Friday, April 30, 2021

How Innovation Works: And Why It Flourishes in Freedom

Innovation happens best when people have the means and the hunger. Government often steps in to remedy the excesses. Alas, these remedies often make it easier for the entrenched behemoths to manage, while making it more difficult for the nimble entrepreneurs to grown. When societies focus more on collective comforts and equity, innovation will often stall. While we like to admire the insightful inventor, inventions are often "destined to happen". It is very common for several people to have the same innovation at the same time. This is often due to the environment that existed at the time. Innovations are usually based on incremental changes rather than drastic switches in direction.

It is very difficult to predict what innovation will take place. The first half of the twentieth century was dominated by innovation in transportation. Trains, cars, rockets and airplanes all helped people to move around the world much faster than they previously had. People projected personal rocket travel and flying cars. However, transportation innovation pretty much reached its peak by the end of the 1960s. (In some ways it has even regressed. Back then astronauts landed on the moon and individuals could travel on the supersonic Concorde.) There have been small incremental improvements (such as more high speed rail). Yet, somebody from 1970 would not notice much significant change in speed of moving around today.

The last 50 years have been dominated by innovation in communications and computation. We may predict further innovation here. But has that peeked? What will be the next wave of innovation? We may guess biotech, but that may or may not be wrong. 

Innovation can often solve problems that were caused by previous innovation. Today the amount of "stuff" produced and energy consumed is edging downward. The amount of work required to produce light from an LED light bulb is orders of magnitude less than that previously required to produce the same light from candles. People have responded by using more light. However, even this has tapered off as so much light has been used. Many other areas use less physical stuff than before.

The author is concerned that we may "mess up" the innovation machine. Trying to "plan" innovation can often backfire. Regulation can also cause problems. Even intellectual property rights can have a negative impact on innovation. There is a balance that needs to be struck in providing for the current society and enabling the innovations for the future.

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