Try out that socialist planning with Nick Timothy

Nick Timothy used to be something or other in British politics. Examining this proposal aids in telling us what has gone wrong in that sphere:

In leaving the EU, we are swapping scale for agility and uniformity for diversity and innovation. But how can we turn these principles into policies and reality?

One way is to become a first-mover and world leader in the regulation of new and high-growth industries. While the EU tends to move slowly on questions of regulation, and its decisions often reflect the interests of established firms, Britain can be faster out of the blocks. On artificial intelligence, automated vehicles, life sciences and many other sectors of the future, Britain can develop a new, more agile model of regulation, and attract investment and global expertise by getting in ahead of cumbersome competitors, like the EU, and reluctant regulators, like the United States.

At heart that claim is that those innovating, us consumers out here who want to be innovated to, need that guiding hand of the clever people in government in working out what can be done and what we want to have done. Only that - dead - hand of the State can possibly lead to the nirvana of shiny white hot heat of the new technology.

This is, writ small and yet equally damagingly, the socialist planning delusion.

The entire point of technological advance is that such expands the universe of things that can potentially be done. This then needs to be matched up against the list of things that the people - that’s you and me out here - desire to have done. Things that are successful are those things that can be newly done and also we desire to be done. The important point to note about which is that no one, no one at all, has any idea what those things are before they are tried, offered, and succeed or don’t.

How can we have regulation therefore? Other than the basics of a common system - which we might as well call Common Law - encoding things like don’t poison the customers, don’t steal and so on.

We have a theory - a surmise perhaps - about why so much of the innovation of the past couple of decades has been in that digital world. Yes, certainly, partly because that’s where the new tech is. But rather more because that’s where there hasn’t been any regulation. 25 years ago there were no - none, zip, nada - regulations or even legal guidances about how a search engine could or should work. As no one had heard of social networks the limitations upon experiment were non-existent. How one might use mobile phones was entirely unguided - which led to that canonical case of the sardine fishermen off Kerala producing pure and exultant economic growth through their employment.

Much of the rest of life, things being done more or less badly by current technology, is indeed regulated. Which is why there’s been so little innovation there, the cost of overcoming the extant regulations. In theory, at least, current law states that to make apricot marmalade one must get Parliament to change the law to allow the making of apricot marmalade. No, really, the Jams, Jellies and Marmalades regs state that citrus extracts - the essential difference between jam and marmalade - may only be added to compotes made of citrus fruits. As apricots aren’t then you can’t. £5,000 fine and or 6 months pokey if you do. It’s as if we still had to gain an individual bill through Parliament in order to gain a divorce. Something which would, we all agree, rather reduce the number that happened. So with innovation.

The case study here would be Uber and Lyft and the like. The new technology made possible a new way of hailing a cab. The extant regulation of the cab hailing business meant that tens of billions of capital needed to be expended on, umm, a new and exciting method of hailing a cab. Their strategy - expressly so - being to move into a market in such size and at such speed that the previous protective regulation be entirely overwhelmed. That is, if they’d had to go and ask for permission, for a variance in said regulation, it wouldn’t have happened at all.

This entire idea that there should be a regulatory pathway to innovation is to entirely misunderstand the principle of the issue under discussion. It’s to commit that socialist planning delusion. You know, the one that enabled the Soviet Union, according to Paul Krugman, not to increase total factor productivity one whit nor iota in its entire 7 decades of existence.

We have learnt the lesson of 1989 around here. That Nick Timothy and others presuming to rule us as yet have not is one of the things wrong with the place. Innovation needs freedom to succeed, not regulation and guidance from the political caste.