Bureaucrats Stifle Innovation

Taught not to try.

The first step in inventing something shouldn't be waiting for government approval. What would ever get done?

"Regulators like to see new types of law and regulation imposed upon the Internet and emerging technologies," warns Adam Thierer, author of Permissionless Innovation.

"From drones to driverless cars to the 'Internet of things' … they want to put the genie back in the bottle of all this wonderful innovation that's out there."

"Think about 20 years ago. If Mark Zuckerberg of Facebook, if Steve Jobs of Apple or anybody from Google had to come to the government, say, the Federal Communications Commission and get their blessing or a license to operate, you have to wonder how many of them would even exist today," said Thierer.

I assume that most would not exist, or if they did, they would be much less useful than they are now. All Silicon Valley innovation would have been slower and dumber had they been forced to apply for FCC permission each step of the way.

Luckily, in the 1990s, a Republican Congress and President Bill Clinton gave entrepreneurs a green light. Shrinking regulation was a popular idea then. As a result, American innovation pulled ahead of the rest of the world. We got iPhones, Google and Facebook because competing private businesses ran the show.

In Europe, politicians took control. French bureaucrats created a computer network called Minitel and spent a fortune giving free computers to millions of people. The Minitel computers replaced paper phone books. People also used them to chat, book train reservations, etc.

Lots of people celebrated the "forward-thinking" French bureaucrats, but by 2012, Minitel was dead—replaced by unplanned innovation from America.

Europe treated innovation as something that could be run by centralized industrial policy. Today, many in the U.S. want to follow that example.

Try anything with a drone that involves making money, and government says you have to wait for permission from the Federal Aviation Administration.

"That's not the way innovation happens," says Thierer. "It's a bottom-up spontaneous kind of thing. Create the right environment and innovators innovate."

Government worries about irresponsible things you might do with your drone, like fly it into an airplane. But drones weighs less than seagulls, which hit planes all the time.

"If you base all public policy on hypothetical worst-case scenarios, then best-case scenarios never come about," says Thierer. "We'll never get life-saving or life-enriching innovations."

Fortunately, not everyone listens to regulators. At one hospital, volunteers use 3-D printers to create prosthetic hands for kids with missing limbs. It's illegal to make such a device without FDA approval, but they do it anyway.

Things can go wrong. But we have mechanisms for dealing with mistakes other than requiring licensing that prevents new things from ever being. Parasitic lawyers will sue you if you injure someone. Property rights and common law can be used to punish those who violate the rights of others.

Says Thierer, "There are always risks in the world. But we have ways of solving that without preemptive, precautionary, permission-based controls."

When we consumers see a new invention or new way of doing business, we ask whether we might benefit from it. Politicians and bureaucrats ask whether the innovator got their permission. Can we tax it? Is it fair? Is it safe? Government errs on the side of saying no.

When we assume that everything new must be approved by the state, innovation heads to other countries. Drone-makers now are moving to Canada and Australia, warns Thierer. Driverless car companies are going to the U.K.

It might seem prudent to have a rule that says: Don't try anything new unless we're sure it's safe. It's actually called "the precautionary principle," and that's basically the law in Europe. But reasonable as that sounds, "make sure it's safe" also means: Don't do anything for the first time.

This is a recipe for stagnation. Think of all the innovation that came out of Europe lately. I can't think of much either—Ikea, the wireless heart rate monitor. Of course, they were invented years ago, before regulation grew and European innovation died.

Let's not let it happen here.

COPYRIGHT 2016 BY JFS PRODUCTIONS INC.