Dear Friends,
It seems to me, the United States is not, and has never been a manufacturing, banking, agrarian or industrial economy, it is and has always been, an innovation economy. From John Deere inventing the plow, to Elon Musk creating the reusable Rocket, the US strength is innovation. This is because at the outset, the founding fathers set up a system where innovation would be rewarded. Obviously the government has fallen far short of this ideal, yet in having it in the first place, and that some innovators still get through the filters to become rich, keeps the innovation game going. Yes, agriculture is and has always been a critical part of the US economy, as has been industrialization and manufacture, but they, and indeed the banking system as well… all grudgingly serve innovation and creative types.
There have been notable examples where the US government, especially in the last century, has become an impediment to innovation. Eli Whitney and the cotton gin is known by all US school children. His invention was copied, at the patent office, and multiple patents were put in at the same time. After decades of litigation he finally regained the right to his own invention, an invention that saved cotton producers millions of dollars, yet Whitney was denied a penny for his contribution. Tucker was an example of a innovator who was destroyed by cronyism. His car was too innovative, it would have cost the big three too much money to compete… so they got the government to shut him down through litigation for a fraction of the cost… undermining the US culture of innovation.
The US provides a place where innovators can come to innovate, outside oppression, bigotry and regulations. Tesla created some of his greatest inventions while living in the US. Because he was recognized for the genius he was here, and in America there was opportunity for him to create… so to America he went. It is notable that Elon Musk didn’t single-handedly upend the paradigm for rocket, electric car and online payment technology in South Africa, he came to the US to do it. Countless other inventors came to the US to implement their ideas, in an environment that fosters invention, rather than crushes innovators. They come to the US because their homes do not allow innovation, instead they fear innovators and stymy them in a multitude of ways, driving out creative types.
Most other nations not only do not foster innovation, it is actively hindered. Wherever there are entrenched economic actors, there will be blockages to innovation. Guilds, regulations, bureaucracy and cronyism are antithetical to innovation… because innovation threatens their monopolies. Most governments protect, and feed their zombie corporations the brains of innovators, so it is in the self interests of innovators to flee. That is how Google has grown to the behemoth it has become, by eating smaller companies. Google need not innovate… it eats the brains of innovators. Try starting a business in most countries, unless you have the graft to pay, or are related to someone, it is impossible… and therefore so is innovation. An outsider who is too powerful would pose a threat to the political order.
The greatest advantage of an innovative economy is it is based on bottomless supply and endless demand. There is no limit to how nice people want their lives to be… creating perpetual demand. Innovation is not based on a limited resource… unlimited ideas hide in the ocean of the Id. Banking funds innovators, manufacturing allows them to create what they envision, and industrialization makes innovative products available to all of us. There was just as much brain power in ancient Rome, China, India and Meso America as in the US today… the difference is that in the US, innovation is encouraged, husbanded and nourished, while it wasn’t there and then. Protect the connected at cost to the innovator. Innovation is indeed the goose that laid the golden egg… or would you rather a goose dinner?
Sincerely,
John Pepin
