An Optimistic Take on ‘Innovation Pessimism’ (The Economist)

Why, when we wanted flying cars, have we got instead just 140 characters? So wonders the founder of PayPal, according to an Economist article on “innovation pessimism.”

While some in Silicon Valley are complaining these days that innovation has become stagnant, even more worrisome are the economists who say that the economic impact of innovation today is wimpier than in the past.

Technological stasis might be behind the slowdown in growth of first-world incomes and employment over the last three or four decades, The Economist worries. Look at kitchens, they haven’t changed much since 1970. Highway travel is not much faster than it was 50 years ago. While life expectancy in America soared from 49 years around 1900 to 74 years in 1980, it grew just 4.7 years between 1980 and 2011.

One theory is that there were only a few truly critical innovations — “the ability to use power on a large scale, to keep houses comfortable regardless of outside temperature, to get from any A to any B, to talk to anyone you need to — and that they have mostly been made,” The Economist explains. Another is that as ideas accumulate, it takes longer for new thinkers to catch up with the frontier of their scientific and technical specialty.

But progress fueled by technological innovation may be cyclical. And it might take some time for newer technologies such as computers, mobile phones and the Internet to start driving up our productivity. “Information innovation is still in its infancy,” The Economist writes, and the 1970s-and-after slowdown might be just a “pause, rather than a permanent inflection.”

1 comment to An Optimistic Take on ‘Innovation Pessimism’ (The Economist)

  • Interesting perspective on the big innovations…health and travel in particular. Ultimately where development cost / benefits cross over from worthwhile to waste, the marginal gains become less attractive.

    In the shorter term we’ll know better in a couple years the effect of fines and penalties for work (income tax increases), for taking risk (capital gains tax increase), while reducing disincentives not to work (lengthier unemployment benefits, food stamps, disability payments). Do the current structure of incenteives / disincentives affect people’s behavior – and innovation? I sure think so.

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