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

• Author: Caplan, Bryan
• Position: Book Review

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

Edited by Fred E. Foldvary and Daniel B. Klein

New York: New York University Press, 2003. Pp. x, 276. $65.00 cloth, $20.00 paperback.

The Half-Life of Policy Rationales is one clever book. Nothing in recent years on the economics of new technology comes close. Fred Foldvary and Daniel Klein immediately separate their contribution from the dissonant chorus of half-baked predictions about how technology is "destined" to change age-old government policies:

[M]any have speculated on the government changes that technology will bring. But few have explored the changes that it ought to bring. This collection suggests that technological advancement ought to persuade policymakers to implement reform in the direction of free enterprise, but it does not predict that public policy will move in that direction. (One may hope that there is a direct connection between the ought and the will be, but that hope is so often disappointed!) (p. 2, emphasis in original) The crux of their view is that many classic "market-failure" arguments for government intervention are out of date, predicated on obsolete technology. Most glaringly, textbooks often argue that X is nonexcludable, therefore a public good, therefore in need of government provision. Nonexcludable, however, really means "not excludable at reasonable cost," and exclusion technology has improved enormously. Computer chips, scanners, and global satellite positioning are only the beginning.

Contributors to the collection illustrate this lesson by using the examples of fisheries, lighthouses, toll roads, parking, and auto emissions. In each case, they review technological advances that weigh heavily in favor of less regulation or even laissez-faire. Thus, in a chapter on roads, Peter Samuel explains that paying tolls no longer need be the painful experience familiar to every hapless traveler on the Garden State Parkway. Cars can now be equipped with a twenty-dollar transponder (seven- to eight-year battery life) that electronically handles the whole process without even requiring the driver to slow down. The toll booth transmits a signal, the transponder replies, and the charge magically appears on the driver's next credit-card statement. This technology is already in use, and it opens up a world of entrepreneurial possibilities, such as peakload pricing during rush hour, premium services, and flexible traffic-light timing.

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