Reasons for optimism – invention and innovation — Adam Smith Institute

Ten years ago, Tyler Cowan published “The Great Stagnation: How America Ate All the Low-hanging Fruit,” arguing that the US economy since the seventeenth century enjoyed free land, immigrant labor, and powerful new technologies, the “low-hanging fruit.” He argued that since 1970 the fruit tree became bare, and the easy access to growth gradually disappeared.

His book became a best-seller and stimulated much debate, but events since its publication have combined to cast doubt on its central thesis. Uber and Airbnb had started before he wrote it, but had not by then revealed the massive economic effect they were to have by lowering the cost of travel and accommodation and bypassing the entrenched dominant city transport and accommodation systems.

Similarly, the CRISPR gene-editing technology had been developed, but few, if any, appreciated what a powerful tool it would become for its potential improvement of the human condition. Autonomous (self-driving) vehicles were the stuff of science fiction when he wrote, as were people-carrying and delivery drones and cultured (lab-grown) meats. All of these innovations and new technologies have shown that the economic tree has a great deal more fruit on it than the low-hanging ones that had been picked.

Each of these innovations is a potential game-changer, displacing an established way of doing things with a novel and disruptive alternative. Each has the potential to stimulate new and unpredictable economic developments that might result from it.

Those who oppose invention and innovation because of the economic growth they bring, and who say that the planet cannot sustain what they call “the drain on its resources,” are misguided. It is invention and innovation that enable us to produce greater value with fewer inputs.

Some oppose technological developments because of the disruption they bring, and it is true that they can displace established players. This is, however, the way the world became richer, and able to support new types of employment more rewarding than the ones they displaced. There are no longer spinning wheels in every peasant hut, but there is a giant textile industry that provides most of the world with affordable clothing of far better quality than it had before.

Established players have often opposed new products and processes that threatened their comfortable places in the economic order. They threw wooden shoes into the textile machines. They lobbied Parliament to require a walking man with a red flag to precede each of the new motorcars. They usually fail because the benefits of the new technology spread more widely to people beyond the narrow group that opposes them out of self-interest.

There is cause for optimism because human ingenuity shows no sign of faltering or failing, and continues to produce and develop innovations that can add value to our lives. It is also highly unlikely that human aspiration will falter or fail, and highly likely that people will continue instead to welcome and accept the new developments that present hem with new opportunities. We can be optimistic that progress will not stop.