Innovation vs. Regulation: Cutting Red Tape

by | Sep 9, 2015 | POLITICS, Regulation

America became the most innovative and prosperous nation in history because many Americans were adventurous, individualistic people willing to take big risks to discover things that might make life better.

I’m upset that the presidential candidates, all of them, rarely mention a huge problem: the quiet cancer that kills opportunity — regulation. The accumulated burden of it is the reason that America is stuck in the slowest economic recovery since the Depression.

I understand why candidates don’t talk about it: Regulation is boring. But it’s important.

The founders of this republic were willing to die rather than be subject to other people’s rules. Today we are so accustomed to bureaucracy that we’ve forgotten what it means to be free.

We now have a million rules — many so complex that even legal specialists can’t understand them. Yet bureaucrats keep writing more. And 22 million people work for government!

Okay, that wasn’t fair. Many of those 22 million deliver mail, build roads and do things we consider useful. But at least a million are bureaucrats. And if you are a rule-maker and you don’t create new rules, you think you’re not doing your job.

On his “Grumpy Economist” blog, the Hoover Institution’s John Cochrane points out that most of these rule-makers were never even elected, and legislatures rarely vote on their new rules. Yet “Regulators can ruin your life, and your business, very quickly, and you have very little recourse.”

Regulators have vast power to oppress.

Their power not only hurts the economy, it threatens our political freedom, says Cochran. “What banker dares to speak out against the Fed? … What hospital or health insurer dares to speak out against HHS or ObamaCare? … What real estate developer needing zoning approval dares to speak out against the local zoning board? The agencies demand political support for themselves first of all.”

Speaking up will bring unwanted attention to your project, extra delays, maybe retaliation. It’s safer to keep your mouth shut. We learn to be passive and put up with more layers of red tape.

Fortunately, a few Americans resist. At Boston’s Children’s Hospital, head cardiologist Dr. Robert Gross dismissed Dr. Helen Taussig’s new idea for a surgical cure for “blue-baby syndrome.” He wanted to do things by the book. So she took the technique to Johns Hopkins Hospital instead. It worked. You don’t hear much about blue-baby syndrome anymore. The embarrassed Gross went on to tell the story many times to teach medical students to listen to new ideas. Breaking the rules saved lives.

But that happened years ago. Few doctors break the rules today. The consequences are too severe.

American entrepreneurs took advantage of a “permissionless economy” to create Google, Facebook, Amazon, etc., but they could accomplish that only because Washington’s bureaucrats didn’t know enough about what they were doing to slow them down.

Now regulators have their claws in every cranny of the Internet. Innovation will be much more difficult.

Today’s regulations are often vague. A typical edict: “The firm shall not engage in abusive practices.” That sounds reasonable, but what is “abusive”? The regulator decides. Compliance is your problem.

If you have the misfortune to be noticed by the bureaucracy, or maybe a business rival complains about you, your idea dies and you go broke paying lawyers.

European regulators have adopted something even worse, called “the Precautionary Principle.” It states that you may not sell something until it has been “proven safe.” That too sounds reasonable, unless you realize that it also means: “Don’t try anything for the first time.”

Since we don’t know all the rules, we’re never quite sure if we’re breaking any. Better to keep your head down.

And sometimes the rule-makers really are out to get you. Nixon used the IRS against political enemies. So did Obama IRS appointee Lois Lerner.

It’s time for Americans to fight back. As Gen. Douglas MacArthur said, “You are remembered by the rules you break.”

America became the most innovative and prosperous nation in history because many Americans were adventurous, individualistic people willing to take big risks to discover things that might make life better.

Every day, bureaucrats do more to kill those opportunities. We’ll never know what good things we might have today had some bureaucrat not said “no.”

Presidential candidates ought to scream about that.

2 Comments

  1. Yes, and also ditch the contradictory and ambiguous anti-trust laws.

  2. Yes yes. And the welfare state – some 120+ various types of handouts, and the Fed that has caused interest rate to be near zero which leads us to consume our wealth rather than build and grow, and our fraud ridden gov franchises, and our terrible and inefficient gov schools, and our non profit hoaxes, and our Medicaid 500 billion a year, and social Security non investment and insolvency, etc etc. – all bad. All killing freedom, innovation, stifling wages and real employment. Creating a future calamity for ourselves or children. Headed for a world where subsistence will be the goal and personal physical protection. Yes. And what can we actually do about it? Vote harder? For whom? We have the state corporatism party and the socialist party. All these insufferable fools think they can legislate and regulate for “good”, but they only stymie and muck up the much much better results of a truly free market. No one is saying anything about real plans to get gov force out of our lives and markets and esp the money market. NO ONE.
    Money for political campaigns is only available for expectations of eventual market advantages. We are a nation of corrupt men and force everywhere. Must we await the collapse and hope a return to freedom is possible?
    The basis of political economy is non-interference. The only safe rule is found in the self-adjusting meter of demand and supply. Do not legislate. Meddle, and you snap the sinews with your sumptuary laws. Give no bounties: make equal laws: secure life and property, and you need not give alms. Open the doors of opportunity to talent and virtue, and they will do themselves justice, and property will not be in bad hands. In a free and just commonwealth, property rushes from the idle and imbecile, to the industrious, brave, and persevering. The laws of nature play through trade, as a toy-battery exhibits the effects of electricity. The level of the sea is not more surely kept, than is the equilibrium of value in society, by the demand and supply: and artifice or legislation punishes itself, by reactions, gluts, and bankruptcies. Ralph Waldo Emerson (May 25, 1803 – April 27, 1882)

Submit a Comment

Your email address will not be published.

John Stossel is author of No They Can't! Why Government Fails — But Individuals Succeed. For other Creators Syndicate writers and cartoonists, visit www.creators.com.

SHOW PROFILE

What do you think?

We are always interested in rational feedback and criticism. Feel free to share your thoughts using this form.

We will post responses that we think are of interest to our readers in our Letters section.

Help Capitalism Magazine get the pro-capitalist message out.

With over 10,000 articles readable online Capitalism Magazine is completely free. We rely on the generosity of our readers to keep us going. So if you already donate to us, thank you! And if you don’t, please do consider making a donation today. One-off donations – or better yet, monthly donations – are hugely appreciated. You can find out more here. Thank you!

Related Articles

When Reason is Out, Violence is In

When Reason is Out, Violence is In

What explains today’s bi-partisan violence? When reason is out, persuasion and peaceful assembly-protest also are out. What remains is emotionalism – and violence.

Voice of Capitalism

Free email weekly newsletter.

You have Successfully Subscribed!

Pin It on Pinterest