When it comes to Innovation are Our Best Days Behind or in Front of Us?

Stephen DeAngelis

October 17, 2014

“Robert Gordon, a curmudgeonly 73-year-old economist, believes our best days are over,” reports Timothy Aeppel (@TimAeppel). “After a century of life-changing innovations that spurred growth, he says, human progress is slowing to a crawl.” [“Economists Debate: Has All the Important Stuff Already Been Invented?The Wall Street Journal, 15 June 2014] That sounds suspiciously like the statement, “Everything that can be invented has been invented,” that was purportedly made by Charles Holland Duell, who was the commissioner of the United States Patent and Trademark Office from 1898 to 1901. Apparently he said no such thing. In fact, in 1902, Duell said: “In my opinion, all previous advances in the various lines of invention will appear totally insignificant when compared with those which the present century will witness. I almost wish that I might live my life over again to see the wonders which are at the threshold.” [“Chances for the Inventor,” The Friend, Volume 76, 1902] Aeppel reports that Gordon’s Northwestern University colleague, Joel Mokyr, “a cheerful 67-year-old economist,” holds the opposite view of his friend. Mokyr, like Duell, believes the best is yet to come. He “imagines a coming age of new inventions, including gene therapies to prolong our life span and miracle seeds that can feed the world without fertilizers.”

 

It turns out that Gordon doesn’t really believe that innovation will stop; he’s just not certain that today’s innovations are moving mankind forward. He argues, as do many other pundits, that the innovations we are seeing emerge could do more harm than good to the human race. Where Mokyr envisions economic growth spurred by “rapid innovation driven by robotic manufacturing, 3-D printing and cloud computing,” Gordon sees “years of job losses, stagnant wages and rising income inequality.” Who’s correct? In a sense, they both are. The advancements predicted by Mokyr will undoubtedly change the business and economic landscape dramatically and permanently. As that shift takes place, there will be a period of adjustment during which jobs will be lost and new industries created. The question is whether those new industries will create enough good paying jobs to keep a burgeoning population employed and secure. Like Mokyr, British entrepreneur and venture capitalist Luke Johnson (@LukeJohnsonRCP) remains sanguine about the future. “The relentless march of progress can never be halted,” he writes, “no matter how much one pines for past glories.” [“There’s no sense clinging to a golden age,” The Financial Times, 10 January 2012] He continues:

“Look at dinosaurs such as Kodak, the world leader in photography for over a century. Its very purpose was the capture of memories. But the death of silver halide film, killed by the unstoppable rise of digital imaging, appears to have done for the US corporate giant. Kodak tried hard to reinvent itself, first in digital cameras and then printers. But it could never replace the margins and cash flow that it enjoyed from the legacy analogue business. … All manner of organisations will face such a fate in due course. Who will read printed newspapers and magazines in five years? Quite possibly even physical books will disappear – and how on earth will the publishers maintain their profits then? It seems to me inconceivable that traditional broadcasters or postal companies such as Royal Mail can maintain their economic models for very much longer. Meanwhile conventional retailers are crumbling under the assault of online merchants such as Amazon. They must succumb or adapt radically in the coming few years. Yet there is a whole new generation of digital media and retailers rising up to supply us with services and goods. Constant, painful restructuring is the way capitalist societies renew themselves.”

The clear implication is that with renewal comes hope of a brighter future. John Gapper (@johngapper) shares Johnson’s optimism; especially when it comes to America’s future. He admits that America has challenges. “It is struggling to solve its fiscal deficit amid acrimony in Washington,” he writes. “It is short of well-paid jobs for the middle classes; its infrastructure is ageing; and the number of visas for the educated immigrants who fuelled the rise of Silicon Valley has fallen.” [“Innovation drives America’s reinvention,” The Financial Times, 3 October 2012] Despite these challenges, Gapper is “struck by [America’s] amazing, enduring capacity to reinvent itself through technology, a tradition reaching back to Benjamin Franklin and George Washington’s science experiments. It has often surprised with inventions such as aircraft, automobiles and computers. It should not be a shock that it still can, despite the worries about its comparative decline.”

 

Virginia Postrel (@vpostrel) is also optimistic about the future. She was surprised to read a headline splashed across the cover of an issue of the MIT Technology Review that read, “You promised me Mars colonies. Instead, I got Facebook.” [“No Flying Cars, but the Future Is Bright,” Bloomberg, 16 December 2012] Speaking of Mars, you have to admit that it’s a remarkable achievement that India has put a satellite in orbit around that planet on a relatively cheap budget. And India, more than any other country, is talking about making its cities smart. That’s progress of the highest order. Postrel notes, however, “The current funk says less about economic or technological reality than it does about the power of a certain 20th-century technological glamour: all those images of space flight, elevated highways and flying cars, with their promise of escape from mundane existence into a better, more exciting place called The Future. These visions imprinted themselves so vividly on the public’s consciousness that they left some of the smartest, most technologically savvy denizens of the 21st century blind to much of the progress we actually enjoy. … The world we live in would be wondrous to mid-20th-century Americans. It just isn’t wondrous to us. One reason is that we long ago ceased to notice some of the most unexpected innovations.” I agree with Postrel. She concludes:

“Technologists who lament the ‘end of the future’ are denigrating the decentralized, incremental advances that actually improve everyday life. And they’re promoting a truncated idea of past innovation: economic history with railroads but no department stores, radio but no ready-to-wear apparel, vaccines but no consumer packaged goods, jets but no plastics.”

We live in world where some of its poorest citizens now have access to smartphones and online banking. They may not be planning a trip to Mars, but their lives are better off as a result of continued innovation. “Innovation,” asserts Jack Gold, founder and principal analyst at J. Gold Associates, “is what makes new markets. It’s what creates new opportunities for companies to grow dramatically. And it’s what creates demand when consumers don’t even know they want something.” [“The Legacy Trap: Getting caught by the innovation curve,” VentureBeat, 26 December 2012] An article in the Economist noted, “Technological progress does not require all technologies to move forward in lock step, merely that some important technologies are always moving forward.” [“Has the ideas machine broken down?” 12 January 2013] While we may not be making progress on all fronts, like flying cars, in the area of communications we’ve witnessed nothing short of a revolution. At a 2013 conference, Peter Diamandis (@PeterDiamandis), chairman and chief executive of the X PRIZE Foundation, told participants, “Three billion new minds are coming online who have never been able to help contribute ideas, solve problems and challenges. And those three billion people are coming online when education and health care are going to make them better educated and healthier. I think it’s going to be driving tens of trillions of dollars in the global economy. … Add artificial intelligence on top of that, and we’re going to start seeing a rate of innovation that will scare all of us.” [“An Explosion in Innovation,” The Wall Street Journal, 21 January 2013]

 

From the arguments presented above, it should be obvious that I believe our best days are still in front of us. We have numerous challenges that need to be addressed, but we will have billions of more minds applying themselves to those challenges. I think we’re going to be amazed.