Tag: Guest Contributors

Some Evidence

Some case studies of innovation begin with a scientific advance such as the identification of the photoelectric effect or other quantum phenomenon and traces its application to an invention dependent on that advance such as the laser. Other descriptions are more ethnographic, observing an industrial ecosystem, then focusing in on its niche like the Connecticut River Valley manufacturing industry of the 18th century and its development of interchangeable gun parts. More quantitative accounts begin with economic dynamics by measuring the role of capital, labor and then try to show excess growth attributed to changes in technology processes or investment.

All of these approaches seek to account for growth not related to easily measurable factors by looking at newly discovered insights or newly introduced technologies that confer some advantage to an offering competing in a market. Many of these accounts are useful in documenting the precedent conditions to productive change. They have been reduced to a list in many papers and articles on innovation and economic growth. They include access to basic research and related intellectual property, capital, talent, geographic or virtual proximity and so on. Other less concrete factors are also named such as entrepreneurism, leadership or vision. This body of literature is rapidly growing but the more that is written about innovation and the greater the attempts to reduce it to an economic model, the further the goal seems to move. The sudden drop in the total factor productivity in the US after the 1970s seems less understood the more that is written about it. Commentators, whether economist or philosophers, business leaders or politicians, have moved from qualitative analysis to social pleading yet offer no reliable, let alone predictable, hypothesis.

To some, the loss of American vitality is seen as an emergency, a surrendering or dissipation of the most valuable trend in human history. The loss of a cultural and economic heritage that transformed the world from a brutal place to a prosperous one. To others the change was the inevitable correction as resources were redistributed by political systems evolving away from their imperial structures of exploitation. Why do some students and proponents of innovation see it as somehow related to culture? Why do discussions of innovation seem to invite political explanations? At any level of analysis, it would seem innovation has almost nothing to do with politics and philosophy, rather a question of science, economics, and commerce. It is true that politics influence and at times determines investment in science and seek to manage economies, if not specific markets, but does that mean we can find the source of innovation in political processes?

The issue of what changed that precipitated the reduction in growth of the US economy and, apparently, innovation has a stock list of suspects. Government regulation is a commonly cited culprit. In the case of nuclear energy this seems irrefutable. Corporatism is another clear candidate. Anyone who carefully analyzes big company structures and processes, from their silo functions to their anti-competitive strategies and general slow-footedness knows that the landscape of a shrinking number of large companies dominating legacy industries can only be poison to innovation. It is hard to consider these and other familiar hypotheses that purport to account for the decrease in innovation, such as failed schools, family breakdown and the loss of faith, without turning away from the question in despair, even horror.

Perhaps it is better to start with a more direct examination of innovation in the past versus today. For example, the slowing of progress in individual transportation in the last fifty years. Why don’t cars fly? It is harder to make a car fly than roll so innovation today won’t look like innovation a century ago. This is the low hanging fruit explanation, flying is harder, but what does that mean? Well, making a car fly is not an incremental change from progressively making cars roll faster and more efficiently. In fact, making a car fly may not be an innovation at all. Innovation is not the invention of new things for their own sake. Innovation solves replication problems. What replication problem does a flying car solve? How much faster does individual transportation need to move over the earth’s surface than a mile a minute? And, for that matter, how much faster than a mile a second does flight need to achieve? The low hanging fruit explanation does seem to touch on something useful, but not in the ordinary sense of the barrier of increasing complexity. It also points to the question of need.

Commentators point to aging American cities with their 19th century subways and mid-20th century skyscrapers as evidence of our decline. (We might observe, as an aside, that no one ever complains about the age of buildings in Rome or Paris) They point to slower travel times, increasing real energy costs and shortening life expectancies in the same breath to demonstrate the drop in the pace of innovation. These seem alarming symptoms of our loss of progress. But are they really? How high does a building need to rise? How often should they be replaced? How many millions should a city accommodate? Subways certainly age, need to be maintained and improved, but should a civilization’s innovative energies be focused on subways? Surely this is not a problem of complexity, nor was the decision to abandon supersonic transport. These are choices that have little to do with innovation as normally discussed.

It is clear that in the postwar period, in different forms in Europe, the Americas, Asia, and the rest of the developed world, much of these societies’ productive energy was focused on “social progress”. Some would call much of it, the changing role of women, concern for the environment, other post-imperial transitions like industrial nationalization and the rise of the welfare state, social engineering that at least in name might be considered innovation. These large reallocations of resources and dislocations of existing social structures undoubtedly had equally large effects on the focus of our productive energies, if not to derail them. For much of the industrial world social progress represented a deliberate regression away from the culture of Manhattan Projects and moon shots. Social progress led not to building more advanced cities but housing projects for the poor, which, in turn, led many to leave cities altogether. In America, the suburban “innovation”, born of the federal interstate highway program, made things cheaper, more convenient at first, and increased standards of living substantially for at least two decades. But it did not just increase the marginal quality of upper middle-class family existence by eventually sending most women into the workforce and expanded the average size of a suburban house and the number of cars in their driveways.  Living standards per capita measured in occupied square feet, miles driven, cost per student, ballooned in the 1970’s and 1980’s until even lower middle-class families living outside of cities occupied larger houses, drove further and spent more per student on education, even consumed more calories, than their counterparts in any other society. Was this not productive change?

Many would say no. Those social and economic changes may have been desired after the two wars and the prospect of global extinction, but they did not yield what innovation always does. Doing more with less, rather the opposite. Reallocation and baby booms might be products of innovation, but they do not bring it about. But the social and material changes in family structure and standards of living do suggest an answer to our question of why building and subway construction have not advanced. They didn’t need to, certainly not with the suburbanization of society and the massive expansion car culture.

There are parallels of this redirection of innovation in energy, in air transportation, even in medicine. A central concept to the development of new medical therapies is the idea of “unmet need”. Still at the dawn of the 20th century most people in the world died of gastric perforation. This mortality was directly tied to waterborne infections and contaminants so the unmet medical need for gastric disease was very high in the year 1900. Epidemiology showed not just mortality, but morbidity, other suffering than death such as poor nourishment, pain, and loss of work, were also caused by digestive disease. At first, slowly through the improvement of urban waste management and water treatment, and then more quickly after World War II through development of a series of pharmacotherapies such as antibiotics, then H-2 antagonists, PPI’s and finally triple antibiotic therapies, the medical unmet need for upper gastric disorders has largely been addressed.

This does not mean that no one suffers an upset stomach anymore. Prosperity and the overabundance of calories ensure that people still need digestive therapies. But as a public health priority, upper digestive disease has fallen from top to bottom. This is reflected in the demand for infrastructure professionals and new upper digestive pharmacotherapies that address digestive disease. Public engineering in the first half of the 20th century in America was a leading professional undertaking as the nation built its cities to postwar capacity. Those same H-2 antagonists and PPIs were the world’s largest selling and most lucrative drugs to treat aging patients born while H. Pylori, a water born pathogen, was prevalent. Today large-scale hydro-engineering projects occur at a small fraction of their former frequency and the gross sales of gastric pharmacotherapies and the innovative creation of new ones are comparatively tiny and few.

Is the contraction of PPI markets and the reduction of sewer treatment projects evidence of an innovation crisis or reduction in unmet need? Why has subway and high-rise construction investment fallen? In the 1920s as the New York City subway system was completed and was the envy of the world, the city had between 8 and 9 million residents that paid a billion fares per year. Those numbers are still largely the same today. Before the completion of most high-rise housing, New York City reached its steady state of population. By the 1970s and during the decades of the decline in US total factor productivity, national firms and their employees were abandoning New York City, raising vacancy rates. So why build and innovate more subways, buildings and their associated technologies? What was the unmet need? The answer is, there was none.

The only objection raised by these facts, that even the poor in the West have excessive basic resources in calories, in utilization of individual transport, spending on education and housing space, is that people are still poor and life for many is grim. But is this a problem of innovation, of productive growth? Would making energy free, as once imagined, or food free, as it nearly is in terms of minimum daily calories, make life less grim? The answer is no, with the sole exception of the extremely poor, defined by the World Bank as less than $1 dollar-a-day of income, a vanishingly small population in the US and one not attributable to jobless or homeless conditions but mental illness and drug addiction. There is no evidence that more square feet or more individual driving or more spending on education will meaningfully reduce the true unmet needs of lower income people. It may make car companies, energy companies, landlords and teacher unions richer but greater innovation in individual transportation, education, energy and food production will not reduce unmet needs in these areas because they are already so low. No amount of additional spending above the already impossibly high per student costs to simply teach a first grader to read will improve literacy rates. Even $100,000 per student per year would not improve the reading scores of the urban and rural poor. And if it did, such improvement would not be due to innovation, which we have defined as doing more with less. Rather, by reducing the scarcity of these resources, suburbanization has led to their inflated worthlessness. Cheap goods and services have led to the devaluing of them to the point of laxity. Is reflected in obesity rates, lowering test scores, falling birthrates, which for any other living system of organisms, would rise with expanding resources. That is until their own waste chokes them. This is the cradle of our heroes, The Muppets.

End of Part 3

Post Script

Ok, if necessity is actually the mother of innovation, lots of needs have been met in the last 100 years, but why did growth stop, the ASB becomes irrelevant and suburban consumerism take hold and become the millennial Muppet cradle sometime in the nineteen seventies? And what about Frank Sinatra? Stay tuned for Part 4.