How to beat Regulatory Capture?

Regulatory capture is a situation in which the companies or the industry being regulated takeover of their own set of rules and the enforcer of those rules. It is a bad situation because the company is then right rules to make it hard for new competitors to get started in their industry.

A great example of this is aerospace. Boeing has completely captured its regulators to the point where if you want to start a new aerospace startup, it costs many millions of dollars and is nearly impossible to reach production. The end result is we are stuck with no innovation and Boeing’s crappy old products.

Another great example of this is in home internet service. Comcast (Xfinity) has cut deals with regulators across the country that prevent new competitors, resulting in customers with very poor service and slow speeds.

Yet another example of this is NIMBYism, when local homeowners in a city group together to pass rules to make it much more difficult to build new housing in that area. They do so to prop up the values of their homes at the expense of everyone else. This is the situation all over California and Washington State where there is dramatic housing shortages even though we can easily and quickly build massive amounts of new housing.

So how do we fight regulatory capture? How do we put an end to special interests?

My suggestion is that all writing of laws and rules and regulation has to be done through GitHub repos where anyone who makes a contribution has to use their real name, provide their real reason for doing so, and provide if they compensated to do so and by how much. This will mean that it is very clear and easy to see where special interests have influenced laws and the public can evaluate this.

Further, voting should not be secret. Everyone should vote with their real name and it should be published what they voted for against and publicly accessible for all time. This will have the benefit of making sure there’s no voter fraud, and also making sure that if you vote for or against something you realize that this is just isn’t your legacy today, but it will be your legacy and everybody will see it forever. So think carefully.

One of the most important areas of complete regulatory capture is intellectual property. The very name is a misnomer. No one should be able to own thoughts and ideas. Each new innovation rests on the work of all of the humans who came before who came up with good ideas, from those who created language to those who created writing to those who came up with math ideas to eventually those who came up with the required ideas right before whatever the new idea is. Each new idea is built on billions of previous ideas and we could not have that new idea without all those previous ideas. Allowing someone to own an idea is insane. It prevents new ideas from being built on top of that idea. It prevents new innovation. It destroys competition and reduced pricing. It is extraordinarily bad for everyone else in the world except for the one who owns that intellectual property. It does nothing to encourage new innovation, but it does crush all future innovation off of that idea.

Published by

Joel Gross

Joel Gross is the CEO of Coalition Technologies.