Pirates of Cyberspace

There are so many compelling ideas and stories about globalization and technology packed into Anupam Chander’s The Electronic Silk Road that it is difficult to select an appropriately blog-sized piece to discuss. Other commentators have noted the apt portmanteau “glocalization,” citing Chander’s insights into how harmonization of international trade principles must take into account both the global reach and local effects of technology and the trade in services. A difficult regulatory challenge to be sure, but one that provides Chander with rich intellectual material to analyze.

In the interest of covering as much of the book as possible, I wanted to use this blog post to discuss glocalization within Chapter Four, “Pirates of Cyberspace.” Here Chander discusses instances where a firm or organization may be frustrated with the law of its nation or a set of nations; and as a result decides to engage in regulatory arbitrage by moving offshore.

Traditionally the issue has been framed in the negative; as a jurisdictional “race to the bottom.” Local regulation is found to be “too burdensome” and some number of firms respond by moving offshore. Whether it is labor standards or corporate compliance, this leads critics to complain that these arbitrageurs are eroding hard-won rights – and opening the door to exploitation of workers, investors, or customers.

Implied in this chapter, however, is that while some sort of race may be inevitable, given competing regulatory regimes, it may not necessarily always be part of a race to the bottom. In fact, it may be that some forms of regulatory arbitrage may promote values that have grown in tandem with the Internet, such as free speech or the exchange of free information. For example, media and journalists are flocking to Iceland for favorable speech and blogging laws; Sweden has allowed Pirate Bay a refuge. These individuals or organizations may in some sense be “scofflaws,” but they may be promoting values that are at the very least be worthy of debate. (Of course one cannot help but wonder whether the “race to the bottom” or “race to the top” is somehow bound up with one’s ultimate feeling about the substantive regulations involved).

As Chander points out, if we are not careful, one jurisdiction’s laxity on some regulatory issue may end up deciding the rules globally. If regulation is determined by where services are rendered, local regulation may stamp out trade through its complexity. The challenge, then, of glocalization in the face of piracy or any type of regulatory arbitrage is to, in the words of Depeche Mode – “get the balance right.

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