Watching the uproar against Uber in New York, I am reminded of 19th-century protests that raged in England against the new “horseless carriage.” Horse bus companies, upset with the convenience and increased speeds of mechanized travel, lobbied the British government successfully to introduce Red Flag laws. As a result, drivers of self-propelled vehicles were required to have a person walk in front waving a red flag to warn horse drivers. The law put strict speed limits on predecessors of the automobile, trying to stave off competition to horse-drawn carriages. Essentially, it attempted to force the new machines to proceed more slowly than horses.
Today, the act is a little known footnote in history, a stark reminder of the misguided resistance â often in the form of regulation â that accompanies technological progress.
The most infamous example of rebellion against technology is the Luddite uprising, which was started by textile workers and skilled artisans in England in 1811. They were afraid that the mechanized looms and spinning jennies of the Industrial Revolution would cost them their jobs. Essentially an uprising against efficiency, it failed to halt the ensuing pervasiveness of machine-made cloth.
Two centuries later, we are seeing calls in New York to limit the number of Uber vehicles. While the city administration has backed away from imposing a cap on the number of Uber cars, it is not clear the issue is completely off the table.
We now live in an “application economy” where advances in enterprise software are redefining existing business models. Another successful example of this is Airbnb, which is using technology to pair hundreds of thousands of homeowners with extra space with travelers across the globe.
The app economy today is growing faster than we are even able to measure it. At last count, there were 1.5 million apps available to Android users on Google Play and 1.4 million on the Apple App Store. App developers made more money last year than the entire Hollywood movie industry.
Recent research we conducted with Oxford Economics shows that most businesses are increasing their investments in new forms of software: 43 percent say that software drives their competitive advantage today, and 80 percent say that it will drive their competitive advantage three years from now.
Limiting Uber, Lyft, Airbnb and others like them won’t stop technological progress any more than putting limits on the horseless carriage in 19th century England saved the horse as the common form of transportation. Regulatory moves by governments can help businesses sometimes, as when the U.S. government broke up AT&T‘s monopoly. This drove competition that directly helped spur American advances in information technology. Thwarting competition through regulatory action, on the other hand, is protectionism.
For smart governments, the time is now to look forward and embrace the new economy and enable it by ensuring we have the skills to build and run it. Digital skills are now critical to national infrastructure. Governments need to act now to develop programs that will amplify the potential for wealth creation that the application economy presents.
By 1900, Red Flag laws had been repealed and the automobile revolution was under way. Today we cannot imagine a world without cars. In some similar form or other, this tale repeats itself with every successful technology. The annals of human progress tell us that resistance to new technologies that produce economic growth and efficiency is invariably futile.
Commentary by Michael P. Gregoire, the CEO of software maker CA Technologies, formerly known as Computer Associates International.