Regulatory shenanigans cause harm not just by suppressing entrepreneurial energy but also by misdirecting it. The economist William Baumol has argued that if the policy background means that the best way to get rich is by building a new device and selling it, then entrepreneurial energy will flow into innovation, but if it is simpler to profit from lobbying government to set the rules up in favour of an existing technology, then all the entrepreneurial energy will go into lobbying.
