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I am concerned by the public's changing mood, in regards to entrepreneurs. In the 1970s the American government began the process of deregulation, which allowed
by lkrubner 17y ago
I am concerned by the public's changing mood, in regards to entrepreneurs. In the 1970s the American government began the process of deregulation, which allowed some important innovations in the industries that were deregulated. Transportation was probably the first big industry effected, followed by many others.
My impression was that there was a stretch when some combination of the public mood and the government's emphasis conspired to encourage small startups. The 1980s and 1990s were clearly good in this respect.
The mood of the last decade has been increasingly punitive. An increasingly harsh attitude toward flexibility in the law has been evident elsewhere for some time, but in the last 10 years that attitude has increasingly been expressed in the field of business. The Sarbanes-Oxley Act is the most evident expression of the new trend - what once would have been treated as a civil matter is now treated as a criminal matter.
At some point during the next 30 years I expect breakthroughs in biology to allow for a new wave of startups, if the government and the public allow those startups to exist. In matters relating to health, it is worrisome to consider what a punitive legal attitude means - a medical treatment that fails to perform leads to jailtime, rather than a lawsuit.
I think it is urgent that everyone who cares about entreprenurial culture in America to make the argument, to their friends and to strangers, that innovation in business depends in part on tolerance, and that, in practical terms, this means most matters of conflict should be treated as civil rather than criminal cases.
Once upon a time, before the mid 1800s, most Western countries treated bankruptcy as a criminal matter, rather than a civil one. The liberalization of bankruptcy law was one of the factors that allowed our modern economies to gain the dynamic nature they now enjoy. I would guess that most of us know someone who has tried to do a startup, failed on their first attempt, and then later met with greater success on successive tries. Tolerance of failure is the first pre-requisite of a dynamic economy.
Since the public seems at risk of forgetting this fact, we all need to make that case, to whoever is willing to listen.
- jakarta 17y agoWhen you cross the line into experimenting with medical treatments, you're not gambling with other people's money, you're gambling with lives. You can't just equate it to any other kind of start up, it has to be held to a higher standard.
- lkrubner 17y agoRegarding medical innovation. Other fields also threaten people's lives. If you build a new kind of jet engine, which gets through testing but which then is responsible for a spectacular crash, then your product has killed a few hundred people. And yet, unless there was fraud in the documentation of the tests, there have not been criminal cases in the past. I worry that in the future there will be criminal cases. Again, the trend that I worry about is that what used to have been treated as a civil matter will, in the future, be treated as a criminal matter. We do not need to focus on the medical field. Many other fields can cause people to die - industrial automation, the transport and disposal of toxic chemicals, the construction of buildings (which could then fail and kill people). All industries are in need of innovation all of the time, yet innovation brings with it risk, including the risk of death. How much innovation will we get if we make these matters criminal? I should emphasize, just in case people forget, that fraud has always been criminal. It has been criminal for centuries. So the move to criminalize more aspects of business is not a move to make fraud criminal. If you think that the Sarbanes-Oxley Act made fraud criminal, then you are mistaken. Fraud has always been criminal. Sarbanes-Oxley is representative of the new trend. The overall goal was to encourage greater accuracy in the reporting of a company's financial health. This goal could have been reached through a variety of methods, including both the carrot (rewards) and the stick (punishments). Rewards could have included tax breaks for meeting some additional level of compliance. Punishments could have included fines levied against companies that failed to meet a higher level of compliance. These approaches would not have raised the risk of jail time for CEO's. Instead, Sarbanes-Oxley decided to go with the heaviest kind of punishment of all - to treat infractions as criminal offenses, potentially meriting jail time. This punitive attitude is going to have a chilling effect on the amount of innovation we can expect in any field.
- kiba 17y agoThe punitive attitude is going that way because there is no incentive or disincentive to care about innovations in any given market. Politicans care far more about abortion and other popular issue because it give them the vote. It doesn't even matter if their policy isn't good, they will parrot it in lieu of popular opinions. Clearly, the republic do not have any if much features that keep bad policies away and tending toward good policies. Unfortunately, it is also very painful to remove a republic or any monopolistic governemnt and start a new type of governing system. It could even have disasterous consequences if the new governing system is seriously flawed. The market for governing is only 200ish suppliers versus 6 billions human beings. Clearly, we also going to need a better system that generate these "governing entities" so that we can speed up innovation in social paradigms that regulate human socities.