The importance of standards in our developing industrial society is growing as technology moves into increasingly complex territories. This common ground helps to ensure that the assortment of technological possibilities is kept to a necessary minimum, whilst also establishing a widespread level of compatibility and quality.

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Part 9 – Risk of “Government Failure” Should Give Government Cause to Pause

I have been describing the facts, law and public policy that support a government preference for market developed IT standards. I now turn to the negative motivation for governments, the risk of failure should government jump into the standard-setting fray. It is often observed that the market is more well informed, efficient, flexible, and nimble than government in developing IT standards. In general, this observation leads to a concern that government intervention to address an IT market failure is the high risk of “non-market failure,” or “government failure.” A non-market failure can be defined as the unintended and undesirable consequences of government failure where it intervenes to address a market failure.

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This is the second in a series of articles in which contributor Stacy Baird presents and in-depth analysis of the role of governments in standards setting initiatives which is posted on a bi-weekly basis. The first in the series can be seen here – Editor

PART 2: There are Good Reasons for Government to be Reluctant to Mandate IT Standards

To start with the end: Government should be reluctant to mandate an IT standard. Before regulating an industry, policy makers have to look at a few things: the sophistication of the industry with regard to what is being considered for regulation; the capacity of industry to address a perceived problem without government regulation; whether regulation would be contrary to or in support of good public policy; and finally, whether the risk of “government failure” outstrips the risk of market failure. It is incontrovertable that when it comes to standards, the IT industries are sophisticated.

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The web has become a natural part of our everyday life. In perhaps no other area is the value of standards more evident. The Internet as we know it would not have existed without standards. Such features as global interoperability and connectivity are the result of important standards such as TCP/IP, HTML and XML. The question is if future development will be determined by markets or politics?
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The ongoing financial and economic crisis is potentially going to have a substantial effect on standardization. This poses a number of new and interesting challenges and questions for standard setting organizations and firms involved in informal standardization.
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