Fill out the brief form below for access to the free report.
Letting Innovators Innovate
While last week I took the New York Times to task for publishing a truly meretricious article that warned of the “downsides” to economic growth, the Old Grey Lady redeemed itself with a fascinating piece celebrating 30 new innovations that no one knows are coming but have the promise to truly affect our lives in the near future. The list itself is entertaining and informative: The innovations include a better functioning (and theft-proof) bicycle, much better cleaning solutions for bathrooms, clothes that can charge electronics, and better-looking movies, among other things. The scale and scope of the list left me with two thoughts. First, if someone — and that includes the author of the 30 new innovations list — had tried to predict what was going to be on this list two years ago, I suspect many, if not most, of these would not have made it. True innovation can be difficult to foresee even a short way along the horizon. Venture capital investors know this and spread their investments across a wide array of different companies and technologies, hoping that at least a few bear fruit. But governments have yet to come to grips with this uncertainty. Instead, public officials tend to use scarce R&D dollars on specific technologies — solar power and car batteries, to name a couple — and then risk the wrath of the electorate when these technologies are slow to the market or never pan out at all. The moral of the story ought to be that our government’s not particularly good at identifying potential growth industries, and it shouldn’t try. Merely maintaining an environment that encourages the private sector to invest in such research and development (while devoting the government’s scarce research dollars to more basic research) is a more productive avenue to increase productivity and economic growth. One good example of this in the Times’s list is adaptive cruise control, which locks a car into a specific distance from the car in front of it rather than a specific speed. Research has shown that even a small fraction of cars operating with adaptive cruise control could dramatically increase the amount of traffic that can travel on a road before it runs into congestion problems. The current administration (and, to be fair, previous ones as well) has devoted billions into building expansive light rail mass transit in places with low density that has virtually no impact on congestion. Adaptive cruise control has the potential to do more to reduce congestion than the sum total of all the light rail projects combined. The second point is that true innovations benefit everyone. To be sure, some of the 30 new ideas will at first be solely the province of rich dilettantes, as Bruce Bartlett notes was the case with the cell phone. Today’s luxury is tomorrow’s necessity, as smart phones, high-definition televisions, cell phones, iPods, the Walkman, stereos, air conditioning, and so on demonstrate the inevitable dissemination of technological innovation down the income ladder. While electric clothes and a steal-proof bike may be priced out of the reach of the masses upon their release, if they prove popular they will reach the hoi polloi sooner or later.
TARIFF-IED: Trade Talk with Matthew Rooney
Bush Institute-SMU Economic Growth Initiative Director Matthew Rooney breaks down the trade conflict with India.
How Trade Spreads Holiday Cheer
It is projected that the average American household will spend more than $1,000 during the holidays this year.
Deporting Salvadorans May Lead to Economic Decline
We should think carefully about a policy whose major impacts are likely to be reductions in employment and economic activity here at home, and increased instability and lawlessness along our borders.