Regulation

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I note some on the political Right are suggesting that there is no logic to my comment that regulation is

the biggest stimulant to innovation there is in the economy.

Well that shows two things. The first is just how little they know about business. The second is that it shows how little they think before they comment. Let's take just one sector, like the motor industry to explore the issue. It's quite true that this was not created by regulation. New ideas are not. And one or two regulations had to be changed to let the sector develop. Having to drive behind a man with a red flag was an initial impediment, I'd wholeheartedly agree.

But let's just look at the things that we would not have without regulation:

1) Almost all safety features in cars (safety belts, crumple zones, non-shatterable windscreens, regulations on brakes etc.) almost none of which have been innovated voluntarily;

2) Fuel efficient engines, which have been developed because of pressure of regulation;

3) Safe cars on our roads, which only happen because of MOT regulations requiring an annual safety check for cars over three years old (see some of those driven in places where there is no such regulation and you'll understand);

4) lead free petrol.

And on, and on, and on. All required innovation. All required investment. All resulted in better products, and motivated consumers to spend on them. None would have happened if the industry had had its own choice. Nor would the car maintenance sector have the critical benefit that MoT regulation provides for it.

Without regulation we would be much worse off and profit would have been far lower. More than that, many people would be dead.

Unambiguously regulation is of benefit, in the main.Which is not to say when a regulation has reached the end of its useful life it should not be culled, usually because an updated version will be needed.


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