Monday, March 29, 2004
Re:In my opinion, the greatest thing about America is innovation

Ramki, Rachit,
This is a common statement, and it is true. But think about it a little and it seems that technological "innovation" is not such a "great" thing per se, in the longer run. In fact I think its a pretty extensive topic.

Chicago school-type economists have this faith in this bird called "innovation" that will swoop down and rescue the American advantage everytime others catch up and start to steal America's beef. So far it has worked, but I think things are reaching a head.

Having grown amidst terrific resource availability, the American culture has been one of untrammelled exploitation, of nature, and sadly also of humans in the earlier days (this was the case with the West in general during colonial times). But as the population has increased, and in a globalizing environment where it is the norm for a freer flow of capital and resources, that environment has changed a little. From the resource scarcity and population point of view, you can compare the economic cultures of Europe (softer, socialistic) with America (still gung ho about laissez faire). Within America also it is possible to contrast the densely populated California with the others.

Apart from population to resources ratio, I think the globalized environment aspect will play a greater role. For instance, I wonder when people say that American companies have increased their productivity like never before, howmuch of those productivity gains are local and howmuch due to tapping into more productive foreign resources. It is debatable. Of course the same applies in reverse to those foreign countries, but I think the primary lever in America's hands is non-economic and geo-strategic (militarized national power).

In any case, can you suggest what sort of innovation will help prevent the potential harm to American society (I'm not using the word "economy" here) now? I've said it before: it seems to me that America's standard of living will have to lower itself, and the better way to do it is to open up to renewed immigration. Otherwise we will see more Iraqs.

Meanwhile, here's an Asian perspective. India's doubts over Us strategic partnership

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