Bryan Griffin: Innovation And Quality

Jul 10, 2019

The government kills innovation and quality.

Last time, I made the argument that even the environment can be better protected and restored through the free market and limited government.

There’s a role for limited government regulation, oversight, and compliance. Yes, the government should have the capacity to step in as a last-resort to provide subsidies for life-saving medical care. But talk of limits and last resorts in these capacities have all but been replaced with a discussion of what is a ‘human right’ that should be automatically provided to every citizen by the government.

Limited government can save; but limitless government only kills.

Democrats no longer care to acknowledge what the market does well – they certainly didn’t in the first Presidential debate.

Some of our greatest milestones in addressing environmental concerns have been the product of waste reductions and efficiencies created through innovation. The computer saved countless forests; natural gas alternatives have reduced consumption of dirtier alternatives.

America has the most innovative healthcare industry in the world because its healthcare system still remains quasi-capitalistic. People travel from across the globe to find cutting edge medical treatments to challenging ailments in America because we still have a medical industry where competition to do better and serve better guides industry decisions. At least for now. “[O]ur edge is slipping away because of crippling domestic regulatory and tax policies,” writes a Forbes contributor.

Do we value innovation and quality enough to ensure the politicians we are voting for will enact policies that allow them to flourish? Or do we sacrifice innovation and quality on the altar of expansive government?

Purchasing a good or selecting a service in the free market means that both parties to the transaction – the purchaser and the provider – consider what they receive to be more valuable than what they give up. The consumer wants the service more than the money, and the provider wants the money more than the time and cost to provide the service. This is because the exchange is voluntary.

The government operates zero sum. It takes money without asking and spends it in whatever capacity the legislature currently authorizes. There’s no room for competition in this equation, so innovating a more effective product doesn’t happen. Further, any feedback loops about standards and quality are slowed down to the level of Congressional action. Accountability is slow and requires many people to get noticed.

I’m simplifying this for the sake of time, but the economics behind it are sound. America has got to realize a thing provided by the government doesn’t make that thing free; we pay later as we whittle down the field of options available to us as consumers, and box ourselves into a system where innovation and quality are no longer incentivized.

We do have a broken healthcare system. But the problem is that insurance companies are given unfair advantage by the government and competition is stifled by overburdensome regulation. The average medical entity spends $40,000.00 a year on compliance with the FDA. Hospitals employ an average of 59 full time personnel to ensure regulatory compliance. No wonder costs are so high. How can newcomers possibly compete?

Medical treatment options also undergo an extensive wait period from the FDA and a myriad of expensive compliance requirements. This hurts society’s ability to help those in need. As a tech writer for Forbes puts it, “By forcing entrepreneurs to invest both significant capital and years of commitment only to arrive at a pre-launch stage, this system attracts entrepreneurs who are innovating primarily for financial gain -- not social good.”

Alexander de Tocqueville, a French philosopher who toured America in the early 1800s, described her people as “ardent in [their] desires, enterprising, adventurous, and above all innovative.” We were on the cusp of the Industrial Revolution and our possibility was limitless.

How would de Tocqueville describe what he saw if he came to America today and had to visit the post office? Or fill out insurance forms? Or observe any other industry that is increasingly becoming more controlled by our massively bureaucratic federal government?

Ultimately, we want a society that encourages innovation and quality for the social good. We should do everything we can to build an atmosphere that fosters those virtues, and in that pursuit the free market excels where the government fails.

The specifics of the prescription for the balance between capitalism and government oversight are complex and detailed. But there needs to be room for both. There is no innovation without competition and quality falls when accountability fails.

Bryan Griffin of the London Center for Policy Research is a lawyer and author who specializes in American policy in the Middle East.

The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.