America’s Anti-Innovation Culture

A recent headline in the Washington Post announced that “Airbnb for cars is here. And the rental car giants are not happy.” The story explained that as rich as they are, major rental car companies “worry about being left behind” by innovative upstarts. So they “have spent several years waging a quiet legislative war” to regulate them.

In other words, industry incumbents are using their influence in government to impede innovation. This situation is symptomatic of a larger problem: the growing hostility to innovation in America.

What the rental car industry is doing is of course nothing new. The ongoing battles waged by taxi companies and hotels against Uber and Airbnb, respectively, are other prominent examples. And even those innovative services are still struggling to overcome our societal risk aversion despite significant acceptance among younger adults.

The first punch industry incumbents throw to the gut of innovators entering their ring is always the same: Go to the government and make a case about the need to “level the playing field” and “protect public health and safety.” Leveling the playing field and protecting public health and safety are code phrases that translate into regulating the innovators the same way incumbents are — it never means deregulating incumbents. The incumbents know that if their fight plan works, small startups without the ability to comply effectively with sometimes hefty regulation will be TKO’d. In such cases, it is not the incumbent’s superior product or service in the marketplace that beats out competitors, but the heavy hand of government intervention.

Like it or not, incumbents have their fingers on the pulse of public sentiment. They recognize that, increasingly, America has a suppressed appetite for innovation. For the very first time, the Bloomberg Innovation Index bumped the United States out of its top 10 list of the most innovative countries in 2018. This is symptomatic of a worrisome decline in our pro-innovation and startup culture.

Read more of this Real Clear Policy op-ed by Devon Westhill by clicking here.