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Demand a Politics of Innovation

2016 is shaping up as an election in which one of our parties will emphasize the need for growth and the other will call for greater economic equality. These concepts are often seen in substantial tension with one another. In my view, however, if the government encourages innovation we can have both growth and greater equality in the relatively short run.

As I wrote in yesterday’s Washington Times for the celebration of Liberty Month:

In this age of accelerating technology, there is no more important policy than to encourage innovation. Innovation is the primary source of economic growth. New innovative businesses, like Google and Uber, transform our lives for the better. And innovation builds on innovation, compounding growth from generation to generation. As the Nobel Prize winning economist Bob Lucas once said: “Once one thinks about exponential growth, it is hard to think about anything else.”

Innovation in the modern era also tends to make us more equal. Innovation creates a stream of new ideas that are rapidly enjoyed by the great mass of people. Material goods are scarce, because individuals can by and large not enjoy the same material simultaneously. But ideas can be enjoyed by all. To be sure, some innovations are patented, but these patents expire. And, as better innovations come along, the old patents rapidly become less valuable. That is one reason that smart phones have so rapidly become available to people of modest means. Thus, the greater the supply of innovations, the great the common pool from which almost everyone can benefit quite rapidly.

We thus need to ask all Presidential candidates what they will do to promote innovation. I had quite a few suggestions. Deregulate at both the local and federal level, particularly eliminating those regulations that help incumbents fence out innovators. Permit more immigration of the highly talented so they can collaborate more easily with our greatest innovators. End the too-big-to-fail financial regime that encourages people to go into finance rather than create the next Google.  Follow Alex Tabarrok’s suggestion and create more discriminating patent laws that do not create patent thickets that slow down innovation.

In short most of my recommendations are to get government out of the way. The one area I think we need more government is in spending for basic research of the kind that cannot be easily patented.

I see an upside for our politics more generally in focusing on innovation:

Focusing politics on improving innovation also has a political benefit that transcends economics. Unlike government transfers from one group to another or social issues that split us along cultural or religious lines, innovation benefits us all. It is a politics of union rather than division.

Reader Discussion

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on July 28, 2015 at 11:16:04 am

Fine argument.

But in campaigning, the trick is not merely to articulate a good policy, but to convince voters that you can actually deliver it. Many people who complain about deficits also support candidates calling for tax (rate) cuts. Are they hypocrites? Perhaps. But even if they sincerely want lower deficits, they may be skeptical that government will deliver it -- whereas they have greater confidence that government can actually deliver tax (rate) cuts.

Similarly, even if people want innovation, they may instead favor the politician that promises redistribution because people have greater confidence that government can deliver such a policy -- whereas delivering innovation seems much more speculative.

End the too-big-to-fail financial regime....

How? Are you endorsing Sarbanes-Oxley?

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nobody.really
on July 28, 2015 at 14:14:00 pm

"Many people who complain about deficits also support candidates calling for tax (rate) cuts" -
Are you NOT supporting John F. Kennedy who showed that you can have both (not to mention Ronnie Rayguns and that most undervalued Prez, Calvin Coolidge).

Cute on the Sarbannes-Oxley? another Democrat transformation of a previously (somewhat) effective mechanism of financial oversight into something that guarantees that organizations will be too big to fail (and in so doing allows for the government to conveniently fine them at a bureaucrats whim).

Ur on a roll, today!!!

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gabe
on July 28, 2015 at 19:39:55 pm

I've got an idea! How about if a candidate promises us half a billion solar panels so we can cover every roof in America with a great source of "free" energy?

Now, the production of solar panel produces massive amounts of nasty chemicals. That isn't a problem of course, because the Chinese will be making the 500,000,000 panels and they give diddley about dumping toxins on their land. Nothing to worry about here in the good ol' U.S. of A.

After a number of years they will break down (the panels, not the Chinese we would hope) and you have half a billion dead solar panels sitting on half a billion roofs. Take 'em off and you've got holes in your roof where the panels were attached. But, why should that be a problem? I mean, look at all the houses with dead satellite dishes on them that homeowners don't want to take down. We're used to having junk on our roofs. No problem there.

To get the panels installed we will, of course, need a lot of manpower to do the work. We can open up the southern border and let a bunch of very low-wage workers in to do the actual work. There will be a problem with technicalities because setting up a solar panel system requires a lot of technical expertise. That shouldn't be a problem though because the low-wage workers can come up to speed quickly on US electrical codes and US building codes, I mean, after all, if they are going to get the details of the complicated installation correct they should be able to get the code work correct, right? We might need a few translators though because the US codes are written in english. Hey, since we are going high-tech, we can use Google translate. No need to worry about shoddy workmanship. Even though the labor will leave immediately after the work is done, they will still do a good job because they love us because we gave them money for doing a little side work.

To get everyone motivated, maybe we can set up tax penalties for everyone who does not purchase solar panels for their home. That would effectively dictate to the American people that we shall do what the feds want, which is exactly what we need since we are too stoopid to figure out on our own what we really need. The Courts can be expected to support this. If dictated insurance purchases were good enough for the American people, so will dictated tech purchases be. It would after all be a tax, not a federal dictate (wink, wink).

Government can help with the expenses by paying some of the costs for me. Those dollars will come from some other American taxpayer. So no issues there. I mean, why should I foot the bill when some other sap will do it for me. And the truly beautiful things is that everyone in the US can do the same thing!

We are so smart! I'm so glad I came up with this brilliant idea. I hope that by writing this I have inspired some equally brilliant politician to run with as this idea as part of his or her campaign platform (hint, hint, Hillary).

Get the government out of the way!? Humbug!!!

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Scott Amorian
on July 28, 2015 at 20:11:15 pm

Scott:

Why AREN'T you running for Governor of Oregon. These kinds of proposals would fit right in. shortly thereafter, you could run for president - you would have a better record than the *absentee Senatorial* moron from Illinois who currently occupies the post - or are you giving your money to another moron, the Fat Lady in a Pantsuit (size indeterminate - or is it just that the media can not ask about it?).

Great plan, especially the part about the dangerous chemicals staying in china - like so much of the rest of the leftist idiocy - if WE can't see it, then it must not exist (like the clean Prius or Volt with the disappearing power cord running all the way back to a coal fired plant).

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gabe
on July 29, 2015 at 16:36:28 pm

My attempt at humor aside, the main place I would expect to find future government interference in technology will be in areas that affect the expenses of insurance companies. Take a closer look some of the recent major governmental and social changes and you will find the insurance companies in the middle of things.

When lots of people do things that harm themselves and each other and those harms cost the insurance companies money, the companies will request legislation to change people's behaviors, since that will save them money. Insurance companies keep their money in investment instruments, so we have legislation to protect those instruments. A large percentage of insurance premiums goes to insurance salesmen as commissions. Reduce the need for salesmen and the insurance companies get to keep more money. Use government to act as salesman, and the taxpayer pays for salesman's salary, (cha-ching!) and the insurance companies keeps the commission. (double cha-ching!) Make insurance purchases mandatory and the insurance companies get more premiums (triple cha-ching!). Since the people who would not otherwise purchase insurance are a pretty healthy bunch, the insurance companies don't have a lot of payout for them (quadruple cha-ching!).

In the case of technology, a lot of HIPAA is about communication standards, which, in theory at least, should make information communications cheaper for the insurance companies.

A lot of insurance payout is due to traffic accidents. As robotic cars prove themselves, expect a big legislative push for the use of robotic cars since that will reduce the number and severity of accidents. Since those same cars can be used to spot dangerous drivers and situations, I would anticipate the acceptance of robotic monitoring of traffic to become an increasingly acceptable form of policing. Robotic cars don't just monitor, they record 360 degrees of traffic information in real time. That information should eventually become public record for documenting law breaking.

Just as automatons can be used for recording traffic violations, they can be used to record other kinds of violations. Where those violations cost the insurance companies money, I would anticipate that those other kinds of records will become accepted as substantive evidence in court as well. I would anticipate that agencies that monitor safety laws will be quick to apply new technology.

I'm not saying that all that's a good thing or a bad thing, that just seems to be a big part of how our governmental system works and how it will work in the future.

As computers are everywhere in our lives, and the computers communicate with each other, our conceptions of privacy is changing and will continue to change. New laws and policing techniques to protect privacy in the coming Internet age will be needed.

I don't think I would see too much government intervention in the details of high tech. Techies are generally pretty bright and we tend to call BS on government wonkiness and we tend to do it with rational arguments instead of hyperbole, which makes us bad political opponents to have. Experienced politicos know enough to not mess with us.

As for the solar panels, those will become safe and cost-effective eventually. My wife works with guys with multiple Phds who specialize in that kind of thing. They are highly authoritative. When they say it's a good investment, it will be a good investment. They aren't saying that yet. Meanwhile, the talk about what a great idea it is to use solar panels is just political propaganda.

And, no, Gabe, you couldn't pay me enough to be governor of any state.

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Scott Amorian
on July 29, 2015 at 20:13:07 pm

Scott:

with the insurance premiums I pay I could not afford to pay you to mow my lawn!!!

Good post BTW: and for those who think that Scott may be "stretching" things on insurance, think again. Who is that silly Lady on the Progressive commercials "hawking" the little technology box for a discount on your rates - yeah, well it rtecords EVERY LITTLE THING THAT YOU DO- and, for those from Loma Linda (as the beached whale in Florida says) just about every car has a computer that DOES record significant amounts of information regarding your driving habits. Not too long, before it becomes MANDATORY for the auto manufacturer to disclose it at trial when accident claims are being made.

Nope, I think I will go back to my 1966 396 SuperSport w/ points and distributor cap, thank you. Do you millenials even know what they are?

take care
gabe

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gabe
on July 29, 2015 at 20:25:20 pm

Speak of the devil ...

(This courtesy of Slashdot.org.) The feds are doing a research project for the next generation of supercomputers.

"Obama's New Executive Order Says the US Must Build an Exascale Supercomputer"

I actually kind of like this project. (Note the subtly snarky title of the article. A lot of techy types don't like you-know-who and friends.) It's like the space race, but against China.

To get a system like the proposed one running, issues of reduced power consumption and improved heat management will be addressed. Silicon photonics will likely be used.

The end result should be technologies that trickle down into small systems, especially the little battery powered ones, like the computers people are using for cell phones today.

Its nice to see government doing something reasonable for a change.

(Gabe, do you really want a car you can fix yourself? Think of all the engine grease under your fingernails ... ewww!!!)

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Scott Amorian
on July 30, 2015 at 09:18:20 am

I will go back to my 1966 396 SuperSport w/ points and distributor cap, thank you. Do you millenials even know what they are?

Does it come with a 710 cap?

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nobody.really

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.

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