Legal Commentary

?Gamesmanship Pays Better than Entrepreneurship?

By Jonathan H. Adler

If you wanted to get rich, would you invest your energies in starting a business to sell an innovative new product or service, or would you move to Washington, D.C. and become a lobbyist?  Townflier CEO Morris Panner looks at trade association CEO salaries and notes that the smart bet is to go inside-the-beltway, and this is bad for business and entrepreneurship.

We are creating so much regulation ? over tax policy, health care, financial activity ? that smart people have figured out that they can get rich faster and more easily by manipulating rules on behalf of existing corporations than by creating net new activity and wealth. Gamesmanship pays better than entrepreneurship.

Panner notes that passage of the health care and financial reform bills exacerbate the problem by delegating expansive regulatory authority to administrative agencies.  Though both bills were quite large and complex, the details for each will be filled in by various federal agencies, creating massive opportunities for lobbyists and interest groups and further obstacles to innovation and entrepreneurship.  As he explains:

This is highly dangerous to innovation, which depends on clear and transparent rules. The more complexity, the more incumbents are favored. They have the capital to participate in complicated regulatory proceedings. They can hire high-priced lobbyists to present facts in a light most favorable to them. The more incumbents are favored, the harder it is for new companies to gain traction.

According to Panner, a self-proclaimed socially liberal Democrat, the solution is to require Congress to delegate less and enact clearer and easier to understand legislation.  When a law is passed, people should know what it means, and what it requires.  Concludes Panner, its time Washington prized ?wealth and value creation . . . above rule manipulation and influence peddling.?

Full post as published by The Volokh Conspiracy on November 19, 2010 (boomark / email).