Larry Downes has a good piece over at Forbes discussing how it's often best for innovation if regulators stay the hell away from innovative industries
. He notes the very different paces (innovation quick, regulation slow) and how that leads to bad outcomes:
The wildly different clock speeds of Moore’s Law and Washington law, however, make for increasingly damaging collisions at the intersection of technology and public policy. Even with the best of intentions, lawmakers, regulators, and judges can’t possibly anticipate tomorrow’s innovative products and services. Nor can they guess how specialized legislation, thrashed out over the course of years and infected by lobbyists and special interests, will return to haunt us when technology inevitably changes.
Faced with the unknown unknowns of dramatically new products—social networks, location-based ads, driverless cars–the best advice for governments is simply to leave them alone. Don’t just do something, stand there. At least until it’s crystal clear that the market has failed, consumers are being harmed, and that lawmakers have a remedy that won’t make things worse.
However, regulators often don't understand this at all. They think that the quick pace of innovation means that companies themselves should slow down -- and that it's their job to force them to do so. Downes shares this troubling story:
At a conference I attended over the summer, on the other hand, the Federal Trade Commission’s Julie Brill got it dangerously wrong. Given the novelty of policy problems in privacy, cybersecurity and competition in the fast-changing Internet ecosystem, Brill argued, both Washington and Silicon Valley should proceed with caution. “Regulators need humility,” she said, “but so do companies.”
The dynamism of the Internet ecosystem certainly calls for more humble trade policy. But the last thing we want is for companies to slow down so Washington can catch up. In Silicon Valley, we have a special name for humble start-ups. We call them failures.
That's not to say that there isn't room for any regulations -- but as Downes notes, the thing that DC should be most focused on is "fixes to previous government efforts that tried but failed to fix a problem that turned out not to need a regulatory solution." Other industries seem to want handouts and investments and the like, but you don't see that much in Silicon Valley.
I was recently on a call with some entrepreneurs and some government officials, in which we were discussing a few laws -- and the government folks kept asking the entrepreneurs if they needed help protecting against copycats (generally foreign ones). The entrepreneurs kept ignoring the question -- and it kept getting asked. Eventually, someone on the call said: "Um. No. Look, someone's going to copy us. We know that. But we don't care because we know we can innovate faster than anyone who copies us." The government folks seemed confused, with one saying something to the effect of "that's great if you can do that, but..." But that really is the difference in mindsets. Entrepreneurs really just want to build stuff and are confident (sometimes too confident) in their own abilities to compete. We don't want government handouts -- we want government to get out of the way.
That's not to say companies should be free to do absolutely anything, but as Downes notes, we don't need the government fiddling around where there is no evidence of real harm. If there is harm, then you can understand why it can make sense to get involved -- but too often government officials seem to think they should get involved just because there's a possibility of harm, or because a competitor got beaten. But that's not good for innovation and it's not good for the public.