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Daron Acemoglu and James Robinson offer here a brief yet beautiful argument against the “great stagnation” thesis [2] – a thesis advanced by scholars such as Tyler Cowen [3] and Robert Gordon [4]. (HT Walter Grinder) Here’s a slice:
All in all, the future is not ours to see of course, but it seems like the responsiveness of innovation to incentives so far suggests that so long as incentives continue so should innovation.
Three quick points:
First, as Virginia Postrel – in one of the best essays yet on this general matter – suggests [5], the presence or absence of technological whiz-bangery in a particular innovation doesn’t determine the economic or social significance of that innovation.
Second, it’s true that innovations such as those that protect people from the historically high risk of starving to death, or protect women from the historically high risk of dying as a result of giving birth, are in some real sense more important than are innovations that improve our ability to travel great distances speedily and in comfort, or to enjoy listening to high-quality musical recordings. But the fact that modern society (finally! – as a matter of historical perspective) has successfully ‘solved’ these obviously more pressing, life-and-death problems – thus leaving only necessarily less pressing problems to be addressed – should hardly count as a bug that plagues us today. It’s an applause-worthy feature of modernity – a fact to be celebrated.
Third, the (what shall we call it?) packaging of innovations shouldn’t blind us to their value. If a lone medical researcher, working over the course of 60 years, invents a pill that, taken once at age 12, successfully inoculates against all cancer – and with no ill side-effects – that pill would unquestionably be hailed, and properly so, as a huge innovation. And this researcher’s name would soon come to humble even those of Lister, Fleming, and Salk. But suppose instead that 100,000 medical researchers, from around the world, working – mostly independently of each other – over the course of 60 years, each slightly improves some aspect of cancer treatment such that 60 years from now cancer is as feared a disease as is athletes’ foot today, not one of those 100,000 researchers will likely become famous as a result. The names of each of these many relatively small innovations will not become familiar in popular society. Yet while the health results in the second case are pretty much the same as in the first, if we focus on the size of the package, only the first innovation will strike scholars as ‘great.’ The risk will be high that the gradualness and the decentral-ness of the second scenario, as compared to the suddenness and central-ness of the first scenario, will cause the results of the second scenario to be less appreciated than would those of the first.
….
In the 1880s Gustavus Swift figured out a way – using chiefly a disassembly (!) line, refrigerated railroad cars, and new techniques for feeding cattle – to greatly increase the supply of beef and to reduce its real price. This innovation didn’t result in people eating meat for the first time, but it did make fresh meat (that is, meat that isn’t salted, smoked, or canned) much more accessible to ordinary people than it ever was before in human history. A great innovation or no?