Why Isn't America Innovating Like It Used To?

http://www.technologyreview.com/blog/mimssbits/27063/?p1=blogs

by olalonde • 15 years ago

28 28 15 years ago

sliceof314• 15 years ago

examine this by economic sectors: primary - extracting products from the earth this sector has seen consolidation (farming) and has been chasing lower and lower returns with higher input costs (see gas fracking for example) secondary - manufacturing offshored tertiary - services offshored / massive incumbents from decades of M&A who stifle competition. Quaternary - intellectual massive cuts to basic science research, libraries, etc..

please read the above with all the caveats which should apply to hysterical internet posts.. :)

jerf• 15 years ago

"Clearly, something powerful was going on in the post-war years that began to peter out by the 1970's."

It's called "picking the low hanging fruit". To my mind, the interesting question is less "Why aren't we advancing at the same pace we could when we were picking the low-hanging fruit?" but "How on Earth have we managed to maintain such a pace for so long?"

I doubt that yanking out computer technology from the past 30 years would have some sort of massive positive impact. Maybe a computer in an office environment is less useful than commonly supposed, but I don't think anything like modern logistic efficiency could be obtained by the literal movement of pen on paper.

jkic47• 15 years ago

I suspect part of the problem is Americans gravitate towards "cool", when the innovation needed is often mundane. Case in point: the massively expensive, relatively unreliable (manned) space shuttle vs the low cost, highly reliable Soyuz rocket.

atacrawl• 15 years ago

My short answer to this riddle is a combination of factors -- incompetent bureaucracies in the public and private sector that discourage unique (or sometimes brilliantly common sense) solutions to problems, an educational system that's increasingly based around useless metrics at the expense of true cognitive growth, and an overall crisis of integrity brought on by decades of crass commercialism and the erosion of basic respect for oneself and other people.

Astrohacker2• 15 years ago

I agree with your "incompetent bureaucracy" analysis, except I would point out that the government is the biggest and most burdensome of all. It would be interesting to chart the number of regulations companies have to follow or risk being dismantled as a function of time. My bet would be since 1900, the number of regulations has increased constantly and dramatically. Every new regulation is a new barrier companies have to cross before being able to exist, and thus they greatly limit innovation.

Note that the government is largely responsible for our education catastrophe. The government should be removed from education, like all other areas of human life. Allow people to have choices in a free market, and the revolutionary innovations would eventually rise to the surface. But for right now, the revolutionary innovations are muffled before they even have a chance.

I'm not so sure I agree with your moral/ethical analysis. People, if anything, are more moral today than 100 years ago. However I'm not really sure how to measure this and I'm open to the possibility that morals actually have declined.

muhfuhkuh• 15 years ago

"Note that the government is largely responsible for our education catastrophe. The government should be removed from education, like all other areas of human life. Allow people to have choices in a free market, and the revolutionary innovations would eventually rise to the surface."

Yet, the "superior" education systems outside the US are also public run and managed (top 5 OECD being S. Korea, Finland, Canada, N. Zealand, and Japan). So, it isn't as if the free market has spoken on behalf of the world against the US public school system. It's a breakdown of priorities and politics in the US, not the system itself.

When there are powers that vilify the teacher simply because s/he belongs to a union, that is not a fundamental breakdown of the public school system.

When there are systems that act simply as babysitters and prisons to the children of unwed urban teenage mothers, that is not a breakdown of the public system.

When there are politicians who decry those with PhDs and ivy educations as "elitists", media figures who scoff at scientific research by poking their head out a window and declaring "it's cold outside, there's no global warming", and a public who determines presidents based on beer-drinking compatibility rather than intellectual capacity or academic achievement, that is not a fundamental flaw of public education.

pessimist• 15 years ago

According to Tyler Cowen - http://marginalrevolution.com/marginalrevolution/2011/01/the... - the earlier massive productivity increases were chiefly due to plucking of low hanging fruit:

1. Big scientific discoveries on 19th century took a few decades to lead to huge technology improvements. Now the easy improvements are gone.

2. There were lots of smart, healthy but poorly educated kids. Now everyone completes high-school. No easy gains left.

3. Land was very cheap, not so any longer.

But the question begs - why hasnt computer/IT revolutionized productivity as much? Perhaps the real big changes - machine learning/robotics are still around the corner.

Astrohacker2• 15 years ago

FWIW, I totally disagree. There is still low-hanging fruit, and there always will be, because the new technology brings fruit that was high down so it's low. The problem is actually the law, because it is so difficult to start a company without doing something illegal. This is the #1 factor stopping innovation.

astrec• 15 years ago

Or, to continue the Cubanist line of reckoning, because it is so difficult to start a company without reading on someone's patent.

Silhouette• 15 years ago

> But the question begs - why hasnt computer/IT revolutionized productivity as much?

Powerpoint.

OK, that's a bit cryptic. The problem isn't just Powerpoint, but what Powerpoint represents is a part of the problem. Powerpoint is a tool that looks snazzy, is widely used, and yet is the wrong tool for almost any job.

Attend or read almost any well-regarded training on how to give effective presentations, and one of the first things you learn is that trying to reduce everything to crowded slides full of bullet points sucks as a way to convey information under almost any circumstances, and that proceeding to read that slide out in front of a captive audience makes it even less efficient than just e-mailing the slides around for them to read at their own pace. And yet, the business community is full of people, right up to the highest levels of management in the biggest companies, who still do this.

There are many other tools offered by modern IT that don't make us much more effective at doing useful work, but it's not always their fault. We see people spending hours fine-tuning Word documents by hitting Enter a few times to adjust the spacing. If those people had learned to use their tools, for example by defining a handful of styles using the perfectly capable stylesheet system Word offers, they would never have had to worry about those extra lines. In fact, they could have avoided the worry altogether if someone had just set up standard document templates in a central place and then got everyone else to use them.

This leads to a fundamental question about the kind of tools we build: are they intended for everyone to understand, or for specialists to understand and everyone else to just use? If the former, then the tools need to present their functionality in an accessible way to general users and the users need enough training to take advantage of what is available. If the latter, then the tools need to present their functionality efficiently for specialists, those specialists need enough training to use the power, and the tools need to prevent general users from inadvertently breaking what the specialists have set up for them. Right now, we have a whole world full of software that expects every user to be an expert and makes little allowance for genuine specialists to support their less able collagues, yet we have a whole world of management who expect people to sit down at work and just magically know how to use Office/SAP/Creative Suite/whatever.

In short, for all the power of modern IT, we aren't very good at using it to build tools that actually help us to do the jobs we need to do more effectively. To do that, we need to look at the jobs and fit the tools to them, not the other way around. We need to look at the difference between everyday users and specialists, and build tools accordingly, which might well mean working for both groups but helping one to support the other. And then we need to train both users and specialists to an appropriate level to use the tools they have effectively, with the genuine support of management.

We wouldn't expect an electrician to install a new power socket using only a mallet and a spade. We wouldn't expect an experienced driving instructor to teach someone to ride a motorbike when they'd never even ridden one themselves, just because it also goes on the same roads. We wouldn't expect a major CEO to go into a half-hour live TV interview without smart people briefing them first on both the material to be discussed and the image they need to project. We wouldn't expect someone who was excellent at giving change on their summer job to do the books for a small company without any accounting training.

So why do we keep building complex IT tools without thinking about who is going to use them, what for, and how the right tools could help?

Figure that out, and you'll figure out why IT doesn't really make us much more productive, and sometimes actually hurts.

mechanical_fish• 15 years ago

Since everyone, including the author of the article, is just tossing out hypotheses with no data, I'll join the party:

This is a chart of productivity that arises from factors other than changes in "number of machines or labor". So if manufacturing raises productivity by making stuff smarter, it shows up here, but if we just hire more workers then that doesn't show up on this graph.

What happened around 1973? Well, the employment-to-population ratio started going up:

http://data.bls.gov/pdq/SurveyOutputServlet

watmough2• 15 years ago

(You have an invalid link there, according to the BLS.)

There was also another big event around 1973! Peak oil in the US, where oil went from being an increasingly available, cheap indigenous resource for the US, to a less abundant, less cheap natural and imported resource.

Here's the chart: http://www.energybulletin.net/image/uploads/27804/us-product...

Of course, in reacting to this, a critical mistake was that the US started to become embroiled in global resource wars (versus fighting communism), culminating in occupying much of the resource-rich territories of the World. This, instead of expanding other resource avenues, such as solar and other renewable resources.

US Military World Footprint http://www.ppu.org.uk/pm/usbases.html

If you look strictly at the effects of the current Libyan civil war / UN action, rather than the rhetoric, it's easy to see that beside the effect on the Libyan people, the primary benefit to the US has been to shut-down Chinese oil-exploration and production in Libya, and when complete, a US-friendly regime will be established that will allow US companies into Libya's oil fields.

yardie• 15 years ago

It is a good hypothesis but the Iraqi government puts a hole in it. A lot of Americans assumed that the Iraqis would be greatful and offer US oil companies a sweetheart deal. They turned around and gave the oil contracts to China and Russia. http://www.nytimes.com/2008/08/29/world/middleeast/29iraq.ht...

And our allies, the Kurds, have been busy as well. Selling oil to the Iranians.

njharman• 15 years ago

> Since everyone... Me too! First i really want to see the chart from 1900-1949. The chart as displayed seems cherry picked to support OA's theory.

But, the answer is in the title Post War. WWII and few years after was time of supreme tech advancement and very austere public sector investment. I can imagine it taking 20 years to capitalize on that.

antpicnic• 15 years ago

The economy has become much more dependent on service jobs. We're not very good at increasing the productivity of services jobs yet. How do you increase the productivity of a psychologist, artist, or even a server at a fancy restaurant?

ez77• 15 years ago

Without any intention to offend Americans, I must admit I am very suprised Google, Facebook, Twitter, and a good bunch of recent, lesser-known leaders are US based. It feels like in a snap a lot of similar companies (maybe hiring American and British staff for PR and marketing) could very well come from India, Israel, Brazil, China, etc. (Skype used to be a notable exception.)

fraserharris• 15 years ago

And this is why people constantly talk about "Silicon Valley of X", but still no-one comes close to Silicon Valley. Its a myth that these internet-scale firms are easy to build. Sure you could build a site that replicates the functionality for a few thousand people, but to make it scale takes a lot more resources that aren't readily available anywhere else on earth.

known• 15 years ago

I think corporations have outsourced innovation to low cost countries.

ronnier• 15 years ago

What about the shifting demographics of the US? Does this not play a role?

johnpapps• 15 years ago

I suggest that it's because of patent law. Martin Fowler wrote about it in his blog recently, and I certainly couldn't put it better myself. Although he is discussing software patents, I believe the same arguments apply across technology these days. http://martinfowler.com/bliki/SoftwarePatent.html

gwern• 15 years ago

I don't really buy the patent argument. A 30 or 40 year old trend over the entire economy is supposed to be explained by patents? There's a seriously strong argument which requires equally strong supporting evidence. Patents don't even apply to much of the economy like education, and even within particular sectors like health care/medicine, the patents tend to be heavily concentrated in things like pharmaceuticals.

So shouldn't we be seeing outsized differences between sectors and sub-sectors, where the patent-free area is growing like gangbusters and the patent-encumbered one is static or negative?

As far as I know, this has not been shown, and sectors which ought to be suffering the most (like software) are still doing pretty well...

rmrm• 15 years ago

It seems to me like we have an issue around creating jobs that bring wealth into a community. I don't know economics so I don't know the correct phrases and probably am butchering the ideas. But..

If you draw a circle around an area, money flows into that area from outside in one form or another. My current living area has 4 main sources of money from outside.

1.) Agriculture. Specialized monoculture that is high value (wine) that is suited for this area. Gets exported all over the world.

2.) Technology. Networking equipment, gets exported all around the world. High margin, high paying specialized jobs. We have a comparative advantage that stems from things that happened decades ago, whereby we have a large concentration of people with experience in this domain. A talented labor pool.

3.) Bedroom community. We are located 45 minutes from a major international hub (SF). We experience a natural amount of runoff from this wealth, in that people that work there live here and bring their money back here to spend.

4.) Tourism. Being located where we are and having natural beauty we experience a high amount of traffic and dollars get spent from outside.

Pretty much all other jobs in this community exist as service to these primary drivers for the community. The money comes from the above, and it gets cycled through the community because those primary jobs have money to spend on restaurants, oil changes, cars, coffee, clothes, real estate, etc etc. Everyone that works in those other jobs (the majority of people) are reliant on the 4 basic primary economic movers above.

It seems to me that all communities must work this same way. Primary drivers bring money in from outside. Of the list above, at least 2 of them, maybe 3, have little or nothing to do with anything particularly industrious or inventive, they are happenstance. Some peculiarity that isn't necessarily shared widely that happens to be profitable and high margin for the community.

When most people think about starting a small business, the think about starting something relating to a service business. These are in essence the easiest to grok and that easiest to understand. People around you have lawns, start a lawn care business. People need to eat, start a restaurant.

Driving through a depressed area, an area that does not seem to have any particular advantages -- and thinking about the business owners struggling there to run these service type businesses, particularly after a factory or mill has closed, which was the prime economic driver for the economy (someone who exported goods and imported money), I am struck by the difficulty in creating new prime drivers.

If I am born and raised in Kansas somewhere, how do I get plugged into the very complicated, fast moving, heavily optimized world economy in order to bootstrap a primary industry. How do I understand and know what is needed, and how to compete successfully? The barriers to understanding how to begin are large.

I think the issue of low hanging fruit is valid, whereas I could 100 years ago create a prime mover perhaps by understanding that which exists around me, for most places nowadays it seems that understanding that which exists around you is not near enough to create any sort of primary driver, something that brings in wealth to the community. Because what exists around you is not very relevant. The barriers to entry are lower in some sense, but the complexity and specialization required are both increased, as are the number and ability of competitors. That acts as a very real barrier to entry.

macrael• 15 years ago

What was that economic theory that most of the colonial empires were run on, where the prime directive was that more gold needed to be flowing into the country than flowing out? It was later abandoned, but I don't recall exactly why. That might be an interesting parallel to your observations.

dctoedt• 15 years ago

> What was that economic theory that most of the colonial empires were run on, where the prime directive was that more gold needed to be flowing into the country than flowing out?

You may be thinking of mercantilism: "Mercantilism is the economic doctrine that says government control of foreign trade is of paramount importance for ensuring the prosperity and security of a state. In particular, it demands a positive balance of trade. ...It also was a motive for colonial expansion." [1]

[1] http://en.wikipedia.org/wiki/Mercantilism (emphasis added).

sixtofour• 15 years ago

Very nice analysis.

Perhaps part of the solution is that the circles get smaller, even down to single individuals. The small circles or individuals "export" their work product, be it software, consulting, content or piece work. They import money into their bank account and thence to whatever community they happen to live in at the moment. The primary driver then becomes their particular skill and the ability to market it.

Their circle goes with them when they move.

msutherl• 15 years ago

For a very astute explication of this idea, I highly recommend "Architect or Bee" by Mike Cooley. It explains well why the replacement of 'analog' engineering methods with computer-aided processes is detrimental to workers and often results in worse output.

Amazon link: http://www.amazon.com/Architect-Bee-Human-Technology-Relatio...

kens• 15 years ago

The question of why US productivity seems to have stagnated since the 1970s, the same period in which information technology has exploded and was supposed to revolutionize everything is known as the "Productivity Paradox". The key article in this area is http://ccs.mit.edu/papers/CCSWP130/ccswp130.html . You can also look at the Wikipedia article, but be warned that it's kind of a mishmash: http://en.wikipedia.org/wiki/Productivity_paradox

The Productivity Paradox is a highly controversial subject with no solid answers. Four main explanations are:

1) Mismeasurement of outputs and inputs. That is, productivity measurements are not showing the "real" state of productivity. In particular, quality improvements don't show up in the statistics.

2) Lags due to learning and adjustment. That is, just like it took industry a long time to make full use of electricity, productivity improvements from computer technology will take time.

3) Redistribution and dissipation of profits. E.g. Amazon makes a lot more money, local bookstores lose money, and the economy as a whole breaks even.

4) Mismanagement of information and technology. That is, the investment in computers is just a waste of money.

The first two explanations are the "optimistic" ones in the sense that technology does in fact benefit the economy, while the last two are the "pessimistic" explanations, that technology isn't helping.

Why Isn't America Innovating Like It Used To?

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