I wrote this a few months ago but was thinking about this today, and realized I forgot to post it here…
In 2013, we have seen a reincarnation of “man vs. machine,” except this time, the machines aren’t algorithms — the machine is government. Within a few months, various levels of government across the United States have made headlines with respect to new technologies, products, and services. Unmanned aerial drones, which have a touchy relationship with citizens worldwide already, present complicated scenarios.
The Texas state government, for instance, recently banned drones for most private use; the state of North Carolina is considering a ban on direct sales of Tesla vehicles; Airbnb was deemed illegal in New York state by a judge; ride-sharing startups like Uber, Lyft, and Sidecar face constant threats and hurdles as they expand outside of the Bay Area; and of course, there’s Bitcoin, where Mt. Gox suffered a recent Fed crackdown as the most active exchange for the popular crypto-currency. The ways things are going, 3-D printers will be banned because some fanatic will hack software that lets him print a 3-D gun.
The common thread weaving through this trend is that the pace of technology is empowering individuals to actively participate in fundamentally new markets and economies. Even just a few years ago, it wasn’t as easy to buy a fully-electric luxury car and not send part of your income to the local gas station; it wasn’t as easy to earn over twice one’s salary by ditching grocery bagging in favor of providing livery services; it wasn’t as easy to convert cash into liquid digital currencies; it wasn’t as easy to rent out your apartment, or your spare bedroom, or your couch to earn a little extra scratch; and it wasn’t easy to physically print out items at home or send items to others via unmanned aircraft.
This shift comes at a critical time for America. In a sluggish economy slowly recovering from the largest wound since the Great Depression and adjusting to a fundamental, structural change (aka, those jobs aren’t coming back), the country is in desperate need of innovation. I say “desperate” because even with successful innovation, our economy isn’t on an enviable pace for growth. Mega-forces like widening income inequality, crushing debt burdens, and the politically-toxic mismatch between our immigration policy and inability to properly educate children for the jobs needed today combine to form a potent mix of stagnation. In lay terms, if someone is laid off from their job bagging groceries because of online grocery delivery or automated checkout machines, will government also prohibit them from using their car to give a “Lyft” to others for money, or renting out the spare room in their apartment on Airbnb to offset their fixed mortgage rate, or storing some of their savings in Bitcoin after losing most of their 401k savings in the 2008 economic collapse?
It remains to be seen how far governments will go. Laws are made to protect people from harm, but they’re also made by taking into account the interests of special interests who spend billions to lobby the halls of Congress. Innovation like the types cited here directly threaten a range of powerful, incumbent, cash-rich industries who view lobbying costs as a minor line-item expense, the cost of doing business in America. The other side of this coin is that, right now, government regulation that overreaches to the point of suppressing an individual’s ability to earn a living wage is the political equivalent of playing with fire. It’s early, but consumer demand is pointing in a direction where the democratization of access to technologies like electric vehicles, 3-D printers, alternative currencies, and peer-to-peer lending puts more power into peoples’ hands than government can realistically control.
Aggregate consumer demand is distrustful of large institutions, is willing to pay for goods crafted specifically for them, is open to turning their assets into wealth-generating vehicles, and so much more. It’s hard to see how government will try to control this. Alas, it will. There is too much to lose. Perhaps this is why many of the startups listed above (and their investors) have begun to form relationships with local and national politicians, have actively participated in panels nationwide with public officials and commissioners, have hired former politicians and policy analysts to help them anticipate these collisions and actively participate in the lawmaking itself to keep the interests of these startups in mind.
The interests of startups like these are the new “special interests” — in fact, they’re “our special interests” — and they protect much more than the companies doing the legwork — they can protect the future income, livelihood, and social security of the former grocery bagger, and in a country founded on principles of humility and hard work, it would be a shame — perhaps even evil, given the criminally economic circumstances of the last two decades — to not empower consumers and leave consumers unprotected. I’m optimistic startups will be part of the conversation that stitches these new laws and regulations together, and I fundamentally believe it is startups like these and all of us consumers, individually and collectively, that will spark the next waves of innovation, with government enabling it, not restricting it. Let’s hope so.