Wednesday, October 12, 2011

Why arent we getting rich?


[Scientists today] are more interested in gathering support for their next grant applications, and building up their laboratory, than science itself. Many decades ago, Feynman similarly remarked that his colleagues pursued cargo cult science: an activity which is indistinguishable from science except for its lack of useful output. Government bureaucrats have probably never had so much power in science. In Canada, the new president of the National Research Council, who is not a scientist, decided to adopt a handful of projects at the expense of all others. Curiosity-driven research is frowned upon. Bureaucrats are eager to turn professors into managers who spend the bulk of their time looking for funding. In effect, in the war between individual freedom and central planning, central planning is winning. Ph.D. students who do not play the political games don’t become professors. Scientists are fast becoming indistinguishable from bureaucrats and politicians [..].

[B]ureaucrats are winning. Worstall gives several insightful examples:
  • Why is it nearly impossible for individuals to purchase small equity in new ventures through sites like Kickstarter?
  • Why is online banking so convoluted? In Africa, they are using mobile phones to pay each other, across countries. There is much room for innovation but it is stalled by regulations.
Today, I could probably install solar panels on my house and generate my own power, but my electricity provider makes it extremely difficult. Last time I was in hospital, it was full of red tape, and they are still talking about implementing an electronic health record (in 2011!). Classrooms today look just like they did in 1950, except that we (sometimes) have a desktop computer in the back of the class. I am still not allowed to use a Segway where I live, let alone more innovative transportation solutions.

My take: After WWII, everything had to be constructed. Entire countries had literally to be rebuilt. The baby boomers were, to some extend, starting from scratch. They could create new government agencies, build new roads… new industries… This is still happening in China, and has happened recently in Germany because of the reunification. However, we now have too much organizational scarring tissue [..].

So, how do we renew with prosperity? I believe we need some form of reboot. We need a major disruption. We don’t need to keep General Motors alive, we need to reinvent transportation. We don’t need to save Wall Street, we need to reinvent banking.

Q&A - 19/6

Bank of England The vast majority of money held by the public takes the form of bank deposits. But where the stock of bank deposits com...