Technology Innovation and Opportunity in (Less Than) Free Markets

Free market thinking seems to have lost much of its public support throughout the world and government involvement is now being viewed as critical to survival to not only the financial world but various other aspects of business. There are direct, and usually pernicious, consequences to government involvement with markets but in an era where "change" rather than rational analysis is what is shaping the views of many what seems to matter is not how what caused the sorry mess we are in, but rather the best quick fix for the pain that inevitably follows from irresponsibility, greed and naivete.

Let's consider how regulation and attempts to nationalize industries and capital markets will impact technology innovation and advancement.

A column in today's Telegraph UK by Ambrose Evans-Pritchard points to Europe as being in far worse shape than the U.S. and likely to suffer deeper economic (and perhaps political) consequences in the long (and perhaps not so long) run. This not only reinforces a negative gut feelings about Europe's prospects that I have harbored since the 1970s, but it also seems to dovetail nicely with the analysis that I carry out here at NanoMarkets. For example, the European approach to nanotechnology regulation is governed by the "precautionary principle," which Jeffrey Matsuura in his nanotech policy book describes as the "application of guidelines that ensure a high level of protection for the public, even when the scope of the threat is highly uncertain."

Disincentives to creating new technology though excessive regulatory or tax policies, restricting the flow of capital to worthy recipients, protectionism or favoring certain technologies at the expense of others in the name of "the common good" are bad for everyone.

Innovation will always seek the path of least resistance. If Europe is shunning or stunting the development of "risky" technologies, then expect a flow to the U.S., where we have venture capitalists that continue to look for good ideas as much as they ever did and even more so for Asian countries, who are less politically correct about technology policy.