Technology brings with it great promise for improving both economic productivity and overall quality of life. But it can create problems too. And when it does, society usually turns to regulators for help.
Part of the challenge of regulating new technologies today is that the range of innovations is stunningly broad, including cryptocurrency, artificial intelligence, social media, fintech, gig labor, autonomous vehicles, online retail, bioengineering, the internet of things, precision medicine, biometric identification, and more. The heterogeneity and dynamic nature of new technologies, as well as the variety of their applications, make for a diverse, and at times vaguely defined, set of social and economic problems that must be solved.
Take, for example, concerns around machine-learning algorithms. The regulatory problems raised by an algorithm used in a voice activation function in a smart phone will differ from those presented by an algorithm contained in life-support equipment used by hospitals. And these problems will vary altogether from the problems created by algorithms used in social media platforms.
Even when it comes just to social media, the range of problems is highly diverse, including concerns over privacy intrusions, the propagation of misinformation, the facilitation of hate speech and cyber-bullying, and various ill effects on children and teens—as well as general concerns about algorithmic fairness, transparency, and ethics.
Although many of the problems associated with today’s newest technologies are themselves new and complex, the main strategies available to regulators for solving them will be similar to the ones they have deployed in the past for changing behavior and reducing harms in other more traditional sectors—while still supporting innovation and economic growth. Regulators will need to understand the specific underlying problems that any targeted new technology creates, as well as the specific pathways that give rise to the problems, so they can take action to induce industry actors to avoid or reduce these problems.
Understanding the causal pathways, however, is particularly challenging when it comes to an ever-evolving sector such as new tech. Regulators will always know less about new technologies and their problems than firms do. For that reason, regulators likely will often find it useful to consider relying on a regulatory strategy called management-based regulation. Management based regulation compels firms to do the work of assessing how their own products and operations contribute to a regulatory problem and gives them the flexibility to develop their own internal plans an
d procedures aimed at solving it. Management-based regulation has been applied to address issues of food safety, chemical accidents, toxic pollution, financial fraud, and the safety of offshore energy development —all regulatory domains that, as with new tech, entail considerable heterogeneity in regulated entities and where outcomes, such as risk, are difficult to assess on a routine basis.
For management-based regulation to work, however, regulatory agencies must have vigilant and well-informed staff capable of making sure that firms take their responsibilities seriously. Agencies need analytically sophisticated pe
ople who not only can stay abreast of technological innovations, but also be able to understand technology markets and the pathways to the regulatory problems that different technologies create, as well as have strong skills in risk analysis that they can apply to the technologies they oversee. Many of these critical skills for regulatory design and implementation are fundamental to the
framework we present through the certificate program in Regulatory Analysis and Decision-Making that we have developed at the Penn Program on Regulation at the University of Pennsylvania Law School.
And as our executive program emphasizes, even in a world of rapidly changing, sophisticated technologies, regulatory excellence fundamentally depends on “people excellence.” Successful regulation—especially in the era of new tec
h—is ultimately more relational than technological. It is about changing human behavior, building credibility, and displaying the fairness and empathy that promotes trust. It demands ultimately a workforce that is steadfastly committed to public service and eager to remain vigilant in seeking to solve problems and making a meaningful, positive impact on society.
Gain a solutions-based advantage in a fast-changing regulatory environment with PPR & Penn Law’s live, virtual Regulatory Analysis & Decision-Making certificate program. Learn more about the program and register today!