Some may agree we have reached a plateau of invention... or perhaps not.
Robert Gordon published a piece recently in the Wall Street Journal titled Why Innovation Won't Save Us. He argues that our prime innovations are behind us. The period from 1875 to about 2000 had four incredible waves of innovation:
- The most significant period of innovation was between 1875 and 1900: light bulb, electricity, internal combustion engine, and the telephone.
- There was another significant growth period after World War II starting with television, air conditioning, the jet plane, and the interstate highway system.
- This then melded into the computer revolution starting in the 1970s.
- It all culminated with information technology and communications converging into the Internet in the 1990s.
These periods of innovation are commonly known. Gordon does not argue that we won't continue to innovate. Indeed we will. His position instead is that the period when technology innovation has a major impact on economic growth is in the past.
This perspective also has some validity in Malcolm Gladwell's Outliers. Gladwell presents a list of the 75 all-time wealthiest people. The list includes Cleopatra, Bill Gates, and Andrew Carnegie. Gladwell writes "an astonishing 14 Americans are born within nine years of one another in the mid-19thcentury." This is the group of industrialists who were born in the 1830s and generated their massive fortunes in the late 19th century. For all of the excitement about the recent communications and Internet boom, it hasn't created the kind of wealth the late 19th century tycoons amassed.
That being said, there are plenty of great innovations happening now. Current innovations include health care, oil/gas, and 3D printing. None of these promise to have the level of transformational growth from prior revolutions. For example, the author claims that natural gas fracking will not spur growth but instead will hold energy prices at bay and therefore prevent economic decline. I find 3D printing to be absolutely fascinating and, if it holds true to promise, it will be a truly revolutionary technology. However, manufacturing as a percentage of the US economy continues to decline and therefore the impact will be marginal.
Gordon is forecasting not an end of innovation but a decline in the level of economic growth associated with it, especially in comparison with the transformational growth associated with innovations made in the past. If you consider that major innovations can only occur once, it does make sense. For example, you can only develop the telephone once. Similarly, we've seen incredible impact from refrigeration. Now those are behind us.
That being said, these are very exciting times. Thinking about a personal genome sequence to identify your susceptibility to certain disease and creating custom medications is indeed fascinating. I'm optimistic about continuing the torrid pace of innovation. However, while these breakthroughs will make many businesses and individuals a great deal of money, they may not come with the macro economic impact of previous change.
These ARE exciting times, and even Tony Stark of Iron Man fiction knows there's another discovery or development on each horizon. What is one innovation you know of now that is just waiting for its next frontier?
- Opinion: Spend on innovation to drive economic growth (libdemvoice.org)
- Innovation, Reallocation, and Growth (blogs.law.harvard.edu)
- International Think Tank Message: High-Growth Small and Medium-Sized Firms and Innovation Fuel Entrepreneurial Engine (kauffman.org)