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Brandon Silverman's avatar

Long-time reader and first time commenter.

I have to say I'm surprised by the take on Gurley's talk. I get why it was a rousing speech to give at a conference but I think an intellectually honest analysis of it would make it clear that it was a fairly specious overall talk. If you disagree, would love to know why but the things that stood out to me:

- The talk is premised on a sleight of hand/logical fallacy where he points out a few examples of egregious regulatory capture and then makes the argument that *all* of Washington is bad...that's just a very basic form of a bad argument

- There are obviously lots of good examples of regulation out there and again, not even a passing mention of any isn't a real argument (something Larry Summers had to correct him on)

- The lack of seriousness was made even more clear when it came down to what to do...which was a kind of hand-wavy "maybe more transparency?" position...but a lot of people have been stuyding, fighting and working on regulatory capture for decades and there are a lot of ways to combat it, including probably the most popular one which is preventing single companies from getting so large they can significantly influence regulators by themselves through money or market power

It was a rousing talk...but not a serious one and surprised to see you give the unsupported, larger claim (all of Washington sucks) such intellectual credence.

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Carter Williams's avatar

I have spent my entire career working on innovation. Some of that with a major defense contractor. I have gone through waves of heavy DC engagement. And no DC engagement.

1) I have never met a Senator, President or Congress person curious to understand the core nature of an innovation. I have had serious conversations with probably 10 Senators, 30 Representatives, 1 President, and many regulators.

2) I have been screwed over by every politician I thought I trusted.

3) I saw other politicians conspire to destroy Chu's agenda (democrat politicians) when he was DOE head because they saw him as naive.

So, I admit I have failed to understand how politicians work.

In the end, government's role is really not to drive innovation. It is to normalize innovation once it emerges. For example, let railroads innovate, but at some point standardize the gauge of track once dominant design is settled.

The opportunity is ultimately an optionality challenge. Optionality is an information arbitrage. As Hayek stated in "Use of Knowledge in Society" the coordination of resources for economic innovation is best done through entrepreneurs close to the signal.

Probably the best thing innovators can do is educate the political class on how real innovation occurs. So that politicians and government can stay out of its way. The natural rate of innovation wants to be higher. And will happen quicker in every state, as it did in the 50s, if we remove the barriers to the optionality.

I am really unsure what role government plays in making this happen other than doing harm to slow it down.

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