Policy and innovation

Policy and innovation
Photo by Dustan Woodhouse / Unsplash

I was recently thinking about how innovation and government policy sometimes act at odds with each other. To better understand this, I wanted to create a thought experiment and think through how a government (espcially an Indian one) might react.

Let's say we build a small machine that allows us to collect and shred plastic in a way that it's financially lucrative. Perhaps we are making filament from it, or generating energy - let's leave that part out of the thought experiment. The key is that it's now profitable to collect plastic from landfills, and abandoned land patches.

People start buying this machine - or even better they learn how to make this - and go on collecting plastic and making money. Now people start collecting plastic from plots of lands that they don't own. So places like beaches, railway lines, and private empty plots. This will lead to 2 things –

  1. People will start laying claim to areas. This means that people will use muscle to collect a tax from a particular area from which money is being made from collecting plastic.
  2. The government realizes this and decides that it will control this instead of letting private citizens illegally collect a tax. So they start opening tenders for this kind of plastic collection work. This in turn means that people will want to slow down the rate at which plastic is being collected.

In both the cases a new industry is created which will try to preserve it's source of income. So something which should ideally be a time bound expedition will turn into something that becomes a slow, bureaucratic shitshow.

Let's come back to reality from this thought experiment.

I wonder how many such innovations have been throttled by policy –

  • solar panels can't be manufactured locally because of the restrictions placed by the World Economic Forum on India
  • India wasn't allowed access to uranium by developed countries
  • Supreme Court has interferred with bans on fireworks to preserve the employment of people in that industry. This has resulted in us not innovating to get cleaner fireworks.
  • Efficiency in agriculture isn't something we are chasing as we have price protections guaranteed by the government

What other industries do you think are being throttled by bad policy?