What we have here is a failure to innovate

This piece blipped across the radar rather quickly. It's the kind of wonky post you have to be an economist to even want to read it, but it makes an important point about our lack of innovation.

THERE’S been a lot of bad economic news lately, yet we may be overlooking the most disturbing development of all: our economic productivity has been weakening.

It goes on in excrutiating detail about how that's determined, but this is the important bit:

It is increasingly clear that many of our current economic problems predate the financial crisis, even if the crisis accelerated them or brought them into clearer view. A recent study by E. J. Reedy and Robert E. Litan, both researchers at the Kaufmann Foundation, found that sluggish job creation was a long-term trend. For instance, job creation from start-ups has fallen every decade since the 1980s, raising the specter of an America with an innovation shortfall.

This harks to an argument a discussion I had with a friend recently about Big Pharma. We're told that they must charge outrageous amounts for drugs to fund R & D but in truth, they don't develop new drugs anymore. They develop new variants of old drugs on which the patents are expiring. Often they're not even as effective as the ones they replace and come with worse side effects besides.

My friend was defending the industry. He knows a small research group that is working on new stuff, but all he could come with when I asked him what the industry in general has developed in the last two decades was AIDS drugs. But I'm not sure they count since they aren't meant to be cures, merely treatments to prolong life and require sustained use of the drug to do so. I mean, where are the Jonas Salks of our time?

This same dynamic rules all our major industries. The only real innovation is in electronics but even there, they're not so much innovating as incrementally releasing ever new versions of the same products with a few new tricks. And the marketing is designed to make the new version obsolete almost before it leaves the shelf.

I believe real innovation could save us, but as long as short term profit for the corporation trumps long term progress for the common good, I don't think we're going to see it in any meaningful way. At least not in a way that solves the decline of our collective humanity.

[More posts daily at the Detroit News.]