Drones and Controlling Sky High Value

 

Think of it as a sort of “global arbitrage” around permissionless innovation—the freedom to create new technologies without having to ask the powers that be for their blessing. Entrepreneurs can take advantage of the difference between opportunities in different regions, where innovation in a particular domain of interest may be restricted in one region, allowed and encouraged in another, or completely legal in still another. For example, the laws and guidelines for using drones or taxing bitcoin already vary widely across the globe, just as they do for ride-sharing services across different cities in the United States.

This was supposed to be how federalism worked. You should be able to use Bitcoin in Tennessee if Alabama won’t let you. But the Federal Government has transferred so much control over value from the States to itself, that States are left with quite little that they can offer to entrepreneurs.

Well, there’s a real possibility that advanced regions will essentially outsource or “regulate away” their own risk at the expense of less advanced ones. To get ahead, poorer countries may become more tempted to take on the very things wealthier countries are fencing out of their borders…a model like this one provides a much faster and more feasible way for developing regions to catch up.

As much as I wish this were true, I’m afraid it is quite naive. Yes, control of, say, what craft you launch in the air is valuable and developing countries could offer this value to budding entrepreneurs in exchange for locating their brain power in their countries. But, this value is so low down the value chain that it can’t compete with stable countries. Control of other value is so much more valuable: your life, your travel, your physical protection, your speech, legal certainty — all things that developing countries lack.