Also coming out of Elon Musk's talk was an interesting revelation about why we've seen so little innovation in the U.S. auto market. As I mentioned in my prior post, he founded a car company and a private space company. That's why his comment about the car market actually came out of him explaining the difficulties in private space travel.


I would imagine that there has long been consumer demand for space travel. Obviously, there are some significant cost problems in making that happen. Yet many new products have faced similar problems in their creation being expensive. Usually, however, innovation and technology drives that price down so that, if there is a market for the product, that market exists before too long. That usually occurs through competition. What makes private space travel different? In a word: regulation.

Although there is high capital involved and unusual technical problems, Musk explains that the regulatory barriers to entry in private space travel were daunting. It turns out, he ran into similar problems with his car company. He said about making cars:

It's crazy how much regulation there is on every nuance. It's amazing. You have to have all sorts of experts in what's called promulgation, which is regulatory compliance, which varies by country and in some cases by state.

Despite what some might have thought, regulation had long kept the big U.S. auto companies safe. Only now, when the big U.S. auto companies' place in the market is so pitiful that it seems that anyone could do better than they can, does the risk of entrance seem low enough that the potential reward appears to be high enough to cover the costs in dealing with all that regulation. Why don't we have better, more efficient cars in the U.S.? Maybe the blame should fall on regulators for stifling competition, and consequently, innovation.


More WIRED liveblogging here:

Part III: Engineers Don't Need Management?

Part II: A World Without Moody's

Part I: Profiting Without Revenue

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