The Agenda

On Innovation and Counterfactuals

Ezra Klein has written a helpful column on innovation. I couldn’t agree with him more on copyright terms, which are out of control. And his broader point that today’s innovations rest on the innovations of the past is a very, very important one, a theme to which I’ll return.

But I do have doubts about whether our higher education funding is structured as well as it could and should be. The fact that higher education expenditures are being reduced doesn’t in itself strike me as bad news. I’m more concerned about how public dollars are being deployed, e.g., how effectively are public dollars translating into skills for young people from working and lower middle class backgrounds? Process innovation seems more important than increased funding. 

As someone who firmly supports public investment in basic scientific research — my favorite use for public funds is funding biogerontological research to delay the onset of various age-related diseases — I do think we should be aware of the counterfactuals re: federal public investment in railroads, per the path-breaking research of Nobel laureate Robert Fogel. While ARPANET and the Global Positioning System were undoubtedly useful, the cold war conflict that gave rise to both programs also created considerable economic drag. It’s hard to tell what kind of a world might have emerged in the absence of the billions of dollars in funding devoted to arming North Atlantic societies to the teeth to defend against the Soviet threat, but I don’t think it’s obvious that a safer world would necessarily have been less innovative. 

Granted, there’s also the argument that the presence of a military threat leads governments to pursue a better mix of economic policies. The need to raise revenue for military expenditures was, as Charles Tilly argued with regards to the emerging states of early modern Europe, a central reason why states create the regulatory institutions and infrastructure necessary for flourishing business enterprises, etc. But again, the mere fact that ARPANET and GPS preceded a wave of technological innovation in our world doesn’t mean that their absence would have meant a world of no innovation. The pace of technological progress during the Second Industrial Revolution and during the 1930s, which economist Alexander J. Field memorably described as “the most technologically progressive decade” [PDF] suggests otherwise. 

And finally, Ezra’s most important insight, that innovation builds on innovation, suggests that we should be very, very skeptical of the National Science Foundation’s report, which employed methods that would be frowned about in a scientific journal. Amar Bhidé shared a few thoughts on the report last week that might be of interest. It seems that the NSF painted a somewhat misleading picture of how innovation works. The humdrum accretion of ground-level innovation — the kind of steps forward that no one thinks of as truly “new” — actually drives economic progress, and it’s the kind of innovation that doesn’t require big R&D budgets. 

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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