Acton Institute Powerblog

Elon Musk on the Problem with Regulators

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RiskAhead“Most of economics can be summarized in four words: ‘People respond to incentives,’” says economist Steven E. Landsburg. “The rest is commentary.”

When governments create a regulation, they are creating an incentive for individuals and businesses to respond in a particular way. But the people who create the regulations — government regulators — also respond to incentives.

As Elon Musk, the CEO of Space X and Tesla Motors, explains,

There is a fundamental problem with regulators. If a regulator agrees to change a rule and something bad happens, they can easily lose their career. Whereas if they change a rule and something good happens, they don’t even get a reward. So, it’s very asymmetric. It’s then very easy to understand why regulators resist changing the rules. It’s because there’s a big punishment on one side and no reward on the other. How would any rational person behave in such a scenario?

 

 

The Entrepreneurial Vocation

The Entrepreneurial Vocation

Endowed with particular natural talents, the entrepreneur is the primary agent of economic progress in the modern world. Yet while the free society is highly dependent upon the entrepreneur for its material existence, the vocation of business is relatively unappreciated within the religious community.

Visit the official website at www.vocationofbusiness.com

Joe Carter Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).

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