Revolution thinking may be cause of USA's lead on innovation
Originally written on February 18, 2017
Revolution is a good word for the United States in many regards. In this post, though, it relates to the ongoing ability of American businesses to invent and sell new products. And this has occurred for so long now it seems to have a created a structural base for ongoing innovation. But why is the USA the world leader in innovation, especially in regards to such “new-to-the-world” stuff?
The usual responses to this question include a large domestic market, limited government, deep capital markets, and a skilled workforce. But many competing countries have these too…and only the limited government bit existed before the Industrial Revolution. What else could explain why such a culture developed in the United States more strongly than elsewhere? Let's examine other cultures to consider it....
This was the most advanced part of the world for much of human history. Japan developed rapidly on the basis of an educated and hard-working population, and could indeed have been the leader. It’s fascinating to think about what Japan would look like now if it had behaved like Singapore after the 1940’s. However, its inability to adapt to a changing world has dealt it out of the game to a large degree. South Korea and China have grown rapidly too. But centuries of tradition and a desire for stability has limited all three of the North Asian giants.
South Asia and Arabia
Both of these regions have historically been important places for innovation. However, religious, tribal and other concerns led both of them to turn inwards and to fall behind. Thankfully, this is starting to change, especially in India…but there are still many barriers.
Africa too had some level of innovation in historical times. Unfortunately, colonization by Europeans and ongoing political and religious turmoil has left it a long way behind. It will take time and stability for Africa to reach its full innovative potential.
This region is generally rich, and is the wellspring for much of American culture, including the English and Spanish languages. After all, the Industrial Revolution started in Great Britain. So why isn’t Europe the most innovative place on Earth? Possibly because it spent centuries having internal fights, colonizing other lands, and developing a level of hubris. Since World War 2, at government and individual levels, Europe has focused inwards on the basis of stability and “rights”.
That leaves us with a handful of remaining countries. Chile and Argentina, while having many of the right ingredients, had their innovative capacity historically stifled by religion and hierarchy. New Zealand, while very innovative for its size, is too isolated, and without the scale to make a global difference.
Canada and Australia share many things in common with the USA. In large part, all three nations were settled from east to west. Australia has a lot of desert in its centre, so the initial flow of population receded back towards the coasts. I imagine the tundra and its weather probably had a similar effect in pushing Canadians south towards the 49th parallel. However, this cause is not enough to explain the difference in innovative capacity by itself.
As George Megalogenis (http://bit.ly/29N3BiG) has outlined, Australia’s economy grew strongly when immigration was open and much worse when it wasn’t. However, Australia’s development started as the Industrial Revolution was getting going. For example, the arrival of railways occurred between 60 to 100 years after Europeans first landed. As such, previously isolated pioneers, who had needed to solve problems themselves, could now import solutions from elsewhere.
I have no doubt that the railways had a similar impact elsewhere. But I think being British colonies stopped both Canada and Australia from becoming the leading innovator. The fact both nations started with existing authorities limited both the need and the desire to think outside the box. On a practical, day-to-day level, citizens may have expected the colonial authorities to solve big problems. As such, the cultural structures needed for innovative thinking had weaker foundations than they did in the USA.
The United States and the American Revolution
The USA didn’t just fall into this position by default, either. The ideals which came out of the American Revolution reflected a markedly different approach to the exercise of power. Such ideals impact upon how American people perceive themselves, and also upon how others perceive them.
I think that when American pioneers faced problems, there was often no authority figure to appeal to. Either people worked out compromises together, or they fought, and they found solutions eventually (not always the optimum solutions). But self-government and the free market may have led to people expecting to solve problems by themselves locally.
For generations, this may mean that Americans have not expected help from anyone else unless they asked for it. But the clear financial and social incentives to being innovative led individuals to put time and effort into solving problems. Over time, this has become a cultural trait and American institutions have reinforced and encouraged it.
The 50 States, and innumerable local governments, all doing things differently, perhaps provide an ongoing spur to innovation. It remains to be seen, however, if this decentralization provides sufficient benefits to the majority of American citizens.