Try innovation instead
WASHINGTON—How do regulations stifle innovation? Let me count the ways. Across our economy, and in sector after sector, regulations put a stranglehold on innovation—in some cases stopping advancement in its tracks and in others preventing it from happening in the first place. Over-regulation is a millstone around the neck of our economy, costing jobs, suppressing investment and blunting our competitive edge.
The most recent target of an onerous proposed regulation is the internet. A free and open internet has become a platform for innovation and economic activity unmatched in history. It has helped equalize opportunity for individuals, enabling them to create and deliver new products and services in new ways to more consumers than ever.
For nearly two decades, there has been bipartisan agreement that a light-touch regulatory approach is the best way to foster a vibrant internet. But the White House has endorsed a proposal to stringently regulate internet service providers like a public utility, taking away their discretion in how they direct Web traffic.
The basis of the net neutrality proposal is 80-year-old legislation that was enacted when rotary telephones were considered modern technology and has little relevance to 21st-Century broadband networks. If the entire internet is allowed to be subject to the tight control of federal bureaucrats, the rate, speed and flexibility of innovation will suffer.
The oil and gas industry is a perennial target of government overreach, putting at risk continued advancement in energy. If the producers can’t raise more capital, they have little to pour into research and development efforts that are crucial to new technology—such as the private sector-led innovation of hydraulic fracturing that ignited the U.S. shale boom. If they don’t have the opportunity to expand markets and sell to more customers, there is much less incentive to innovate when innovation in energy technology is possible. Projects are often stymied by a broken permitting system.
Delays and duplication in the environmental review process have stalled, stopped or killed hundreds of projects, many of them promising renewable energy technologies. A poorly functioning regulatory system can actually harm the environment by preventing advanced energy from being deployed.
The financial services industry continues to grapple with the unintended consequences of the Dodd-Frank financial regulatory reform law.
When creating new financial products, instead of considering what the market needs, companies are forced to consider what regulators will think. Some will simply eliminate products or get out of certain markets to avoid regulations.
Even the education sector hasn’t been spared. Innovations in online learning help eliminate cost, access, and distance barriers for students who may not otherwise get a post-secondary education. But the Department of Education wants to mandate that the states “authorize” online education offered by any college. States are ill-equipped to take on this task, and it would create a costly and burdensome bureaucracy that would discourage schools from offering such programs. It would be unfortunate, to say the least, if a misguided and unworkable regulation took away this opportunity for young people to improve their lives.
There are countless other examples of regulatory overreach that drag down growth and harm employment. No one is suggesting that we should have no regulations. Many rules are necessary, and the business community supports them.
What business doesn’t support are regulations whose costs outweigh the benefits. And lost innovation is a heavy toll. Innovation is crucial to a vibrant economy, job creation and our competitive standing in the world. We need more of it, not less.