What’s New about Ingenuism?
Ingenuism Weekly 12
“The recipe for great work is: very exacting taste, plus the ability to gratify it.” —Paul Graham, Hackers & Painters: Big Ideas from the Computer Age
INTERVIEWS
How the World Got Rich - Deirdre McCloskey and Yaron Brook
Starting in 19th century, the Great Enrichment sparked unprecedented prosperity around the world. Yaron Brook talks to economist Deirdre McCloskey about what caused it--and why those lessons remain important to the future of progress.
McCloskey is Distinguished Professor Emerita of Economics and of History, and Professor Emerita of English and of Communication, adjunct in classics and philosophy, at the University of Illinois at Chicago. Trained at Harvard in the 1960s as an economist, she has written twenty-four books, including the Bourgeois Trilogy.
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INSIGHT
What’s New about Ingenuism?
Robert Hendershott and Don Watkins
Ingenuism did not spring out of a vacuum. We developed the framework as an additional dimension to the best existing explanations for humanity’s outstanding progress over the past two centuries, in particular Endogenous Growth Theory and Innovism.
Centuries of accelerating economic growth is a challenge to reconcile with classical economics. For most of history, humanity seemed to be running in place. Regression inevitably followed times of abundance and progress. Even in the early stages of capitalism when the world began to break out of the Malthusian Trap, it was understood that declining returns on capital made an eventual return to stagnation inevitable.
Only this didn’t happen. Instead, progress seemed to accelerate. Scholars recognize two factors as contributing to this miracle.
In his Nobel Prize winning work on Endogenous Growth Theory, Paul Romer noted the key difference between what he called society’s stock of “results” and capital. Results (ideas, insight, and technology) are nonrival, that is, they can be used by everyone at the same time. Capital is rival (a machine can only be used for one purpose at a time) and depreciates, so capital investment leads to decreasing returns over time. Results build on themselves, so investments that create knowledge and innovation produce increasing returns and continued exponential growth. As long as we maintain these investments, we create more results and progress, which fund further investment. This positive feedback loop maintains exponential growth.
Deirdre McCloskey offers a different view. The Great Enrichment, she argues, was the product of a change in the way people viewed commercial activity. Beginning in the 16th century and culminating in the 18th and 19th centuries, businesspeople came to be viewed as possessing virtue and dignity, which led to the protection of the “bourgeois” way of life in the form of liberalism: the protection of liberty, which meant the protection of the bourgeois way of life. Liberalism left people free to try and improve on ideas that enriched the world. McCloskey rejects the traditional term for this system, capitalism—she calls it Innovism.
How do these theories fit in with the Ingenuist framework?
Exploration
Ingenuism’s concept of “exploration” zeros in on the kinds of activities that generate results and explains why it’s only liberalism that can generate results.
Much of the learning that produces ideas, insight, and technology is learning-by-doing, which involves risk-taking, failure, and rewards for success. Liberalism unleashes this kind of exploration: you’re free to test your ideas, to fail and try again, and to prosper if you succeed.
And, per Romer, you’re free to invest in these activities—to direct financial capital towards human capital, knowledge creation, and innovation. Such investment itself involves exploration, as when venture capitalists make small bets on high-risk startups, and over time direct more and more capital toward the winners.
Connection
Ingenuism’s concept of “connection” is implicit to both Endogenous Growth and Innovism. Making it explicit draws our attention to the main causal factor explaining why growth accelerates under liberalism.
Liberalism fosters prosperity by enabling connection. A small society of self-sufficient farmers would remain relatively poor. But free people don’t remain isolated from each other. They use their freedom of thought and speech to conceive and share ideas. They use their freedom of association and property rights to work with others in order to implement new ideas. It is this rich connective activity that funds, generates, and spreads results.
As liberalism expands, connection expands, magnifying the impact of learning. Greater connection leads to even faster growth. At the same time, innovation itself enhances connection—think the Internet—which leads to yet more growth. This is at the core of accelerating progress.
Environment
Ingenuism’s concept of “environment” incorporates McCloskey’s framework. We agree with McCloskey that cultural norms supportive of commercial activity and political freedom are crucial for innovation. They liberate and encourage people to devote themselves to productive activities, to risk failure, and to enjoy success.
But our concept of “environment” includes more than just the widest social-political conditions of progress. This allows us to integrate political-economic theories about innovation and progress with key insights about what kinds of corporate cultures and incentives lead to innovative companies and which do not. It is this fusion of how innovation takes place at the team level, the firm level, and the macro level that is one of the most powerful aspects of the Ingenuism framework.
Endogenous Growth Theory highlights the importance of investing to produce non-rival results. Innovism highlights the importance of nurturing the right culture. Ingenuism highlights the importance of building connection to magnify the benefits of both along with a supportive environment that nurtures discovery and unleashes the power of human ingenuity.
QUICK TAKES
It’s only a flesh wound
The precondition of any great achievement is ambitious goals. This story focuses on orthopedic surgeon Cato Laurencin, who “made a bold commitment to regenerate an entire limb within 15 years—by the year 2030.”
Laurencin and his team have individually engineered and made every single tissue in the lower limb, including bone, cartilage, ligament, skin, nerve, blood vessels. Regenerating joints and joint tissue is the next big mile marker, which Laurencin sees as essential to regenerating a limb that functions and performs in the way he envisions. . . .
"We're in the thick of the science in terms of making this happen," says Laurencin. "We've moved from making the impossible possible to making the possible a reality. That's what science is all about."
I’m reminded of something Boom founder Blake Scholl often says: every start up is hard, so you might as well work on the most ambitious hard thing you’re passionate about. Similarly, all scientific and medical advances require an incredible amount of work and dedication. Putting that effort in the service of a goal like Dr. Laurencin’s is going to be crucial to deciding how much progress we enjoy in the years ahead.
Don’t complain…adapt
Here’s the trajectory of nearly every technology. It gets created. Some people celebrate the possibilities while others warn of foreseeable and unforeseeable dangers. Over time, some negatives do emerge and the benefits of the technology get taken for granted. There is increasing pressure to regulate or even ban the technology.
What gets almost totally ignored is our ability to adapt to the inevitable negatives of technology.
Take social media. For years, social media was celebrated for connecting us like never before. Then problems emerged: addiction, distraction, privacy invasion, online abuse. Those are real problems. But they don’t erase the benefits of technology. Rather they call for adaptation and innovation.
Many of us have adapted as individuals. We turn off our notifications. We leave our cell phones in another room when we’re with friends and family. We don’t let our 12-year-olds have their own smartphones or social media accounts.
Technology companies are helping us adapt. Twitter, for example, recently announced it’s creating new tools to help users suffering from Internet abuse. For example:
Potential features it’s considering include letting users ‘unmention’ themselves—i.e. remove their name from another’s tweet so they’re no longer tagged in it (and any ongoing chatter around it won’t keep appearing in their mentions feed).
Technology is imperfect, but the solution is almost never restricting and controlling technology—it’s more technology.
Where is my flying car?
The New York Times profiles the state of the flying car industry. And, oh by the way, there actually is a flying car industry!
Mr. Leng’s company, Opener, is building a single-person aircraft for use in rural areas—essentially a private flying car for the rich—that could start selling this year. Others are building larger vehicles they hope to deploy as city air taxis as soon as 2024—an Uber for the skies. Some are designing vehicles that can fly without a pilot.
While there are still plenty of technological problems to solve—advances in battery technology are high on the list—many of the challenges ahead aren’t technical. They’re regulatory.
BlackFly is classified by the government as an experimental “ultralight” vehicle, so it does not need regulatory approval before being sold. But an ultralight also cannot be flown over cities or other bustling areas. . . . [Some] estimate it will be years—or even decades—before regulators will allow just anyone to fly such a vehicle over cities.
Okay, that’s not totally unreasonable. But what about autonomous flying cars, which should be far easier to make practical than autonomous cars?
Many believe this is how flying cars will ultimately operate: as a taxi, without a pilot. In the long run, they argue, finding and paying pilots would be far too expensive.
This arrangement is technically possible today. Kitty Hawk and Wisk are already testing autonomous flight. But once again, convincing regulators to sign off on this idea is far from simple. The Federal Aviation Administration has never approved electric aircraft, much less taxis that fly themselves. Companies say they are discussing new methods of certification with regulators, but it is unclear how quickly this will progress.
There’s no question that safety is an important value. But so is progress. Government policy setting clear safety targets for new technologies would allow entrepreneurs to race toward them, rather than wade through years of uncertainty. We should not tolerate anything less than that.
Business at the speed of regulation
There’s a long debate to be had about how (and whether) to regulate tech companies. But I think we can all agree that this is not it:
Nine months after Nvidia, the second-most valuable microchip developer in the world, announced its $40 billion takeover of SoftBank-owned chip designer Arm Holdings, the companies are facing delays in submitting the deal for approval by the European Union’s antitrust regulator, according to three people involved in the process. The regulator is asking far more questions about the deal than either company anticipated before the filing.
Making matters worse, the regulatory agency told the companies that if they don’t submit a lengthy approval request by the end of this month—which seems unlikely to happen—then they should wait until September so that the review wouldn’t start during Europe’s summer vacation months, two of these people said.
If you want to know why Silicon Valley is in the United States and not Europe, start with the fact that regulators feel free to all go on vacation for months at a time.
Nuclear power never tasted so good
Nuclear power is the most promising energy technology in the world. And anyone whose conceptions of its safety (or cost) are based on Chernobyl or even Fukushima are simply behind the times.
Copenhagen startup Seaborg Technologies has raised an eight-figure sum of Euros to start building a fascinating new type of cheap, portable, flexible and super-safe nuclear reactor. The size of a shipping container, these Compact Molten Salt Reactors will be rapidly mass-manufactured in their thousands, then placed on floating barges to be deployed worldwide – on timelines that will smash paradigms in the energy industry.
Like other molten salt reactors, which have been around since the 1950s, they're designed to minimize the consequences of accidents, with a pair of very neat passive safety measures the company claims can greatly change the safety equation at the heart of any nuclear power investment.
The article goes deep into the safety features. But what I found surprising was the idea that this technology has been around in some form since the 1950s. Well, why didn’t we use it?
It turns out the answer has to do with one of the most tragic facts about nuclear power: it was not allowed to evolve freely by entrepreneurs seeking safe, low-cost nuclear solutions. It was foisted on the market prematurely by bureaucrats.
[T]he Atomic Energy Commission, which preceded the Department of Energy (DOE), was committed to light water reactors, a variant of which was already powering the nuclear navy and another variant was finding success in the electric power industry.
Industry money, utility demand, and the politics influenced by Adm. Hyman Rickover were all for light water—only light water. They feared light water—a successful and workable technology—would be undermined by competing technologies, among them molten salt.
My view is that the best barometer of our culture’s attitude toward progress is our treatment of nuclear power. The 1950s and 60s saw technocratic support for nuclear. Unfortunately, this manifested itself in top-down “expert” choices that thwarted the ingenious improvements that normally follow the first generation of a new technology. So the initial excitement was followed by anti-technology, environmentalist opposition to nuclear. The next step, I hope, is the liberation of nuclear so that innovators can engage in creative exploration.
RECOMMENDATIONS
Andreessen Horowitz’s Future
Andreessen Horowitz describes its new media endeavor, Future, as “Technology, innovation, and the future, as told by those building it.” That tells you almost everything you need to know about this incredibly valuable publication. As TechCrunch notes:
The publication will cover topics that they find compelling with a broad theme of “rational optimism”—something that the firm feels there isn’t enough of in coverage of tech at large.
This isn’t a news operation, Wennmachers says, and they will focus on future-focused informational and editorial content, rather than day-to-day tech occurrences.
For example, in “Technology saves the world,” Marc Andreessen runs down the list of how technology helped us survive the COVID-19 pandemic. He ends by celebrating the rise of remote work, concluding:
This is, I believe, a permanent civilizational shift. It is perhaps the most important thing that’s happened in my lifetime, a consequence of the internet that’s maybe even more important than the internet. Permanently divorcing physical location from economic opportunity gives us a real shot at radically expanding the number of good jobs in the world while also dramatically improving quality of life for millions, or billions, of people. We may, at long last, shatter the geographic lottery, opening up opportunity to countless people who weren’t lucky enough to be born in the right place.
(Here’s our take on COVID-19 and progress.)
Byrne Hobart, meanwhile, explores many of the dynamics of bubbles, arguing:
even though the term “bubble” is usually pejorative, the right kind of bubble, at the right time, can exert a powerful positive effect on the world. A bubble is an objectively irrational shared belief in a better potential future … but that doesn’t just describe someone bidding up asset prices; it also describes anyone who chooses to build that kind of future.
(Here’s our take on the virtue of bubbles.)
And here’s Linda Xie talking about some of the future innovations blockchain technology will make possible—in particular, the promise of smart contracts.
Smart contracts power new kinds of transactions with clear advantages over those enabled by legacy systems. Traditionally it takes weeks and reams of paperwork for a bank to verify an individual’s assets and issue a loan, for example. With a smart contract, a piece of code could automatically issue a loan based on the collateral provided by the individual.
Smart contracts go beyond simply allowing for instant and verifiable transactions for various applications though — they can also be programmed to interact with each other. In other words, they make crypto programs composable, like building blocks. This capability of composability is one of the most talked-about among tech enthusiasts, and not talked about enough more broadly, yet it’s one of the most powerful aspects of crypto. Because composability allows anyone in a network to take existing programs and adapt or build on top of them, it unlocks completely new use cases that don’t exist in our world.
(Here’s our take on Bitcoin and the value of blockchain technology.)
One of the best ways to learn about innovations is to hear from people creating them—and one of the best ways to learn about the process of innovation is hear from the people living that process.
Future is an incredible resource for anyone interested in 21st century progress.
Until next time,
Don Watkins
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