Should entrepreneurs have to beg government for permission?

By Aaron Rice
October 28, 2020

We know the world changes around us on a regular basis. We can order anything we want on our phone and have it delivered to our front door. Well, except for alcohol. We can use that same phone to catch a ride, rather than having to rely on a government monopoly for service.    

These are just a couple of the more obvious and more recent changes. But it is up to us to adapt and keep up, and for most of human history we’ve done a pretty good job at that.

So, what has been holding us back? Usually the government, and our permission-based society. This became all the more relevant and all the more noticeable at the beginning of the COVID-19 pandemic. 

Think back to two pressing needs at the time: face masks and hand sanitizer. Empty shelves dotted grocery store aisles. Obviously demand increased, but the private sector can adapt. What was the hold up? Government, specifically the Food and Drug Administration. 

Distilleries wanted to produce hand sanitizer, something that makes a lot of sense, but they faced a maze of local and federal regulations before they could begin. And if you want to make a face mask, you must first go through the FDA’s approval process, which can take months. In both cases, the regulations were eased, and manufacturers were allowed to ratchet up production.  

But should these and many of our regulations exist in the first place? Yes, we need safety, but we can’t be so inflexible that government red tape blocks production on a needed item during a pandemic. That’s obvious, but there are plenty of other areas where government does not allow us to adapt and does not allow entrepreneurs to put their skills to use. 

That is why we need to shift from a permission-based society to a default of permissionless innovation. And it is something we can do in Mississippi, a state that has long trailed the rest of the country when it comes to economic growth. Because too often, government creates the framework, a few enter that field, and then “capture” regulators to make it more difficult for new entrants or technology.

The sharing economy is a great example of this. For decades, government approved taxicabs had a monopoly on the service they provided. They encouraged regulations and worked with local governments to create them. Then ridesharing companies were launched and all of a sudden, they had competition. And the outdated model couldn’t compete with prices, availability, and overall service. Naturally, they went back to government to restrict Uber and Lyft. And local governments like Oxford were happy to comply. 

After all, these new people didn’t come to us for permission. 

So how can we change that and why is this necessary?

COVID-19 impacted more than our ability to purchase face masks or hand sanitizer. Our education systems, restaurants, retail, airlines, and hospitals have all undergone changes to their business model because of the pandemic. We as a state should be encouraging their innovation, rather than placing roadblocks.  

An industry neutral regulatory sandbox offers an opportunity for these businesses to navigate around, and temporarily suspend, problematic rules and regulations, allowing businesses to adapt and compete, based on their own ability and market response rather than their ability to win favor from politicians.

And we need to do this before everyone else.


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