Aborted Innovation

Thursday, July 10, 2014

Regulars here know that I oppose government regulation of the economy on the grounds that it violates individual rights and is, therefore, contrary to the proper purpose of government. That said, in the fight against regulation, it can be persuasive to consider cost-benefit analyses, such as one I got wind of a few years ago that placed a price tag of $1.75 trillion per annum on federal regulation alone. However, this approach comes with a couple of problems, one of them being that, in the face of such analyses, many people lose sight of the main objection against regulations noted above.

Another problem is that an ideological opponent might simply lob the results of a completely different cost-benefit analysis your way:

My analysis ... went through the [Office of Management and Budget] data, which indicate that the benefits of government regulations have consistently and significantly exceeded their costs.
Unless you have at least a basic understanding of at least one of these analyses, you aren't going to be able to offer much insight about this little discrepancy -- not that there's anything right about the government issuing marching orders.

That said, I think it is safe to say that the author of the above quote did not factor in a close cousin of Bastiat's Broken Window. Let's call it aborted innovation. The Health Care Blog reports that Google's co-founders have a very limited entrepreneurial appetite for branching out into medicine due to the regulatory environment they would face:
On the face of it, it's pretty amazing that a company that doesn't think twice about tackling absurdly challenging scientific projects (e.g., driverless cars) is brought to its knees by the prospect of dealing with the byzantine regulation around healthcare (and more generally, our "calcified hairball" system of care, as VC Esther Dyson has put it).  A similar sentiment has been expressed by VC and Uber-investor Bill Gurley as well; evidently taking on taxi and limousine commissions is more palatable than taking on the healthcare establishment.  [minor edits]
The author thinks that there is a path forward even "within the constraints of our existing system", but this system may have already cost us the progress that two very able minds could have brought us.

Whatever the calculable costs or alleged benefits of the government building hoops and making us jump through them -- which is wrong to begin with -- I fail to see how many people would tolerate this going on for long if they knew these hoops were causing people to pass on the chance to save or improve their very lives.

-- CAV

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