Red Tape Strangling Innovation

A great op-ed in today’s Washington Post entitled “Strangling innovation and job creation with red tape”. Morris Panner writes:

As a Democrat whose politics are undeniably liberal on social issues, I lamented the outcome of the midterm elections…..

…..We are creating so much regulation – over tax policy, health care, financial activity – that smart people have figured out that they can get rich faster and more easily by manipulating rules on behalf of existing corporations than by creating net new activity and wealth. Gamesmanship pays better than entrepreneurship.

….And the Obama administration’s new regulatory initiatives make this considerably worse in subtle ways.

The two largest pieces of legislation enacted in the past two years – health care and financial reform – are very vague. Take the new Consumer Financial Protection Bureau. It has a broad mandate to protect us from financial abuse, but when it comes to the actual implementation, the Brookings Institution wrote that unelected regulators will decide “almost everything” about how the organization works.

This is highly dangerous to innovation, which depends on clear and transparent rules. The more complexity, the more incumbents are favored. They have the capital to participate in complicated regulatory proceedings. They can hire high-priced lobbyists to present facts in a light most favorable to them. The more incumbents are favored, the harder it is for new companies to gain traction.

There’s a lot more good stuff here.