The Only Pro-Entrepreneurial Policy

I always cringe a bit when I hear of some politician or other trying to “spur innovation” or “create a ‘Silicon Valley’ in ______”. They clearly don’t know (or care?) what they’re talking about.

So I enjoyed an article in last week’s Economist on the topic:

But in the 20th century, as Britain’s trade swung away from the Atlantic towards Europe, the city got into the habit of resisting innovation rather than embracing it. Liverpool became a hotbed of militant trade unions, which hastened the decline of the shipping industry (by striking against containerisation, for example) and almost wrecked the municipal government.

Politicians want to affiliate with the prestige of successful entrepreneurs and cutting edge technology. But the bottom line is that they are constitutionally incapable of embracing the ONE thing that makes entrepreneurial culture tick.

Failure. Lots of failure. TONS of failure. Not just failure of nascent startups themselves, failure of incumbents, annihilation of jobs, industries and established patters of commerce and trade.

Protect last year’s champions (the current employers of all your voters) and you crush innovation.

My view is that innovation is the base case; it’s honestly a very natural thing for humans to do. It is stifled quite deliberately for fear of its consequences.  The only pro-innovation policy, therefore, is to give up the power to stop it.

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