blatham wrote:Here's an interesting graph and attending commentary...
Quote:Regulation Breeds Innovation
Your point here is undoubtedly correct. However, not all regulation is actualy beneficial in achieving its intended purpose, and not all of the innovation it excites actually contributes to the intended purpose or the public welfare.
For example the prohibition of alcoholic beverages in this country in the early years of the 20th century stimulated a great deal of innovation in areas ranging from the local production of "bathtub gin" to the illicit import of Canadian booze and its distribution through a criminal network that in effect enjoyed a government-sponsored monopoly. Hardly an example of regulation for the public good. Moreover very little of the innovation so excited contributed in any way to a reduction in alcohol abuse by the drinking public.
The fact is that until the clean air act there was no reason to wish for or desire a reduction in the sulfur dioxide content of industrial stack gas. The SO2 had (and has) little economic value. Thus the regulation in this case created an appetite for innovation that did not previously exist. Interestingly, and ironically, our success in limiting SO2 emissions significantly exacerbated the greenhouse gas problem in that SO2 has a powerful counter effect in the atmosphere. This illustrates the potential for unforseen adverse side effects in regulation.
In addition, among the several unanticipated features of the Clean Air Act is that it created disincentives for the incremental modernization and improvement of existing powerplants -- including improvements that would reduce the very emissions the Clean Air Act was intended to limit.
The law and government regulation are blunt instruments that don't easily change and evolve with changing circumstances. Regulations, once established, tend to remain long after their intended purpose has been met or become irrelevant with the passage of time. In general the regulated world quickly acclimates itself to the regulations - including even the subversion of its intended purpose - and usually does so with more creativity and agility than is shown by the bureaucratic types who craft the regulations.
Thus the bland statement that "Regulation breeds innovation" is about as usefully meaningless as (say) the assertion that coercion breeds compliance.