Of Giraffes and Trade Deals: Why the TTIP might be bad for innovation

If you get excited about the politics of regulation and international trade (and who doesn’t?!), then you’ve probably heard by now about the Transatlantic Trade and Investment Partnership, also known as TTIP; a trade deal being negotiated between the United States and the European Union. The general consensus about TTIP, which I am inclined to agree with, is that it is a Bad Thing, due to the fact that it would weaken labour and environmental protections, expand internet surveillance, and impose a little clause called Investor State Dispute Resolution which would allow foreign private companies to sue governments for lost profits due to regulation.

I’m going to write here about the effect of this treaty and others like it on technological innovation and transitions. A few have already looked on how these kind of beyond-the-border regulatory harmonisation treaties empower patent trolls, so I’m not going to get into that. Instead, I’m going to look at one of the central justifications for the treaty, namely the idea that regulatory harmonisation will create jobs and prosperity. I went to a panel discussion about the TTIP last week, where the treaty’s one supporter; argued that differences in standards and regulations between countries cost money, and that a lot more money could be made if companies didn’t need to devote resources to meeting these mismatched regulations when selling worldwide. That sounds like a pretty common-sense argument, and even if you dislike the TTIP more generally, you might agree that that is a silver lining (Although the math suggests it’s a pretty small one). I want to argue that even if regulatory harmonisation does save money, it could still be a bad thing.

But before I do so, I need to address how we think about technological progress, using a biological analogy. Technological development is often imagined as an evolutionary process, roughly analogous to the biological evolution of organisms. But in at least some popular and political discourse, this is based on a Lamarckian rather than a Darwinian model of evolution. These diagrams describe the difference between the two:

Darwinian vs. Lamarckian evolution: According to Lamarck, the giraffes strive to grow taller. According to Darwin, the shorter ones simply starve to death.

According to Lamackian evolution, creatures grow stronger, faster, smarter, and generally better through intentional striving. The classic example is that giraffes started with short necks, but by reaching to get higher and higher leaves, they forced blood into their necks, causing them to grow longer. These gains were passed on to the next generation, which grew in turn until giraffes became the long-necked creatures we know today.The popular model of technological development is quite similar: The willful exertion of engineers’ and entrepreneurs’ energies supposedly leads to products getting better over time, while new and superior products are developed.

Today, however, we know that evolution is a more complicated process. The giraffes’ necks got longer because the short-necked giraffes can’t reach their food, and therefore starve. It gets more complicated than that, however. In most species, the gene pool is too big to allow even a beneficial mutation to survive very long-it will simply be diluted. Furthermore, the fossil record does not usually show slow, gradual changes-species seem to evolve in short, rapid bursts. So biologist Stephen Jay Gould proposed punctuated equilibrium. The gist of the idea is that occasionally, a small population of a species gets separated and isolated in a new environment, where the small gene pool allows rapid adaptation. In the case of the giraffe, then, giraffes evolved when a handful of short-necked giraffe-like ancestor species got lost in a place with a lot of tall trees, and had to adapt quickly.

When you look closely at it, techological evolution is much more like Darwininan evolution than Lamarckian evolution. It’s full of false starts, while supposedly antiquated technologies fight to compete with new ones new ones. We can even speak to some extent about a technological ‘gene pool’: New technological ideas have to survive in a larger market full of established players who may resist new ideas, even if they have major advantages over the status quo.

And so the natural conclusion is that, just like in biology, technologies rely not just on variability in the gene pool (created by engineers and entrepreneurs working on diverse ideas), but also variation in selection environments, to be a driver of change. So where does variation in technological selection environments come from? There are a few places. The basic physical environment is one; it’s unlikely that Mexican engineers would have developed the snowmobile, for example. Another one is culture. It’s been argued, for example, that Scottish Presbyterian values might have had an impact on that country’s shipbuilding industry in the 19th century. We could list a few more. But an obvious one is regulation. If one country has different regulations from another governing technology, then its engineers will develop different innovations, while its entrepreneurs will fund different technological models. The result is greater technological diversity, which allows us more freedom in selecting the best option.

There are concrete examples of this. A great one is California’s Zero Emission Vehicle mandate. In 1990, to deal with increasing pollution, the state required all car makers wishing to sell cars there to produce and market a certain percentage of zero emission vehicles. The mandate was changed over the years due to lobbying and a series of court cases, but it did successfully lead to the development of some electric and hybrid vehicles, and probably played at least a small role in the current promise of companies like Tesla. The TTIP, or some future beyond-the-border trade deal like it, could lead to these kinds of regulations being challenged, creating a globally homogeneous regulatory environment and therefore far less technological diversity.

Columnist Thomas Friedman has become famous in part for declaring that now, in the neoliberal era,  “The world is Flat”. The TTIP essentially follows that logic by proposing to flatten all the different regulatory frameworks that shape technology around the world. But even if you ignore all the economic, social, and environmental objections to globalisation, however, a flat world is not necessarily a good thing. Topography creates diversity in cultures, policies, and economies. And these differences can be a big generator of change. So even if you take its proponents completely at their word, the Transatlantic Trade and Investment Partnership may very well still be a Bad Thing.


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