Even “innovation” is a 2-edged sword in a quest for growth

The TechColumbus Innovation Awards last week give us yet another opportunity to praise the innovators in our culture.  Seems like our entire economy hinges on innovation – and particularly new ideas and new companies in the high tech sector.

But there are some who are questioning the actual track record of innovation – as we know it – in light of the current state of the economy and the progress of recovery from recession.  Notably Tyler Cowen, a professor of economics at George Mason University, has written a nice overview in the The New York Times, as well as a self-published ebook The Great Stagnation (available for Amazon’s Kindle or Kindle app), $3.99.

By a variety of measures, according to Cowen, our economy has not met the hype about high velocity, high growth.  Net income for individuals and families roared upward from World War II to1973, but barely passed 20% increase since 1973, on average, and has actually declined a bit in the last decade.  He looks at three major components of the GDP – government spending, health care and education – and their real contribution.  Through his lens, even though the three combine to 25% of GDP, they arguably make a veritable zero percent contribution to the actual flow of money.

High tech – and the much vaunted increase in “productivity” – also demonstrate at best an ambivalent actual contribution.  When you figure that “productivity increase” is code for “more work from fewer workers” – it’s not hard to understand how the jobs eliminated by more efficient communication and data capture and processing have created permanent changes in organizational structure and the need for people.  Further, most high tech innovations involve the elimination of middle men, and new products that are comprised of bits on a screen rather than hard goods requiring manufacturing, and distribution.  And where manufacturing is necessary – think iPod, iPad and the next iTech wunderkind – it is most likely to be manufactured outside our national economy by economies that have specialized in making manufacture as inexpensive and efficient as possible.

Ironically – or perhaps symbolically – Cowen’s book is published only for e-books, and is available only online.  Thus it required no paper, ink, printing presses, cardboard for packing, trucks for shipping, or retailers for sales.

It is not difficult to see how the “jobless” recovery – if recovery it is – persists.  Our proudest high tech achievements are undercutting the traditional economy and no one is thinking clearly about what is to come, and how this might play out.

And if we find the smartest move is to forego some high tech in favor of going back to a cruder, more atom-oriented product development – how does that fly relative to the green movement – and the reduction of the use of natural resources (from which all good products ultimately flow)?  So – thanks for all the good work TechColumbus, but we’re obviously looking at only the tip of something very very challenging.

Cowen’s book is quite readable, short and provocative.  And not a little disturbing.  Any thoughts of a self-healing financial crisis, a brief interruption of an inevitable upward spiral, fade decisively away.  But it would be a slap in the face worth taking, if it opens eyes to a reality we have managed to avoid until now.

— Rich Bowers

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