Incumbent Capitalism

This is one of my big beefs with the way we think about capitalism in this country: We fundamentally support what I call incumbency capitalism. We don’t support innovation capitalism. What’s the difference? Every rule around tax credits in the oil industry is set up by, and influenced by, the lobbyist from the oil industry. The royalty rates aren’t free auctions for offshore drilling; they are influenced by the oil industry. Depreciation policy is incumbency policy meant to benefit large capital expenditures instead of R&D investments. So, we can easily change a few of the rules, encourage more R&D and maybe less capital investment or other things. And almost all policy, because it is influenced by incumbents—and not just in oil and gas, but in nuclear, in solar, in wind—is influenced and shaped by incumbents. And I call that incumbency capitalism.”

Vinod Khosla, Managing Partner, Khosla Ventures

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