More from another article about Uber, the smartphone app that dispatches taxis and radio cars:
So why are incumbent regulated industries fighting these developments? And why are the regulators who police them turning around instead to slap down the innovators before they’ve even had a chance to try new approaches to old businesses?Right. The theory.
The short answer is that innovation and regulation simply don’t work together. Regulated industries—including strictly licensed services from lawyers and doctors, public utilities such as power and water companies, and government-provided services including roads, bridges, and the post office—operate outside market-based systems. Competition is prohibited, even criminalized. Since innovative technologies are a particularly ruthless kind of competitor, they are directly or indirectly banned.
But why do governments choose to displace the market in the first place? In exchange for rules that sharply limit if not ban industry disruptors, companies in regulated industries agree to a wide range of public interest concessions, including price controls, guaranteed access, pre-approval on changing or eliminating services or offering new services, and extensive licensing requirements, oversight, and continuing education. That, at least, is the theory of regulation.