synthetic zero

December 25th, 2010

Though I am strongly progressive, I have never felt comfortable within the confines of the typical left-right debate that goes on in this country. For me, progressive means progress, which is to say, not ideological, but rather devoted to empirical understanding of what works and what doesn’t work, evolving ideas, and innovation.

What really doesn’t work for me is the tired left-right debate between those who supposedly favor “government regulation” vs those who favor the so-called “free market”. What I favor is not in the middle, between those extremes; it’s something radically different.

For example, let’s look at what has often gone wrong with government regulation. Totally centrally planned economies are destined to be extremely inefficient, for example; the right-wing darling Friedrick Hayek correctly pointed out why: even a benevolent central planner cannot process enough information quickly enough to optimally distribute resources. Markets, which are inherently decentralized, do this job much more quickly, and can handle and process far more information more rapidly and responsively than central planners ever could.

But that doesn’t make me a libertarian. It makes me an anti-Stalinist, against any form of Soviet-style central planning. Yet my opposition goes further than that obvious straw man; I’m also against the sort of micromanaging that we used to do of the telephone industry and airlines, for example, which I believe tended to stifle innovation and keep prices higher than they otherwise would have been. I think conservatives were right to attack and dismantle much of that. Prices went down and options went up in the aftermath of both moves (but also in the wake of the forced antitrust breakup of AT&T, we should remember).

But let’s now look at some successful regulation. Banking regulations such as Glass-Steagall, it turned out, were very good ideas which dramatically improved the stability of our banking system at the cost of damping some of its dangerous and unstable hyper-growth. Banking regulations in Canada, for example, protected their country from the financial meltdown we saw here. In urban planning, regulations such as Oregon’s Urban Growth Boundary and their clever mixed-used zoning had a spectacular effect on revitalizing Portland’s downtown and close-in neighborhoods and have made Portland one of the most livable cities in the country, if not the world. Or in telecommunications, the transition to HDTV was another example of successful government regulation which led to more, not less, innovation.

I think we can begin to see a pattern: “good” regulation tends to avoid micromanagement to the extent possible. It tends to set large-scale, overarching, big picture rules or guidelines, it doesn’t choose winners in the market and it doesn’t dictate, for the most part, how people innovate on the small scale. Sometimes government is ideal for setting up infrastructure (transit systems, public schools, libraries, fire, police), but when it comes to regulation, it seems to work best when government sets up fences but gives the private sector a lot of freedom within those fences. Successful regulation tends to increase competition, it even encourages or increases it (breaking up monopolies or preventing them from unfairly leveraging their market position to disadvantage new entrants to the market, for example), when possible, it doesn’t tell people HOW to do things, but, through clever large-scale policy, it can encourage larger-scale goals. Portland’s Urban Growth Boundary and their clever mixed-use zoning regulations had the effect of revitalizing the downtown and close-in areas which had been on the decline, and they reduced sprawl, and all this happened without the government dictating on a small scale where and how developers developed.

I think we need to develop a new theory of what kinds of government regulation work and what kinds do not, based on actual case studies. It should be evolving, not based on a fixed ideology. Do the research, see what works and doesn’t, figure out why and how it does when it does, or why it didn’t when it failed. Politics, I think, ought to become more evidence-based, more human, more pragmatic, and less based on abstract theory without a grounding in practical reality and observation. It’s not that the answer is “somewhere in the middle” between lots of regulation and none.

We need a new politics, a more human, perceptive, evolving, and evidence-based politics.

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