Government Regulation and Outrage

If you were paying attention to the press last week, you probably read a headline like this one from TechCrunch: "Not From The Onion: Minnesota Bans Stanford’s Unauthorized Free Online Education." Or this headline from VentureBeat: "Dear Minnesota, free online education is a good thing (yeah, really)." While the sarcasm is appreciated (really, all of us from Minnesota are quite nice about these things), it was the articles themselves that turned me from a bemused spectator to an angry commentator.

TechCrunch writes:

This story of government overreach is so outrageous that we have to re-iterate that it is, in fact, real: the State of Minnesota has banned popular free online education site, Coursera ...


... the silly incident underscores a widespread problem between government regulators and startups: 20th century consumer and worker rights laws are hindering innovation.

VentureBeat writes similarly:

That, of course, is as ridiculous as it is ineffective. Coursera is delivered by the free and open Internet, so unless the state of Minnesota wants to start censoring the Internet, good luck.

You would think the government passed a law banning puppies and chocolate.

Coursera today released a statement that clarified many of the issues related to students taking classes in Minnesota. As Coursera noted, "Some states, like Minnesota, have laws to regulate higher education dissemination, mainly in the interest of protecting their citizens from sub-par education." [emphasis mine]

It is important to emphasize that the law in question was passed almost 30 years ago, mostly in response to the burgeoning for-profit university industry that were quickly making headway across the country. Despite the conspiracy theorists of some members of the press, these laws were not passed to protect state universities from competition, but rather in response to an issue of concern: consumers were signing up and paying for university degrees in which they received sub-par credentials.

If you don't understand why these regulations were important, than maybe it would help to listen to a recent episode of Frontline that investigated the scare tactics of the for-profit higher ed industry. In the context of the approach that industry took to its consumers, it is surprising that there aren't even harsher laws on the books to protect consumers.

Should Coursera be covered under the law? No. It's an entirely different institution, which is now recognized by the MN Office of Higher Education. Politics and the law worked as intended.

But I want to step back and address this issue of "20th century consumer and worker rights laws [...] hindering innovation." These laws don't come in a vacuum. Most of these laws came about because private industry pursued unethical practices that harmed consumers, and required a legislature to take action.

The issue of Uber strikes as close to the heart of this issue as any other recent company. Uber is a great service that I have enjoyed. They have a new business model, and they are setting a high bar in customer service, transparency, and ethics. But, there is a reason that taxis and their drivers are regulated. Bad meters, extortion, and longer routes are just some of the issues that plagued the taxi industry before consumer protection laws.

These laws are indeed protecting incumbents today, and it behooves Uber to argue its case to politicians, much as Coursera made its case in the past few days. But let's not forget the entire history of these laws. Some consumer protections are necessary in the marketplace to ensure that ethical practices are rewarded. For every Uber and Zazzle, there are a dozen firms that would jump at the chance to make a quick swindle if they could (some industries in their entirety thrive off of such practices).

I want innovation as much as possible (it's what pays my bills, in a literal sense). But I also want to know that the goods and services I purchase meet certain standards. The law can facilitate the market when done right, and the outrage of the technorati toward 20th century laws should change to a much cooler approach that emphasizes methodical improvement over feverish exasperation.