Replace Regulation With Innovation

by Jim Iannuzo

The Obama transition team and Bush administration argue that "responsible" regulation is a positive market force. This implies that the law of Supply and Demand should be replaced with a centrally controlled Comparative Advantage model. It's clear from history that government regulations pick winners and losers. Look no further than ethanol subsidies and subsequent tariffs on Brazilian ethanol. Regulations make it harder for an alternative technology to compete with the "favored" political choice. We have ample CNG (compressed natural gas) but it is not the favored technology. In areas of heavy regulation, we have lost whole industries to low cost overseas producers. Burdensome regulation swamps out America's innovative edge causing a lower standard of living while simply shifting production offshore.

When consumers decide the cost / efficacy of a particular product, we benefit as a nation. America dominates the design, development and production of advanced microprocessors in a market virtually free of regulation. Every year the cost of a new PC goes down while the computational power increases. Semiconductor companies compete with innovation, technology and lower your component cost year after year. Consumers directly benefit from this lack of mandates. Arguing otherwise implies a mistrust in individuals and business to complete mutually beneficial transactions while trusting the wizards of Washington. American companies must reject government managed economic models and understand that we benefit by replacing regulation with innovation.