In Praise Of Exuberant Growth: Finding That Free Lunch

from the the-economics-of-innovation dept

Business Week is running a long excerpt from a new book about the economics of innovation (tragically, Business Week believes that they need to make people click through a ridiculous number of screens to read the whole thing, when having a “single page view” would make much more sense for those of us who hate clicking over and over again and just want to read the damn article). The book is called Rational Exuberance : Silencing the Enemies of Growth and Why the Future Is Better Than You Think and it talks about how risk taking and exuberant growth from innovation helps expand the economy and help so many people increase their standard of living. Considering the focus these days on people who seem more worried about how growth can destroy their jobs, this is a refreshing change. It’s a reminder that the economy is not a zero sum game – and innovation helps to expand the overall pie, rather than just shift the pieces around. One of the most interesting ideas in the excerpt is to just look around at how many jobs there are today that were completely unavailable (or even unimaginable) 100 years ago. In fact, you could even make the same argument for ten years ago as compared to today. Even more important is realizing that not all of the job creation is directly attributable to the innovation, but often indirectly. For example, the article points out that massive amusement parks like Disney World in Orlando, Florida wouldn’t have made sense without the innovation of commercial airline travel. When people today insist that their can be no new types of jobs in the future if our jobs are offshored or automated, just think how many jobs were created over the last hundred years for people who felt the same way, and realize that the pace of innovation, our “rational exuberance” hasn’t slowed down.

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Comments on “In Praise Of Exuberant Growth: Finding That Free Lunch”

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Cyke says:


I know what you are saying, but most people can’t wait 100 years to get a new job. The key word in every thing you said is “innovation”. Unfortunately, as you have pointed out many times (and I agree) so many governments and court systems and current bussiness are doing everything in their power to kill innovation! I can only hope it will change, or 100 years will not be as far fetched as it sounds.

Rob says:

Re: well...

I agree with Cyke. Never before in history has our government and our biggest corporations worked together so aggressively to *stifle* innovation and cut costs / increase immediate profits at the expense of long-term growth and investment. If you transplanted today’s business climate to the 19th century, the railroads would never have been built (eeek, that would hurt next quarter’s profits!).

Anonymous Coward says:

Cyke, not all railroads were successful and

those that were created monopolies which profited enormously by exploiting those that depended on them to sell their goods. Now consider things from the point of view of the rail baron. What incentive does he have to innovate when he already dominates his market?
The same thing is going on right now in information and communication technology and markets (with government not that far behind).
In all cases the monoplists are doing their best to stifle and/or co-opt any innovation that threatens them and this is the smartest thing they could possibly do based on the length of the human lifetime and the rate at which most innovations are accepted by non-monopolists.

Gumby says:

Always try the Printer-Friendly option...

(tragically, Business Week believes that they need to make people click through a ridiculous number of screens to read the whole thing, when having a “single page view” would make much more sense for those of us who hate clicking over and over again and just want to read the damn article)
If you read the Printer-Friendly version – it’s only two web pages.

Jess Burgess says:

Types of Innovation

Quoting Michael Schrage ( June 2004)

“Deception is at the dark heart of wicked innovation. Alluringly misrepresented e-mail attachments and ?phishing? expeditions?the fraudulent use of corporate names and logos to gather people?s credit card numbers?are only the most obvious examples. The use of anabolic steroids, human growth hormone, and other illicit performance enhancers in baseball, football, and Olympic sports represents another genre of effectively deceptive innovation. In a field where the price of being found out is high, these ?natural? substances give users a competitive edge with a low risk of detection.

Precisely because cheating is the essence of wicked innovation, we need to rethink the role of competition in its pathology. Two kinds of innovators stand out. The first are those who ?compete with? each other; that is, they respect certain rules in their efforts to succeed in the marketplace. The second are ?compete against? innovators whose goal is to spread their own inventions and eliminate their competition, free choice in the marketplace be damned. Compete-with innovation is about value creation; compete-against innovation is about value negation.”
My thoughts:
The rate of economic expansion is directly proportional to the rate at which human wants become human needs. As I approach retirement, I am praying for a lot of the good kind of exuberant innovation and less of the bad kind of exuberant innovation.

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