Site Meter

Category: Symposium (Infrastructure)

0

Recognizing the Limits of Models and Empirics

In the book, I stress the limits of mathematical models and quantitative data in the infrastructure context because the models and data tend to be partial and distort by omission. The following footnote in the Conclusion captures my concern:

Economists strongly prefer to work with formal mathematical models and quantitative data, for good reasons, but this preference introduces considerable limitations. Among other things, this preference leads many economists to isolate a particular market or two to analyze, holding others constant and assuming them to be complete and competitive. This approach is highly distorting in the infrastructure context because infrastructure resources are often foundations for complex systems of many interdependent markets (complete and incomplete) and nonmarket systems. Economists may cordon off various nonmarket systems and corresponding social values because such phenomena are deemed to be outside the bounds of economics. (Recall the discussion in chapter 3 about such boundaries.) But to focus on markets and their interactions and ignore nonmarkets and relevant social values distorts the analysis of infrastructure, whether or not we label the analysis “economic” because it is within the conventional bounds of the discipline. Of course, many economists are well aware of these boundaries and the corresponding limits of their expertise and policy prescriptions. Nonetheless, these limits often are not apparent or well understood by policy makers and other consumers of economic analyses, and even when the limits are understood, there are various reasons why they may be disregarded — for example, ideology or political pressures.

J. Scott Holladay, an environmental economist, explained to me:

When conducting an economic valuation of an ecosystem, we are well aware of our limitations. In a valuation study, we identify environmental services and amenities that are valuable but cannot be valued via existing economic methods, and we may assign a non-numerical value to make clear that we are not assigning a value of zero, but when the valuation study is used by policy makers, those non-numerical values may effectively be converted to a zero value and the identified environmental services and amenities truncated from the analysis. Is that a fault of the economist or the policy maker?

To be clear, I do not assign fault to anyone. Rather, my aim is to examine the consequences of reductionism and shed light on the importance of what is often ignored (or truncated).

Now that the book is in print, I have gone back to this point—expressed in this footnote and elsewhere in the book—and wondered whether this will be something that readers find frustrating or illuminating. I have also started to puzzle about what to do about the problem, whether / how to develop better models and gather more and better data, etc. Any thoughts?

1

If Infrastructure, then Commons: an analytical framework, not a rule

It is probably worth making it clear that, as I state multiple times in the book, my argument is not “if infrastructure, then commons.” Rather, I argue that if a resource is infrastructure—defined according to functional economic criteria I set forth in the book, then there are a series of considerations one must evaluate in deciding whether or not to manage the resource as a commons. Chapter four provides a detailed analysis of what resources are infrastructure, and chapter five provides a detailed analysis of the advantages and disadvantages of commons management from the perspective of private infrastructure owner (private strategy) and from the perspective of the public (public strategy). Chapters six, seven and eight examine significant complicating factors/costs and arguments against commons management.

After reviewing the excellent posts, it occurred to me that blog readers might come away with the mistaken impression that in the book I argue that the demand side always trumps the supply side or that classifying a resource as infrastructure automatically leads to commons management. That is certainly not the case. I do argue that the demand-side analysis of infrastructure identifies and helps us to better appreciate and understand a significant weight on one side of the scale, and frankly, a weight that is often completely ignored.  Ultimately, the magnitude of the weight and relevant counterweights will vary with the infrastructure under analysis and the context.

In chapter thirteen, I argue that the case for network neutrality regulation—commons management as a public strategy applied in the context of Internet infrastructure—would remain strong even if markets were competitive. In his post, Tim disagreed with this position.  In Tim’s view, competition should be enough to sustain an open Internet, for a few reasons, but mainly because consumers will appreciate (some of) the spillovers that are produced online and will be willing to pay for (and switch to) an open infrastructure, provided that competition supplies options. I replied to his post with some reasons why I disagree. In essence, I pointed out that consumers would not appreciate all of the relevant spillovers because many spillovers spill off-network and thus private demand would still fall short of social demand, and I also noted that I was less confident about his predictions about what consumers would want and how they would react. (My disagreement with Tim about the relevance of competition in the network neutrality context should not be read to mean that competition is unimportant. The point is that the demand-side market failures are not cured by competition, just as the market failures associated with environmental pollution are not cured by competition.)

In my view, the demand side case for an open, nondiscriminatory Internet infrastructure as a matter of public strategy/regulation is strong, and would remain strong even if infrastructure markets were competitive. But as I say at the end of chapter thirteen, it is not dispositive. Here is how I conclude that chapter:

 My objective in this chapter has not been to make a dispositive case for network neutrality regulation. My objective has been to demonstrate how the infrastructure analysis, with its focus on demand-side issues and the function of commons management, reframes the debate, weights the scale in favor of sustaining end-to-end architecture and an open infrastructure, points toward a particular rule, and encourages a comparative analysis of various solutions to congestion and supply-side problems. I acknowledge that there are competing considerations and interests to balance, and I acknowledge that quantifying the weight on the scale is difficult, if not impossible. Nonetheless, I maintain that the weight is substantial. The social value attributable to a mixed Internet infrastructure is immense even if immeasurable. The basic capabilities the infrastructure provides, the public and social goods produced by users, and the transformations occurring on and off the meta-network are all indicative of such value.

 

0

Frischmann Predicts Prometheus

Thanks so much to Frank, Danielle, and Deven for inviting me to participate in this symposium. It’s a great pleasure to discuss my colleague Brett Frischmann’s timely, engaging, and important book about infrastructure.

I’m going to focus my comments on Frischmann’s theory of intellectual infrastructure and how it relates to the structure of intellectual property law. Just a few days after the release of Infrastructure, the Supreme Court handed down its decision in Mayo Collaborative Services v. Prometheus Laboratories. That case presented the question whether certain diagnostic claims were within the scope of patentable subject matter under section 101 of the Patent Act. The Court held that they were not, in a manner that is strikingly consistent with Frischmann’s theory. Hence the title of my post. But Frischmann’s theory may also go a long way toward bringing some order to an area of patent law that has long been confused.

Let’s start with the concept of intellectual infrastructure. Frischmann explains that intellectual or cultural resources can be infrastructural in the same manner as physical goods. So long as the resource is a “nonrival input into a wide variety of outputs” (275), it satisfies the characteristics of infrastructure that Frischmann so richly describes. In turn, that suggests that the case for managing the resource as a commons is strong. Frischmann then explains how this concept applies to ideas. Ideas, he writes, often are infrastructure (subject to a number of complications that I’ll put to the side). So in his view, intellectual property should protect implementations of ideas but not the ideas themselves (286). To sort one from the other, Frischmann turns to the concept of abstraction in copyright law and argues that patent law should follow a similar path.

Now consider Prometheus. The inventors in that case discovered a correlation between the effectiveness of a drug and the amount of certain metabolites of that drug in a patient’s blood. Their patent claimed a method of optimizing the dosage of the drug based on that correlation. The method was simple: (1) administer the drug; (2) determine the amount of metabolites in the patient’s blood; (3) make an inference about drug dosage based on the correlation. Doctrinally, the question before the Court was whether this amounted to a claim on a “natural law” – the correlation between drug dosage and metabolism that happens in the human body – which would be unpatentable under a long-standing exception to the scope of patentable subject matter, or a patentable application of that law.

 

Read More

Why Do We Lack the Infrastructure that We Need?

Brett Frischmann’s book is a summa of infrastructural theory. Its tone and content approach the catechetical, patiently instructing the reader in each dimension and application of his work. It applies classic economic theory of transport networks and environmental resources to information age dilemmas. It thus takes its place among the liberal “big idea” books of today’s leading Internet scholars (including Benkler’s Wealth of Networks, van Schewick’s Internet Architecture and Innovation, Wu’s Master Switch, Zittrain’s Future of the Internet,and Lessig’s Code.) So careful is its drafting, and so myriad its qualifications and nuances, that is likely consistent with 95% of the policies (and perhaps theories) endorsed in those compelling books. And yet the US almost certainly won’t make the necessary investments in roads, basic research, and other general-purpose inputs that Frischmann promotes. Why is that?

Lawrence Lessig’s career suggests an answer. He presciently “re-marked” on Frischmann’s project in a Minnesota Law Review article. But after a decade at the cutting edge of Internet law, Lessig switched direction entirely. He committed himself to cleaning up the Augean stables of influence on Capitol Hill. He knew that even best academic research would have no practical impact in a corrupted political sphere.

Were Lessig to succeed, I have little doubt that the political system would be more open to ideas like Frischmann’s. Consider, for instance, the moral imperative and economic good sense of public investment in an era of insufficient aggregate demand and near-record-low interest rates:

The cost of borrowing to fund infrastructure projects, [as Economic Policy Institute analyst Ethan Pollack] points out, has hit record “low levels.” And the private construction companies that do infrastructure work remain desperate for contracts. They’re asking for less to do infrastructure work. “In other words,” says Pollack, “we’re getting much more bang for our buck than we usually do.”

And if we spend those bucks on infrastructure, we would also be creating badly needed jobs that could help juice up the economy. Notes Pollack: “This isn’t win-win, this is win-win-win-win.” Yet our political system seems totally incapable of seizing this “win-win-win-win” moment. What explains this incapacity? Center for American Progress analysts David Madland and Nick Bunker, see inequality as the prime culprit.

Read More

2

Brett Frischmann’s Contribution to Policy Debates Regarding Governance of Infrastructures

Because the framing of issues is so critical to how policy debates are conducted and policy outcomes are ultimately chosen, Brett’s analysis contributes to more balanced discussion within policy debates related to governance of infrastructures. Brett’s book emphasizes the functional role both of infrastructure resources to society and of commons as a resource management strategy, providing important insights for considering appropriate governance of infrastructure resources. Its analytical strength stems from development of a typology of different infrastructures “based on the types of systems dependent on the infrastructural resource and the distribution of productive activities it facilitates” (p. 61), which is then used to understand the importance of (what Brett describes as) demand-side characteristics of various types of infrastructures. This demand-side functional approach is contrasted with the supply-side approach that has tended to dominate the focus of policy debates related to governance of infrastructures.

To understand Brett’s analysis, it is critical to understand the definitions of component terms and certain economic and legal concepts upon which his analysis is based. For this reason, one has to patiently work their way through substantial portions of the book that lay the foundation for understanding how his typology contributes to understanding commons management (a form of nondiscriminatory access rule) to infrastructures both generally and in specific contexts. This is a compliment – not a criticism – of how Brett took on the challenge of carefully constructing analytical arguments, particularly from concepts of law and economics of which readers are likely familiar but perhaps with differing shades of meaning.

However, it is also challenging to accurately incorporate the research of others who are also attempting to contribute towards a more balanced policy debate of governance related to access to infrastructures. In this regard, for me, a weakness in the analysis throughout Brett’s book is some inaccuracies (or insufficient clarity) as to the functional role of various bodies of law that have developed to address access problems in varying contexts. For example, discussion of common carriage (see p. 218) conflates origins of the common law of common carriage and public utilities. The origins of common carriage obligations are based on duties under tort law; and it is public utility law, not common carriage, that developed in part from laws of franchise and monopoly. But because some infrastructures – such as railroads, telegraphy and telephony – are both common carriers and public utilities, the distinctive functional roles of the two bodies of law have come to be conflated and misunderstood. This conflation, in turn, has tended to mislead discourse related to many deregulatory telecommunications policies, including network neutrality.

Therefore, in my view, the contribution of Brett’s work towards a more balanced policy discussion of governance of infrastructures would be further strengthened by juxtaposition of his functional approach to infrastructure resources with a more carefully delineated (and accurate), functional approach to the various bodies of law that have developed thus far to address varying forms of infrastructure access problems.

 

3

Public Choice: More than a Mere Footnote in Infrastructure Policy Discussions

[My thanks to Deven Desai, Frank Pasquale, and all the folks here at Concurring Opinions for inviting me to contribute to this symposium on infrastructure policy and Brett's important new book on the topic. -- AT]

As a textbook, there’s a lot to like about Brett Frischmann’s new book, Infrastructure: The Social Value of Shared Resources. He offers a comprehensive and highly accessible survey of the key issues and concepts, and outlines much of the relevant literature in the field. The student of infrastructure policy will benefit from Frischmann’s excellent treatment of public goods and social goods; spillovers and externalities; proprietary versus commons systems management; common carriage policies and open access regulation; congestion pricing strategies; and the debate over price discrimination for infrastructural resources. Frischmann’s book deserves a spot on your shelf whether you are just beginning your investigation of these issues or if you have covered them your entire life.

As a polemic that hopes to persuade the reader that “society is better off sharing infrastructure openly,” however, Frischmann’s book is less convincing. It certainly isn’t because I can’t find examples of some resources that might need to be managed as a commons or a collective resource. But there’s a question of balance and I believe Frischmann too often strikes it in favor of commons-based management based on the rationale that “citizens must learn to appreciate the social value of shared infrastructure” (p. xi), without fully appreciating the costs and complexities of making that the paramount value in this debate. Read More

1

Brett’s Big Book

Brett Frischmann strikes me as the Sonic Youth of law professors. You might not know any Sonic Youth songs, but when you read interviews of your favorite artists, they all mention Sonic Youth as a huge influence on their own sound.

That is: Brett influences the influencers.

A few years back, Larry Lessig wrote a law review article responding to one of Brett’s early pieces on infrastructure and telecommunications. Brett followed up with pieces co-authored with leading communications scholar Barbara van Schewick and leading patent guru Mark Lemley. The others taking part in this symposium are a who’s who of heavy hitting thinkers in the field, from Georgetown’s Julie Cohen and Columbia’s Tim Wu to top Google lawyer Rick Whitt.

The uninitiated may wonder: what’s all the fuss about?

Brett does something in this book and in his work on infrastructure that is truly novel and very important. (Yes, all books and articles claim to be novel and important; Brett’s actually is.)

I think the most valuable contribution is that his economic analysis of infrastructure helps expose many of the flaws in our current thinking about the law and economics. While many argue that defining property rights and internalizing externalities are essential for economic growth and effective markets, Brett demonstrates that regulating some resources in commons and encouraging the “externalizing” of positive externalities (or spillovers) often leads to greater economic growth and more robust markets.

As a result, Brett’s ideas challenge conventional law and economics thinking in a profound way, but do so based on the premises and tools of economic analysis. They also do so based not on hypothetical markets but on examples of infrastructure that we use every day and can relate to. For those who have come to believe that much of traditional law and economics appears stylized, inaccurately frictionless, and out of sync with reality, Brett’s insights are eye-opening (and refreshing). They point the way forward for economists and policymakers to do better. Hopefully, his ideas influence those influencers.

Symposium on Brett Frischmann’s Infrastructure, April 24-27

book coverThis week, Concurring Opinions is hosting a symposium on Brett Frischmann’s book, Infrastructure: The Social Value of Shared Resources.  Having long followed and enjoyed Brett’s work, Deven and I are honored to organize the discussion.

The book is described here (OUP site) and here (Amazon). The introduction and table of contents are available here. As the introduction notes,

Viewing foundational environmental and intellectual resources through the infrastructure lens yields interesting insights regarding commons management institutions. In particular, both environmental and intellectual property legal systems construct semi-commons arrangements that create and regulate interdependent private rights and public commons.

The symposium will include contributions from Julie Cohen, Laura Denardis, Andrew Odlyzko, Tim Wu, Marvin Ammori, Timothy B. Lee, Robin Chase, David Isenberg, David Post, Adam Thierer, Rick Whitt, and Barbara A. Cherry.