Innovation Matters For All Income Levels

Why is this important? Today's innovation - such as it is - seems to exist mostly for certain government and special interest functions. Fortunately that wasn't always the case...but what to do about the fact it is, now? Even though diverse forms of innovation once led to greater total factor productivity and growth, recent generations have not benefited from innovation across the spectrum of possibility. As a result, people from all walks of life can be forgiven for wondering if innovation even matters.

And yet, innovation once provided economic access and mobility for all income levels - in other words the gains of the 20th century. Who has enough incentive now, to reform a broken supply side marketplace which stands in the way of economic prosperity? And who "cares" that central bankers are following the lead, of all who are too comfortable with a downshift in expectations?

Unfortunately the first quarter contraction has me in rant mode. How much better might that first quarter have been, if supply side limitations in physicians had been adequately addressed in recent years? A lack of concern regarding needed production reforms, lurks behind conversations where one hears "X amount of dollars ought to be sufficient for the healthcare needs of a poor person!" or "Give em an air conditioner and a little wood frame house to live in and they'll do fine!"

Who for that matter is "poor" at any given moment...should a substantial part of the population be expected to revert to living standards from fifty years earlier, because of a current lack of income? What if IT had been forced into such a limited mindset? We might still be showing up at offices equipped with typewriters, adding machines and perhaps a few bulky computers. What if we could make full use of the resource potential which now exists? What if education could actually be used so that individuals find better ways to solve problems? What if people still had the right to define product for themselves and for others in their midst?

To be sure, plenty of technological advancement continues apace. But it has precious little to do with services, or the environment factors involving construction which cry out for reform. For instance, a recent Business Insider article speaks of great technological gains in the next twenty years, but are these something the average citizen can get excited about? Where are the IT building components which could turn today's infrastructure requirements into options instead of burdensome necessities? Or, perhaps local holographic environments for those who are limited in travel options? How about building components that your little sister could bring to site, and snap together in an afternoon?

If much touted robots, drones, big data and surveillance mattered so much in a broader sense for total factor productivity, then why would central banks have downshifted growth prospects to such an extent? The most recent number for first quarter GDP "growth" - minus 2.9 %, is starting to look like a lost decade style number. And as John Cochrane says in this post:

It's also extraordinary because the Washington policy machine has gotten bored with growth or lack of growth and moved on to squabble about other things...What was a recession is turning into everyone's nightmare, perpetually slow growth.

Innovation is all about supply side factors, and yet today, much supply side potential remains missing in action. So long as vital elements of the marketplace are missing, it may be difficult to convince any central bankers to maintain monetary policy on a reasonable growth trajectory. That only means it will be even more difficult, for individuals who still have little economic access.

There needs to be a unified approach, which addresses the multiple factors which play into one another and prevent anything constructive from getting done. In particular, this is not about superficial "maker versus taker" arguments, in spite of political nonsense to the contrary. Indeed, some who consider themselves in a maker position (particularly services), were granted special government privileges in order for that to happen. In some instances, this may not change. Just the same, marketplaces need to exist across the income spectrum, special privilege or no. Anything less is not enough.