Regulation Kills Innovation. So These Entrepreneurs Didn't Ask for Permission.

From SpaceX and Tesla to Uber and Lyft, many of the most successful companies thrived without the government's stamp of approval.


America has so many regulations that today, often the only way to do something new, to create something great, to prosper is to ignore rules.

Minutes before SpaceX launched a rocket, the government told the company that the launch would violate its license.

SpaceX launched anyway.

CEO Elon Musk says that the Federal Aviation Administration has "a broken regulatory structure" and that "there is simply no way that humanity can become a spacefaring civilization without major regulatory reform."

But reform isn't likely.

While businesses must constantly adjust to survive, once bureaucrats create regulations, they have no incentive to repeal them, ever. Instead, they add hundreds of new ones every year.

Musk complains that government "can over-regulate industries to the point where innovation becomes very difficult. The auto industry used to be a great hotbed of innovation…but now there's so many regulations that are intended to protect consumers….Regulation for cars could fill this room."

So, Musk broke rules to make Tesla the success it is. He knew he couldn't innovate if he obeyed all of them. He's flaunted the rules of the U.S. Securities and Exchange Commission, even tweeting that SEC stands for "Suck Elon's…"

So far, he's gotten away with it.

So have a few others.

In my latest video, Adam Thierer, author of "Evasive Entrepreneurs and the Future of Governance," explains why rule breakers are the best hope for innovation.

"When 23andMe came out with genetic testing by mail," he says, "they didn't get a permission slip from the Food and Drug Administration. They just started providing that service."

Once the bureaucrats noticed, they ordered 23andMe to stop offering health insights based on genes.

"The product was off the market for over a year. That stopped genetic testing by other companies, too," says Thierer. "Smaller players saw what the government did and said, 'I don't want that to happen to me.'" This delayed innovation for years.

"Maybe the only way to succeed today is to break the rules," I suggest.

"Yes," says Thierer. "Just to go out and try doing it."

A group of parents whose children have diabetes did that. They developed software that helps people track blood sugar levels.

"Their hashtag is, '#WeAreNotWaiting,'" says Thierer. "What are they not waiting for? For the Food and Drug Administration to approve new insulin monitoring devices. Instead, they built them themselves. These devices were better than regulatory approved devices."

But it only happened because they had the courage to do it without permission.

"Innovations come out of nowhere," Thierer points out. "The problem is law sometimes blocks all of that and says, thou shall not until you get a permission slip. That's the death of entrepreneurialism."

Ride-sharing companies such as Uber and Lyft prospered only because they didn't ask for permission; they just created ride-sharing apps. By the time sleepy bureaucrats noticed and took steps to regulate Uber and Lyft to death, the company had so many satisfied customers that politicians were afraid to crush them.

Some regulation is useful. The alternative isn't zero rules. "If a product is dangerous," says Thierer, "it can be recalled. You can be sued. But don't treat innovators as guilty until proven innocent."

It's easier to see how absurd regulators can be when you look at old regulations.

In 1982, after Sony's Walkman came out, a New Jersey town banned wearing them while walking. "You couldn't wear headphones because they would be a danger to yourself!" laughs Thierer. "Sometimes, laws stop making sense. Governments need to adapt."

COVID-19 persuaded some governments.

Suddenly, it was OK if private companies made virus tests, if nurses and doctors practiced in other states, if doctors used telemedicine without obsessing about stupid privacy rules, if liquor companies made hand sanitizer, etc.

"All sorts of people started doing really interesting entrepreneurial things to try to just help each other out," says Thierer.

"Those laws needed to change," Thierer concludes, "but most changed only because people evaded the system."


NEXT: Catherine Lhamon, Once and Future Title IX Czar, Says Campus Rules Don't Require 'Presumption of Innocence'

Regulation Elon Musk Space Coronavirus Innovation Entrepreneurship FDA FAA Uber Lyft Medicine

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42 responses to “Regulation Kills Innovation. So These Entrepreneurs Didn't Ask for Permission.

  1. You know who also didn’t ask for permission? Bill Cosby.

    1. The courts say otherwise.

      1. Cosby got off on a technicality. He also got off on the women he drugged.

        1. Polanski didn’t “rape-rape” that kid he drugged, according to Whoopie Goldberg, so he didn’t spend a day in jail!
          Oh, and it looks like Cuomo is gonna skate on all his gropes!
          Ain’t it wonderful being a lefty shit?

          1. Actually, wasn’t the reason Polanski was never prosecuted because France never extradited him to the U.S.?

        2. He was found guilty in a civil suit.

          1. Liable, not guilty. Big difference, legally.

  2. Stossel the only true libertarian writer on Reason most of the time.

    1. Weird. damikesc wrote almost the same exact words yesterday. Guess it’s just an odd coincidence, not sock puppetry:

      1. No, TDS-addled lefty pile of shit, it’s stating the obvious.

    2. +100000000

  3. Isn’t spacex getting a ton of money from the government?

    1. All companies get money from their customers. The government is one of their customers.

      1. I do think they did get some subsidies though.

      2. So if SpaceX is really entrepreneural and independent, let them contract only with private individuals and private firms.

    2. Ton is relative. Far less then Boeing and the like. They also had to sue in order to even bid on military contracts to launch satellites. Elon for all his flaws is a disrupter of the status quo and plows through the bullshit.

      1. No it isn’t “relative.” Either they take Gummint Cheese or they don’t. And if they take Gummint Cheese, the Gummint can dictate what they can do.

    3. They do. Unlike NASA they can actually put shit in orbit.

      1. Both NASA and SpaceX also waste tax money blowing shit up on the platform too.

    4. Exactly what I was thinking. How far would Elon Musk flout regulation if the U.S. Government tightened the purse-strings? This was not one of John Stossel’s better researched pieces.

  4. Why did Uber and Lyft get in so much trouble? Because they didn’t ask permission first. Fuck Newsom, he lost that inititiative they now get to operate in California without having to pay baksheesh.

    Fuck Newsom! Vote to recall!Elect Bear! Bear won’t try to ban the gig economy! Bear shits in the wood, not in your hand!

    1. If only they could elect the actual bear. Bear won’t even show up to work. Bear won’t sign executive orders. Bear won’t sign bills. The bear is a model of the ideal libertarian governor.

      1. All he wants is the occasional pic-a-nik basket for himself and Boo-Boo.

    2. Hey, TDS-addled pile of shit! You got what you wanted!

    3. A bear was taking a shit in the woods when a rabbit hopped by. The asked the rabbit, “Do you have a problem with shit sticking to your fur?” The rabbit replied, “No.” So the bear picked him up and wiped his ass.

  5. “You couldn’t wear headphones because they would be a danger to yourself!”

    Well, make of it what you will, the justification for these laws was that people were walking out into traffic once the auditory cues of oncoming cars were drowned out by Juice Newton’s Love’s Been a Little Bit Hard on Me.

    I’m curious about NJ’s law thought, does it explicitly ban Walkmans or does it cover the public wearing of headphones?

    1. Anti-science, anti-Fauci! Headphones keep germs out of your ears.

    2. Which could actually be dangerous for people in cars. Swerve, hit the pole, you’re dead.

    3. How does a person driving a vehicle get their auditory cues?

      It is legal in all 50 states for a person who is deaf to get a driver’s license and drive an automobile.

  6. Copyright and patent laws are also bars to innovation, and the former stifle freedom of expression in the bargain.
    Down with intellectual property!

    1. I’m guessing you own no intellectual property which could be copied, right?
      It takes us ~ 6 months between concept and first run to bring a new product on line, and I’m sure you’d buy one, send it to China and get bids.

  7. The only thing is that most of us don’t have the political and public support of Elon Musk. Think about what would happen if Exxon tried a new type of drilling without asking for a permit. Even if it worked, the EPA would proudly be hauling executives out in handcuffs in front of the cameras. The media would also be condemning it and lawyers would be lining up for lawsuits no matter how tenuous or temporally impossible the damages.

    If we do not have laws that apply equally, then we have laws that apply only to the politically disfavored, which means we have no laws at all.

    1. This is why I don’t understand the Uber/Lyft phenomenon. Why does Elon get a pass from the courts and regulatory capture (especially in California and New York) and Flytenow gets immediately shutdown. How did he evade union enforcers? I’m not convinced gobs of money is the answer.

  8. Fixing government is simple, prohibit it from initiating force.

    1. Ironically; The U.S. Constitution does PROHIBIT the Federal Government from initiating force 99% of the time they are currently doing so…..

      But Nazi-“democracy” has taken over the USA government.

    2. Does that include not initiating force on Mrs. Martinez in Lantana, Florida for having a damaged fence and walkway and parking on her lawn?

  9. The only REAL monopoly in the USA is Government-Guns.

    The biggest deception of this century is that the “[WE] Foundation Corporation” (i.e. Government-Guns) need to extend their ‘monopoly’ to stop the ‘monopoly’ created by themselves.
    “If a private business isn’t providing good service you stop giving them your money. If the government isn’t providing good service you give them even more money!”

  10. I’ve printed cards that have quotes about free speech and civil liberties. I leave them on counters and tables of businesses I go to. When confronted with lies or negative comments about America, climate change, politics etc..I politely say that’s not true smile and move on. I tell everyone to look into the libertarian party. Among other things. All small I know, but I’m through just taking it.

    1. You enthusiasm is great, however, respect for private property rights means you should get the business owner’s permission before distributing literature on the business premises.

      1. He’s a rebel and a rabble-rouser.

  11. “He’s flaunted the rules….”

    Hey, if you’ve got it, flout it!

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