One of the key elements that is required for innovation to flourish is freedom. By that I mean the freedom for trial and error, particularly the freedom to experiment, to be wrong, to fail, to start again. This freedom for entrepreneurs was a feature of 17th to 19th century Britain, not just the North East where I live, but across the UK, making it quite distinct from continental Europe (except Holland).
I believe this economic freedom is also the key to understanding China, because one of the reasons for China’s economic success is that – although not free politically – it has been free economically for entrepreneurs, at least until recently. There is an important lesson for the UK.
Humans of course have always innovated. But not until recently have they innovated rapidly enough to overcome Malthus. An ancient and modern contempt in many minds for the innovator, and the resulting control of innovation in most places, has radically slowed innovation. Merchants in Confucian countries were ranked below peasants, and only barely above might-soil men. No play of Shakespeare celebrates a bourgeois. Even Antonio the merchant of Venice is a right fool for love, love for the aristocratico Bassanio. And bourgeois Shylock, though he does speak in dignified blank verse, is held in a contempt usual in an England emptied of Jews until Oliver Cromwell. The contempt for the bourgeoisie (and Jews) was routine until the idea of liberalism sharply changed social attitudes, by a Bourgeois Revaluation, at first in the Dutch Republic of the 16th and 17th centuries, and then with a Dutch king and a Dutch stock market and a Dutch national debt in England, and then Scotland, and then the world.
Economic Theory of Democracy also includes several other major innovations, including insightful discussion of information shortcuts as a tool for overcoming voter ignorance, crucial advances in the application of the median voter theorem to analyses of electoral competition, and much else. In a single book published before he turned 27, Downs achieved far more than most scholars accomplish in a lifetime.
And he didn’t stop there. In later years, Downs turned his attention to housing and urban policy, and published influential analyses of bureaucracy, rent control, housing shortages, and traffic congestion. On the latter issue, Downs was a leading advocate of peak‐hour congestion pricing, which (in part thanks to him) most experts now recognize as the most efficient solution to the problem of traffic jams. In 2010 he spoke at a Cato Policy Forum on traffic congestion.