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Get With the E-Commerce Program

Industry executives like to claim that online commerce will grow if only the U.S. government will butt out.

That claim is about as reasonable as the claim that the automobile industry would have grown even if the government had refused to build roads, establish rules of the road, create a legal system to handle disputes and enforce standards for auto safety.

The Internet industry's argument is preposterous. After all, the U.S. government has already intervened by creating the Internet's basic packet-switching technology, growing an encryption industry, paying for the Internet's operation via university funds and by subsidizing local Internet lines with extra levies on business phones.

Industry's answer to this response is simple: 'That's all in the past, now butt out.'

Sorry. The government - which acts in the name of the nation's 260 million citizens - has the right to regulate, suppress or subsidize electronic commerce, even if that incurs enormous economic costs. After all, people can change laws and the Constitution, can't they?

Industry executives like to describe the World Wide Web as the world's greatest information network - a sharp sword that cuts across borders, cultures and economic sectors to bring entertainment and information to anyone with an Intel chip and a phone line.

But this sword cuts both ways - just as the Web allows a merchant to sell anywhere, it allows a government and its citizens to regulate anywhere.

Naturally, industry executives play down this side of the equation, insisting that government's role should merely be to level all those immovable borders, cultures and economic sectors that restrict their new technology. They also insist that some of these hated rules will kill the Internet, which was designed to survive nuclear blasts but supposedly can't
survive the cutoff of local phone subsidies, the government's promotion of key-recovery software or some responsibility for catching online thievery.

As if.

In reality, laws exist for the citizens of democracies, not business executives.

It is up to the Web executives to try to merge into the existing environment before asking that existing practices be changed to suit them.

Thus industry should be congratulated for creating the porn-filtering software that helps parents keep their distance from online smut.

Similarly, industry should get some plaudits for the modest steps it has recently taken to protect the privacy of its online customers.

Next, industry must develop fair rules for dealing with wronged consumers, for protecting others' intellectual property and for sharing the tax revenues with states and cities. Industry also must help write fair rules for the international sale of services, such as telemedicine, banking and insurance. How can the insurance industry be extended worldwide via the Web without some international agreement on consumer protection, anti-fraud measures and legal settlements?

Only if these tasks prove impossible - or exceedingly expensive - can industry executives reasonably ask democratic governments and citizens of the world's countries to alter their existing rules and practices to suit the new industry.

Of course, industry has an
economic incentive to push
governments for as much
freedom as possible. In the United States, that tactic has generated
results, as shown by recent
court decisions, by congressional support for tax-free elec-
tronic commerce and by the impending White House report on electronic commerce, to be unveiled with fanfare early next month.

But if the industry pushes too far it could cause a regulatory backlash - as shown by
the early radio industry, the cable TV industry and the anti-porn fight - that could cost the industry dearly. n