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Following Visit To Uber Headquarters, Rubio Discusses Regulatory Impediments To American Innovation On CNBC

Mar 25, 2014 | Comunicados de Prensa

Rubio: “Yesterday I chose to go to Uber’s headquarters here in Washington, DC. It’s a car service company which is not being allowed to enter many markets in Florida simply because the established taxi cabs and the established transportation companies don’t want the competition. That was never the reason for regulation.”

CNBC’s “Squawk Box”
March 25, 2014

CNBC’s Joe Kernen: “Senator Marco Rubio is fired up about America’s regulation system. He says it’s impeding investment and free enterprise, and this morning he’s unveiling his new National Regulatory Budget bill. Joining us now is Senator Rubio. It’s timely for us because of something we were talking about yesterday, Senator. There was a piece, I don’t know if you saw it in El New York Times business section over the weekend. The New York Times had no problem explaining why entrepreneurs are fleeing France and heading to London. 

“They even quoted a couple of guys who said, I think I actually have the quote that we ran yesterday and I asked my colleague Andrew about it, but the guy said, here it is. It was called ‘As Entrepreneurs Flee.’ But he said — okay, we’re not going to show it. He actually said, ‘The endless regulations and taxes in France make it impossible to do any business there.’ And I said, ‘Why can The New York Times see that it matters in France, but they never seemed to tie any of our problems, in this country, to regulations and taxation?’ And I was told by my colleague, Andrew, that it’s a matter of degree, that the regulations in this country have not risen to the level where they’re detrimental to any type of corporate activity.”  


Senator Marco Rubio: “First, I did see the article and I did think it was illustrative of some of the things that we are facing. Look, I think the point is this, and here’s the part that I’m really focused on, is the aspect of growth called innovation. Innovation, doing something that no one else is doing, is the way you can explosively grow an economy. Regulations are an impediment to innovation for two reasons. First, because they’re a barrier to entry in terms of the cost associated with compliance. But second, because oftentimes innovations are used as a tool by an established industry or an established company to keep potential competitors out. So we do need regulations. We want safety and we want to make sure that the customer is protected, the consumer is protected. But regulations should never be used as a defensive weapon, by an established industry or an established company, to keep out competition. 

“That’s why yesterday I chose to go to Uber’s headquarters here in Washington, DC. It’s a car service company which is not being allowed to enter many markets in Florida simply because the established taxi cabs and the established transportation companies don’t want the competition. That was never the reason for regulation. 

“So we’ve unveiled a National Regulatory Budget bill, which we’ll file today, which basically says, ‘Every year the federal government will come up with a regulatory budget, a number of what regulations should cost the economy. And if the existing regulations in any given year exceed that number, that budgeted number, they will have to reduce regulations per agency until they are under that budgeted cost.’”  

Kernen: “Senator, we’ve seen how many regulations are introduced per year. I mean, there are people that follow this. The regulations that were introduced 20 years ago, you never take them off the books. So every time we add new ones, it’s almost like accumulative. Didn’t President Obama appoint some guy that he was going to look at all the old regulations and get rid of a lot of them, anything that was being detrimental? Was that just to look good? Did anything come of that, that was actually productive? You know what I’m talking about, right?”  

Rubio: “Yes. And here’s the problem with that. It would be the same as if you have a massive leak in a ship and you’re trying to shovel out water or pail out water with a small pail or a cup. For every regulation they’re cutting, they’re implementing hundreds of new ones to replace it. And so therefore, the give and take on that is just too overwhelming. And the point you make is actually right. Many of these regulations — one, they’re on the books — are almost impossible to take away. And look, this is not about anti-regulation. We do need some regulations in order for the free market to work, particularly for the public health and safety and to protect consumers. 

“But you go too far on this stuff, and innovation becomes difficult, if not impossible, in many sectors in our economy. So if you look at the parts of the economy where you’ve got massive amounts of growth through innovation, they’re unregulated spaces, like the creation of apps where a company sold recently for what I think is $300 million per employee. And on the other hand, you see areas, like Tesla, where there are states like New Jersey that won’t allow you to buy one because car dealerships and established industry does not want people to be able to buy a car over the Internet.”  

CNBC’s Andrew Ross Sorkin: “Let me ask you about Tesla. That’s an interesting regulation. There are a number of dealerships, obviously, in your state. You would have no problem with allowing Tesla to sell direct?” 

Rubio: “Absolutely not. I think it’s an established product. I think customers should be allowed to buy products that fit their need, especially a product that we know is safe and has consumer confidence built beneath it. I’ll tell you something else you can’t do in Florida. You can’t buy wine online. If you decided to buy a fine wine online, directly from the grower, the maker, you can’t do it. You’ve got to go through this three-tiered system, where it’s got to go through some wholesaler and distributor to send it to you. Again, an existing, established industry that is using regulations to crowd out competition and consumer choice.”  

Rubio: “The bottom line is that, time and again, what you see are established industries and established companies who use their access to government to impose and protect regulations that protect their status quo at the expense of competitors.

“Imagine if Blockbuster video had been able to pass a regulation that said, ‘The only way you can watch movies after they leave the movie theater is if you rent on a rental DVD or video cassette.’ We’d never have Netflix. You’d never have video streams.”  

Kernen: “Senator, we’ve had free market guys on say that, like Welch and others, say that every regulation that’s introduced from here on out should be viewed through the prism of what it does for job creation, because that’s paramount in all of our minds. And I think that fell on completely deaf ears on this administration. I don’t think they ever considered job creation. 

“Now, I’ve seen the EPA tell me, to the decimal point, how many lives they will save with carbon caps or something. They say, ‘We’ll save 6,200 lives if we get rid of sulfur.’ Yet they never are able to calculate any job losses based on the regulations that they’re imposing. To me it’s staggering in an environment where we hear so much happy talk about trying to help people that are in need to get a job, and the regulations just keep on coming from the same people expressing this faux empathy for people that don’t have a job.”  

Rubio: “Right. And that’s what the National Regulatory Budget is geared to do, is to force a cost-benefit analysis on every new regulation, and even on existing ones, to get under the budgeted amount. That’s exactly the cost-benefit analysis we do not have happening right now. When a new regulation is proposed, there’s all these proposed benefits of what the regulation may or may not do. No one is looking at its costs — cost of compliance, its cost of job creation and especially its cost in terms of snuffing out potential innovation in that space.”  

Sorkin: “Senator, are there any regulations you do like, though?”  

Rubio: “Sure. Look, for example, I want our water to be clean. When I turn on the tap in my home, I want to make sure there isn’t poison in there. I want to make sure that the airplanes I get on can make it to my destination safely. And I’m happy to know there are regulations that oversee how those aircrafts are maintained. I mean, I’m not 100% in agreement with everything the FDA does. I’d like to have the world’s best sunscreen available in the U.S., which is not, because of the FDA dragging its feet. But I’m also glad to know that, in terms of the chain of custody, the medicines that we take in the U.S. are not counterfeits. 

“So of course regulations are important. But the purpose of regulations is to protect the consumer and to protect the public. They should never be allowed to be used as a weapon to crowd out innovation or competitors. That’s why big government fails. Because big government helps the people who have made it at the expense of the people and the ideas that are trying to make it.”