US Regulation Threatens Innovation

We need to reduce regulation dramatically

SpaceX announced in a long letter yesterday that while their latest experimental rocket has been ready to fly for over a month, the FAA has informed them they probably won’t receive a license to fly until late November. SpaceX says this delay will “severely impact their expected schedule.” Interestingly, the previous flight went off without an issue meaning there seems to be no reason for requiring a new license.

Regulation has long been a touchy issue for me. I of course understand things like preventing companies from dumping chemicals into water, but today’s regulations go so far beyond that to the point of absurdity and stemming innovation.

Look at AI and its fast pace. One of the primary reasons it’s moving so quickly is because there is so little regulation around it. It is a certainty that the more regulation around a given sector or product, the less innovation it has and the more expensive it will be. Essentially, regulation is a hidden tax on everything we use and purchase.

My personal favorite example is nuclear power. Even many environmentalists would like to build new nuclear power plants. France has the cleanest air in the world because they generate most of their electricity with nuclear. China is building hundreds of nuclear power plants. AI will require thousands of megawatts of new power that no other source can provide.

But the extreme regulation around nuclear makes it both extremely time consuming and prohibitively expensive. Most of these regulations were passed decades ago before modern nuclear reactor designs significantly reduced risk. In fact, including Chernobyl, Three Mile Island, and Fukushima, nuclear actually has the lowest deaths per megawatt of power generated, even lower than solar and wind since a few installers are killed each year deploying both. Yet despite its excellent safety record, the US government puts so much red tape in front of building a new plant so drastically increasing the cost that we have resorted to keeping old plants operating long after their original decommissioning date. The effect is decreased safety and significantly more expensive electricity, as most of us can attest with our bills.

In fact, Peter Thiel’s Founder’s Fund mentions an interesting concept about energy in its manifesto. For society to flourish, the cost of energy production needs to continuously go down since consumption dramatically increases with technological innovation. Yet since the 1970s, the cost of power has consistently risen at an unsustainable rate. Why? Well, regulation. And we all pay for it.

Housing is another good example. I have spoken to several developers who have told me the reason so little new housing built in comparison to, say, the 2000s is directly related to increased costs of regulation. A significant portion of our ever more expensive housing and shortage can be explained by over regulation.

I am a huge fan of the proposal that Elon Musk get involved auditing the federal government for waste and unnecessary regulations. The bureaucracy has continued to grow to serve the growing bureaucracy and has ventured into the territory of the asinine. Governmental regulation and bureaucracy should not hinder innovation, technological advancement, and the building of necessary infrastructure, all of which it constantly does today.

It’s time to simplify the codes as much as possible so that our economy and new innovations can thrive.