One of the best aspects of working at BGOV is interacting with our clients. As the market-leader in the government affairs information services industry, BGOV serves some of the smartest and unique professionals in the Government Relations space.
I recently had the opportunity to speak with Bruce Mehlman, co-founder of Mehlman, Castagnetti, Rosen & Thomas, about his most recent analysis of the business and political landscape (click here for his most recent quarterly analysis).
TC: Bruce, good to be with you. You publish quarterly strategic insights that seem to get wide circulation among GR professionals, the media, C suite executives and investors. Your latest and greatest analysis is on the subject of “Permissionlessness”. What’s the general idea of that concept?
BM: Smart observers have pointed out that the internet age has enabled, with relatively little friction, new business model creation that better serves the day-to-day needs of three billion individuals worldwide. These new businesses are capable of unseating incumbents and avoiding regulatory quagmires while building successful enterprises in record speeds and with incredible efficiency.
This contrasts most profoundly with say, drug development, where the so-called “precautionary principal” requires government approval that your product is safe and effective before you can start selling it to a specifically-approved target market.
You see this permissionless advantage with AirBnB, you see it with Lyft and Uber, you’re seeing it across a broad swath of companies and industries. But it’s not just limited to the business arena. What struck us is that the trend extends way beyond the business world. We see permissionless publishing in media – whereas a minimal number of gatekeepers –three major TV networks and a handful of major newspapers used to decide who could publish, now everyone has a podcast, anyone can post their thoughts on Twitter, or host a Youtube channel.
And now you’re seeing the same basic permissionless behavior permeate politics, upending the Establishment. Major parties used to be the key gatekeepers controlling fundraising, organizing and getting out the vote, for example. That’s no longer the case, as digital platforms and networks empowered the do-it-yourself campaign and outsider candidates such as Donald Trump and Alexandria Ocasio-Cortez.
TC: Where or when did permissionless behavior originate from?
BM: Well, the most current round is internet-enabled. But if you go back in history, we see peaks and troughs of permissionless behavior throughout. The invention of the printing press led to the Protestant Reformation; new technologies accelerated the Progressive era that addressed the excesses of America’s Gilded Age.
There’s certainly a cycle to new technologies and new social realities that enable innovators to disrupt establishment. That leads to new competitors, new realities and new challenges
TC: So where are we at in this cycle?
BM: 2016/2017 may have seen “peak permissionlessness.” A lot of empires are striking back. In politics, a permissionless president lost the House and gained a lot of oversight in the most recent mid-term election. In the market, forces have weighed in to slow down Bitcoin. Platform technology companies such as Google and Facebook are experiencing a growing “techlash” over privacy, competition and content policing issues, both in the U.S. and all around the world.
TC: What’s the role of government in terms of policing permissionlessness?
BM: Government has always had a role. In the Gilded age (see Bruce’s analysis of the Gilded Age here), for example, the government restrained that era’s permissionless actors through economic policy (e.g. food safety regulations, antitrust rules, worker protections, etc.), political reforms (direct election of Senators and enfranchising women) and social reforms (Prohibition and the High School Movement). Eras of permissionlessness usually lead to reforms and new rules intended to better harness the upsides of innovation, while containing externalities. Government is a major player.
TC: Would the market be a better overseer vs. the government?
BM: The market is very effective, but it’s not perfect and it’s not perpetually flawless. Efficient markets need some basic rules and sometimes the rules need to be updated to match new market realities. Policing works best when there’s a market / government triangulation.
TC: So where’s this all leading? Given where we’re at in the permissionless cycle, talk to me about some implications.
BM: The great question for public policy in next decade ahead is can we sensibly tame behavior or is regulatory winter coming. Remember, this is a global phenomenon too. So take, for example the technology industry, which is facing a huge potential policing wave in Europe, and quite frankly never had genuine freedom in China to begin with.
Both markets and government are trying to find the right balance — Nobody wants to kill the golden goose, but it needs to stop sh*tting in the house – let’s hope we can get it right.