The road to innovation fatigue is paved with good intentions embodied in laws, regulations, and even corporate policies. Leaders at all levels must be aware of uninteded innovation-killing consequences that may follow from their good intentions. Staying in touch with the “voice of the innovator,” as we advocate in Conquering Innovation Fatigue, is vital in avoiding such pitfals.

The Wall Street Journal from Dec. 4 offers two columns with examples of innovation fatigue factors that can be introduced by well-intended actions. The first article I wish to mention is “Near-Zero Rates are Hurting the Economy,” an opinion column from David Malpass, president of Encima Global, LLC. He argues that the artificially low interest rates created by the Federal Reserve Bank in the name of rescuing the US economy have actually been driving capital overseas and starving small companies–the leading sources of most innovation, economic growth and job creation, as studies from the Kaufmann Foundation and others have shown. Here is an excerpt:

[M]ore than a year after the heart of the panic, the Fed is still promising near-zero interest rates for an extended period and buying over $3 billion per day of expensive mortgage securities as part of a $1.25 trillion purchase plan. Capital is being rationed not on price but on availability and connections. The government gets the most, foreigners second, Wall Street and big companies third, with not much left over.

The irony of the zero-rate policy, coupled with Washington’s preference for a weak dollar, is a glut of American capital in Asia (as corporations and investors shun the weakening U.S. currency) and a shortage at home. For gold and oil, the low-rate policy works, weakening the dollar so commodity prices go up and providing traders with ample funds to buy into the expanding bubble. Those markets are almost daring the Fed to try to break out of its zero-rate box.

But for small businesses and new workers, capital rationing is devastating, spelling business failures and painful layoffs. Thousands of start-ups won’t launch due to credit shortages, in part because the government and corporations took more credit than they needed (because it was so cheap).

Already countries with higher interest rates, Australia for one, are viewed as less risky because they have room to cut rates if there’s another emergency. This wins them capital and jobs that might otherwise be ours.

According to International Monetary Fund data, U.S. GDP has fallen to 24% of world GDP from 32% in 2001. And as U.S. capital escapes the weak dollar and high tax rates, the U.S. share of world equity market capitalization has fallen to 30% from 45%. This leaves the U.S. alone with Japan at the bottom of the monetary heap, with rate expectations so low they repel investment.

When single individuals or organizations make policies that affect millions, it is far too easy for good intentions to translate into new problems, unless the decision maker is essentially omniscience. Failing ominiscience, perhaps market forces should be given a try, allowing the invisible hand mediated by the mechanism of price to determine the right allocation of resources. But even with a reluctance to use market forces to set interest rates and allocate capital, wiser decisions could be made by policy makers if they understood the personal side of innovation and the barriers faced by the innovators seeking to propel our economy forward. Unfortunately, the real innovation engines of the future aren’t likely to be powerful, highly connected people today, but may be a lone entrepreneur or president of a small company today that could grow and create many thousands of jobs, if only given a chance. Giving credit and bailouts to well-connected dinosaurs can be based on good intentions, but it may be a misallocation of resources that only makes things worse for the most important prospective innovators and job creators out there.

A second article in the Dec. 4 Journal is “Sarbanes-Oxley on Trial” (p. A24), an op-ed piece that briefly mentions the economic burdens this 2002 law has imposed, and urges government to modify its implementation to be more accountable. There is much more that could be said, some of which we discuss in our book. Sarbanex-Oxley is especially burdensome on small, innovative companies and has driven many innovators to look outside the United States in launching a start-up. Intended to make businesses safer and more accontable, it has slowed job creation and economic growth, in the eyes of some experts. Unintended consequences. It’s something every policy maker and business leader needs to be worried about. Are you listening to the voice of the innovators who have to live with your decisions? That could be the difference between success and innovation fatigue.