Pencils Palace
"If we try to eliminate risk we eliminate invention and innovation."

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By MichaelRead
June 22, 2009

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Have you ever gone to a kitchen store? If you haven't you should. Everything there is because someone got peed off doing it the hard way. One pot doesn't hack it and that's why there's several, each to do a special function; one knife doesn't hack it that's why there's a variety of knives and many special functions, such as a grapefruit knife and a zesting knife. I could go on, but my point is invention often comes about because what is, isn't sufficient. My point beyond this is specialization does not necessarily mean singularity. In fact, the opposite.

The same with an economy. Capitalism encourages diversity; there's examples galore and that's found in increasing choice. Some of these choices will become successful, some not, but the nature of capitalism/competition means an environment where one size doesn't fit all. Nor does one solution fit all, which brings us to regulation and the effects of it.

A good argument can be made for standardization and metrics of such as purity of foodstuffs and medicine. Various pure-food acts have been extremely beneficial.

However, regulation to prevent miscalculation, as President Obama proposes in the use of financial instruments, prevents the ‘kitchen store' effect. Agreed, the risk of previous endeavors shown as boom and bust should be examined, but examined for result not limited by regulation disallowing risk.

If we try to eliminate risk we eliminate invention and innovation. Assuming we know all parameters concerning risk is hubris. There are some verities, yet even these are subject to forces either not fully understood or placed in categories effective in one period but not another.

The problem with regulation is it's trying to mold something that's best left unmolded. Capitalism is sloppy and succeeds because there is a large area of slop. Why it is sloppy is because nothing is fixed. There is no ultimate product. In fact, there are products not even thought of and they, when they come about, change this mix regulation tries to unify.

One reason why so many emigrated to North America was because the countries they left were highly regulated. To them North America was an opportunity denied by regulation in their home lands. When you have time, David, look at the three waves of emigration to the US during the late 1800s and the early 1900s and why there were pack peddlers.

But back to regulation. In theory, it smooth things; yet in practice it stultifies.

And back to our kitchen store. Imagine the result if there were regulations as to pot size, knife configuration and the regulation no new device can be introduced since it would affect the producers of an inferior device.