Feeds

back to article Hm, nice idea that. But somebody's already doing it less well

We know there's massive amounts of invention going on. Innovations are popping up all over the place. And while this should be increasing economic growth, none of this invention and innovation is being reflected in our economies. My own diagnosis: when it comes to the "creative destruction" that capitalism is supposed to be good …

COMMENTS

This topic is closed for new posts.

Page:

Bronze badge

It has to be remembered …

ribosome, it should be remembered that the unlike the UK and France, the US was neither a guarantor of Belgian territorial integrity prior to WWI. nor of Polish territorial integrity prior to WWII. The eventual US causae bellorum did not appear before 1917 and 1941 respectively; and it was Germany who declared war on the US first in 1941.

As far as US business wanting to be on the winning side, please read these excerpts of speeches given by Senators Norris and LaFolette prior to the US becoming an Associated Power in WWI.:

https://www.mtholyoke.edu/acad/intrel/doc19.htm

It may be difficult to belive how thoroughly isolationist the vast majority of US citizens were in the first half of the 20th century, but nonetheless it was the case.

US business wanted to be on the most profitable side; winners and losers were not material to this goal. If the collective bottom line would have been best served by remaining neutral, then neutrality would have been maintained throughout both conflicts (at least vis-à-vis Germany).

0
0
Anonymous Coward

Re: But do we actually need all this progress?

What if they had managed to smuggle in small nuclear weapons?

We wouldn't have had to bail out wall street and people would have felt some sympathy with the poor, overworked and underpaid bankers. Maybe they would have held a raffle for their families?

0
0
Coffee/keyboard

Obviously Andrew hates small businessmen and jobs

Cab companies are small businesses who hire dispatchers and company operators. By making this dispatchers and operators unnecessary, Andrew would DESTROY SMALL BUSINESSES and KILL JOBS. ANDREW HATES JOBS AND SMALL BUSINESSES.

0
5
Silver badge
Facepalm

Re: Obviously Andrew hates small businessmen and jobs

Put your glasses on and take your meds.

3
1
Happy

Re: Obviously Andrew hates small businessmen and jobs

Erm, this article was written by Tim Worstall. Not sure if you are just trolling or really do have an Andrew Orlowski fixation, but try to get it right!

4
0
Silver badge

Re: Obviously Andrew hates small businessmen and jobs

Much as I hate to agree with such an overt "free marketeer", or to see anyone lose their jobs, the argument you are putting forward is similar to not wanting rid of the guy with the red warning flag in front of early cars.

While it might reduce the need for schedulers, by making taxis easier and possibly cheaper it might well bring more jobs driving and maintaining the cars. That is the nature (generally speaking) of Industrial era progress.

What I do question is the need for growth as such. More money per capita - where does the money come from? A lot of what we see as growth in increased consumption, and that is leading to problems of waste disposal and material scarcity (or ultimately the cost of recover it in usable amounts).

What the West needs is an economy that is less about buying cheap tat from the lowest priced off-shored supplier and about having a good standard of living (which is more than your tat count) without the underlying presumption of growing working population and consumption of materials.

4
0
Silver badge
FAIL

Re: Obviously Andrew hates small businessmen and jobs

"Cab companies are small businesses who hire dispatchers"

According to the article, part of the objections to the cab hailing app is that the yellow cabs are not licensed for pre-booked journeys. So, by definition, there are no dispatchers to sack.

1
0
Silver badge
Thumb Up

So you fell uncertain? Step this side, please. May I see your tax returns, sir?

I SAY! Let's add this...

Directly from Regime Uncertainty: Some Clarifications by Robert Higgs.

Private investment is the most important driver of economic progress. Entrepreneurs need new structures, equipment, and software to produce new products, to produce existing products at lower cost, and to make use of new technology that requires embodiment in machinery, plant layouts, and other aspects of the existing capital stock. When the rate of private investment declines, the rate of growth of real income per capita slackens, and if private investment drops quickly and substantially, a recession or depression occurs.

Such recession or depression is likely to persist until private investment makes a fairly full recovery. In US history, such recovery usually has occurred within a year or two after the trough. Only twice in the past century has a fairly prompt and full recovery of private investment failed to occur — during the Great Depression and during the past five years.

In a 1997 article in the Independent Review ("Regime Uncertainty: Why the Great Depression Lasted So Long and Why Prosperity Resumed After the War" PDF) I argued that a major reason for the incomplete recovery of private investment during the latter half of the 1930s was "regime uncertainty." By this, I mean a pervasive lack of confidence among investors in their ability to foresee the extent to which future government actions will alter their private-property rights. In the original article and in many follow-up articles, I documented that between 1935 and 1940, many investors feared that the government might transform the very nature of the existing economic order, replacing the primarily market-oriented economy with fascism, socialism, or some other government-controlled arrangement in which private-property rights would be greatly curtailed, if they survived at all. Given such fears, many investors regarded new investment projects as too risky to justify their current costs.

Regime uncertainty pertains to more than the government's laws, regulations, and administrative decisions. For one thing, as the saying goes, "personnel is policy." Two administrations may administer or enforce identical statutes and regulations quite differently. A business-hostile administration such as Franklin D. Roosevelt's or Barack Obama's will provoke more apprehension among investors than a business-friendlier administration such as Dwight D. Eisenhower's or Ronald Reagan's, even if the underlying "rules of the game" are identical on paper. Similar differences between judiciaries create uncertainties about how the courts will rule on contested laws and government actions.

2
2
Bronze badge

Re: So you fell uncertain? Step this side, please. May I see your tax returns, sir?

I do think Higgs has part of it, yes. Have done for a long time. I don't think he's got all of it thought, in that I don't think regime uncertainty was the only thing that prolonged the recession.

But then I'm like that: I tend to think that no one economic idea or set of them explains everything. There's elements of truth in most explanations, but no single one is the unalloyed and perfect truth. Not as yet, the subject just isn't that developed as yet.

1
0

Re: So you fell uncertain? Step this side, please. May I see your tax returns, sir?

I think Higgs overplays the effect of poltical uncertainty to a degree - but a lot of it does comes back to that. US isolationist tendencies were not completely based on fear of the political instability of most of mainland Europe but they were certainly exacerbated by the perception that Europe's inability to deal with these questions was going to drag everyone into another "european war" as most americans would certainly have classified WW1 and likely saw WW2 even after Pearl Harbor.

Another main influence was the disastrous effect on the European economies of the treaty of Versailles which amounted to cutting of your nose to spite your face.

The Mississipi Valley drought (coming precisely when it did) was also an often underestimated kick in the pants for the US economy at exactly the wrong time.

All of these things contributed to the depression but there is little doubt that the shamefully unregulated explosion of unsustainable credit leading to the stock market bubble and crash, the subsequent failure of the banks and the destruction of confidence in the capitalist system at the very time that it was being challenged politically around the world was by far and away the leading cause of the depression.

Anyone in any doubt that it was naked greed which led to this should spend an hour or so reading the Great Crash 1929 by JK Galbraith.

0
0
Thumb Up

Hmmm, regulatory capture vs regime uncertainty

Interesting point, DAM. I am often to be heard extolling regulations because they give the kind of certainty that developers need to know what "hoops they have to jump though" even at the same time as I condemn the kind of regulatory creep that leaves entrenched players in the market with altogether too much power (regulatory capture). I fear there is no simple answer, but being aware of both sides of the issue is valuable.

[I don't mean to say these two concepts are antithetical - only that in applying one, you can create problems affecting the other].

Agree with Tim or not, his articles do get people thinking - and provide some nice commentary as well.

0
0
Alert

Re: Hmmm, regulatory capture vs regime uncertainty

if El Reg's more lefty commentators wanted further reading then they might want to try Gabriel Kolko's "triumph of conservatism" first, Robert Higgs might cause their heads to explode.

0
0

Post growth?

For some strange reason, the seasonal intake of excess booze has led our household to discuss growth and consumerism (we know how to party). We came to two conclusions:

1) There hasn't been anything new on the market for a while that has made us go "ooh, must have the precious". Sure, plenty of incrementally improved stuff, but nothing worth coveting.

2) We've got enough stuff and don't see why we should go into debt to fuel a consumer led boom that may put some growth back into the economy. Sorry, I know we're being selfish, but whatever.

If more people start thinking the same way, we start to break our present model of consumer led capitalism which is dependent on constant growth - at least in the West.

3
0
Bronze badge
Stop

Wait, what?

Netflix has spent over a million dollars on lobbying in Washington, DC, some of which went to pushing through legislation that will allow its users to share their video watching habits on Facebook.

Is that really "allow users to share", or "allow us to share until users explicitly tell us to stop"? This whole argument just got dramatically less persuasive when it started painting giants like Netflix and Facebook as industries being stifled by regulation. Say, you don't suppose journalists can be "captured" too?

2
0
Silver badge

Re: Wait, what?

It's pretty obvious from http://en.wikipedia.org/wiki/Video_Privacy_Protection_Act that it's "allow us to share" as they've already gotten sued for broadcasting people's viewing habits.

Due to the law "Netflix changed its privacy rules so that it no longer retains records for people who have left the site" which IMHO is as it should be.

Granted this is wikipedia and YMMV, grain of salt, etc etc, but it does agree with my general memory of the situation.

0
0
Boffin

Environmental/Energy?

Could the increased cost of energy extraction and waste disposal be consuming our growth?

http://usatoday30.usatoday.com/money/industries/energy/story/2011-12-13/electric-bills/51840042/1

Without a significant decrease in energy costs any growth will be consumed by increased extraction costs. We've mined all the cheap and easy stuff and are digging deeper and farther out then ever. Solar, Wind, and other renewables are more expensive then their non-renewable counterparts and economies based on them will see a larger piece of their economic output used to support them. On the other side of the same coin we're globally *trying* to limit pollution, where once pollution costs were externalized (by dumping it where ever), now it's a cost of doing business.

2
0
Meh

Innovation != growth

I'm not sure that's the only reason. Inventing the washing machine must have been great for growth because it frees up lots of time to be productive with. But Twitter, Facebook, and on-line news sites with comments (erm...) suck up huge amounts of time that that might well have been used more productively if they didn't exist. So even though they are innovations they actually reduce economic activity.

5
0
Silver badge
Pirate

Well, I'd suggest that rebuilding from WW2 helped a lot of that growth into the 60s

And it's not like you didn't have major players (*cough* IBM *cough* Ma Bell/AT&T *cough*) sitting on innovation in the tech markets.

However, I have to agree that innovation often poses a threat to established bureaucratic and commercial interests, and those interests game the regulatory environment to hold on to their market position.

(no where's that damn money icon I keep asking for?)

1
0
Bronze badge

Re: Well, I'd suggest that rebuilding from WW2 helped a lot of that growth into the 60s

The Marshall Plan helped Europeans a great deal more than it did the United States. Granted, had you folks taken full advantage of the Marshall Plan, you would have been light years ahead of us, but then you did not so we are now where we are. The United States is once again falling further and further behind while our socialist neighbors move on ahead. Why? For pretty much the same reasons Mister Worstall pointed out in this article.

0
0

If laws regarding regulation were easy to change or alter to reflect the every whim of the market then there would be little point in having them at all, at which point we simply abolish them all and go back to letting companies and business do what they want how they want. I am sure many would love this approach.

Government and regulation is too big, expensive and crap until it is something that you feel passionately about then all of a sudden you want more involvement of said beast.

2
1

"Government and regulation is too big, expensive and crap until it is something that you feel passionately about then all of a sudden you want more involvement of said beast."

So, basically, government for the sake of government. Self serving and self perpetuating bureaucracy - the worst kind (the only kind?).

I say No - something is either needed, or not. Feel free to apply your passions to something else - the privilege of paying more of my money in taxes to support a bigger government than is absolutely necessary does not instigate any passions in me (at least not the positive kind).

0
0

It's called rent seeking. Putting yourself in the way of progress in order to cream your own living off it.

1
0

Stick to tech...

"A brief divergence into economics: we're not talking about macroeconomics here. That's the interest rates, unemployment, exchange rates stuff, all the things we see economists getting wildly wrong on the news. Rather, when we're talking about decades we have to be talking about microeconomics:"

No - that is a divergence into complete and utter economic ignorace.

Macroeconomics is short term, and micro is long term? Where on earth did you get that from?

Micro is small scale (a single industry, or company for example) macro is the entire economy. Micro analysis is inherently *short term* (5 years or less), macro is always considered in the context of comparatively long term trends (years and decades). Also, interest rates and exchange rate "stuff" also form a key part of microeconomic analysis.

As to your central argument, inventing things is not the primary driver of an economy. Not even close - China has grown at an enormous rate in recent years, and it has nothing to do with their inventions.

As an economist I'd strongly advise you to stick to tech - I actually thought this was a Spinal Tap-style spoof article!

6
1
Pint

Oh great. Yet another article by some wannabe economic expert on a tech forum.

Why is this drivel allowed on el reg...a technology site?

Pint ready in celebration when "Tim" buggers off with his utterly infantile "articles".

3
1
Devil

re: Why is this drivel allowed on el reg?

Western Market Capitalism is perfect, it's your perception of economic stagnation and a tech sector litigating itself to death that's faulty.

0
0
Pint

Re: re: Why is this drivel allowed on el reg?

Western Market Capitalism is perfect, it's your perception of economic stagnation and a tech sector litigating itself to death that's faulty.

My god yer right! WMC is perfect...what with governments bailing out major corporations that love to trumpet how bad government is for business. I also love how the corps bleat about the "free market model", which when it goes tits up then demand that the government bail them out...which is the exact opposite of the model they profess to support. Of course its all bollocks because the corps will cry that they are too big to fail...well...perhaps if you followed a different model, had proper compliancy controls in place, auditors who would be legally obligated to report corp malfeasance to regulators for example, corporate officers held responsible for illegal acts (prison time for you Mr Money Launderer/LIBOR fixer et al), MBA's who are taught to run a business....not monetize everything within an inch of its life. I happen to believe that capitalism is a great model only when it is going hand in hand with a good and decent policy of social responsibility. Otherwise its a monster that will eat all in its path....led by a handful of sociopathic bastards.

/rant

The litigation/patent troll thing is frankly totally out of hand and does no one any favours besides short sighted lawyer types and VP's who can't see more than a half move ahead.

Pint for us all surviving the "Mayan Apocalypse".

1
1
Bronze badge
WTF?

Ikea Selling food - Innovation?

From TFA :- "Ten Ikea stores are planned [in India] .... as part of a bigger push to enter emerging markets. However, last month officials told Ikea it was only allowed to sell furniture products, and that selling food and drink would infringe on regulations."

Is that supposed to be an example of suppressing innovation? WTF has Ikea selling food got to do with innovation?

4
2

Re: Ikea Selling food - Innovation?

WTF has Ikea selling food got to do with innovation?

I know! Absolutely fuck all!

1
1
Anonymous Coward

Re: Ikea Selling food - Innovation?

> WTF has Ikea selling food got to do with innovation?

I read somewhere that since the sub-prime product collapsed, the marketeers are heavily moving into commodities and food production, even buying land in the former Soviet republics. So, the only kind of innovation the consumers are likely to see is vastly increased food prices.

0
0
Silver badge
Happy

Re: Ikea Selling food - Innovation?

I've only been to Ikea a couple of times, but I do remember free samples of Swedish meatballs....

0
0
Bronze badge

Re: Ikea Selling food - Innovation?

Because low cost food will draw a crowd. While members of the crowd are eating, guess what else they are doing? They are looking at the furniture Ikea sells. Ikea should approach the local food vendors for the food. Then they woould likely have less trouble.

1
0
Bronze badge
WTF?

@Billy Catringer - Re: Ikea Selling food - Innovation?

Wrote :- "Because low cost food will draw a crowd. While members of the crowd are eating, guess what else they are doing? They are looking at the furniture Ikea sells."

More likely it gets the shoppers to stay longer and not wander out when they get hungry. And you can't see any furniture from where you sit to eat, in the Bristol Ikea at least. But yes, I did get that idea, I'm not that slow - really. However the idea is commonplace and age-old - ever been to a leisure centre/funfare/bowling alley/Harrods/M&S/Casino ...........?

So, as I said - WTF has it got to do with innovation?

0
0
Bronze badge

Re: @Billy Catringer - Ikea Selling food - Innovation?

@Nuke

Bear in mind that I have never been to India, but I think it must have everything to do with innovation--in India.

0
0
Bronze badge

Ikea unable to sell food in their Indian stores

Nuke, Ikea being unable to sell food in their Indian stores was presented as an example of regulatory capture, not as an example of innovation.

0
0
Silver badge

Nice try Tim

But the truth is, we have run out of cheap energy and in the end that's what is starting to dominate the economics

http://ourfiniteworld.com/

1
0

Poor try itzman

"But the truth is, we have run out of cheap energy"

Rubbish - energy is expensive because of all the green power being shoved down our throats.

Heard of shale gas? Its so abundant in the US the gas price has crashed because of the oversupply. In Australia there are hundreds of years of gas supplies using normal extraction methods, not to mention the absolute mountain of coal reserves - what was that about no cheap energy again????

Seriously, this club of Rome nonsense was debunked decades ago...

1
1
Bronze badge

Re: Nice try Tim

Yes, I am sure that most of us understand the arithmetic involved--but it is a case of lies, damned lies and statistics, isn't it? We are near or just past the peak oil according to that Malthusian's charts, are we not? But, look! We have discovered how to fracture shale to produce untold trillions of tonnes olf methane. Hallelujah! Once we get close to running out of that resource, guess what? We will almost certainly find a substitute. Meanwhile, our numbers are on the decrease. Virtually all of the population growht in the United States is from immigration. Italy is having a population crisis. They are not replacing their numbers, neither is Japan. This is true of almost every industrialized nation on Earth. By the time we start aiming for power satellites in high orbit, we will have a stable population world wide. That is if the Environmentalists don't push us off the edge with their water-headed policies. I would not bet against them succeeding.

0
0
Anonymous Coward
0
0
Bronze badge

Re: The US gas price has crashed?

Wrong gas. Remember, to the Brits that's "petrol" and "gas" is propane/natural gas.

0
0

The examples of this are endless. I once talked to a VC who pencilled in the combined inertia of competition, consumer education and regulation as requiring non-green field investments to show a 1-2 order of magnitude of improvement (combined out of better, faster , cheaper) in the lab. By the time the various hurdles had been inefficiently overcome it would still need to be at least twice as good to beat the incumbent advantages. I'd also factor in a decade or two as well.

There is another subtly I've noticed over the years that is even harder to pin down - the approach and attitude of regulators who are often interpreting the law to guide their actions. This can be good - the UK removed the prohibition on 'commercial' use of free spectrum like 2.4Ghz rather quickly because of basically a good ability to talk to non-obvious stakeholders. It can also be bad when new environments mean people don't expand beyond their existing network despite changing times. The early days of TV without Frontiers that became the AVMS directive comes to mind.

0
1
Bronze badge

Too Big to Fail.

Oh, and Tim should have asked "Will the Americans be allowed to frak?" That issue is still very much in doubt. I am certian that the Canadians, the Aussies and everyone else that is able and has the appropriate geological formations under their lands will frak, but probably not us--not so long as President Obama is in office.

Bear in mind that I am not among those that fears global warming. I am more inclined to believe that Presidnt Obama dislikes the United States and the United Kingdom for being "colonial" powers. I have read that his mother inculcated this fact in him when he was learning to read. As he sees it, we have a great deal to answer for and must be made to answer for it, never mind that the people responsible for that misbehavior are long dead or powerless. Otherwise, why wouuld he go to a country like Brazil and encoruage them to drill for oil offshore during the ongoing crisis in the Gulf of Mexico? Whjy did he bow to the king of Saudi Arabia? Yes, I did vote for him. That should tell you what I thought of Mitt Romney.

0
1
Pint

Re: Too Big to Fail.

Whjy did he bow to the king of Saudi Arabia?

So what did you make of Shrub near as dammit shoving his tongue down King Abdullah's throat?

Pint cos it'll take a one to deal with whatever bollocks answer you come up with.

0
0
Bronze badge

Re: Too Big to Fail.

@IT Hack,

You would have to ask President Obama that question to get the real truth. I know why George W. Bush did what he did--it was all about the Benjamins for him. The US dollar, in a roundabout way, has been backed by Saudi OIl since Tricky Dick took us off the gold standard. Despite the Bushbaby's fawning, that has stopped rather abruptly. The Chinese are using their numbers to supplant us in that part of the world. We have put our currency printers on overtime while the Chinese have been buying gold. Shameful, ain't it?

0
0

Thanks for the interesting article

3
0
Happy

Growth...

There does seem to be a serious lack of understanding within the general public (of course I'm not counting us commentards amongst the the hoi polloi) on some of the basic concepts of economics, with growth a particular issue.

I would take issues with a couple of things in the article though. One of the paras seems the paras seems to suggest that a lack of regulation is allowing developing economies to better make use of new inventions which has caused their fantastic rates of growth when in most cases it is the cost of established tech, like mobile phones, reducing significantly due to the maturity in developed economies - that and remarkably better education in places like Brazil and China over the last 20 or so years. Its pretty easy to get the rates of growth they have been having when you turn tens of millions of uneducated subsistence farmers in to skilled and semi skilled workers.

Also, as others have said, I'm not sure that I recognise your description of micro vs macro . it seems to be a bit confused compared to my economics modules at uni. I see what you're saying about individual structures typically classed as micro economics causing long term structural harm, but micro isn't just those things, as well as macro not just being medium and short term.

Oh, and quoting Keynes? Don't they expel you from the Adam Smith institute for that?

0
0

Observe history?

In 1833 C.F. Martin left Germany where the system of guilds severely restricted his business of Guitar Making. He went to the USA and set up a very successful company. Arguably guitars have been quite important to the US economy. I wonder where he would choose to go these days.

1
0

Executive summary: too much gubbermint regulation

is stifling growth from new technologies.

Which explains perfectly why Somalia is the most technologically

advanced nation on Earth.

2
0
Megaphone

Amen

The whole idea of working or owning is all about a more prosperous future than if one did no work or owning. The whole idea of politics is to protect vested interests, starting with generally approved ones such as defending the nation and establishing a justice system, and moving down from there, all the way to Taxicab Regulations. This is fundamentally the same conflict as the Greeks saw in Democracy 2500 years ago: chances are that if people can vote themselves benefits obtained by force from others at no cost to themselves, they will.

They ought not to be allowed to do that. Constitutional government attempts to resolve this problem, and has done rather well at it, in certain places and for fairly long times in some of them.

0
0

Page:

This topic is closed for new posts.