Innovation is everything and everywhere

Quibbling over language can be incredibly frustrating when all we want to do is get on and solve problems, especially problems as large as the looming threat of a double dip recession. But sometimes you do have to stop the lights and have the discussion whether or not it is all semantics.

I have a long standing problem with innovation. Nothing against the 'I know it when I see it version', the concept defining product or technology that comes along oh so rarely. My frustration is with the innovation is everything that is good, innovation as essentially all change. And as such it becomes useless as either a term, an analytical frame or a rallying call.

A frustratingly good example of this came along this week with the Hamilton Project at Brookings releasing a self styled policy memo entitled A Dozen Economic Facts About Innovation. What is pitched as a policy memo is actually a series of quotes selected I am assuming to fit the narrative from a workshop that was held in DC in June of this year titled PhDs, Policies, and Patents: Innovation and America’s Future. So there's no bias already in here, no selection bias on the people attending, the pitch they might give or the messages they were expected to provide?

So much for that. But as you read the 12 'facts' you get the sense that the writers let it all get away from them. The first fact elides productivity and average wage increases with innovation. We may want this to be true but there is no link shown, nothing other than a sense that innovation is good, rising productivity is good, so let's say the first caused the second.

The second fact really starts to go to town claiming innovation is the cause of increases in life expectancy. OK, better medicines, more machines are helping, but surely doctors have something to do with this, lifestyle changes might have something to do with this? And it avoids the polarisation of health outcomes between those who are becoming morbidly obese and those who are taking care of themselves. But again, innovation is good, it is all change and all pervasive.

I won't bore you with going through all 12, but I would nudge you to look at number 6 and see what you think. Have economists completely lost the plot when total factor productivity, essentially all the things we cannot explain through things like capital and labour, is equated to innovation?

Or is this the best example that innovation is being used as a catch all, a bucket in which to throw everything that is changing and we believe to be positive?

Unfortunately this may be a battle lost, as there is now a disconnect between the use of the term innovation, the attempts to measure it (for example through the Community Innovation Survey), and what we really want to get at - sources of growth. Maybe if we can start tidying up this language and stop being so all encompassing we might get somewhere.

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