Regulation and Innovation

A Mises Daily post today by Mark Thornton is entitled “The Attack on the Washing Machine.” I immediately thought of Jeffrey Tucker’s book, Bourbon for Breakfast. Later in the blog post there is an advertisement for Tucker’s book. I read the book last year at Christmas; it was a gift from my brother to our mother, who certainly does not follow Mises Daily.

Today, students in one of my senior undergraduate courses, the Economics of Entrepreneurship, are writing an essay on their final exam about one of the required readings, Baumol’s (1990) “Entrepreneurship: Productive, Unproductive and Destructive.” It struck me how effectively Tucker provides example upon example of how regulations affect innovation. Baumol focuses in general on the “rules of the game.” Admittedly many of my students struggle with the Baumol article. Tucker picks everyday things that almost all of us recognize and struggle with. The washing machine is but one example that a household member would identify with. The shower head is another great example in the book. The water heater is another. Students of economics would do well to read the Baumol article and Tucker’s book side by side.