Where Innovation Comes From

Ezra Klein of The American Prospect notices how progress works:

The great success stories of capitalism are the inventors and the innovators—the men who dreamed up the telephone and hammered out the contours of evolutionary theory. Indeed, their names come easily to our lips even today: Alexander Graham Bell. Charles Darwin.

Less well known are the names that could have been on our lips. On Feb. 14, 1876, Elisha Gray entered the U.S. Patent Office. Like Bell, he meant to patent a device for "transmitting vocal sounds telegraphically." Unlike Bell, the device in his patent actually worked. But Gray was a few hours too late. Bell's representative had come earlier in the morning to assert Bell's claim. In the log books, Bell is the fifth applicant that day and Gray is the 39th. And so it is Bell's name we remember. Meanwhile, Antonio Meucci, an Italian stage technician, had applied for a "caveat"—a placeholder patent—five years before either Gray or Bell. But lacking the $10 necessary to pay the patent office, his claim lapsed….

That is often the dull reality of progress: It follows a comma rather than a paragraph break. A field of research achieves a critical mass of ideas and underlying concepts and the next step becomes clear to a number of ex[p]erts.

For libertarians, this is old hat. Yes, of course: Innovation is usually a matter of incremental, unplanned evolution with dispersed researchers building on one another's work, not a centrally directed project driven by a handful of heroic geniuses. That's a fine Hayekian argument for scientific and economic liberty, along with the other sorts of intangible wealth that foster such improvements. It also raises questions about the efficacy of our monopolistic patent system. But Klein doesn't take his discussion in those directions. Instead he offers a non sequitur:

The story of history…is often told through the achievements of individuals. And to some degree, there is value in that. Society is a collection of individuals. If there were no rewards for innovation, we might find spontaneous invention giving way to its opposite. But we are far from that world. Instead, we have set up a system that lavishly rewards individuals and impoverishes society. Where the richest percentile see their incomes grow by $863,000 and the poorest 20 percent see gains of $1,600.

Now, I'm not interested in defending any particular income distribution, including the one America has now. And it's not obvious to me that levels of income and levels of innovation should always go hand in hand in the first place. (There are perfectly legitimate ways to accrue wealth without being innovative at all.) But by definition, innovation enriches society, unless you're talking about innovation in crime, repression, and the like. "The poorest" benefit the same way the rest of society does: through the presence of the goddamn innovation. Progress means your standard of living increases in ways that aren't measured by income statistics: a medicine that's more effective, a car that's more efficient, software that's less buggy.

It's an odd essay. When Klein contrasts the growth of income in the highest percentile and in the lowest 20 percent, he declares that "given what we know about innovation, it's not clear that that's a wise—or fair—distribution." I keep looking for the place where the argument about innovation connects with the conclusion about income. I can't find it.