Lee Teschler – Executive Editor
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In olden times when there were no such things as cell phones, Uncle Sam regulated the phone system. Phone companies charged their customers for every handset attached to the lines and used time-domain reflectometery to check phone lines for illegal handsets. Thus began a ritual of sorts among EE students rooming in apartments back then: Shortly after learning about time-domain reflectometry, future EEs would also find out about the technique’s use by the phone company. They would almost immediately add new handsets in their apartments after disconnecting the ringers to render the instruments invisible to phone technicians.
This kind of petty larceny ended during a wave of deregulation in the late 1970s. But it didn’t happen everywhere. Some countries actively slowed the adoption of mobile phones, for example, under pressure from their fixed landline monopolies. Sweden is a classic example. Though it is now the home of Ericsson, one of the world’s largest makers of wireless telecom network gear, Sweden had banned private ownership of phones as recently as the 1980s.
It’s safe to say the deregulation wave made possible several innovations that have become an important part of world commerce. To cite just one, the services that FedEx now provides only became practical after transport regulations were dropped in 1977. In the 20 years prior, the U.S. Civil Aeronautics Board had refused to allow new cargo carriers and even prevented existing carriers from expanding.
Today it is hard to imagine life without a FedEx. Unfortunately, those days of deregulation and the resulting innovation look to be over. Rather than taking down regulatory barriers, the trend is to erect them when a truly innovative idea rears its ugly head.
Consider the case of ridesharing services such as Uber and Lyft. We may one-day have a hard time imagining a world without ridesharing. Yet this idea has been all but banned in some countries and drivers who offer rides in certain U.S. locales are still subject to arrest. Ditto for the drone delivery service envisioned by Amazon chief Jeff Bezos. Once the first delivery drone prototype flew, the Federal Aviation Administration was quick to enact a regulation forbidding operators from flying drones that left their line of sight.
Regulatory reach extends even to occupations that don’t seem to need regulating. On TV, Jimmy Kimmel Live! has a recurring bit called “Unnecessary Censorship” where innocuous words are bleeped out for comic effect. The much less funny version of this routine is run by governments and could be dubbed “Unnecessary Licensing.” In 2007, Texas enacted legislation requiring computer repair techs to obtain private investigator licenses for work that might potentially bring them in contact with customer data. Monks in Louisiana had to go to court a few years ago to keep the right to sell their handcrafted caskets without a license. If you want to do manicures in Alabama, you’ll need to take a National Nail Technician/Manicurist exam after you complete hundreds of hours of “training.”
Dubious occupational licenses make it more expensive to get into businesses like making coffins. But they also send a message that would-be innovators should look elsewhere for more promising areas.
There is more than just anecdotal evidence to the idea of an up tick in regulatory shenanigans. A Canadian public policy think tank called the Fraser Institute annually produces an Economic Freedom index ranking countries by economic freedom. In recent years, the U.S. has been falling on Fraser’s Index of Regulatory Freedom thanks to more stringent regulations.
It’s easy to summarize the reason why: Politicians and business leaders regularly claim they want to promote innovation – until they discover whose ox will be gored in the process.
Filed Under: Commentary • expert insight, Design World articles
And internet service and cable tv and every manner of gummint taxation on cell phone service and……
Most excellent article. Was surprised to see a “political” article from designworldonline. Applicable to so many things. One that comes to mind is education. Teacher union lobbyists want the monopoly on education and have convinced government to ban vouchers that would allow parents to get education for their children wherever they please. Seems the goal of education is education, not a specific source of education. If all children have the opportunity for education, then no one should care where it comes from (public, private, or home). Sole source education also gives the government advantage in propaganda. People have to pay more for education without government propaganda. “Free” schools are not free.
Congress critters vote to favor those who pay them. That is normally the incumbent businesses.
As my grandpappy always used to say, (in a thick Eastern European accent) “They are all crooks.”
The reality is that money talks and those without it walks. That means that those able to purchase the legislation that they want can. The benefit of the public is very seldom as important as the achievement of personal agendas and those of the paying supporters. That is not new, it has been around as long as there have been people in charge. Some are more honest than others, but as a whole there is a problem.
So the challenge has always been to “get around the man”, meaning finding ways to avoid the regulations. The ride sharing business is one more example. Those demanding it’s elimination are not complaining about the competition, since those paying too much now would object. Instead the subterfuge of safety concerns is being used to hide the motive for eliminating the competition.
So it is not really innovation that the politicians are against, they are against what they are being paid to be against. Delivering a serviuce in exchange for money. Quite similar to prostitutes, really, it appears.
It is actually quite simple (or at least “Einstein’s simpler”) if we drop unnecessary generalizations. In the case of ride-sharing there is a simple question to answer: should ride-sharing services be subject to the same regulations as taxi cabs or the current regulation of the taxi cabs is outdated and should be changed? Both modes provide essentially the same service (on-demand transport of passengers on arbitrary routes) so they should be subject to the same regulations. Of course that would make the lawmakers actually busy with law making .. this would be like .. work! Which obviously does not go very well with the crowd of spineless con loafers …