Tech firms weigh role of government in digital age

The government should cultivate a better sense of knowing when to meddle in new economy policy and when to step back and let the market take the reins, according to a report scheduled for release Thursday by the Computer and Communications Industry Association (CCIA).

"Failing to reconsider the appropriate role of government in a digital age, and blindly applying old principles to new challenges, would be a serious mistake for policy makers to make," according to the study, co-authored by Stanford University Economics Professor Joseph Stiglitz, and Peter Orszag and Jonathan Orszag, both of Sebago Associates.

"The Role of Government in the Digital Age," flags some "green light" activities that the government should tackle. The federal government should provide public data, improve the efficiency of government services and support basic research, but that should be the extent of its involvement.

"Our study should serve as a roadmap to policymakers about the proper role of government in the digital economy," Stiglitz said in a CCIA statement.

The report warns that the government should "exercise substantial caution in entering markets in which private-sector firms are active" and it should not do anything to reduce competition or affect revenues nor should it provide goods and services that could pose privacy or conflict-of-interest problems.

If the private sector is not providing certain necessary goods and services, the government could get involved in a limited way. Among the "yellow light" activities are ensuring proper online privacy and security mechanisms are available and providing services only if it cannot be done efficiently through the private sector. The government should hold patents or copyrights only under special conditions, such as national security, the report said.

"We are confident that this report will help further CCIA's efforts to combat the inappropriate competitive activity, lack of privacy protections and conflicts of interest that characterize a number of initiatives in which the government clearly has overstepped its bounds," said Ed Black, president and CEO of CCIA.

CCIA has loudly criticized the Internal Revenue Service's eFile program and the U.S. Postal Service's e-commerce initiatives, saying both agencies have over-stepped their mandate and should not compete with the private sector. CCIA also has raised privacy and conflict of interest issues when government agencies seek to make a profit when they hold the keys to consumers' personal information.

CCIA said the study was completely independent. Black noted he crossed his fingers when CCIA commissioned the study and was relieved to find that Stiglitz and his co-authors reached conclusions that were agreeable to CCIA.

Jason Mahler, CCIA general counsel, pointed to the reputation of Stiglitz, whose name has been bandied about as a Nobel Prize winner. The economist is also known for advocating a role for government in the economy.