Each regulation has a cost. Of course privacy and sensitive data protection is a nice to have, but is it worth the marginal cost it imposes? Or another way to see it: When you have a large number of costly regulations, you raise the cost to the point that the EU tech industry underperforms:
Practical: have a “regulatory budget”, where you impose a limited amount of regulations that offer the most benefit without making the industry uncompetitive relative to international competition. (or give up on the industry, for example solar, batteries, EV manufacturing, consumer goods seem to be all China now)
USA Way: in practice the USA Federal government is slow to impose regulations due to centuries old accidents of history* and the way wealth corporate lobbyists are able to strongly influence the government. There is also a broader cultural ethos of entrepreneurship and free markets.
For example, at the Federal level : cigarettes are still legal to sell, fossil fuels still have no carbon taxes imposed.
These are among the lowest hanging fruits possible, the evidence is beyond any reasonable argument, and yet no action has been taken, likely due to the lobbying by the wealthy companies who stand to lose.
This happens to also impose a “regulatory budget” and it happens to allow the USA tech industry to be dominant.
At least, that’s what I think in that I don’t think anyone is a ‘live player’*, none of these governments are trying to maximize any sort of utility function, they just each grind slowly forward to different sets of tradeoffs and are influenced by history.
*3 branches of government, where each has a veto on the others, and there are 1990s laws that happen to give tech companies wide latitude to do whatever they want. Most of the last 20 years, at the Federal level there has been deadlocks, where different parties control different branches, leading to less new legislation and a series of crises where essential tasks like adjusting the ‘debt ceiling’ are not performed.
Thanks for the detailed and clear answer! I mostly agree with you.
Each regulation has a cost. Of course privacy and sensitive data protection is a nice to have, but is it worth the marginal cost it imposes? Or another way to see it: When you have a large number of costly regulations, you raise the cost to the point that the EU tech industry underperforms:
There is a clear difference in mindset like you said. Europe is less inclined towards entrepreneurship and more towards a powerful state that regulates the economy. I won’t lie, I am often disappointed when looking at it on the entrepreneur side.
But overall, and I think that’s the whole point : most europeans are fine with it because of the tons of protections it brings to citizens compared to… well pretty much everywhere else. (again this is looking at a very broad picture, there are huge differences in Europe between countries, people, etc...)
Here, GDPR is often looked at through the eyes of americans and obviously it’s completely against the US way : that was actually the point, exactly like the tax on digital services and other “attacks” against tech giants. Americans can say they hate the GDPR, that’s fine with me but always saying “this is so stupid” is imho misunderstanding its goal.
Each regulation has a cost. Of course privacy and sensitive data protection is a nice to have, but is it worth the marginal cost it imposes? Or another way to see it: When you have a large number of costly regulations, you raise the cost to the point that the EU tech industry underperforms:
https://www.forbes.com/sites/markminevich/2021/12/03/can-europe-dominate-in-innovation-despite-us-big-tech-lead/
Ideal : Do Everything The Proper Way.
Practical: have a “regulatory budget”, where you impose a limited amount of regulations that offer the most benefit without making the industry uncompetitive relative to international competition. (or give up on the industry, for example solar, batteries, EV manufacturing, consumer goods seem to be all China now)
USA Way: in practice the USA Federal government is slow to impose regulations due to centuries old accidents of history* and the way wealth corporate lobbyists are able to strongly influence the government. There is also a broader cultural ethos of entrepreneurship and free markets.
For example, at the Federal level : cigarettes are still legal to sell, fossil fuels still have no carbon taxes imposed.
These are among the lowest hanging fruits possible, the evidence is beyond any reasonable argument, and yet no action has been taken, likely due to the lobbying by the wealthy companies who stand to lose.
This happens to also impose a “regulatory budget” and it happens to allow the USA tech industry to be dominant.
At least, that’s what I think in that I don’t think anyone is a ‘live player’*, none of these governments are trying to maximize any sort of utility function, they just each grind slowly forward to different sets of tradeoffs and are influenced by history.
*3 branches of government, where each has a veto on the others, and there are 1990s laws that happen to give tech companies wide latitude to do whatever they want. Most of the last 20 years, at the Federal level there has been deadlocks, where different parties control different branches, leading to less new legislation and a series of crises where essential tasks like adjusting the ‘debt ceiling’ are not performed.
https://medium.com/@samo.burja/live-versus-dead-players-2b24f6e9eae2
Thanks for the detailed and clear answer! I mostly agree with you.
There is a clear difference in mindset like you said. Europe is less inclined towards entrepreneurship and more towards a powerful state that regulates the economy. I won’t lie, I am often disappointed when looking at it on the entrepreneur side.
But overall, and I think that’s the whole point : most europeans are fine with it because of the tons of protections it brings to citizens compared to… well pretty much everywhere else. (again this is looking at a very broad picture, there are huge differences in Europe between countries, people, etc...)
Here, GDPR is often looked at through the eyes of americans and obviously it’s completely against the US way : that was actually the point, exactly like the tax on digital services and other “attacks” against tech giants. Americans can say they hate the GDPR, that’s fine with me but always saying “this is so stupid” is imho misunderstanding its goal.