Interesting Read about Innovation's Impact on Society
 

Keeping America's Edge, by Jim Manzi. Basically it asks and tries to answer the question: "Can The US Continue To Innovate At A Necessary Rate Without Causing Complete Social Upheaval?", as Mike Masnick over at Techdirt.com characterized it.

Interesting, but he misses an important fact: If manufacturing as a percentage of GDP remains relatively constant over time while employment declines linearly, that can only mean that "Ever-increasing productivity" does not involve "the use of human capital in new and constantly evolving ways." Instead, it involves replacing human capital with technological capital. That means the answer to his question is an emphatic no. There has been, is, and will continue to be increasing social upheaval until we change the rules of the game to favor working people and not large corporations.

What I liked about this piece, CWT, is that it is fundamentally apolitical; it's about the consequences of industrialization.

But to respond to your comment -- he says at one point: "Were America to retreat from global competition, sooner or later those who oppose our values would become strong enough to take away our wealth and freedom." To me this implies a constant struggle between corporations large enough to compete world-wide and the damage they cause to our society by ignoring the upheavals to the working men and women who live with them.

He goes on: "If the pain of innovation calls for some mitigation of its effects, but the demands of global competition require that we not unduly stifle innovation, clearly some balance must be found. The task of striking such equilibrium, however, is made far more difficult by the internal deterioration of our society — which harms both our ability to compete and our capacity for social cohesion." A rather profound realization, in my view.

I think the idea that we need extremely large corporations to compete is flawed. That's where jobs go to die, and where the least innovation happens. Better to favor small businesses and workers: more competition and more innovation with less upheaval.

I certainly agree that the largest corporations are where the least innovation happens, even in high-tech industries (with the possible exceptions of Google and Apple). It occurs to me that most large industries lobby like hell to have laws passed that will protect their dying business models, but in so doing don't necessarily improve their relationship with workers or preserve their numbers.

Yes, I think Apple and Google are good examples of exceptions to the norm. Even they don't employ very many people compared to the income they generate though, and that's part of the problem. We tend to view a company that makes lots of money with few employees as a good thing. It isn't anymore, and as technology improves it will become more and more harmful to the economy.

But the article points out that "All told, finance, insurance, real estate, automobiles, energy, and health care account for about one-third of the U.S. economy." Think about that: with the exception of the auto industry, none of those support very many uneducated workers -- they support what this paper is referring to as the high earners. Agriculture, which supports fewer and fewer workers is only 3% of the economy, and too many retail jobs are in reality minimum wage, no benefits type jobs employing the bottom tier.

You often rail against the big corps, but the paper asks the question: "How do we continue to increase the market orientation of the American economy, while helping more Americans participate in it more fully?" -- not a trivial pursuit.

Well that's the problem isn't it? Those retail jobs need to pay more, and if they did we'd probably get better service! We also need to ensure that agriculture pays, or we'll end up importing all of our food until the cost of transporting it gets too high and we have a famine.

High earners aren't the problem — yet. If we allow things to go as they are though, there will be fewer and fewer high earners. For example, insurance companies don't sell many large life insurance policies to low income people!

But, of course, whenever retail workers get paid more, the number of them declines; we see more self-serve, more salad bars, more parking garages with credit card slots instead of a booth, more telephone button pushing instead of an operator, more robocalls, etc.

Back to the actual article...

I think it's an interesting piece. He makes a very interesting problem statement (I especially like his thoughts on the growing cultural disparity between the rich and the poor, though I don't entirely agree, it's an interesting point.)

That being said, his third paragraph makes a whole host of logical leaps that are a bit...uh, much I guess?

Firstly, what does he mean by "countries that don't share American values"? That's a loaded statement, it could mean anyone. I hate it when people do that. To some it will mean China, others the Middle East, others Europe (I'm thinking Canada personally ;)). It's a blanket statement and a scare tactic, and I don't like that.

Secondly, he assumes deregulation is the answer to technological problems. There's no evidence of this. Deregulation tends to lead to centralization of resources, and that means that a lot of smart people don't have access to materials, labs (or even time) to help move the technological fronts forward. I'm not saying that he's entirely wrong, he just makes an assumption and doesn't back it up, and that's troubling.

That being said, I do like that he is looking at technology from an economic, social and cultural perspective. Tech can be divisive if we're not careful (just look at cwtnospam, see how divisive it is?) And while I don't like views of this particular article, I think this is a topic that should be discussed. We don't want random chance leading us by the nose...

The problem with "countries that don't share American values" does in fact reflect much of Europe and in some regards Canada as the author points out. Every other democracy in the world is politically to the left of the United States (note I don't say "America" here -- I live in America too ;)) and that is certainly the case here in Canada. Our Conservative party is only midway through your Democratic party in the left/right political spectrum and as a result we do have universal medical care, numerous social welfare programs, higher tax rates of course, and fewer really large industries. Our banks are much more heavily regulated, so, of course, none of them had any problems during the recent crisis; they weren't into the funny money bubble.

The downside, of course, is that is that we are a much more resource-based economy with considerably fewer really innovative companies relatively speaking. In spite of that, however, the paper rings true; we do have a large divide between the rich and the poor that is heavily dependent on level of education and wedded state. Halifax, where I live, has a 6% unemployment rate, however, because it is a very diverse and stable economy; it's the industrial sector that is suffering. Having said that, Nova Scotia is in dreadful financial condition; similar to some of the states in the US.

Interesting read and a good summation, I think, of the problem. The writer is clearly a conservative, however, and (as Jay pointed out) takes a lot of leaps of faith for granted. For example:

---Not spending money on social programs means the money saved will be spent on research and development of innovative new products. Money might just be spent on bigger yachts, corporate jets, and golden parachutes. Or, alternatively, it may well not be spent in the US at all.

---Govt health care, if properly implemented, could well cut the TOTAL cost of health care and make more money available for possible investment. We'd be insuring a lot more people, but remember our current system costs double what most industrialized nations pay.

---His basic premise is that for the US to maintain economic success, we must deprive the masses of basic needs. That's BS and that is classic ultra conservative thought. If we are going to have to live in poverty and without basic needs being met, exactly what is the benefit of economic success?

I will semi-agree with the writer on the need for education reform, differing only in degree. I think we should burn the existing system to the ground and start over for k-12. The cookie cutter approach to public education just leaves too many people out and dooms them to a life of frustration and poverty. I believe we can and should teach values in our schools. We can do better, much better, than what we're doing now.

Agree; greed usually rules.

Seems to me that the chances of 50 states (who will ultimately deliver the care and funds) getting this right is slim to none. In my view, the absence of a public option knackers the whole deal. Rich insurance companies will get richer and so will doctors as the government trickles money into the system.

Recall, however, the author's main objective here, AEH; he is shooting for continued domination of the US Economy in the world, not for the happiest and healthiest population.

The biggest barriers to educational reform at any level are these: tenure and a huge resistance to measurement of merit.

The term "American Values" is code for conservative values.... which is:

--Rugged individualism.... each person is responsible for himself in all things and in no case is it a government responsibility to help him.

--Free markets, as in free from any govt regulation so that the markets can be manipulated by the market players.

--Strong families. (of course, that's a liberal value, too, but in conservative thought this translates to anti any kind of alternative family and to welfare being the cause of the breakdown of families.)

Economists have long recognized the value of saving and investing for future wealth. So, nothing new in his basic thoughts.... he just reiterates the thought into all the reasons we cannot afford social programs.

What he doesn't say but leaves implied is we should not spend tax dollars on social programs.... we should keep taxes low on the wealthy so the wealthy can invest those dollars. Or, said another way, taxing the wealthy and corporations will result in the destruction of the US economy. His agenda is clear.

Absolutely.

I just visited with a relative who consistently votes Republican. This guy recently had a heart attack, and was talking about how much better the care he got at the VA was than through his private health insurance. The whole conversation oozed irony!

It's almost amusing that people don't see how business innovation works. First, you come out with an innovative product/service that fills a previously unmet need. Next, you make incremental improvements to the product/service until the market and product/service reach maturity. Finally, you find innovative ways to get more money while providing less. It happens in every industry, but people don't ever see it! That's sad since many industries are very mature, including the health insurance racket.

And there will always be this resistance. Teachers don't want to be held responsible for the study habits of students they cannot possibly control beyond the classroom (if even there!), and parents don't want to be held responsible for controlling their kids.

@NovaScotian
Agreed. I am thinking in terms of we're running a 19th century system in the 21st century. Nine month school year for example. All students progress at the same level even though there are some huge and obvious differences in students. Raising standards for moving to the next grade does not address the basic problem.... which is we are not educating each child to THEIR potential. Too many being left out.

Current system does not address the needs of the current working families. In a world where there are a lot of single parent families and a whole lot of families where both parents work, the school day should be flexible enough to accommodate the families' needs, too. Why in the heck not leave a couple hours in each school day for supervised homework? Isn't that better than sending two hours homework home for a single, working mother of three to get done?

I agree for the most part, however some high-tech development simply cannot be done by small companies due to the costs involved. There is always a need for both--but we need more regulation and control of large corporations.

True. I don't think that a large company should be broken up just because it's large, but it should need to justify keeping it together on a regular basis, and that shouldn't be a formality. Since it's not a legitimate part of producing and selling innovations that benefit society, significant lobbying would indicate to me that a company is a prime target for being broken up.

You know the retort made by Churchill to Admiral Fisher, who had been waxing pompous about the Traditions of the Navy. "The traditions of the Navy", snarled Churchill, "are rum, sodomy and the lash".

Two can play at such games, and some ill-disposed fellows could easily put together an uncomplimentary list of "American values", which would have different consequences for which countries share them. If one such value be executions, for example, then China most definitely does share it. If another be intolerant religiosity, then the USA and the Muslim world stack up on the one side, Europe and (so far) China on the other. If a third be held to be the right to bear arms, then the country that best shares American values would be Afghanistan; and so on and so forth.

Excellent, that's what I mean. "Values" is a very vaguely defined term, and could mean just about anything.

That's what makes "American Values" so troubling, it's divisive rhetoric. It is a myth that we hold onto in order to keep a "cultural identity", which is in itself a myth. The distinctions between cultures is fundamentally meaningless. Life, liberty and the pursuit of happiness, that's what I was taught in my US school. Those are not US values, they're universal values.

The only way governments (notice, not people, people inside a country are very diverse on an individual level, so...how governments) differ is in how they pursue those goals. And yes, that difference can cause a sticky mess, but I think that if we all understand that we all seek similar outcomes, it will make life slightly less contentious.

Before Canada had a Bill of Rights & Freedoms, the espoused "values" of the government taught in schools were "Peace, Order, & Good Government"; a set of values normally interpreted to mean that the rights of the community trumped the rights of any individual. I was disappointed when the focus shifted to individual rights because this empowered special interests and political correctness while communities aren't really recognized.