It allows entrepreneurs in the heavily regulated field to work with regulators and launch new, innovative products. Now, more states like Wyoming are also adopting such an approach.

Of course, as with most policies, soft law could devolve into soft despotism by caging technologies rather than setting them free. It is important that legislative and judicial checks and balances provide appropriate recourse when conflicts arise. Whatever tradeoffs we face with soft law, it is already allowing some innovations to continue in a way hard law would not.

The American approach to innovation has generally allowed for the freedom to create, and it’s made us the leader in the field. When things move too fast for traditional policy making, soft law can help strike the balance.

Jennifer Huddleston is a research fellow with the Mercatus Center at George Mason University. She has a JD from the University of Alabama School of Law and a BA in political science from Wellesley College.