In a brief essay, Anton Howes asks: “Is innovation in human nature?” That is to say, do people have some natural stock of innovative capacity, waiting to burst forth when conditions are right? By way of anecdote, Howes’ answer is: not really. He pushes back against the idea that the industrial revolution took place merely because the economic conditions were suitable for one: “The more I study the lives of British innovators, the more convinced I am that innovation is not in human nature… People innovate because they are inspired to do so. And when people do not innovate, it is often simply because it never occurs to them to do so. Incentives matter too, of course. But a person needs to at least have the idea of innovation—an improving mentality—before they can choose to innovate.”
Let’s ask more generally: What are the factors that drive economic growth? If we pull out and dust off our econ textbooks, we’ll read that growth is a function of higher investments, spending, trade, productivity, and so on. They can be broken down into ever more abstract categories, but technical enough that we can measure them to two decimal points and above. Howes’ framing prompts me to bring up some questions I was too dumbfounded to pose in four years of econ classes: How do beliefs about the future affect long-term economic growth? What role do optimism and pessimism play? How important are imagination and drive to growth?
And most of all: Why do we treat innovative capacity as some kind of fixed stock, constant across time and between countries, ready to be activated as soon as policymakers have finally gotten around to legislating the right conditions in place?
I’ve come to the view that creativity and innovative capacity aren’t a fixed stock, coiled and waiting to be released by policy. Now, I know that a country will not do well if it has poor infrastructure, interest rate management, tax and regulation levels, and a whole host of other issues. But getting them right isn’t sufficient to promote innovation; past a certain margin, when they’re all at rational levels, we ought to focus on promoting creativity and drive as a means to propel growth.
I wonder if economists overrate the easier-to-observe policy factors and under-theorize the idea that positive visions of the future drive long-term growth. To put it in a different way, I wish that they would consider definite optimism as human capital. In addition to education levels, human capital models should consider factors like optimism, imagination, and hope for the future.
When I say “positive” vision, I don’t mean that people must see the future as a cheerful one. Instead, I’m saying that people ought to have a vision at all: A clear sense of how the technological future will be different from today. To have a positive vision, people must first expand their imaginations. And I submit that an interest in science fiction, the material world, and proximity to industry all help to refine that optimism. I mean to promote imagination by direct injection.
Let’s start with the capacity of science fiction to improve imagination. One way of having a better idea of the technological future is to first read about one in a book or see one on screen.
Alas, for some reason, science fiction movies have taken a bleak turn in the last few decades. The dominant mode in modern sci-fi movies is dystopia, and perhaps even nihilism. Today, the contrarian project is to present an earnest, joyful vision of the technological future. That kind of undertaking will invite mockery from commentators posting essays on Medium, but one can hope that younger, less jaded people will find attractive that daring imagination.
If I had funding and access to studio talent, I would reshoot a bunch of films. Elysium, with a focus on the logistics behind the smooth functioning of a satellite habitat. Ex Machina, featuring an artificial intelligence whose greatest desire is not acceptance in human society. Gravity, with greater marveling of space and the desire to explore, not the aftermath of random mechanical failure. Her, in which artificial intelligences decide to improve humanity, instead of migrating en masse to a higher spiritual plane. Star Wars with no wars and no Jedis—and therefore no Sith—that instead draws out the gains from interstellar exchange under oversight of the Trade Federation. (Bonus points for working out rules that would govern countervailing duties and state procurement under a galactic trade regime.)
I confess I don’t know how to make these stories exciting. Doesn’t it sound though like an exciting challenge for the creative type? It is so conventional these days to watch yet another movie about how robots attempt to wipe out humanity, but ultimately fail, because they’re missing some essential soulful touch. So let me provide prompts to the enterprising screenwriter: What might society look like if we had energy too cheap to meter? If artificial intelligences must be otherworldly, how about we present them as angels of Rilke come down to Earth? When humanity manages to become a solar civilization, can we depict the inventions we need to colonize various moons and planets? How about the logistics of how colonies trade?
Books are less uniformly dystopian. I loved two that I read in the past year: Seveneves by Neal Stephenson and The Three Body Problem* by Liu Cixin. Both present definite optimistic visions of the future: Calamity threatens humanity; but it allows some time for humanity to prepare; and humanity uses this time to plan out the technological future. It more or less fulfills what it set out to do, and for the most part people triumph over their threats. I am delighted by the theme of people working hard to overcome existential challenges.
And I hope that many more authors and directors get into this genre. Let’s have more movies and books that look forward to the technological future.
Economists tend to be dismissive of arguments for industrial policy. I usually agree with their arguments, but today I want to stick up for one potentially positive aspect: That manufacturing and engineering work can improve imaginative capacity through exposure to industrial processes. I sympathize more often with those who lament the decline of the US industrial base because I think that more people should have greater proximity to the world of manufacturing and engineering.
(A bit of context: According to FRED’s measure, the number of people employed in manufacturing peaked at nearly 20 million in 1979; that figure is slightly above 12 million today. As a share of working age population, that’s a decline of 14 percent in 1979 to 6 percent today. That decline in headcount has not translated to a decline in total output. Today, manufacturing output in real terms is higher than ever before. But it’s worth noting that the figure collapsed after 2008, and is now only a shade higher.)
The fewer the manufacturing workers and engineers, the more removed everyone is from the particulars of industrial processes, and the more remote that knowledge becomes in each successive generation. We become think tankers and app designers and restaurant hosts, while the details of the industrial world become further and loftier abstractions. How many of our grandparents were familiar with the details of ball bearings, wire production, concrete mixing, industrial chemicals, while we are not?
I regret this abstraction of the material world. Most of our living standards are tied to the world of atoms. Even when we spend a lot of time online and on our phones, we go to work in cars and subways; keep ourselves warm and cool using machinery and electricity; surround ourselves with objects that let us cook or relax; and on and on. The online world is not entirely free of the material world. Our phones require aluminum and rare earths and silicon chips; the internet is powered by cables that run under our streets and beneath the oceans; we mine our bitcoins with a great deal of electricity.
Manufacturing work tends to be hazardous or unpleasant in all sorts of ways. But it’s also associated with faster productivity growth and the greater possibility of technological upgrading. Here’s Andy Grove: “Abandoning today’s commodity manufacturing can lock you out of tomorrow’s emerging industry.” If a country gives up on manufacturing too early on, even if it’s very low value-add stuff, it also loses all the tacit knowledge and design expertise from a workforce familiar with industry. The US continues to retain the highest value-add work of R&D and marketing in many sectors; but a lot of the scaling expertise, supplier networks, and supply chain knowledge have dispersed to other shores. I predict over the long term that diminishes the country’s capacity to have the labor force ready to take advantage of scaling up a big, innovative technology; and it slightly reduces the chances that the country will have the talent to create it.
If a state has lost most of its jobs for electrical engineers, or nuclear engineers, or mechanical engineers, then fewer young people in that state will study those practices, and technological development in related fields slow down a little further. When I bring up these thoughts on resisting industrial decline to economists, I’m unsatisfied with their responses. They tend to respond by tautology (“By definition, outsourcing improves on the status quo”) or arithmetic (see: gains from comparative advantage, Ricardo). These kinds of logical exercises are not enough. I would like for more economists to consider a human capital perspective for preserving manufacturing expertise (to some degree).
I wonder if the so-called developed countries should be careful of their own premature deindustrialization. The US industrial base has faltered, but there is still so much left to build. Until we’ve perfected asteroid mining and super-skyscrapers and fusion rockets and Jupiter colonies and matter compilers, we can’t be satisfied with innovation confined mostly to the digital world.
Those who don’t mind the decline of manufacturing employment like to say that people have moved on to higher-value work. But I’m not sure that this is usually the case. Even if there’s an endlessly capacious service sector to absorb job losses in manufacturing, it’s often the case that these new jobs feature lower productivity growth and involve greater rent-seeking. Not everyone is becoming hedge fund managers and machine learning engineers. According to BLS, the bulk of service jobs are in 1. government (22 million), 2. professional services (19mn), 3. healthcare (18mn), 4. retail (15mn), and 5. leisure and hospitality (15mn). In addition to being often low-paying but still competitive, a great deal of service sector jobs tend to stress capacity for emotional labor over capacity for manual labor. And it’s the latter that tends to be more present in fields involving technological upgrading.