10 Theses About Regulation's Impact on Innovation & Growth
Podcast Ep. 25: A First Synthesis
The original thesis of the “Stranded Technologies Podcast” is that the adoption of many technologies is blocked by political obstacles, red tape, and overregulation.
After 8 months and 24 episodes, I want to synthesize a few more specific thoughts about regulation that are relevant for entrepreneurs and innovators.
Why are regulations important?
John Maynard Keynes observed that capital accumulation and technical improvements enabled economic growth.
Keynes calculated that with 2% growth per year, the economic pie increased by 7.5x in 100 years. If it would be 5%, it’s 130x our current level of wealth.
That would lead to an age of superabundance vs. what currently seems like an era of stagnation, growth lower than 2%, or no growth at all.
Regulations have a much larger impact on those than immediately obvious. They directly affect Keynes' factors of capital accumulation and technical improvements.
If we want to reach an age of superabundance, we need to look at our process for making rules that impact hundreds of millions of people.
The 10 Theses
My 10 theses are the first draft of a more general theory and pathways for entrepreneurs to overcome these obstacles.
(1) Our knowledge of the multi-layer effects of government regulation is comparable with medieval doctors' knowledge about the human body.
(2) It is an obfuscation to equate equates regulation with government regulation. There are many more ways for achieving the same effects.
(3) Our association of regulation with stability is influenced by pro-authority bias.
(4) Regulation mostly targets groups that are unpopular with the majority.
(5) Government regulation mostly follows as an overreaction to public events.
(6) We regulate seen consequences and disregard unseen consequences.
(7) In the absence of binding obligations, public officials have a herd mentality.
(8) Most business regulations fail because they don’t address the Safety Paradox.
(9) The main problem with regulation is the process of how we make decisions.
(10) Bad regulations are hard to get rid of (Machiavelli Effect).
Towards the end of the episode, I discuss different solutions such as ethical exit, jurisdictional shopping, competition, and experimentation in governance.
Over the coming episodes of this podcast, we'll get more in-depth about solutions, entrepreneurs that achieved the impossible, what promising governance experiments are underway and how to achieve 100x growth for humanity.
Besides the podcast episodes thus far, below is also a reading list of books and articles that influenced me a lot.
Milton Friedman, “Free To Choose”
J. Storrs Hall, “Where is My Flying Car”
Tom W. Bell, “Your Next Government”
Balaji Srinivasan, “The Network State”
Hernando de Soto, “The Mystery of Capital”
Michael Huemer, “In Praise of Passivity”
Michael Huemer, “Justice Before Law”
Michael Huemer, “The Problem of Political Authority”
Jessica Flanigan, “Pharmaceutical Freedom”
D. Levine & M. Boldrin, “Against Intellectual Monopoly”
Bryan Caplan, “The Myth of the Rational Voter”
Bryan Caplan, “Open Borders”