Dotting the i’s: Invention, Innovation and the Industrial Revolution
(See Cocktail Party Economics Chapter 4 p 48)
Invention is the mother of necessity ~Thorstein Veblen (1857-1929) American economist and sociologistThe implications of A Dozen Facts about Innovation by Michael Greenstone and Adam Looney published as part of the Hamilton Project by The Brookings Institution worries me. A lot actually. You can find the article here or here in PDF format.)
Major ThemesLet me give you an overview of the policy memo’s major themes.
- Innovation and inventions (as measured by total factor productivity) are a major source of growth for the United States which is a good thing. It leads to a higher standard of living, a longer life span and more leisure. (No worries yet.)
- Since 1973 total factor productivity (TFP) has slowed down in the USA. The annual growth rate fell from 1.9% to 0.7%. In other words, if the growth rate hadn’t fallen, worker’s conpensation would be 51% higher than it is now. (Some anxiety now.)
- Prospects don’t look good for the future if things don’t change. Why you ask? First, not enough students choose Science, Technology, Engineering and Math (STEM) majors that feed innovation. Furthermore, women who have increased their participation in undergraduate education, tend to drop out of these innovation inducing majors. Lastly, close to half of the folks who do choose STEM PhD’s are foreign students and are not allowed to stay in the USA once they are done their degree. Therefore, the US doesn’t get to keep the fruit of their educational investments. (Brooding fears.)
- Change is possible but politically difficult. This requires significant changes in US immigration, education and R & D policies. (Ominous feelings of gloom.)
Post ScriptSo why this article as my first? Here are my top ten reasons
- What Canadian can resist an American report authored by someone with the last name Looney? It captures some sense of angst we feel about our neighbours to the south.
- The authors are both economists.
- My husband is an engineer/innovator so I have a personal interest.
- The article is free.
- It was recently published in August of 2011.
- The piece is very readable and meets my definition of entertaining.
- The topic is very important as an overarching theme.
- The memo is very short. Only 22 pages.
- The Brookings Institution is very reputable. A good site for students to check out.
- The document mentions Tyler Cowen in the sixth point of the document who very kindly gave my book a shout out in his blog Marginal Revolution.