One of the best short books of the year is The Great Stagnation by Tyler Cowen. He argues that the west has reached a technological plateau: we have eaten all the low-hanging economic fruit, so growth is stunted and progress will be much harder from here. We have assumed debt and lived beyond our means, under the illusion that our incomes and productivity are still climbing like they did in the past.
The author’s core concept – that innovative breakthroughs are much scarcer than before – implies that we must become better at industrial invention if we are to recover our living standards and tackle unemployment.
It is surely no coincidence that Apple, one of the world’s most valuable companies by market capitalisation, is the pioneer of the iPod, iPhone and iPad – all revolutionary products. Yet its revenues place it outside the top 100 corporations if judged by sales. Investors appear to rate innovation above almost anything else; given Apple’s prodigious margins, cash generation and growth, perhaps they are right.