A comment published in my local alt-weekly newspaper raised a provocative question:
Funny, isn’t it, how when some tech billionaire “disrupts” an industry, bankrupting businesses and putting people out of work, it’s presented as a good thing, yet when the state “disrupts” an industry to cut back on fossil fuels pollution and other environmental damage, the disruption is presented as a problem.
I live in Portland, Oregon, and comments like these are sure to generate a lot of nodding heads and silent finger snaps.
The comment refers to Oregon’s Advanced Clean Truck (ACT) Rule, which went into effect Jan. 1 and mandates that a steadily increasing share of truck sales be of the electric variety. Modeled after a similar law in California, the ACT Rule requires that 7% of new heavy-duty truck sales in Oregon this year be electric, climbing to 40% by 2032.
The rule’s proponents argue that it’s needed to “address the public health crisis caused by persistent diesel pollution.” But while the goal of reducing emissions may be laudable, the execution has left much to be desired. Daimler Trucks North America, the nation’s largest heavy-duty vehicle manufacturer, temporarily halted diesel-truck sales in Oregon because of ambiguities in the rule’s implementation?.
Since the comment was meant to provoke a response, let’s respond.
Put simply, these market and government disruptions aren’t the same. Very different forces drive them, and they lead to very different outcomes.
Market Disruption: Driven by Choice
When a firm—even a firm led by a tech billionaire—“disrupts” an established industry, it isn’t as if it happens because they waved a magic wand and changed the rules overnight. Indeed, they may not change the rules at all.
Apple’s iPhone disrupted the mobile-phone market. Its introduction led to the demise of Blackberry and knocked Nokia and Motorola back on their heels. Apple didn’t need a government mandate to displace Blackberrys and flip phones. Instead, consumers willingly adopted the new technology. This willingness reflects an essential economic principle: voluntary exchange benefits all parties involved.
This kind of disruption is a natural part of how markets work. New ideas replace old ones when they do a better job of satisfying consumer demand. Sure, some businesses may close, and some jobs may disappear, but new opportunities usually arise in their place—a process the political economist Joseph Schumpeter called “creative destruction.” While Blackberry, Nokia, and Motorola scrambled to remain relevant, the iPhone created an entire multi-billion-dollar ecosystem of app developers and e-commerce that was unthinkable before the smartphone.
Someday, electric vehicles (EVs) may well displace those with internal-combustion engines. But today is not that day. They do not yet satisfy widespread consumer demand. Many households don’t have the ability to charge their vehicles at home and “range anxiety” is widely recognized as one of the top reasons why people don’t switch to an EV. Portland has the state’s only electric-battery charging station for heavy trucks.
Government Disruption: Little or No Choice
When governments decide to “disrupt” an industry, it’s usually through mandates, bans, quotas, or rate regulation—rules that everyone has to follow, whether they like it or not. These disruptions aren’t about offering people better choices, but enforcing certain outcomes.
Take, for example, rules aimed at phasing out fossil fuels, such as increasing Oregon’s electric-heavy-truck sales to 40% by 2032. While reducing pollution is important, it’s unclear whether these policies will actually, on net, reduce emissions, affect climate change, or benefit consumers or businesses.
When the government “disrupts” via strict regulations, businesses can’t always adapt quickly enough. Jobs may be lost, not because consumers have chosen something better, but because companies are forced to cut back or shut down. Worse, the disruption might not even deliver the intended benefits. If the technology isn’t ready or the infrastructure to support it doesn’t yet exist (e.g., charging stations for electric trucks), the disruption can lead to higher costs and wasted resources, without solving the original problem.
Accountability Matters
Another big difference between market and government disruption is accountability. When a company tries to shake things up and fails, it’s their loss. Investors lose money, and the company dials back or goes out of business. Think of the many startups that never made it past their first year. Such business failures may be a disaster for the company, but they’re a success for the economy. Market disruption only sticks around if it works—if it actually makes people’s lives better in some way.
Government disruption, on the other hand, doesn’t have the same feedback loop. If a policy doesn’t work, it’s not the policymakers who suffer—many are often out of office before the failure is apparent. It’s taxpayers, businesses, and workers who bear the cost. And unlike a failing business, a bad policy doesn’t just disappear; it often lingers, creating more problems over time.
Some of the harms of government disruption can be softened when enacted through the give-and-take of the legislative process, where the worst proposals can be scrutinized, discussed, and rejected. But some of the most onerous regulatory disruptions—such as Oregon’s ACT rule—are imposed by nonelected bureaucrats who face few consequences for their harmful decisions.
Disruption with Purpose
This isn’t to say that all government intervention is necessarily harmful. There are times when the government can play a helpful role, such as funding research or building infrastructure that makes it easier for new technologies to succeed. But for disruption to work—whether driven by the market or the government—it must align with what people need and want. It also needs to respect the practical realities of how industries operate.
The key difference is this: market disruptions arise because they offer something better. Government disruptions often happen because someone in power thinks they know more and better than the people and firms affected by the regulations. That’s a big distinction, and it’s why we should be careful about conflating market disruptions with government disruptions.
Why the Double Standard?
So, returning to the original question: Why do we celebrate one kind of disruption and criticize the other?
The answer is simple. Market disruption usually improves people’s lives by giving them better options. While sometimes well-intentioned, government disruption often forces changes that people might not be ready for or that don’t work as intended.
Think of it this way: if someone invents a faster, cheaper, and cleaner way to ship goods, businesses will jump at the chance to use it. If, however, the government tells firms to switch to a more expensive and less reliable method, the reaction will be very different. One is a choice; the other is a mandate. And that’s why people view them differently.
Disruption isn’t good or bad on its own. It depends on how and why it happens. Market disruptions—driven by choice and competition—tend to foster progress and innovation. Government disruptions—driven by mandates and regulations—often create more problems than they solve. Yes, there is a double standard, and that’s a good thing.
