by Jerry Brito

We don’t want to build? Maybe we should build anyway

Marc Andreessen’s essay about building has been haunting me since I read it. While I agree with almost every particular point it makes, its totality left me nonplussed. Here I’ll try to unpack why that is.

After rehearsing the litany of stagnation with which we’re all acquainted, Andreessen provocatively fingers the cause:

We could have these things but we chose not to — specifically we chose not to have the mechanisms, the factories, the systems to make these things. We chose not to build.

“Who do you mean we, kemo sabe?” is what I immediately thought, and I imagine many others had a similar allergic reaction. But I think the we in his formulation means society, acting collectively through its democratic institutions. In which case, yes, “we” chose this path.

So why did we choose not to build?

The problem is desire. We need to want these things. The problem is inertia. We need to want these things more than we want to prevent these things. The problem is regulatory capture. We need to want new companies to build these things, even if incumbents don’t like it, even if only to force the incumbents to build these things. And the problem is will. We need to build these things.

Again, if you read the “we” in that passage as “society, acting collectively through its democratic institutions,” then it makes perfect sense. Our collective will, expressed through our democratic institutions, has decidedly been to slow or prevent innovation and building in all the areas Andreessen singles out: housing, education, transportation, medicine, finance, energy. Those are all regulated sectors of the economy, and as Andreessen hints, the regulatory apparatus has been captured by incumbents who will use it to keep out innovation that threatens their position.

But here’s the important point: those small interest groups, acting through democratic institutions, to prop up their interests at the expense of the greater public’s is not some subversion of the system; it is the democratic expression of society’s will. Entrenched incumbents are not just people who look like the Monopoly Man, incumbents are also public school teachers, coal miners, doctors and hospital administrators, flight attendants, and truckers.

Mancur Olson, one of the greatest thinkers of our time, explained our predicament decades ago in two important books: The Logic of Collective Action and The Rise and Decline of Nations. He showed that, on a given question, small groups (like energy incumbents) are easier to organize than large groups (all Americans who would benefit from nuclear energy) because their direct incentives are greater. Benefits are concentrated and costs are diffused, so acting openly and legitimately through democratic channels interests groups will secure protection even at the expense of the greater public. The result is that “society, acting collectively through its democratic institutions” sends a clear message: “We don’t want these things.”

A stable democracy with the rule of law is a perfect environment for groups to form, grow, and attach themselves to the body politic. Over time interest groups and rules accrete, and after a certain point nations burdened by so much accumulated regulation will become sclerotic and fall into economic decline. And that’s where we are today. That’s why we’re not building.

And this is why I felt vexed by Andreessen’s essay. Because he does not give even a hint of how we might solve that problem, and that left me cold. Yes, “we” don’t want these things, but how do we get ourselves to want them? It’s not that you or I or entrepreneurs need to want it (which is what I’ve seen some interpret him to mean), but that we need to overcome the logic of collective action, which is inherently biased in favor of small groups who want to “prevent these things” rather than “to want them.” Until you solve that, it doesn’t matter what you want to build or that it would be a clear net positive for society. Andreessen, however, doesn’t say how that’s to be done, and understandably so because it may well be impossible within the bounds of our present institutions.

Olson saw one way out of the trap. As Jonathan Rauch explains in his indispensable book Government’s End:

Occasionally some cataclysmic event—foreign occupation, for example, or revolution—might might shake a society, sweep away an existing government, and shatter the society’s network of interest groups. The old order would be scuttled, and the barnacles would sink with the ship. In the aftermath, the restored economy would be freed from its accumulated burden of protective perks and anticompetitive deals.

Now the theory’s darkest implications come into view. “If the argument so far is correct,” Olson wrote, “it follows that countries whose distributional coalitions have been emasculated or abolished by totalitarian government or foreign occupation should grow relatively quickly after a free and stable legal order is established.” And that is just what happened in Japan and West Germany after the war. … Sometimes a slashing fire can rejuvenate a forest by clearing away clots of undergrowth and deadwood. Olson was suggesting that something analogous had happened to Germany and Japan. The fires of cataclysm had cleared away the detritus of stability.

His hypothesis suggested a social cycle. A country emerges from a period of political repression or upheaval into a period of stability and freedom. The country is, at first, relatively unencumbered by interest groups and their anticompetitive deals. If other conditions are favorable, rapid growth ensues.

Maybe a pandemic can be such a cleansing fire.

I’m not holding my breath, though. We’ve already seen all kinds of regulation suspended in the name of emergency action, and there’s the promise of much more. But it’s happening half-heartedly and within the bounds of our existing institutions, so you can already see the reaction springing into action.

Here’s an example from the front page of the New York Times on Monday under the headlines, “Antibody Test, Seen as Key to Reopening Country, Does Not Yet Deliver; The tests, many made in China without F.D.A. approval, are often inaccurate. Some doctors are misusing them. The rollout is nowhere close to the demand.”:

Officials fear the effort may prove as problematic as the earlier launch of diagnostic tests that failed to monitor which Americans, and how many, had been infected or developed the disease the virus causes. Criticized for a tragically slow and rigid oversight of those tests months ago, the federal government is now faulted by public health officials and scientists for greenlighting the antibody tests too quickly and without adequate scrutiny.

The Food and Drug Administration has allowed about 90 companies, many based in China, to sell tests that have not gotten government vetting, saying the pandemic warrants an urgent response. But the agency has since warned that some of those businesses are making false claims about their products; health officials, like their counterparts overseas, have found others deeply flawed.

Tests of “frankly dubious quality” have flooded the American market, said Scott Becker, executive director of the Association of Public Health Laboratories. Many of them, akin to home pregnancy tests, are easy to take and promise rapid results.

So who’s going to win this in the long term? The public’s access to rapid at-home tests, or the laboratory interest group?

And no doubt FAA regulators read the Times. What are their incentives when urged to lift restrictions on delivery drones? It’s what you’d expect:

[T]here wasn’t any indication that the FAA was prepared to change its regulations for any wide-ranging drone use because of the pandemic.

“We” just don’t want it, if “we” is embodied by the FAA.

The always interesting Elaine Ou has a modest proposal:

“We” didn’t want Uber or Airbnb, but we got them anyway because they were built in spite of regulation, and now “we” can’t live without them. I’m not sure a strategy of civil disobedience scales for other sectors, but a during a pandemic may well be an appropriate time to ask for forgiveness rather than seek permission.