In 1865, the British Parliament passed Locomotive Act, requiring every self-propelled vehicle to be preceded by a person on foot carrying a red flag. The law was designed for steam engines lumbering through market towns.
By the time it was repealed in 1896, France and Germany had built automobile industries that Britain would spend decades trying to match. Regulatory caution, when it outlasts the risk it was designed to address, produces losses that are real, large and invisible.
