Free minds, free markets … free networks? by Scott Woolley @FortuneMagazine December 16, 2010, 8:31 AM EST E-mail Tweet Facebook Google Plus Linkedin Share icons What does it means to be a libertarian in the digital age? Tim Lee is just the man to ask. Tim Lee Many computer geeks are also libertarians, so it’s not too surprising to hear Tim Lee proudly describe himself as a member of both groups. No, what makes Lee unusual is his passion for figuring out exactly what it means to be both a libertarian and a technophile. What’s the best way to increase both the power of technology and the preserve of liberty? As Washington feuds over rules that will govern the digital future, that question seems particularly important, timely and (for Lee and others with a libertarian bent) confusing. Take the raging fight over “network neutrality.” Protecting the open nature of the Internet, where anyone can communicate with anyone else on essentially equal terms, surely advances the cause of individual liberty. Yet the government now seeks to advance that goal with a new layer of new regulations, exactly the sort of thing libertarians naturally distrust. The 31 year-old Lee, who is among other things an adjunct scholar at the Cato Institute, a PhD candidate in Princeton’s technology and public policy program and an increasingly well-known blogger, first became fascinated with solving such seeming paradoxes thanks to a gut feeling he had about some of his natural political allies. “It was obvious to me that some of the things that some libertarians were saying about tech policy were wrong,” he says. Just as libertarians disapprove of both Republicans (for their tendency to regulate private conduct) and Democrats (for their tendency to regulate the market), Lee argues that libertarians should forge a third way in tech policy. In the raging network neutrality debate, for instance, Lee argues passionately for the virtues of open networks, putting him squarely in the camp of Democrats who see the openness of the Internet under attack. At the same time, he is loathe to grant the government any power to control the Net, seemingly putting him back in the Republican camp. But Lee objects to the assumption that there are “just two sides: a pro-market side that believes that ‘the market will sort that out if we let it,’ and a pro-regulation side that wants the government to mandate the use of open technologies.” Much as libertarians argue that supporting freedom in both the bedroom and the boardroom is not only a viable political philosophy but a logically consistent one, Lee argues that techies need to consider the “the possibility that the open-vs-closed debate might be orthogonal to the free-markets-vs-regulation debate—that one can be pro-openness and anti-regulation.” Asked about the Republican opposition to net neutrality he is withering, saying that the right has blundered into an ignorant opposition to open networks. “Free marketeers…because they see people use left-wing rhetoric to talk about this openness stuff they assume ‘I must be on the other side,’” Lees sighs. “The dynamic becomes self perpetuating.” Lee sees Republican opposition to unlicensed spectrum (of the sort that makes Wi-Fi possible) or any alteration of the patent rights as similarly ignorant, based on what he calls “a vulgar version of the Coase Theorem.” That theorem, which helped economist Ronald Coase win the Nobel prize, states that as long as property rights are clearly defined the market will maximise wealth irrespective of who starts out owning the property in question. Lee’s says that libertarians often ignore Coase’s critical caveat—that his theorem holds only in the absence of transactions costs, which in the real world tend to be substantial. Thus the vulgar version becomes: “More property rights are always better.” In fact, as Lee points out, in both cases the government is deeply involved in designing the shape of the market. In the case of patents and copyrights, the law determines the length of a legal monopoly and then punishes any competitor who breaks the monopoly. When it comes to spectrum, the invisible natural resource that’s essential to all wireless industries, the government controls all sorts of ways that even privately licensed spectrum can be used. (“The primary problem is that so little of the spectrum is available at all,” Lee notes.) For all his complaints about the state of technology policy regulation, Lee remains cheerfully optimistic about the power of free markets and future technologies. He sees open networks spreading not thanks to any government but thanks to the demands of the market. Case in point: the mobile phone industry. “The wireless carriers are ceding a lot of control, probably more than they realize,” Lee says. “The long run trajectory is that you’ll be able to do whatever you want with your phone.” With the growth of Android and the breadth of variety of iPhone Apps, the path towards “openness” in the wireless world is slowly coming into view. But the free market path that leads to a world of truly “open” networks is still far from obvious, and that is the path that Tim Lee is trying to map.