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How Corruption Is Strangling U.S. Innovation (2012) (hbr.org)
122 points by hype7 on March 21, 2014 | hide | past | favorite | 97 comments



In Africa, the arrow usually goes money -> power: you want pull with the government, so you buy it.

In the US, the arrow usually goes power -> money. People with power use it to enrich themselves, as this article demonstrates. The reverse almost never happens.

Much ballyhoo is made of "money in politics" and how terrible it is. But those who believe US companies can "buy legislation" are welcome to explain how (e.g.) Google, the second-largest corporation in the US by market cap, was not allowed to build a bridge by the Mountain View City Council (http://www.mv-voice.com/news/2013/12/12/council-deadlocks-on...).

Nothing big. Nothing unethical. Just an ordinary twenty-foot bridge over a creek between two Google offices. Denied for unspecified "environmental reasons", even though the bridge would save thousands of miles of polluting car travel every day. Google offered to conduct an environmental impact review at their own expense, but even that was denied.


> But those who believe US companies can "buy legislation" are welcome to explain how (e.g.) Google, the second-largest corporation in the US by market cap, was not allowed to build a bridge by the Mountain View City Council (http://www.mv-voice.com/news/2013/12/12/council-deadlocks-on...).

A single event doesn't certainly demonstrate anything; a disproportionate amount of "legislation purchasing" happened and is happening - and this is very factual.

If you have a look at what's happening in the sectors... well, all the sectors, but especially the financial, food and military ones, you would have a clear idea of which process are we in.


> A single event doesn't certainly demonstrate anything.

It demonstrates what is possible, not probable, and as long as we keep that in mind, there is nothing wrong with it. My life is string of single events, and I will refuse to believe it "doesn't demonstrate anything."


Certainly, but there is a misunderstanding here.

I don't doubt that any event is meaningful.

What I'm saying is that, in a certain context, a single event that highlights that "corporations have relatively little power", doesn't disprove many events highlighting that "corporations have plenty/excess of power".


"In Africa, the arrow usually goes money -> power: you want pull with the government, so you buy it."

Hate to break it to you, but it's the same in America (and most "western" countries). There are too many examples of corruption in our [American] government, in the last 6 months, to even list - from local traffic cams to the new F-35 fighter jet. And it's at all levels of government.

Don't kid yourself, America is not liberty, it's Negative Liberty. And money buys power. it always has.


most "western" countries

Can anyone suggest a country, where there is relatively less corruption?


Here's the map: http://www.transparency.org/cpi2013/results

US is doing pretty OK, although not nearly the best.


Keep in mind that this doesn't measure corruption, but perceptions of corruption. If corruption exists, but is not obvious to the average person, then it won't be reflected in the Corruption Perceptions Index.


I hate to nitpick, but that link points to a survey on the perception of corruption, not actual corruption.

I know it's near impossible to measure actual corruption, but other data points would be helpful.


I was wondering whether someone would nitpick about that, but given the audience I should've known.

It's the closest proxy we have though, especially given the subjective nature of corruption.


Is it possible your example of Google actually proves the point? Maybe Google didn't pay the right people in government to get the bridge approved? I don't know anything about this bridge proposal, but I would think that the 'money in politics' issue is less of an issue in regional/city politics than it is in state and federal.

Local representatives look their constituents in the eye on a regular basis. State and federal members don't have the same reminder of who they work for.


> Is it possible your example of Google actually proves the point?

One of the classic signs of a conspiracy theory is that it is not falsifiable: evidence to the contrary is actually evidence of the the theory!

> I would think that the 'money in politics' issue is less of an issue in regional/city politics than it is in state and federal.

Not at all, it's just that it's less money. How do you think the area where Google is got transformed from a rural-ish area full of farms and orchards into what it is today?


> "One of the classic signs of a conspiracy theory is that it is not falsifiable"

The assertions raised absolutely are falsifiable. You just need to bring the proper data to do so.

The original assertion is that Google's failed bridge proposal is an example that money doesn't buy power.

But that begs the question of whether Google actually tried to buy the result they were looking for. If they didn't expend their money on this issue, it's not at all a counter-example against "money buys power". [1]

Further, one would have to reasonably show that even if Google did expend their money, that they outspent any would-be counter-parties.

So you can definitely falsify the assertion. You just need the proper data.

[1] Given the peripheral benefits of the proposal, it could quite likely be a reinforcing example. If one can't get even a good project through a political body without paying the right gatekeepers, it only reinforces the original charge.


Yeah, people with a lot less money than Google have railroaded things through the zoning board before. I suspect Google just didn't care that much, it's not like Larry Page was personally making this happen.

Money buys power over time. It's not like you cut a check, "Ok, here's your corrupt deal sir". Think of the law as limestone and money as water -- it'll get where it wants to go, eventually, however circuitously it has to.


> It's not like you cut a check, "Ok, here's your corrupt deal sir".

Well, actually, in truly corrupt places, that is exactly what you do. Perhaps in ways that are less traceable than a check, but yes, you pay people personally to do things in a fairly direct way. That or you intimidate them, like this boy who was held hostage for years, and then disolved in nitric acid in order to get his father to recant his testimony:

http://it.wikipedia.org/wiki/Omicidio_di_Giuseppe_Di_Matteo

That kind of thing happens in the US and elsewhere too, for sure. And I'm not saying money does not buy influence, but it's a different kind of thing. It'd be very difficult to completely level the playing field for those with and without money.


> One of the classic signs of a conspiracy theory is that it is not falsifiable: evidence to the contrary is actually evidence of the the theory!

"Evidence" that could be evidence in either direction isn't useful evidence. :) The theory that they probably failed to pay some party (whether financially or some other form of power-kickback) was my first thought on reading the initial story. It seems to be as valid of a theory as any other without clear evidence pointing either way.

Is that what happened? I honestly have no idea, thus I have no idea whether this incident points towards more or less corruption.


The Power -> Money direction indeed seem to be such, and everyone's picking up on it, including popular culture

"Such a waste of talent. He chose money over power. In this town, a mistake nearly everyone makes. Money is the Mc-mansion in Sarasota that starts falling apart after 10 years. Power is the old stone building that stands for centuries. I cannot respect someone who doesn't see the difference." -- Frank Underwood / House of Cards US


Power is the old stone building that stands for centuries

It really isn't. Politicians fear scandals because the powerbase that they spend many long nights and hard years building can be undone in a heartbeat. "A week is a long time in politics".


That's only inconsistent if those with power are the politicians. Are they really?


Then we're back to money == power, which is a premise the show argues against.


I think that's an oversimplification. There are more actors besides politicians and people with lots of money. People like the directors and executives of agencies like the NSA or the CIA, political advisers, board members of the FED and similar organizations, etc.


It's an oversimplifaction to say that politicians are the only ones for whom power can disappear in a heartbeat.


This is one of the axioms of the show, and it's utter nonsense. It doesn't stand up to rational analysis. Political "power" is incredibly ephemeral and brittle - just look at Chris Christie.


Rational analysis has never been a meaningful cornerstone of politics.


I should say that the Rockefellers have done better at lasting than the Tafts did.


How much did Google spend on lobbying for that brige? In Mountain View, who opposed the bridge?

Maybe the denial had nothing to do with money. I've seen projects denied at the city level for lack of proper permits, zoning, insurance, studies, etc, etc. Even a bad presentation at a council meeting could derail a project (I've seen that too).

Compared to a company like ATT, Google spends peanuts on lobbying. In fact, the whole tech sector does, compared to the health sector, banking, or defense.


It helps too that the local level has much less attention, less stakes, and is much less of an echo chamber. Google's (probably) not going to offer to fund your next city council campaign war chest for allowing them to put a bridge in, but they might fund a senator who could help them crush their competitors on a national, or international, scale. It also helps that at the national level, its often not "me vs you" specifically, but rather amorphous lobbying groups that theoretically represent an industry's wishes. "Don't you want to help promote strong, beneficial laws for competitive American businesses?" vs "Want to do me a favor?"


Money does have a big influence on politics, but only indirectly. Each factor of two a politician outspends their competitor in an election by only tends to get them another 1% of the vote. Not nothing, but not really worth the appearance of corruption that you risk if you just give your donors what they want.

But the important thing that money does is allow you to hire lobbyists. Congresspeople need to pass legislation on a wide variety of issues. As anybody who's ever heard their rep talk about the "intertubes" knows, our legislators aren't necessarily experts on everything. The executive branch gets around this by hiring experts, but somehow we've decided to steadily cut Congress's staffing budget for the last few dozen years.

But there are a class of people who are personable, who have been cultivating relationships with the right people for years, and who have persuasive sounding plans for legislature that could "Save America and benefit your constituents" who are perfectly happy to step up to help out. And if their advice isn't exactly impartial, well, I honestly worry a bit more about incompetence than venality so I won't say this is the worst possible thing. But I'd be very supportive of any motion to say, bring back to the Office of Technology Assessment[1] or such.

And many of the other things the article brings up are just standard Public Choice[2] problems. Taxi cab drivers will vote as a block to stop Uber, consumers will vote based on other issues. Dealership owners and employees vote for state legislators, Teslsa employees are mostly off in some other state and consumers have more important things to care about, etc.

[1]http://en.wikipedia.org/wiki/Office_of_Technology_Assessment

[2]http://en.wikipedia.org/wiki/Public_Choice


>Each factor of two a politician outspends their competitor in an election by only tends to get them another 1% of the vote.

Source? That's really interesting - I would have expected it to have a much larger impact.


That indicates bureaucracy more than standards.


to summarize: regulatory capture is an existential threat to the American economy, and any regulation that restricts a silicon valley firm is prima facie regulatory capture.

I, too, am alarmed by the changes in campaign funding we have seen in the last 20 years. The author applies his alarm narrowly to problems in his private equity portfolio. I do not share his alarm on that particular topic.

By and large, I prefer to live in a world with taxi and hotel regulation, even if it impairs the ability of some bay area millionaires to add to their fortunes. Not all regulation is a sign of regulatory capture. Not all lobbying is intrinsically bad. Not every improvement in efficiency improves outcomes for society.


I prefer to live in a world with taxi and hotel regulation

Please enjoy them, then. The rest of us whose judgment is sufficient to choose our own taxis would appreciate if you kept the cops out of our private choices.


You judgement is sufficient because you live in a world where taxi are regulated and as such any legitimate unregulated competition will strive to provide you the same guarantee you get with the regulated ones.

Now I'm not saying that the current regulation shouldn't get refreshed to consider what is currently available. But I'm amazed how people are just all or nothing about regulation.

You should want enough regulation so that a basic level of service is guaranteed. If that is not the case, it becomes too hard for customer to efficiently compare services. Like in this case, you should be able to compare taxi companies in less than a few minutes. If you need more than that, then chance are that you will stick with the reliable provider you know. Good competition happens when consumers are willing to try alternative.


Stockholm, Sweden, has a fairly unregulated taxi market in that pricing is set independently. This causes massive issues, specifically for tourists who have no idea what to pick. They end up paying $500 USD to go from the airport to town, a ride that is usually closer to $60-70 USD.

I guess what I'm saying is judgement is contextual.


That's why old regulations were good in old times but now that app can help you choose the best taxi at the best price this is not necessary.

Technology changes, people change so regulations must change with it.

We should version control all laws and regulations and we should debug them when we see people taking advantage of them in unexpected ways.


*can help you choose the best taxi [registered through that app] at the best price [available through the app].

Do not forget that Uber, TaxiMagic, etc. are still closed and managed environments -- they are simply more opaque, as a corporation is choosing the makeup of that market instead of a government entity.

Laws are already version controlled and debugged when necessary, where does that come from? Laws are amended and repealed all the time, in every level of legislation.


You can have multiple apps on your phone however i know very few people who would ask every taxi parked there how much they charge.

Plus the first one is a market place the second is just one taxi.

Hell I wouldn't mind if a government entity launched an app that did the same thing.


Sure, just make sure the taxis only drive on your private road.


Well, dividing the world in them and us is certainly not a very good beginning of a conversation :-|

But aside, the problem is not in the individual problem theirselves.

The problem is that an excessive deregulation is a part of a large process of demolition of the human rights of the great majority of the population.

Paradoxically, such huge problem is difficult to notice, because it requires vision.

In a world where there would be an excess of human rights and slow economy, deregulation would be fine. In such world, I would agree to liberalize the taxing and housing.

We're on the opposite side, though. So keeping deregulating is going to make the disaster we're already in even worse.


Don't assume you represent "the rest of us". You don't. Your choice is valid, but it's not mine, and that will be true for many others.


The irony with your statement is that your position is to make the choice for everyone in the market in a one-size-fits-all fashion.

His choice is to allow variety, competition, and customization so that more people get a chance to find the service that satisfies their needs.

I don't think anyone is saying to completely do away with all regulation in every instance - but have you seen the competitive barrier taxi regulation in most metro areas? It's specifically designed to prevent competition from those without massive resources. It's the stereotypical big guy keeping the little guy down with their million dollar medallions and special connections to lawmakers.


Upvoted for a fair point. Regulation must work effectively for it to deserve support going forward, and I am 100% with you when it comes to opposition to excessive or prevents-fair-competition type regulation in this kind of space. I'd probably prefer improved regulation than zero regulation though: regulate what matters, but otherwise step aside.

Taxi and hotel regulation IMO comes with a safety aspect which should, for example, protect lone or vulnerable travellers from harm (to a limited extent, of course, but some is better than none). Personally, I will accept a bit of restriction to my options in return for widely vetted service provision.


Let's take a look at that:

Quick, tell me which ISP provides fiber to the home with unlimited bandwidth? Only 1, so far, and only in limited areas. If it was ONLY our judgement that determined the quality, then I would be all for it. Unfortunately, there's sometimes a race to the bottom. Regulations help, to a certain extent, to control that. I know I wouldn't want open heart surgery provided by the lowest bidder.


Express kidnappers agree with you.


Of course, without a clause any taxi driver is free to kidnap and murder you! These silly liberals don't think things trough. /s


So as long I'm a taxi driver I can kidnap you?

Or do you actually believe that all these regulations are going to prevent somebody from kidnapping people?

I sincerely doubt that.


You don't need to care about the millionaires in silicon valley, but you should care about the poor unemployed guy who is denied the right to earn a living by driving people around in his car.


What about the guy driving the car and the family of the girl who were killed accidentally by an Uber driver, and Uber trying to skate responsibility? Regulations aren't in place contrary to popular opinion here just to make rich people richer...


Accidents happen. How would this be any different if a taxi driver killed them and tried to skate responsibility?


It's a great question. As a contractor, is the Uber driver forced to carry his own liability insurance? How much? Is Uber liable, too? What is the answer to those same questions for a regulated taxi or limousine service?

I don't have time to look up the answers because of work, but I'm genuinely curious if anyone knows. It seems like these are reasonable questions to ask, and could lead to a constructive conversation about the role and necessity of regulation.


Isn't that why we have judges? To evaluate who is responsible when a crime happens? Why exactly is industry regulation required for that?


If the driver worked for Yellow Cab or some other official service and had proper insurance, liability coverage, indemnity protection he wouldn't be liable for $100k in damages or whatever it may be, or other bills which could arise from this due to that dreaded regulation word.

Many things that keep you safe every day are due to regulation, not hindered by it.


If the driver worked for Yellow Cab or some other official service and had proper insurance, liability coverage, indemnity protection he wouldn't be liable for $100k in damages or whatever it may be, or other bills which could arise from this due to that dreaded regulation word.

The first question is, why should we care if the driver is liable? If the driver wants to share the liability with the employer; we have a system of enforced agreements for that, it's called contracts.

But regardless, that didn't answer my question. When someone is killed, there's a trial to judge who is responsible for the tragedy. If the judge/jury thinks that Uber is (in part) responsible, we don't need regulations to force them to pay. If they don't, why should they pay?

Regulations seem like a way to replace the justice system with blind rules.

Many things that keep you safe every day are due to regulation, not hindered by it.

Who says I want to be safe? Why do you need to force that decision on me?

I can understand that you and others want to be safe. But the solution is easy: you keep a program with all those checks and certifications and you provide a nice symbol that only those drivers can use on their cabs (everyone else would be prosecuted for fraud).

Then drivers can choose to take the certification, and people can easily choose if they want to only use certified taxi services or not.


> By and large, I prefer to live in a world with taxi and hotel regulation

I can see why you'd want licensing for taxi drivers (to help against customers getting ripped off or mugged), but what's the point of limiting the number of taxis (which is really one of the main points against taxi regulation)? I'm not sure it restricts the number of cars in the streets, if people who would otherwise take a cheap taxi now have to own a car instead. My point is there is such a thing as too much regulation.


  > My point is there is such a thing as too much regulation.
Or just poorly constructed regulation. I agree with you. I want taxi regulations, because I've got enough historical and international perspective to know what will happen without them and to know that they are, at worst, the lesser of two evils.

However, I absolutely want smart regulation that gets out of the way where it isn't helping anyone and ensures that the services people want can be delivered.

That being said, I would prefer better public transit than more taxis, but that's just another side of the same many-sided die.


In some places we have this thing called public transport. In some very odd places we even use bicycles.

Taxis, like all other cars, clog up the roads with their inefficient size to passengers ratio, and pollute the air. Limiting the number of taxis can be a matter of maintaining a half way liveable city.

If there were plenty of cheap taxis in my town (Amsterdam) I would use them a lot, because I'm a big fat lazy motherfucker. Unfortunately, there are too many people like me, and our selfishness would be detrimental to the society around us.

(I'm typing this as it's pouring outside and I have to get to the office. I would love a cheap taxi right about now, but the world doesn't revolve around me.)


Regulation isn't an appropriate response. If taxi's are cheap to operate (hence ample supply but artificially limited) then personal vehicles are cheap as well. "Big fat lazy motherfuckers" will just buy their own vehicle and make an even larger mess.

Pardon my idealistic views, but it would be better to curb demand for taxis with: a. cheaper, more consistently on-time public transportation b. safer bike routes c. casual carpool programs

The real question is why you rather take a taxi than your local public transportation.


> Regulation isn't an appropriate response

The previous poster is from Europe, I'm guessing that you're from North America. In which case your definition of an "appropriate response" to societal problems and market externalities is completely different.

Regulating in order to maximise the value to all of society is perfectly appropriate for Europeans.


Speak for yourself.


I'm also from Europe, and I agree with icedog.


Sorry - super late reply on this. I wasn't trying to imply that regulation was the 'correct' response as that's a value judgement. I was just trying to point out that the USA and Europe broadly have different views of what a legitimate response is.


"The real question is why you rather take a taxi than your local public transportation."

Eh, probably because public transport would have to cost twice as much as a taxi to make it even half as comfortable? Not even counting that a taxi will take you door to door?


bike routes are so over rated, other than strict diehards they are fair weather routes only. Otherwise its too hot, too cold, to wet, I don't feel like it, got to carry something, going to the store, etc/etc/etc

taxis arose because public transportation doesn't always go where people want and is not as timely. Regulation is required for safety, it should not be used to curtail competition against entrenched interests


Models of NYC traffic show that increasing the number of cabs would not cause a proportional decrease in the number of private cars, and that the congestion would make the average taxi trip take longer, even including the time spent waiting for a taxi.

http://www.npr.org/blogs/money/2012/07/31/157477611/does-new...


By and large, I prefer to live in a world with taxi and hotel regulation

Why, exactly?


Well, for a start, if you buy or rent an apartment in a nice quiet building, you didn't sign up for one of your neighbours deciding to run a hotel with strangers coming and going at all hours.

Regulation prevents people getting profits by externalizing their costs onto others without their consent.


Why is this person renting or buying an apartment in a building whose management allows their residents to rent their apartments out like hotel rooms? Why can't this function through contracts with disputes being adjudicated through a court system rather than through comparatively blunt statutory regulation? For example, replace "run a hotel with strangers coming and going at all hours" with 'smoke cigarettes' or 'own a pet.'


The answer is, management usually doesn't allow this, and they flaunt the rules anyway. Which is why the guy in the story I posted below is getting evicted. And how many AirBnB types pay taxes on the income either?


My response is, statutory regulation usually doesn't allow this, and they flaunt the rules anyway. I don't see how statutory regulation solves the problem you're arguing it's supposed to. Is your concern that courts do not punish contract violators as harshly as those who violate statutory regulation? Or maybe that allowing different management policies places too great a burden on consumers? Alternatively, I can see why hotels would favor blunt statutory regulation and that anti-competition aspect of it is of concern to me.

How many stay-at-home parents pay taxes on their income? Or would you be ok with AirBnB if payment mostly occurred through barter or a "gift economy?"


I'd be OK with it if the people who wanted to do it got the rules of their building association changed! Usually the residents would vote. Strange how that never seems to happen. The hotel regulation gives people who play by the rules they freely accepted when they move in a tool to use against those who flout them.


Absolutely, it would be awesome if people utilized voluntary collective action rather than coercion or fraud to assert their preferences. But why create a new, coercive tool that carries additional negative consequences instead addressing the inability/inefficiency to deal with the problem through contracts and the courts? What do you think causes the inability/inefficiency? I can't help but get the impression that people think that issues can't be addressed without statutory regulation such that it becomes a self-fulfilling prophesy.


So the amount of foot traffic going in and out of my (quiet) apartment is the issue? I hope I'm not exceeding this limit already by myself especially since none of my neighbors know who I am. As for having my friends over, this is an issue as well?



Yes, having my friends over. We talk, drink, play video games, code, etc. This one scenario necessitates regulation to punish all other people who use or would potentially use Airbnb/Lyft/Uber in a responsible and professional manner?


Good that also the problem of Intellectual Property has been touched in the article!

This is an important one. Because they always claim, that make the IP rights stronger does strengthen the innovators. The opposite is true!

You see it also in the patent system. When old (and stupid) patents hinder innovation (what happens all day today), than the patent system becomes the biggest hindrance to innovation.

The point is good: When it is better to "own" old IP than to make new one, the system is strangling innovation, nothing else.

This system is for the "owners" not for the "creators"!


If you've ever visited DC, it's plainly visible in the skyline. There is a law stating no buildings can be taller than the monuments, so all the buildings are the roughly same height.

There are a handful of true government buildings, and everything else is associations, thousands of them, things like american dental association, metal workers association, etc. There are so many associations there is an association of associations.

It is these people writing the laws. The congressmen don't even read them all before they sign them.


Aside from the point of congressmen not reading bills prior to signing them, this is not really an issue.

Why should we expect every member of congress to be an expert in dentistry? We shouldn't as that would be a waste of time. That is what the numerous associations/think tanks are there for. To guide legislators in their decisions.

Abuse exists, but that does not mean we should abolish the idea of it.


None of those people represent me. They represent dentists, steel workers, etc. My representation is severely drowned out by all of the money. This is the problem. Their laws may benefit me, or they may hinder, but they certainly do not benefit democracy. I should not need a million dollars to throw at capitol hill for my vote to count. Sure, we should have experts from the industries to guide the laws, I'm just not sure they should be paid by industries when they do it.


Step 1. take a bunch of stories in the news about tech firms.

Step 2. rehash them together without a discussion of the individual issues at stake in each case, which can be quite different and complex.

Step 3. slap on a catchy title.

voila, your HBR article is ready!


Yea I was a underwhelmed that Tesla, AirBnb, and Uber where the examples in Harvard Buriness Review of corruption stifling innovation.

These are billion dollar companies and their political problems are dam near mainstream news. How about this guy [0] who invented a needle that could cut down needle prick injuries by over 99% and cost the same as the regular accident prone needles in use but was blocked by medical monopolies with legal kickbacks.

[0] http://www.washingtonmonthly.com/features/2010/1007.blake.ht...


Step 0. Find stories where the software industry isn't benefiting from the frivolity of the system.


Looking at the case of Uber I think it's not so much corruption as vested interests that are fighting against it. NY taxi medallions for example are worth about $13bn or $1m each and the guys who have spent $1m are going to lobby against Uber, corrupt politicians or not.


This is just a partial look of the problem, which is inherent to a republic, and goes kind of like this: If a law would be a big economic boost to 50 people, but a minor loss to 50K, chances are those 50K will put less pressure on the legislature to stop the law than the 50 people to at making sure it passes. So established players with money can make sure we get laws that help them, hurting the majority of the electorate.

Lobbying is pretty much unavoidable. For more on the concept, and on why some groups can form a lobby, while others just can't get anything effective passed, there's 'The Logic of Collective Action' from Olsen, 1965. It talks a lot about unions, but the argument is the same for groups that represent companies.


Yes, this is a general problem, but that doesn't mean that it can't be ameliorated.

One of the most insightful things I read about health-care reform in the U.S. was this: a lot of people on the left would have preferred a single-payer system to what was actually enacted, but that really wouldn't have been feasible in the U.S. The reason single-payer is successful in keeping costs down is that the government sets prices. There's a committee of experts somewhere that sets prices of drugs, procedures etc, and periodically adjusts them based on technological advances, market conditions etc. This couldn't work in the U.S. because the pricing body would be subject to intense lobbying by medical suppliers, and would quickly reflect their interest in keeping prices high, rather than the public interest in lower prices. (I wish I had a citation, sorry.)

So does that mean single-payer medical systems are impossible? No, of course not. It works fine the U.K., Canada and Taiwan to name a few. In those countries, the kind of lobbying that dominates politics in the U.S. is simply illegal.

At the same time, not all special-interest lobbying is harmful. Consider the case of wheel-chair users. They represent a tiny fraction of the citizenry, but they benefit greatly from a law that requires public buildings have wheel-chair access ramps. That would saddle the majority with a small cost, but the public doesn't care either way. So the wheel-chair lobby has to put effort into getting the law passed, and it's a good thing if it succeeds!

So, yes, this is a general problem that has no solution. But that doesn't mean that corruption on the scale and scope that exists in the U.S. is inevitable, or that it's not really hurting U.S. democracy. It is.


Two things. As much as I don't like the idea of incumbents using their weight to protect against innovative competition, is this not just the nature of a strategic view of competitive advantage? I mean, it's not nice, but it seems like strategy 101 to bolster barriers to entry to protect against new entrants. Without these barriers being possible, incumbents would presumably create barriers in a different manner (through acquisition etc)? It's not like massive incumbents will whither and die because they can't encourage legislation to be adopted, it's just a currently effective strategy.

Secondly, a semantic point, it talks about 'disruptive innovations', but surely the key characteristics of disruptive innovations, at least in the sense that Christensen described them, is that incumbents either don't see the value in them or else the product targets a segment with a low-performance product that incumbents don't see the threat of.

Tesla and Uber don't seem to fit this bill for me, they seem more like maybe sustaining and radical innovations, respectively, and I don't think existing value networks will be affected. They seem like they're just segmenting and differentiating to me. I can't see everybody driving around in Tesla-type cars bought in manufacturer-owned dealerships in 20 years, say, because as the article says itself, it only suits "innovative manufacturers like Tesla and Fisker that only have a very few number of models and who want to locate in high-traffic areas".

I don't think it's disruptive.


> As much as I don't like the idea of incumbents using their weight to protect against innovative competition, is this not just the nature of a strategic view of competitive advantage?

Yes. What is wrong is that the government shouldn't be helpping them.


my "cool story, Hansel" that goes with this: I worked in electronic bingo. One of the things we faced was that paper bingo card manufacturers routinely wanted to limit the effectiveness of electronic bingo markers so-as not to drive themselves out of business. One method they did was limit the number of cards that could be sold to any one person, electronically or otherwise.

Also, in some jurisdictions we had to have a paper copy of each card sold to match what was in the bingo machine.

Thus, the paper market would never, ever die. So-much-so that the electronic company we were, invested in a printing press.


This is pretty interesting considering most conservatives want less regulations and most liberals want more.

In every example, they cite over regulated industries where the biggest players are using those regulations as a means to stifle innovation.


Why can't Tesla just have regular dealerships and let people buy them?

Why can't airbnb just collect and pay the taxes?

Why can't uber properly license the drivers?


> Why can't Tesla just have regular dealerships and let people buy them?

"Regular dealerships" are a horrendous waste of resources. It's a business structure that made sense 50 years ago and makes very little sense today. Tesla doesn't need regular dealerships, so you're asking why they shouldn't be forced to waste money buying land and buildings and hiring people that could all be doing something MORE useful, just in order to make their company look more like the rest of the industry they're trying to disrupt.

It's like asking "Why can't Apple just use Windows on its computers like everybody else does?" Or "Why can't Walmart just set up tiny little stores that sell a few things - why do they have to make these huge box stores that sell everything?"


Dealerships don't make since today?

I like being able to take my car to the place I bought it to be fixed.

I like that I do not have to try and convince some sales guy to come take a look at my car.

I like the fact that I can touch, get in, kick, and drive the car I buy before I but it.


As technology advances cars are more reliable, more consistent, and tend to require ever less ongoing maintenance and a lot of what they do still need is stuff like changing the oil (which you can do most quickly and conveniently at the nearest drive-through Jiffy-Lube place that specializes in this one service) or replacing the tires (which you can do most cheaply and conveniently at the nearest CostCo while you do other shopping there).

There's no particular reason why we should expect the best firm at selling cars would be the best firm at fixing them. If there's a market demand for a network of company-owned garages, companies will supply that. If there's a market demand for a way to try out the car first, companies will provide that service too. But there's no reason either of these needs to be legally tied into how you have to buy the car. Me, I'd like the option to buy my car just the way I'd buy a computer. Go to the manufacturer's site online, spec it out, make the purchase online, and have the car delivered to my door or someplace nearby that I can pick it up when it's ready.


Amazon has a patent on 1 click to buy, and I am supposed to believe that mickey mouse remixes are stifling competition? Are you a child or do you write for children?


It's not mickey mouse, the extension of copyright that resulted. The point he's making is that a big business (Disney) can sway legislature for their own benefit.

If you're not aware, the copyright period has been extended several times up to the point of ridiculousness based mostly on Disney's lobbying.

Patents are a massive problem in tech, but copyright is a problem for innovators in the arts - especially authors.

The insult at the end is entirely unneeded. Hell, I wouldn't be surprised if a child saw the issues presented more clearly for not having had to deal with reality nearly so often.


Copyright is a problem if you're an artist too stupid to understand satire.


It's also a problem if you're an artist that makes something 'close enough' to Mickey Mouse, and you don't have the resources to both fight the legal battle, and support yourself while your income stream is shut off due to the legal battle.


It's also a problem if you'd like to preserve old art or repurpose it for the modern era. The tragedy isn't Mickey cartoons, it's all the less-famous art that is being lost forever with the passage of time. Which could have been reissued by whoever came across it, were it not for perpetual copyrights making that impossible to do legally.




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