Jul 22, 2015 - 10:00am

Elon Musk Knows More About Regulation Than the Regulators


Former Senior Director for Emerging Issues and Research, U.S. Chamber Foundation

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Elon Musk, chairman and chief executive officer of Tesla Motors, stands with a row of Tesla electric vehicles following the opening bell ceremony at the Nasdaq Marketsite. Photo Credit: Daniel Acker/Bloomberg
Elon Musk, chairman and chief executive officer of Tesla Motors, stands with a row of Tesla electric vehicles following the opening bell ceremony at the Nasdaq Marketsite. Photo Credit: Daniel Acker/Bloomberg

This post originally appeared on uschamberfoundation.org.

“There are few industrialists in history who could match Elon Musk's relentless drive and ingenious vision,” says Ashlee Vance, a Bloomberg Businessweek journalist, in his new biography of the talented head of SpaceX and Tesla. And when Musk sat down with government regulators, in a story Vance recounts later in the book, we finally found out what happens when an unstoppable force meets a stationary object.

A few years ago, Musk met with the Federal Aviation Administration (FAA) to discuss approvals for a particular SpaceX effort. He couldn't believe what he was being told in the meeting—Musk found the bureaucrat's statements "silly"—and told the subordinate's boss so. What Musk received in reply was the verbal equivalent of a pat on the head.

"His manager sent me this long email about how he had been in the shuttle program and in charge of 20 launches or something like that and how dare I say that the other guy was wrong," Musk said. 

So what did Musk do? "I told him, not only is he wrong, and let me rearticulate the reasons, but you're wrong, and let me rearticulate the reasons. We're trying to have a really big impact in the space industry. If the rules are such that you can't make progress, then you have to fight the rules" [emphasis added].

What Musk then said captures what the private sector faces when dealing with government regulators:

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?

And the answer, of course, is that government does nothing. It has time and money on its side. That is why efforts at subjecting regulators and the rules they enforce to consistent review, as well as making the procedures businesses must follow be more transparent, are gaining attention these days.

After all, if a billionaire on a mission to save mankind struggles to navigate government, what hope is there for the average person?

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About the Author

About the Author

Former Senior Director for Emerging Issues and Research, U.S. Chamber Foundation