the fact that technology is a public good, under-produced by the private market. to get back to the network that matters the most around here, you talk about the internet. that began as a creature of government-funded research. it became a platform and a piece of infrastructure that laid the groundwork for all sorts of innovation that nobody could have possibly foreseen in the '60s and 70s. when the government was funding the research that led to the internet. nobody could have predicted. the wealth it would have created or the innovation it was going to help foster. now once the internet grows up, you have problems that you have to deal with. one is network neutrality. the question there is whether and to what extent we're going to let the people who own the infrastructure adopt practices that are going to favor or disfavor certain types of data applications, content or certain users. the stakes there are particularly high.

because that is where we decide whether the internet is going to remain an open platform. where new people can innovate without permission. and whether we are still going to see the kind of radical disruption that has marked internet technology. if you let incumbents make the rules there, you're not going to get the innovation that you see when you have an open architecture that lets everybody in and let's somebody brand new come in. whether they have permission from the incumbents or not. when it comes to network neutrality and the innovation that's at stake, i ask, well is there a good market solution there? i don't think there is since there's no good market solution, i think that's a good place where the government intervenes and its role there really is to i guess kind of regulate to keep, keep the structure open. so that new internets can come in and you have room for new innovation that is not limited by what we already see on the internet. if you take a different question

that the internet poses, one of privacy, you have a different question, i think kind of a different answer and the question there is whether you're going to regulate what information websites are going to collect. and how they can use it. there i see a much bigger potential for market-based solutions. i think you can think about disclosure, you can think about competition whether its in technology or the development of applications that are better or worse at protecting your privacy. there's some barriers to it. i think the information costs are very high for users. i think a lot of users don't fully understand some of the privacy implications of data collection. i think it's difficult for them to make tradeoffs and really make the balance that a market solution is going to require. but the fact is, it's at least possible to imagine some market-based solutions to privacy problems. so what we see here, with the new do not track proposal that we saw from the white house in the past few weeks, i think you see what is in some ways, the

worst possible of all worlds. and that is because the so-called do not track proposal you see is really much more like well, we're going to let some people track and some other people not track. problem being that it utterly confuses consumers. if you have regulations that ostensibly prohibit tracking but actually permit tons and tons of tracking. i think what you end up with is you lull the consumer into a false sense of security or complacency that prevents the market solution from implementing itself. in that respect, i think that's an example where regulation can really foul up what might otherwise be a perfectly plausible market solution. and government regulation is often at its worst when it takes on this sort of pervasive and permanent oversight function. so what i would say is if you believe technology is a public good that's going to be

underproduced, there's a sim beowes ib beyoes is, i think government is at its best when it cultivates technology and gets out of the way. number two is important because sometimes getting out of the way means not just the government getting out of the way. but the government playing a role to make sure that incumbents also do not stand in the way of new inventions and new innovation that going to grow technology and develop it even further. zbld sim. >> i want to see if i can ground new things that have been happen sog we get less abstract. a lot of it comes from conversations i've had with mark. you've often talked about the way in which there's been kind of a regulatory turn in i.p.

enforcement online recently. sopa, pipa, government-mandated or encouraged efforts to have isps monitor the content of their subscribers' accounts and the whole debate over network neutrality. obviously reflects the same. what do you make of all of that. can we draw some conclusions. can we get government to regulate what we want and not regulate what we don't want. >> i think there's a consensus so far on the panel, my guess is on the whole panel, that, that starts from the idea that historically, certainly today, technology flourish where market entry is free. if in fact people are free to come up with a new idea that's completely different from what anybody has done before and says won't work and launch it into

the marketplace, we get a lot of benefit. people make a lot of money and we change the world. so what we don't want from government is a another may i regulatory regime, right? if we've got a regulatory regime and says i need permission to get into the market, i need permission to do this new thing. then we've got a problem. then we're relying on the government, not the innovator to do this. so far i think i'm aligned with richard. with you thing i want to add, it may lead us in some different directions, we also don't want a private individual who has got a mother may i control over market entry. >> gate keepers who can enter the market. the problem is also that particular incumbents can and will have an incentive to impose those restrictions if they have the ability to do so. and it's important to remember because did quite often gets

lost in the rhetoric, it's not the case for private decision-make something not efficient. it's the case that market decision-making is generally efficient. market decision-making is generally efficient because a bunch of stupid or greedy or short-sighted private people who make the wrong decisions get thrown out by other people who make the right decisions. so for the market, for private decision-making to work, there's got to be a market that's competitive. if we have a mother may i regulatory regime. other government imposed or incumbent imposed, we're not going to get that. so get to the specific examples of, that larry has raised. intellectual property i think is hard from this perspective. because you can look at intellectual property as richard does, and say, it's a property regime. it's something around which parties can freely contract. property regimes libertarians

are good, so more intellectual property is better. you can look at the intellectual property rights and say this is a government restriction of what people can do with their own physical property and ideas. government restrictions in a marketplace are bad so libertarians ought to think i.p. rights are bad. the problem is it's both. it's the basis around which we can contract and allow the spread of new ideas, and it is a government regulatory intervention in the marketplace to restrict in certain circumstances what people can do. what i think we've seen in intellectual property, in both copyright and patent in the last few years, maybe in the last few decades is a turning towards increasingly the regulatory side of intellectual property and away from the kind of free and open licensing. in part you see that if you look at the statutes, if you look at the copyright statute as it

existed, in 1975. if you compare it with the copyright statute that exists today, i think it's four or five times as long. there are large swaths of the copyright section that are regulation, they regulate price, they set compulsory licenses, they determine what can you did and so on. the patent act is moving in that direction. it's most of the main provisions of the patent act have been none law in their orientation, as richard indicates, the new patent statute is definitely a step towards the regulatory piece. but i think we see it not only in the statutory frameworks, but we see it in the way the law is being applied. so in copyright law, after 15 years in which government more or less, sometimes by being physically restrained, kept its hands off the internet. we see greater and greater efforts pushed by copyright owners to try to impose regulations on what it is people

do online. and rightly concerned that a copyright infringement. the move has been to say let's decide whether or not you can put your website up at all. government is seized and shut down in this country 450 internet domain names and all of the speech contained thereon. without ever getting an adversary hearing and a court order that says there's any copyright infringement here, much less the entire site is copyright infringement. that's a regulation, that's a mother may i regime. suddenly you're not in business because the government has decided your website is not appropriate. we've seen efforts by the government and by private parties to push technology mandates. your website will be permissible only if you adopt certain types of filtering technologies to strip out improper material. and in those cases i think we're

moving toward. >> try to impose regulation i think we see something similar in patent law. and et cetera here a little more troubling. here i know i'm going to disagree with richard. patent law is supposed to increase innovation, right? the goal of the patent system is encouraging innovation by innovators economic rewards. did should worry us that our fastest developing, most innovative industries, the ones that are generating the most new innovations and the most money, by and large hate patents, all right? they view pat bts as a tax, as a cost of innovation, not a benefit of innovation. they view them that way, largely because they are happily innovating in a world in which they are not restricted by the law. and when the law shows up, it shows up to limit what they can

do. not to encourage them or help them to get economic benefits, right? so in the information technology industries in the software industries, where there are lots of patents and where most of the patent lawsuits are currently filed, the most innovative companies will tell you patents are largely a problem for us, and the people who are filing those patent suits are either people not in the market at all, the so-called patent trolls 0or they're the people who are, on the market decline, right? they're yahoo asserting against facebook has happened this week. here are a bunch of patents you've got to license from us. the industry which is really do need patent protection, the reason we need strong patent protection for certain parts of industries, the pharmaceutical industry and the biotechnology industry, need that patent protection, ironically enough, because they are regulated industries. the reason we've got to have strong patents in the pharmaceutical industry is because the government says you can't launch a pharmaceutical

product until ten years of review have gone through and you've spent $900 million. now you've got to have some way to get that $900 million back. how do you get that money back? we guarantee you insulation from competition for some substantial period of time so you can make back the money we made you pay in the first place. i think that once you take that regulatory system for granted, and it might, it might or might not be a good thing. we're then stuck with some need for a patent system like that. but it's far from ideal, right? it's moved us in a regulatory term. it's about limiting market industry in the service of furthering government regulation. all right. the other piece of what larry asked me and we've heard both from richard and tony, is about network neutrality. and i think thinking about this mother may i framework, makes network neutrality a really hard problem. network neutrality is a really hard problem, because it is

unabashedly government regulation in the service of open entry. in the service of not letting people stand as gatekeepers to prevent market entry. and i'm really on board with the goal of network neutrality, right? the internet works precisely because if you have a new idea, all you have to do is write code and put it on the network and no one can stop you from doing that. we do not want to lose that. there are some powerful people who want to impose limits on that principle and they're by and large incumbents in this industry, particularly the transmission industry. that said, i'm also quite a bit nervous about the idea that the government is going to get it right. if the government sets a series of rules designed to make sure that this openness continues. and so -- i think the hard tradeoff we're left with in this regulatory turn in some sense is

the extent to which we impose structural limitations, we keep saying, you know what, if you're in market a, you can't be vertically integrated into market b or impose very simple bright-line rules, even though they are inefficient at some level. you must carry all traffic, we don't care whether you've got a good argument that network management requires to you block that traffic. you can charge different prices but you can't discriminate against who you're charging. because if we don't adopt those kinds of rules, as sort of structural separation rules, the alternative may be, either from the government or from powerful incumbent who is don't have significant market checks on them, mother may i regime, that i think we're seeing increasingly taking place. >> thanks, mark. save it until the end. next we turn to peter. peter, i want to ask you a more

specific question. although building off of what we've talked about so far. you've spoken quite a bit and in a lot of different contexts on innovation and technology. and the depth of innovation in certain industries. there's a lot of innovation that's happening, still happening in the technology and computer space. obviously you've talked about other areas where innovation seems not to be happening so much any more, transportation, agriculture, places where there were bursts of it in the past. the question is, why not? is there something different about technology or are we doing something wrong? >> yes, i think the why question is a very difficult one to answer. why questions are always hard to answer. perhaps it is a good strting point to talk a little bit about the what. i believe the what is that we're in a world of, of in which we're no longer living it. in a technologically accelerating civilization at all. i sort of date the end of rapid

technological progress to the late '60s, early '70s. i think at that point, something more or less broke in this country. and the western world more generally. that put us into a zone where there's much slower technological progress. i think there's a important exception with computers, the internet. as well as financial innovation. think those are three areas where we had, kpo areas, computers and finance where we had a lot of innovation in the last 40 years. finances probably going to be less going forward. i'll get to that in a second. but i think it is worth reflecting on how all 69 other areas have slowed down. and that this is everything from transportation to energy, to, to biotechnology. agro-tech, down the line. in, you know, the most literal version of the question, are we, are we moving faster, is the transportation question. and if you think about every decade, from 1500 on, people moved faster.

this was a basic measure of how you determined whether society was progressing faster sailboats, 19th century faster railroads, faster cars, faster planes, it culminated with the concor concorde, 1976, today i would say travel speeds are back to 1960, which he you include the low-tech airport security systems that plague people. a and. >> the official reason for sloetdown on transportation has to do with high energy costs. at this point we've never recovered from the oil shocks of '73. oil prices today are higher than they were during the carter catastrophe. clean tech has become a toxic word for money-losing investments in silicon valley. and of course, you look at all

the other -- the nuclear industry was dead decades before fukushima. it would be immoral to encourage any graduate to study nuclear engineering with much of a future. if you look at warren buffett, perhaps the savviest investor of our time. his single-biggest holding is in the u.s. railroad industry, which is basically a massive bet that the transportation and energy consumption patterns of the 21st century will involve return to the 19th century. a 40% of what gets transported on rail is coal. so buffett is making a bet is that after oil will not go to clean tech, we'll go back to coal and railroads. and i think there is a lot of reasons to think that that's the basic trend that you're on with respect to that. the crisis in energy in the last decade has broadened into more general commodity crisis. there was a famous bet in 1980 looking at a basket of

commodities how they would perform over a decade. simon happened to win the bet that decade. if you reran the bet from 1993 onward on a rolling decade basis, ehrlich has won the bet every year, we're basically living in an in an increasingly malthusan world with incredible scarcity because there is not enough to keep pace. the green revolution was the revolution of the 50s and 60s, increased worldwide food production by over 100% and massively decelerated in recent decades. bh you see events going on in the world through the prism of technological deceleration it gives you a different perspective what's going on. events in the middle east, for example, where the so-called green revolution is often attributed to the wonderful information age that we're living in and how twitter is helping connect the world or something like that, i think it has to come seen really as a direct result of massive technological failure and

triggered by food prices that have risen by 50 to 100% in the previous few years and basically what happens when a desperate people become more hungry than scared. biotechnology, we have had by all rights there should be tremendous progress in biotech and again we see this pattern of significant failure, about one third as many drugs and fda trials today as there were 15 years ago, and the big pharma companies have finally started firing all the scientist that is have not been able to get things through an onerouset is of regulations and our expectations in all of these areas have been dramatically reduced. it will be inconceivable for the u.s. congress to declare a war on alzheimer's comparable to the car on warns in 1970 even though something like 40% of the people have insip ent stages of dementia and i think something

like this can be repeated in different areas. if you ask people whether they believe we're living in a technological accelerating civilization the straight forward answer is whether they will be better off than the current generation and most people no longer think that is the case. i think that's somehow forces us to call into question the narrative of incredible technological acceleration. there is an important exception in computers and finance and i would submit the why explanation for this sort of tale of two words, of the computer and financial world, where there is a lot of progress and everything elsewhere things were badly stalled is that basically computers and finance were fairly lightly regulated in the last 40 years, and everything else was heavily regulated and we're living in a world in which bits are unregulated and the world of stuff is heavily regulated, and so when people say we need more engineers in the u.s., you have to start by acknowledging the fact that almost everybody who went into engineering did very badly the

last few decades with the exception of computer engineers. when i was at stanford in the 80s it was a bad decision for people that went into mechanical engineering, kemal engineering, bioengineering say nothing of nuclear engineering, petroleum engineering, the reason, the rocket scientists went to work on wall street is not just because they got paid more on wall street but also because they were not allowed to build rockets. so and super sonic planes and so on down the line. so my i think many different variables that might have come together. my own sense is that we have to think about the very heavy regulatory differential between these areas and that this is a big -- has been a big driver of this, sort of heavy environmental mentality has driven the regulation of the world of stuff and the world of bits has progressed because it

has been relatively unregulated, and so again the thought experiment i would give you is if you thought of a company like zynga with the game of farmville and you say we have to take that through fda approval before we allow them to produce the game and see whether we have to have a phase, maybe we'll skip the animal trial and let's go straight to the phase 2 and phase 3 trials and you have to test for efficacy and safety. so you have to test is it actually safe for people to use? you have to have a double blind tests with lots of different people and then you have to have a test for efficacy. does it actually improve your brain functioning? if it doesn't do that, you can't do it and if you change one line of code you have to start all over from scratch. you would not have a video game industry in this country or any entertainment industry if you had that. i think there has been sort of a

catastrophic set of government policies basically destroyed most of technological innovation and we see this in manifesting itself in an economy with stagnant wages, median wages flat since 1973 and increasingly broken political system which is becoming a zero sum political system when there is no growth and basically a winner for every loser and a loser for every winner and the political system finds it much harder to craft compromises where everyone comes out ahead because there is no way to craft such a compromise and i think that's the basic technological understanding of what's happened. we've been in massive denial about this. i think the denial manifested itself in a series of destructive bubbles predicated on continued progress that did not quite happen. i personally think that even the idea of science as a public good is not quite accurate and that some important ways the

government played a big role in destroying science as well, and if libertarian account of the history of science, we had very talented scientists that did a lot of good work in the early 20th century. in the '30s and '40s the government was able to accelerate science on a one time basis and taking the scientists and giving them a lot of money and having them produce more and probably the single biggest thing they produced was the nuclear bomb, and again i think it would be interesting to see what people on the left think of that as the single illustration of government funded science. the "new york times" op ed on the day after hiroshima in 1945 made arguments similar to the ones about science being a public good, and i am sort of quoting it now almost verbatim, that people who believe that science should be a private matter and was not a public good had a lot of answering to do because the army having directed

scientists had been able to give great invention to the world, e.g., the nuclear bomb and this contribution had been made in three short years where as prima donna scientists working on their own would have taken half a century to make that sort of progress. i think the problem at the tail end of it science becomes politicized and you basically have scientists that have to fight each other to get the government money. i think that just like the idea of a philosopher king is a bit of an oxymoron and philosophers are very different from kings and i think the idea of a scientist politician is an oxymoron. they're fundamentally different from great politicians. when you plit size science you destroy it altogether. we have 100 times as many scientists as we did in 1920. if there is less rapid progress than in 1920 the productivity per scientist is perhaps less than 1% of what it was in 1920. i think that's the rough math.

i believe that it would be helpful to have a very comprehensive discussion as to how we get out of this sort of situation we find ourselves in and i think the first step is to acknowledge that we are finding ourselves -- that we have been daskly in a desert for something like 40 years and if you want to get out of the desert, you have to acknowledge you're in one and not in some sort off efe efe eo forest. >> i want to say clean up bid. whatever that would be. i actually would be curious to get obviously your perspective as someone who is literally on the trenches of all of these questions in the most immediate sense so let's stap back to where we started and your sort of take on government regulations and its effect on what you're trying to do with technology. >> sure. i guess i would start by saying

i love having this on the board because it makes for the most interesting board meetings possible as you can imagine with some of these principles coming to play. great to be here by the way. >> try to give you cover. >> yeah. peter and i are in the minority. in silicon valley generally, i think, and facebook. in our ideological leanings. anyway, i think i agree with mark that i agree a lot with what people said so i woemt take too much time here. i will try to get a little bit of practical reflection. i think the question as i saw in the program, thank you, larry, was something along the lines of technological progress require regulatory guidance? i am with