Also, I see for the queue has to be address of what seems to a growing obsession with innovation.
On one level I actually don’t think much will come of all of this talk, but its so widespread that just in expected value terms its worth addressing.
As a short introduction, it is certainly true that innovation is why our lives are so much more pleasant that those of our ancestors. But, it is a mistake to draw a straight line from innovation to improvements in living standards.
The innovation has to do something that matters and matters to a lot of people.
So before going wild over innovation, we might want to ask – what would you like to do?
Now to be sure there is innovation generated preference. I.E.: “If I had asked them what they wanted, they would have said a faster horse”
However, we should think about what it would really take to draw more out of this type of evolutionary process.
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Monday ~ February 13th, 2012 at 12:14 pm
Morgan Warstler (@morganwarstler)
Reduce taxes on serial entrepreneurs to nada.
Consumers don’t know what they want until they see it, the more things they see/taste/try the more innovation we’ll have.
The reality is, you don’t miss what you don’t have now, so even though we could have spun the Internet up 10 years earlier with freer markets, that is not known – so we can’t miss it.
Current SMB tax code encourages owners to keep their profits in their current venture rather than pass it through and go do something else. This biases the best at creating newcos to wait longer than they should.
When the best and brightest don’t want to pretend they should be in charge of allocating capital, and instead desperately try to make consumers happy… god will be in his heaven and all will be right with the world.
Monday ~ February 13th, 2012 at 12:55 pm
Curt Doolittle
Just trying to counter your obsession with consumption, the denial of the importance of production, of incentives and of the information necessary for calculation.
Innovation decreases prices, and wealth signaling subsidizes research and development – without which luxury goods like automobiles, televisions, washers and dryers, even makeup and hair products would never become consumer goods. Innovation is the source of disequilibrium. And all increases in consumption are made possible by the creation of a disequilibrium that makes it possible for capital to be risked in order to create a new method, product or service.
The difference between the left and the right is largely one of differing interpretation of the value of entrepreneurship. The ‘left’ assumes it happens by magic and momentum. The Libertarians and the ‘Right’ believes it is hard, dangerous for participants, a fragile sentiment and uniquely western in its pervasiveness.
There is no equilibrial steady state. The natural state of man is endemic, malthusian, egalitarian poverty. The only way out of endemic egalitarian poverty is individual property rights, numbers, money, capital concentration, truth telling, contracts, rule of (common) law, science and literacy. In other words, those with innovative ideas need the least friction from fellow ‘shareholders’ to invest in opportunities. And even then, the problem over the long term is controlling the malthusian fertility of the underclasses.
(I wont even get into the problem of the median IQ necessary to establish and perpetuate certain norms.)
-Curt
Tuesday ~ February 14th, 2012 at 6:42 pm
Lord
The left loves innovation, it just recognizes that much of what passes for it is rent seeking while the right see rent seeking as their natural born advantage.
Monday ~ February 13th, 2012 at 1:33 pm
IVV
Curt has it right: the purpose of innovation is to decrease prices.
In essence, it’s a question of efficiency. An innovative process is an efficient process–it provides more utility for a similar level of inputs than preceding processes. Most importantly, it allows for the utility to be consumed by a larger fraction of humanity, because of this reduced price.
Humanity’s greatest successes occur when the benefit can be shared in the widest manner possible. Literacy’s a great example of this. We are able to train, educate, and bring on line more human capital because we can write things down and leave them for other people to pick up and learn from on their own time. Literacy was still valuable when it was a skill held by the elite, but shifting literacy to the general population allowed for much more.
As a result, the solution I see to Curt’s “underclass” problem is in improving the underclass. The greater access the underclass has to innovation, the greater benefit to everyone. Of course, that’s far more easily said than done, and there is great debate on how to approach it… but that’s where the debate and research should lie.
“Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage — to move in the opposite direction.” -Albert Einstein
Monday ~ February 13th, 2012 at 2:23 pm
Becky Hargrove
Even though innovation is the prime mover of monetary economic growth, it is restrained in that it is forced to work at the margins. In other words, there is no way to make innovation an exponential benefit all the time, because of the distillation (of resources) required for monetary flow. So we make do with incremental change that hopefully happens across broad spectrums. However, that does not mean exponential economic growth is not possible; only that it is not possible to achieve in the monetary terms that require a steady production set point. (or excessive knowledge rents for that matter) What would I like to do? Pull the lid off of potential exponential growth that taps into local wealth and community,and multiple production set points. These things take time…