"Capitalism is the unequal distribution of wealth. Socialism is the equal distribution of poverty." -Winston Churchill
America is at a crossroads regarding its economy and identity. This all comes in the wake of a government that has expanded spending to record levels and a nation that is recovering from government-imposed lockdowns.
As states begin opening back up, the circumstances have created an ideological and economic policy vacuum as various factions clammer to define "the new normal."
Although many would have frowned upon the idea of the government giving out money on such a large scale, the recent events of the past year have further normalized the idea of government handouts to the populace. Despite assertations from many that such programs were only to be utilized during the pandemic, the nature of government has moved these programs closer to a position of permanence.
In the words of Milton Friedman: "Nothing is so permanent as a temporary government program." Indeed, efforts are underway even now to make such handouts the codified law of the land, with many in Washington advocating for an expansion of the welfare state to the extent that the nation has not seen since Lyndon Johnson's disastrous "Great Society."
Yet the question must be asked, what is the real economic benefit of the government handouts that the Left has continually attempted to advance? Although the shortsighted proposals of some promise at least temporary advantages, it is critical to consider whether or not these moves have long-term benefits for the economy. Time and time again, the government has shown itself to be a poor distributor of other people's money.
Handouts stagnate economic growth because there is no exchange of goods or services when the money goes from the taxpayer to the government to the welfare recipient. Under free-market circumstances, economic transactions are voluntary exchanges that occur so that all parties get something of value. When there are more transactions, more economic activity occurs. On the other hand, the government gets the money it uses for the welfare state either by borrowing it on the taxpayers' credit or using force to enact taxation.
For instance, when the government uses one dollar for these entitlement programs, it transfers that dollar from the producer to the recipient by force. This transfer guts the value that could have been put into the economy if the recipient had worked for that dollar. Taking the money that taxpayers earned through their own labor and transferring it to handout recipients that did not work for it disregards the value of the taxpayer's labor.
Yet, the damages from the redistributive entitlement programs do not just end with the disregard of taxpayer labor. Such programs also lower the productivity of the workforce as workers are incentivized not to work. This creates a consuming cycle as the businesses that are dependent upon employees cannot find a labor force to operate the business.
When these places of employment are forced to close their doors because they can't find employees, there are fewer available employment opportunities. Government welfare programs are then further grounded into society to address all of the resulting unemployed. Through a cycle of government dependence and poverty brought about by entitlement programs, communities that were once thriving can be decimated as the whirlpool of government welfare programs consumes the economy.
Finally, government handouts are more than just a problematic economic element. There is perhaps no more destructive force to destroy the motivation and work ethic of a workforce than the sedative of government handouts. When a government doles out the entitlement dollars to the citizens, it sends a message that the nanny state will provide some or all of their income.
The American economy and work ethic are legendary as the world's greatest engine for free enterprise, industry, and innovation. To protect this incredible success, there must be a recognition that destructive consequences come from policy proposals to grow redistributive entitlement programs.
A path of socialist programs is a path to ruin for America. Public policy should prioritize an economic environment where citizens can genuinely experience the value of their own labor and thrive in the success of the free market system.
Regulatory sandboxes are a unique solution to prevent government regulations from smothering new technologies and innovations. The programs allow innovative companies to be temporarily exempt from prohibitive regulations until the state can establish an objectively informed regulatory framework for the innovation.
These programs have been adopted in select states as a unique way to encourage business growth and innovation. Although the programs have come in many forms, policymakers have implemented sandboxes across several different sectors.
In a day of big technology companies, regulatory sandboxes provide a regulatory development platform for all companies so that even small innovators with less political and financial capital can have an established framework to present their new innovations to regulators.
This report highlights innovative legislation and policy ideas that would advance such regulatory reform proposals around the nation:
Financial Technology
The financial technology sector was one of the first sectors to utilize the regulatory sandbox model. This type, known as a “FinTech” regulatory sandbox, has become the most widespread type so far and has seen success across several states.
Financial services are rapidly evolving. These sandboxes provide a regulatory framework for companies to develop innovations that increase access to capital, enable unique financial transaction models, and develop tools to build finance into new technology.
Arizona (2018), Nevada (2019), Utah (2019), Wyoming (2019), Florida (2020), West Virginia (2020)
Bills Introduced:
Illinois (2019), South Carolina (2019), Texas (2019), Connecticut (2021), Louisiana (2021), New York (2021), North Carolina (2021), North Dakota (2021), Oklahoma (2021)
Blockchain
Blockchain is an emerging technology that has quickly been thrust to the forefront of technological development. Using a highly sophisticated record-keeping system, it has applications for a myriad of industries ranging from banking to logistics.
In order to encourage the growth of this technology, the states of Wyoming and Utah both implemented regulatory sandboxes that included blockchain technology. Wyoming and Utah both opted to include blockchain under the umbrella of their FinTech sandboxes.
However, although many proposed bills have placed blockchain under FinTech, other legislation (e.g., Rhode Island) has opted to specify an entirely separate sandbox for blockchain. This specification is based on the understanding that blockchain has more applications than solely the financial sector.
Passed into Law:
Utah (2019), Wyoming (2019), Hawaii (2020)
Bills Introduced:
South Carolina (2019), Idaho (2021), Louisiana (2021), North Carolina (2021), North Dakota (2021), Rhode Island (2021)
Insurance Technology
Insurance is an extraordinarily complex and dynamic industry. Using insurance sandboxes, innovative businesses have the opportunity to provide insurance services that might be outside of the status quo. By having the ability to offer innovative insurance, companies can explore ways that would help them better serve their customers.
Passed into Law:
Kentucky (2019), Vermont (2019), Utah (2020), South Dakota (2021), West Virginia (2021)
Bills Introduced:
New Hampshire (2020), Louisiana (2021), North Carolina (2021)
Legal Services
The state of Utah’s Supreme Court first implemented a legal services sandbox in 2020. Over the last year, the program has seen great success, being utilized by non-profits, non-traditional legal services, and the use of technology for legal services.
According to a recent report, these innovators have provided legal services to hundreds of individuals, and there has not been a single complaint from consumers or entities. In 2020, California also introduced a legal sandbox through its bar association.
Implemented:
Utah (established in 2020 by administrative order of the Utah Supreme Court)
California (established in 2020 by the state bar association)
Agriculture Technology
Agricultural technology has immense potential as a catalyst to grow the industry, increase profitability, and increase efficiency. Self-driving tractors, drone crop analysis, DNA soil sampling, and other innovations will be part of this dynamic transition. In recognition of this, the state of Mississippi was the first state to propose a regulatory sandbox to promote agricultural innovation.
Bills Introduced:
Mississippi (2021)
Digital Medical Technology
Digital medical technologies carry the immense potential to provide health care services by harnessing the power of technologies such as telehealth, mobile apps, artificial intelligence, and wearable devices to deliver higher quality services. The state of Wyoming passed a law implementing the nation’s first and only digital medical technology sandbox.
Passed into Law:
Wyoming (2019)
Energy Technology
Energy technology is one of the fastest-growing sectors in the country. As worldwide energy demand continues to rise, the need to integrate innovative technologies into the energy sector has increased. In recognition of this, Mississippi was the first state to have an energy technology sandbox introduced in the Legislature.
Bills Introduced:
Mississippi (2021)
Property Technology
The innovative applications for technology in the property sector are immense. Some key technologies being used include satellite mapping and surveying, virtual reality, blockchain, and artificial intelligence analysis of market conditions.
In 2019, the Arizona Legislature passed a bill that established a property technology sandbox. This is the only such program in the nation, making Arizona the friendliest state in the nation for property technology innovators.
Passed into Law:
Arizona (2019)
General Sandbox
In order to facilitate innovative technology developments, regardless of industry, some states have looked at the prospect of general regulatory sandboxes. The general sandbox program provides a more comprehensive innovation environment that frees up businesses to explore multiple innovations across different sectors.
In 2021, after the success of its multiple industry-specific sandboxes, Utah was the first state to establish a general sandbox program. This program came after passage of the state’s several industry-specific sandboxes. This has immense economic potential for Utah as innovative start-ups look to open up in Utah. Other state legislatures have introduced general sandboxes.
Passed into Law:
Utah (2021)
Bills Introduced:
Mississippi (2021), Tennessee (2021)
My Father passed away from Alzheimer’s disease this past December. Alzheimer’s is a cruel disease and watching my Dad suffer from it was especially difficult for my entire family.
Before entering a long-term care facility, my Dad received physical therapy in his home as his physical state declined. The visits did little to help, however. My Mother complained that the therapists were so overbooked that they could not schedule nearly as many visits as the doctor had requested. When they did visit, they rarely stayed for more than a few minutes.
My Mother didn’t know it at the time, but the home health agency that provided my Dad’s in-home physical therapy had little incentive to provide time-intensive, quality care. They had a monopoly on home health patients in the area they serviced. They would keep my Dad as a patient whether my Mother was happy with their services or not.
Home health services enable the elderly to receive care in their homes rather than being institutionalized in nursing homes. And the role of home-based care is about to become more important than ever.
The number of Americans over the age of 75 is expected to nearly double over the next twenty years, according to the U.S. Census Bureau. This aging population is expected to place massive burdens on our healthcare system, especially the long-term care industry.
To address this looming crisis, President Biden has proposed spending an additional $400 billion in Medicaid funds on in-home long-term care services. Home-based care can be more cost-effective than nursing home care, and older Americans overwhelmingly prefer to receive care in their own home.
President Biden is right to look for solutions to the problems with long-term care. But a one-time cash infusion for Medicaid home health services would do nothing to change the real problems in the long-term care industry.
Thankfully, Mississippi does not have to wait for solutions from Washington D.C. There are steps we can take right now that would make a real difference in the quality, accessibility, and affordability of the care that our parents and grandparents receive.
The most obvious reform would be to end the monopolies enjoyed by home health agencies like the one that treated my Father. Those monopolies are created by Mississippi’s certificate of need (CON) laws.
CON laws push more seniors into nursing homes by limiting the availability of home health services. Certificate of need laws require anyone wanting to start a healthcare facility to first prove that there is an unmet need for those services in the community. Mississippi is one of only 14 states that impose CON requirements on home health agencies.
Research shows that certificate of need laws serve to limit competition and prevent the expansion of the home health industry. A 2016 paper concluded that CON laws “act as a direct impediment of expansion of home- and community-based care” and “provide nursing homes with some degree of market power that does not allow the market to respond freely to price changes or federal policies.” Other research indicates that certificate of need requirements decrease the quality of care provided by home health agencies.
If our CON law wasn’t bad enough, Mississippi is also the only state in the nation that has imposed a complete ban on the opening of any new home health agencies in the state for the past 40 years. Instead, the state has chosen to allow existing home health agencies to have monopolies in their service areas.
The Mississippi Justice Institute has filed a federal lawsuit seeking to end Mississippi’s 40-year ban on new home health agencies, as well as the state’s home health CON program. But state lawmakers should not wait for that litigation to conclude before taking the initiative to end these senseless policies.
Our parents and grandparents deserve a healthcare system that can adequately care for them. Monopolies that reduce the supply of care available to them, while driving up the price and decreasing the quality of their care should have no place in Mississippi.
The whole point of the American Dream and our free-market system in America is that people from all walks of life have the opportunity to dictate the direction of their own lives.
The entrepreneur is perhaps the most quintessential example of this sentiment. If someone has an innovative and marketable idea that helps people live better lives, America is supposed to be structured so that he can build off that idea.
However, despite this concept of entrepreneurship being inseparable from the American ethos, small businesses are continually struggling to enter the marketplace in an environment that favors big businesses that can weather the regulations and red tape much easier. This creates what some have called an economic "kill zone" for small businesses as they attempt to grow.
Some may suggest that this is a justification for the further institution of government regulation to ensure a "free" and competitive system. However, the solution may rather be the opposite: eliminating and reforming regulations that have hindered startups and small businesses from gaining the capital required to succeed.
Even before the Covid-19 pandemic, small businesses and startups have struggled with gaining enough capital to find a footing with their respective business plans. Although the pandemic has widespread effects that have been felt by businesses of all sizes, for many larger corporations it has been merely a speed bump.
However, the pandemic exasperated the problems that small businesses already face. In the wake of government-imposed lockdowns and their collateral effects, unforeseen obstacles have left many of them crippled. This is especially true regarding the issue of raising capital.
As an issue compounded by the pandemic, the inability to obtain sufficient credit from banks was already one of the biggest problems small businesses face. Since the financial crisis in the late 2000s, government policy has imposed regulations that seek to protect the economy from poor financial investments.
However, as time progresses, large corporations benefit from low-interest loans, while small businesses and startups are left dependent on government assistance programs.
Regulations may seem like the answer, but they often have the effect of bringing about unintended consequences. Just last year, the NFIB Research Center conducted a study asking small businesses what the 75 most important issues that they faced were.
The first three issues were health insurance, finding and retaining good employees, and taxes, respectively. The fourth biggest issue was unreasonable government regulations that leave them effectively crippled in needless expenses and red tape. While these regulations may appear to be placed to protect our economic system, the reality is that regulations often harm the economy they are supposed to protect.
Some may suggest that the Covid pandemic has helped businesses push the reset button on the government regulation problem by forcing them to move to alternative business platforms such as the internet and by benefiting from government assistance.
However, any sort of solution that is specific to the pandemic can only be temporary at best and leaves entrepreneurs reliant on the government at worst. In order to move ahead on promoting entrepreneurship, public policy should not perceive regulations as the tool to promote freedom.
If the goal is for startups to get the credit and capital they need, policies should permit lenders to take the calculated risk, without the government dictating how it is supposed to operate on every level. If small businesses are to benefit from a free market, then it needs to be free!
Josiah Dalke is a Research Intern with the Mississippi Center for Public Policy. He is a Washington State native seeking a government degree at Patrick Henry College.
Some have propounded that America is the epitome of a capitalist nation. With the largest GDP globally and generations of hard-working individuals behind it, the country has become the center of world financial markets. On the fundamental level, the country has free-market economics, a principle that is grounded in the very Constitution itself.
One might think that with such a background of incredible success, the government would not want to enact policies that would go against this foundation of free-market economics. However, this is not always the case. Rather than leave a working system to continue to work, many in the government have continually tried to resize a shoe that already fit.
Over the past several years, many Americans have become increasingly apprehensive of the encroaching power of government. As the federal government has assumed an arbitrary prerogative to interfere in the private sector at will, financial markets have become extremely sensitive to the fact that the government has expanded its intrusion into free markets.
For instance, in recent weeks, investors have been uncertain about the direction of the Federal Reserve as President Biden considers leadership changes that would be in line with his policy priorities of big government expansion and spending. The concerns of investors are not unfounded. The recent administration has increasingly embraced the policies of Keynesian economics that often prioritize government control of the economy as a key to market success.
To recognize the effects of such a posture of government control towards the private sector, one need not look any further than the nation of China. In an attempt to rein in control of financial institutions, the Chinese government banned financial institutions from trading in cryptocurrency.
This led to an 11 percent drop in the value of Bitcoin in less than 2 hours. Many have grappled with this recent spectacular decrease in the value of cryptocurrency. These are ultimately the shockwaves of government overreach being felt. This is all despite the fact that the Chinese government has no direct policy jurisdiction over the American economy.
If the Chinese domestic policies of economic interference and government control can have such a rippling effect on even the American economy, how much more danger is there when American investors have an ever-encroaching government of their own to deal with? Indeed, the United States federal government itself is proposing even more regulations for cryptocurrency that have made many investors uneasy in an already fluctuating market.
Despite the grand plans and agendas of economic bureaucrats and regulators, such plans beg the question of whether or not government oversight has a consistent track record of bringing about prosperity. If America wants a more prosperous economy, is a conglomerate of government bureaucracies really the way to achieve it? The success of free economies suggest otherwise.
“The advantage of a free market is that it allows millions of decision-makers to respond individually to freely determined prices, allocating resources - labor, capital and human ingenuity - in a manner that can't be mimicked by a central plan, however brilliant the central planner.” -F. A. Hayek
One of the dangers of an ever-evolving technological landscape is that people can often get lost in the technical weeds without looking to the practical benefit.
Such is the case when it comes to technological advances in agriculture, especially in regards to government regulation and control.
The state of Mississippi is ripe with opportunities to advance agricultural technology further. AutoProbe, for example, is a rising technology in the state that uses robotics to help gather uniform soil samples and analyze them. This enables farmers to work the land more efficiently and helps with greater crop yields.
Furthermore, farmers use drone technology to make strategic agricultural decisions from information gathered from the air. But not only does this technology enable an aerial view of farms, but drones also help find patterns of defoliation, small canopies, and color changes in crops. All of these factors impact the final crop significantly, and drones can more quickly and efficiently determine this information.
Finally, smart-monitoring technology helps farmers conserve resources and energy to most effectively produce food for consumption. Combines that would take three times as long to harvest a crop can now be done quickly and efficiently thanks to the ability to monitor rain and radar simply from one’s phone. This is even easier to accomplish with hands-free satellite guidance.
Despite these immense benefits, some policies have proved to be a boundary to the prosperity that comes from common-sense policies that allow innovative farmers to be the most effective. The problem is that many state and federal regulations on agriculture are overzealous in the mitigation of safety risks -often to the detriment of agricultural efficiency and innovation.
Take the state of California, for example. According to the California Code of Regulations, an operator must accompany all self-propelled equipment when in motion. This means that regardless of whether the machinery in question needs an operator, an operator is still required to legally handle it, depleting the purpose of the machinery being “autonomous.”
Such a policy may be put in place for the sake of safety but does not consider the practical effects as it dissuades farmers from investing in more efficient, automatic machinery. After all, why would a farmer purchase expensive autonomous machinery over manually operated machinery if regulations remove the practical benefits of automation? It simply does not stand to reason, which is perhaps why not many states have adopted the same policy.
However, unreasonable boundaries to the use of technology in agriculture do not stop with autonomous machinery. Although there may often be freedom to produce certain agricultural products using technological innovation, there have been technology restrictions on how farmers can sell those same products. The regulatory boundaries follow farmers even if they try to use certain technologies to sell what they produce.
For instance, many states, including Mississippi, have “cottage food laws” that prohibit farmers and others from using the internet to sell processed agricultural products, such as pickled products, dried fruits and vegetables, jellies, and many other goods.
This effectively stops the use of mobile apps and other technologies that would allow farmers to use the internet to sell such products to potential customers. By limiting such agricultural activities to in-person sales, there is a government-imposed boundary on farmers trying to take advantage of even basic internet technology to sell their products.
The key to moving agricultural technology policy forward in Mississippi is finding solutions to policy problems, expanding technology horizons, and giving farmers the chance to press ahead without being legally restricted to outdated methods.
Innovation has always been the key to American economic success. Giving our agriculture system the edge it needs to succeed has to be of the highest priority when legislators gather to find solutions.
Mississippi farmers should have the freedom to use technological innovation as a way to work their farms as efficiently as possible as they seek to provide a livelihood for their families. Public policy should take proactive steps to provide safeguards against technology regulations so that they have the full liberty to do just that.
Josiah Dalke is a Research Intern with the Mississippi Center for Public Policy. He is a Washington State native seeking a government degree at Patrick Henry College.
Interest in cryptocurrency, such as Bitcoin and Ethereum, has seen an increase over the last several years. People throughout the globe continue to be intrigued by the concept of a currency that has no physical backing but rather one that is fixed in cyberspace.
This has led to a new playing field that is rapidly working into the mainstream financial system. However, as this new system of currency is becoming less theoretical and more concrete in practice, there is an increasing risk for government control and centralization.
There are currently two primary approaches to digital currency: cryptocurrency and central bank digital currencies (CBDCs). Cryptocurrency is a specific kind of digital currency that holds to the principle of value through scarcity. Rather than having a fluctuating base value like paper currency, Bitcoin and other cryptocurrencies operate in a constrained system (in Bitcoin, for example, there will only ever be 21 million tokens) to establish a base value. Governing bodies do not determine this value, but it instead lives on distributed ledgers or blockchains.
CBDCs, in comparison, operate based on government oversight and centralization of resources through a central bank. This system is newer than other digital currency systems and has grown out of the potential shortcomings of the cryptocurrency system.
For example, some have argued that having a centralized and controlled digital currency system would best allow for tracking transactions between parties and maintaining a country’s capital controls. In other words, by treating CBDCs like cash, the value of the currency can fluctuate based on its variable supply. This makes it easier for the central banking system to regulate how the digital currency operates within the system, allowing for more financial control by the central government.
While the Mississippi legislature has not passed detailed legislation concerning digital currency, state and federal governments across the country have taken a particular interest in this area over the last several days.
For example, U.S. Federal Reserve Chair Jerome Powell has advocated that greater regulation be placed over cryptocurrency (if not establishing a federal CBDC) to mitigate potential risks to financial stability. This announcement came after last week’s discovery that Bitcoin’s worth had dropped nearly 30 percent after China had established new regulations upon the sector and has wavered in value since.
Many interpret these new findings as a justification to increase the government’s involvement with digital currency. However, the danger of CBDCs is that they undercut the free market principle of competition within the context of various methods of currency.
Additionally, cryptocurrency, as it stands, provides a private option that prevents the problem of inflation that we see with government-centralized currency. The mere concern of financial instability is insufficient to justify centralization. After all, as Heritage Foundation’s Stephen Moore notes, “nearly every recession and depression of the last century can be traced to government mistakes, not necessarily private ones.”
As this new system continues to develop, it is all the more crucial to keep in mind the dangers of centralization and the giving up of financial control to the government.
Josiah Dalke is a Research Intern with the Mississippi Center for Public Policy. He is a Washington State native seeking a government degree at Patrick Henry College.
In the wake of a series of high-profile cyberattacks, the world has had to respond to concerns about security issues surrounding critical vulnerabilities.
The attacks have hit multiple sectors with far-reaching implications. CNA Financial, a major commercial insurance firm, was recently hit by a massive ransomware attack, crippling its operations until a ransom was paid. In a separate incident, ransomware infected Colonial Pipeline, a fuel pipeline supplying a large portion of the eastern United States, leading to fuel shortages and economic disruption. In an additional instance, hackers attacked the Irish Department of Health, and the system has yet to be restored.
It has become apparent that in a day of cloud computing, artificial intelligence, mobile apps, and automated industry, the economy and society are tied directly into the cyber world across every sector. Consequently, cybersecurity has become more important than ever as criminal actors work harder and harder to exploit the vulnerabilities of a digitally connected world.
Cybersecurity advancements are ultimately a question of who can innovate faster—the good actors versus the bad actors. On the one hand, bad actors exploit security vulnerabilities by using innovative methods to compromise security. On the other hand, cybersecurity developers have the task of trying to stay one step ahead of the cybercriminals. These innovations require aggressive and dynamic steps to beat the hackers at their own game.
However, cybercriminals have an advantage over their cybersecurity counterparts that can often be overlooked. When they run their criminal operations, it is needless to say that they do not generally subject themselves to government policies that might burden legitimate businesses, such as paying high taxes and complying with business regulations. This gives cybercriminals an advantage.
Much of this discussion is similar to the problems with restricting law-abiding citizens from gun ownership. If the law-abiding citizens are restricted from what guns they can defend themselves with, criminals will naturally just violate those same gun laws in order to arm themselves for criminal acts.
In the same way, it is important to note that many of these cybercriminals are members of sophisticated criminal organizations that freely leverage their illegal operating practices to get an edge over their cybersecurity counterparts. While cybersecurity firms are dealing with burdensome policy hurdles such as high taxes, long regulatory approvals, and red tape, cybercriminals can operate with reckless abandon as long they are able to evade law enforcement.
In the wake of cybersecurity compromises, it is easy for government policy to try to intervene and quickly provide short-term proposals for long-term problems by demanding that companies meet certain cybersecurity standards.
Nevertheless, it is unlikely that such standards will likely be able to solve the problem fully. Regulations cannot provide a lasting solution to the dynamic world of cybersecurity. Even those companies that may be fully “government compliant” can still be vastly compromised on the cybersecurity level if they are just trying to meet minimum government standards.
While there have been many calls for expanded government involvement in cybersecurity, the vast nature of the problem gives the government a very low chance of being able to fill the gap on its own.
From a public policy perspective, it is vital to look at the bigger picture. State and national policies should be implemented to encourage innovation itself through regulatory reforms like regulatory sandboxes.
From the business policy angle, policies should be enacted that make it easier for start-ups to launch than before -including start-up cybersecurity firms. This not only lowers the policy burdens placed on cybersecurity firms and expands the amount of economic growth. It catalyzes the variation that is essential to maintain a cybersecurity ecosystem that can quickly evolve and respond to emerging threats.
New companies bring new innovations and ideas to the table. This adds to the arsenal of available security tools.
Implementing policies that promote a business-friendly environment has true potential for greater growth and advancement that carries promises of a more secure cyber-ecosystem. While regulations, tax burdens, and other barriers to tech start-ups may have been overlooked as an issue that affects the United States' ability to have strong cybersecurity, the top-down effects can be felt across every sector.
When market forces are permitted to work freely, the free society will continually develop stronger means to protect itself. This is no less true in the cybersecurity sector. An unhindered free market has the real capability to bring even more strength into the cybersecurity sector and lead the fight to out-innovate malicious cybercriminals.
I’m Matthew Nicaud, the Tech Policy Specialist at MCPP, and your host for the Tech Talks interview series. In our Tech Talks, we engage with tech leaders, policy makers, and entrepreneurs to discuss the tech world in the Magnolia state and promote public thought on key tech issues.
I recently had the pleasure of interviewing Senator Angela Hill. We discussed a variety of engaging issues related to innovation and the promotion of free market policies. Senator Hill serves as the Chair of the County Affairs Committee and the Vice-chair of the Accountability, Efficiency, Transparency Committee.
Senator Hill recently introduced two bills, SB2976, and SB2975. These bills would create platforms for innovation. Known as a “regulatory sandbox,” these platforms would allow innovators to introduce their innovations to the market without being suppressed by heavy-handed regulations.
These bills would be among the first of their kind in Mississippi and would lay a pathway for innovators to increase opportunity in the state. We recently interviewed Senator Hill to discuss these bills and how they would impact innovation in Mississippi.
Senator Angela Hill: Innovation is a critical part of maintaining a competitive economy and expanding opportunities. An economy that stagnates will decline. If the state government regulates innovators so much that they can’t even grow and test their ideas, then there is little opportunity for growth. Measured deregulation is an economic development issue as much as it is a regulatory issue. Instead of setting up more state programs, the state should get out of the way and let hard-working Mississippians generate prosperity in an open economy.
By definition, innovation is new and disruptive to the status quo in a positive way. New innovations often allow for new job opportunities, solve problems, lead to greater efficiency, and generate business growth. This is incredibly beneficial from an economic perspective. Despite all these benefits, regulators sometimes misunderstand innovators. This can lead to companies being forced to fulfill complex and burdensome regulations that stifle innovation.
For instance, Vizaline is a prime example of the state of Mississippi stifling innovation through an overzealous regulatory board that brings suits against private companies in a crony protectionist fashion. Vizaline uses publicly available land descriptions to create a geospatial rendering of property parcels through computer software. After years of litigation, the suit against Vizaline cost state taxpayers and this innovative company a lot of money. Additionally, this same board unsuccessfully sued another company prior to Vizaline, and the taxpayer was on the hook for this large bill too.
The board eventually conceded the case and changed the regulations in favor of Vizaline. Vizaline now operates in multiple states across the Southeast, yet it is troubling that the legal battle had to happen in their home state of Mississippi. This speaks volumes about why we desperately need regulatory reform in this state. We have plenty of anti-competitive statutes on the books that we need to get rid of as well as a sound check on these burdensome regulatory boards. The regulatory sandbox is a step in the right direction. We need more small business innovators to be welcomed, not hindered. Government just needs to get out of the way of innovation.
There should be safeguards in place that allow Mississippi innovators to develop their innovations and build more successful businesses. To that end, I am advocating for practical solutions that lower the regulatory burden in our state. These practical solutions address the issue through policies such as regulatory repeal, occupational licensing reforms, and regulatory sandboxes.
Matthew: What is a regulatory sandbox?
Senator Hill: It is the key solution I am using to be proactive in making Mississippi innovation-friendly. A “regulatory sandbox” program grants a waiver to the program participants, allowing them to be exempt from any unnecessary regulatory requirements while developing an innovation. I introduced two bills that put this proposal forward.
The first bill was SB2975. This bill had a particular focus on allowing for innovation in the energy sector. This would include energy management software systems, energy trading via blockchain, energy efficiency development, and other energy innovations. Although energy sandboxes have been allowed under limited circumstances in other states, Mississippi would be one of the first states to implement a regulatory platform that accommodates energy innovators actively.
The second bill was SB2976. This bill takes a broader approach and allows any innovator from any industry to be exempt from unnecessary regulations over a specified period of time during the innovation development. This would be groundbreaking legislation. A similar measure was just successfully implemented in Utah, and it received a robustly positive response from entrepreneurs in the state. There are so many Mississippi innovators that have ideas to bring to the table. We should make it easy for them to put their ideas to work by not smothering them with regulations.
Matthew: How would regulatory sandboxes benefit everyday Mississippians?
Senator Hill: Regulatory sandboxes would help by encouraging innovation to happen right here in our home state. The people of this state want to see new businesses and ideas happening in their own communities and not just in faraway corporate offices. By having regulatory sandboxes, we are providing a platform for everyday Mississippians to have a chance at pursuing their bright ideas.
Another thing to consider is the small business angle. According to the Small Business Administration, 99 percent of Mississippi businesses are small businesses. When you look at innovation development from a small business owner's perspective, many don’t have the resources necessary to meet complex regulatory requirements. Sure, big companies can often afford to meet all the excessive regulatory requirements that it takes to get their innovations approved. But even big businesses are leaving states like California that make it difficult for their innovators. In order for innovation to expand in Mississippi, state policy has to protect innovators from unnecessary regulatory obstacles.
Matthew: Could regulatory sandboxes potentially make Mississippi more economically competitive with other states?
Senator Hill: Absolutely. Regulatory sandbox programs have been successful in several states across the country and around the world. States with regulatory sandboxes have seen a consistent track record of growth and development across multiple economic sectors. For instance, several states have instituted regulatory sandboxes in the financial technology sector. They have seen companies coming to do business because of that freedom to explore technology concepts without the burden of unnecessary regulation. Other successful regulatory sandboxes that have allowed for innovation include insurance, energy, and legal services. The model has been extremely popular with start-up companies that don’t have the amount of capital it would take to meet complex regulatory requirements.
When businesses consider whether they want to come to our state (or stay in our state), many will look at how friendly we are to innovation. Other states are welcoming them with open arms. Why should Mississippi be left behind? By allowing innovators to set up shop in our state, Mississippi has the potential to tremendously grow as businesses bring their talent to the state and build our economy with their skills. This is a commonsense policy. Let’s forge ahead to make Mississippi a destination for the best and brightest innovators by removing regulatory boundaries.
You can learn more about the Mississippi Technology Institute here: https://mspolicy.org/mississippi-tech-institute/