Innovation!

It's hard to imagine why future technological progress would accelerate economic growth faster, on average, than recent technological progress. Yes, technology is great, and future technology more so than past technology. That also was true in 1980. And in 1960. And, for that matter, in 1860. We're on the technology express, an exponential curve. What makes 2020 the time when the curve bumps up to a higher one?

But isn't that always how economists think? You can't bank of dreams.
Technology is all that and more; and while everyone is looking at biotech and nano, there is great interest in fusion, in particular fusion of the non-tokamak designs that are proliferating. Fusion will do for energy what computers did for memory; make it cheaper than anyone could believe and support the most complex, energy expensive and game changing technologies that are to come.

Right, we need either radically cheaper energy or radically improved automation. Fusion is the only radically cheap energy on the horizon, but I won't hold my breath. And current trends, as well as policy choices of Obama (ie carbon taxes, renewable energy push, etc) will likely lead to higher energy prices. So that's not good.

At some point robotics gets good enough and the construction industry will take a quantum leap up in efficiency. The speed of building roads, houses, and the like will radically accelerate. Advanced robotics could enable revolutions in large-scale engineering. Shipbuilding is a good example of something that's been fairly resistant to automation so far.

Biotech might increase our health and productivity, but the vast majority are healthy now throughout their working lives. The toll of obesity, diabetes, etc doesn't seem to drastically reduce productivity. There'd likely be some improvement. Probably be more productivity boost from a better version of caffeine.

The IT revolution now seems to mainly invent better and better ways for people to kill time - video games and porn for men, facebook and blogs for women, pirated movies for everybody --it's fun, but it's not especially productive.

What we need is a new Bell Labs and beefed up state sector -- not just the puny crumbs that the NSF doles out. It's expensive to pay a bunch of nerds to sit around all day and hope they come up with the next big field -- but if we hadn't done that, there would have been no information theory or cryptography.

The cumulative impact over time of founding those two fields will be infinitely greater than whatever the fuck the techies are up to now. There was an opinion piece (I think) in the WSJ about how much greater innovation is today -- but it was about using the technology to better understand your customers, market to smaller niches, and update how their preferences are changing by the minute.

Basically, innovation now means being able to better sell your deodorant, or to know which packaging color the Asian housewives in Boston vs. Denver prefer. No one gives a shit about breaking the case of the universe open again and seeding a new knowledge colony, notwithstanding the tired phrase about thinking outside the box.

In order for innovation to save us from our fiscal irresponsibility, we have to pursue policies that encourage innovation as a nation. In the last decade we have introduces a number of stealth regulations that are killing innovation in the U.S. These include crippling our patent laws and Sarbanes Oxley. For more information see http://hallingblog.com/2009/05/26/innovation-regulatory-road-kill/. Note President Obamaâs plan to change the patent term for drug patents is not a step in the right direction