Last Friday, I posted a not-so-serious note on how people think any new technology developed after their birth is worse than technology that was already around when they were born. But this touches on a serious subject that I want to address today and the next couple of Wednesdays: the lack of productivity growth in developed countries.
I’ve spent time both in academia and in industry and I believe I have some ideas on why. Through industrialization of research, pretty much any low hanging fruit in parts of science and engineering has already been picked. What is left is either intractable or too difficult (and sometimes there are physical limitations, such as in semiconductors). And those that can be solved, need significant time. These days, neither in industry nor in academia, there’s practically anyone willing to support that kind of research and in order to get a paycheck/tenure/promotion/funding you need to show steady and continuous progress. That leaves very little incentive for anyone to even try. Even worse, funding agencies like US National Science Foundation expect you to provide a path to the solution in your grant application. So you have to have already made some progress before you can even apply. Incentives and rewards matter
Two broad thoughts: (1) perhaps academic research has become so specialized that researchers are less likely to have the breakthrough ideas often cross not only segments of their discipline but also other disciplines. Industrial research has always focused on topics with immediate relevance and application, but perhaps all researchers are more short-term and narrowly focused than in the past. (2) Many of the areas of greatest research application do not add to measured productivity. Specifically, we must have a green energy transition for reasons you all know, but the total amounts of resources needed to produce a given quantity of energy will increase, so measured productivity will fall. Similarly, bright minds are drawn to create social media applications and internet advertising, which may be neutral (cynics would say negative) to productivity.
I’ve spent time both in academia and in industry and I believe I have some ideas on why. Through industrialization of research, pretty much any low hanging fruit in parts of science and engineering has already been picked. What is left is either intractable or too difficult (and sometimes there are physical limitations, such as in semiconductors). And those that can be solved, need significant time. These days, neither in industry nor in academia, there’s practically anyone willing to support that kind of research and in order to get a paycheck/tenure/promotion/funding you need to show steady and continuous progress. That leaves very little incentive for anyone to even try. Even worse, funding agencies like US National Science Foundation expect you to provide a path to the solution in your grant application. So you have to have already made some progress before you can even apply. Incentives and rewards matter
Isn't it natural that it is getting more and more difficult to improve the better you get?
....is this an argument as to why it is becoming more difficult for professional investors to beat the market?
Two broad thoughts: (1) perhaps academic research has become so specialized that researchers are less likely to have the breakthrough ideas often cross not only segments of their discipline but also other disciplines. Industrial research has always focused on topics with immediate relevance and application, but perhaps all researchers are more short-term and narrowly focused than in the past. (2) Many of the areas of greatest research application do not add to measured productivity. Specifically, we must have a green energy transition for reasons you all know, but the total amounts of resources needed to produce a given quantity of energy will increase, so measured productivity will fall. Similarly, bright minds are drawn to create social media applications and internet advertising, which may be neutral (cynics would say negative) to productivity.