Faster, Please! · Economics & Policy
TIER 4 Thu, 1 May 2025 22:13:35 +0000
A new Census Bureau study finds that patents flourish but struggle to translate into the broader economy ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ | | ---|---|--- | | | Forwarded this email? Subscribe here for more --- --- _This is a free edition of_ _**Faster, Please!**_ ,_my regular newsletter about creating a better America and world by accelerating scientific discovery, technological progress, and commercial innovation. (And creating a pro-progress culture.) If you enjoy it and find it helpful in any way, please consider buying a subscription to the twice-weekly regular issues that include in-depth essays, Q &As with smart people, and summaries of relevant news stories. _ Upgrade to paid * * * # 🗽⤵ Why American growth falters despite abundant ideas ### A new Census Bureau study finds that patents flourish but struggle to translate into the broader economy | | James Pethokoukis --- | May 1 --- | --- --- | | | --- | | --- | | --- | | --- | | READ IN APP --- | | ---|---|--- My fellow pro-growth/progress/abundance Up Wingers, A big theme of my 2023 book, _The Conservative Futurist_ : America's half-century productivity slump (what I term the "Great Downshift") represents a perfect storm of a) macroeconomic headwinds, b) self-inflicted policy wounds, and c) a profound cultural pivot. The gains of the Great Inventions, as Northwestern University economist Robert Gordon calls them, of the second-stage of the Industrial Revolution (electrification, internal combustion engine, industrial chemicals) were largely harvested by the 1970s. That, just as research itself became demonstrably more difficult -- the low-hanging fruit had already been picked --requiring exponentially more scientists to yield comparable breakthroughs. (More on this in a moment.) The story only gets worse. Simultaneously, policymakers erected formidable barriers to progress. New regulatory regimes, such as the National Environmental Policy Act and its state-level counterparts -- multiplied costs and timelines for everything from nuclear power to urban development, while ambitious projects from supersonic transport to space exploration saw federal R&D funding evaporate. Most consequentially, however, was America's startling philosophical retreat from Up Wing to Down Wing. The environmental movement that emerged in the early 1960s came to fundamentally reject the notion that growth and ecological health could coexist. Vietnam-era disillusionment with what philosopher Lewis Mumford termed the "Megamachine" (the interconnected technological systems of military, industrial, and academic institutions forming a self-perpetuating juggernaut) transformed technological optimism into deep suspicion. Influential doomsday narratives cemented this pessimism in the national psyche -- with a big (ongoing) assist from Hollywood. The cost of this Down Wing shift has been incalculable, not merely in foregone GDP but also in our collective capacity to envision and build a better tomorrow. Now with the emerging Age of AI, America gets another bite at the apple. Let's hope we have learned our lesson -- the correct lesson. #### Progress grows expensive As such, I am super interested in a fresh working paper from the Census Bureau titled, "Growth Is Getting Harder to Find, Not Ideas," which digs into one of the macro headwinds identified in the book (and mentioned above): Transformative ideas are becoming scarcer and more costly to unearth. In my book, I cite the well-known paper "Are Ideas Getting Harder to Find?" by economists Nicholas Bloom, Charles I. Jones, John Van Reenen, and Michael Webb in which they try to answer the eponymous question. They find, for instance, that advancing Moore's Law now requires 18 times more researchers than in the early 1970s. "Just to sustain constant GDP growth per person," the researchers conclude, "the US must double research effort every 13 years to offset the increasing difficulty of finding new ideas." | | ---|---|--- Ideas aren't running out, but they are getting more expensive to find Also from the paper: > Our research shows that this pattern holds across a range of case studies. Whether we look at crop yields for corn and soybeans, or medical innovations that reduce mortality from heart disease and breast cancer, we find a similar trend. There have been technological improvements, but these require the devotion of ever-growing amounts of resources to the research process to maintain steady rates of improvement. The relevant metaphor has thus shifted from picking low-hanging fruit to oil extraction -- ideas lie deeper in more complex geological formations, requiring specialized teams and expensive equipment to access. #### Patents versus productivity The Census Bureau paper challenges this pessimistic diagnosis about research productivity. The central question is straightforward enough: Is economic deceleration caused by an ideas drought or by obstacles after ideas are conceived? To investigate, the authors constructed a massive database of 90 percent of American patents filed since 1977 linked to their corporate owners. So a broader approach than Bloom & Co. This effort enabled the researchers to examine two distinct links in the innovation chain: from research effort to ideas, and from ideas to firm growth. Two key parts to their findings: First, patent output per dollar spent on knowledge inputs has increased over time (0.46 to 0.62 patents per dollar of employee salaries). Similar improvements appeared in high-quality and breakthrough patents, challenging the notion that important new ideas are becoming harder to discover. Second, while innovations still help companies grow sales, since around 2000, companies haven't grown as much as expected based on their innovation output. In other words, research labs continue creating valuable ideas, but the broader economy struggles to translate these innovations into widespread growth. The real bottleneck appears to be downstream from discovery -- perhaps in a) how innovations spread throughout the economy, b) challenges in scaling them up, c) increased market concentration limiting competition, or d) regulatory barriers. #### AI to rescue The two papers are thus complementary: Team Bloom signals that something is amiss. Team Census pinpoints where the system is leaking Schumpeterian energy. For policymakers, this suggests continuing research funding while giving equal attention to competition policy, skills, infrastructure, deregulation, and other governmental mechanisms that might help novel ideas diffuse through the economy efficiently. (You would also want to make sure your economy isn't shielded from global competitive pressures through protectionist trade barriers.) AI might be of help here, of course. For instance: * Such systems might analyze patents from different fields to discover applications the original inventors never thought of. * AI could help navigate complicated regulations and pinpoint the best markets for scaling up technologies, while also helping policymakers direct resources to areas where innovation faces roadblocks * For researchers, AI could handle the routine analysis work, freeing up human brainpower for creative breakthroughs. One thing's for sure: This isn't the final world on the subject. Upgrade to paid Share * * * * * * | | ---|---|--- As Congress Does Less, The Courts Are Doing More Breaking news: _The Dispatch_ has acquired SCOTUSblog, the gold standard in Supreme Court analysis. Reliable coverage of the Supreme Court has never been more important. With an unbridled executive branch and a Congress eager to surrender its constitutional prerogatives, the federal judiciary is playing an increasingly important role in shaping the country's direction. Join 600,000 loyal readers and check out _The Dispatch_ today. No insulting clickbait, no false outrage, no annoying auto-play videos--just reliable journalism that helps you understand the big decisions that will shape our nation's future. **Faster, Please! readers: Take 25% off a** _**Dispatch**_**membership today** Claim your 25% off membership * * * * * * ## Micro Reads ### ▶ Economics * **How to Make American Babies Again \- WSJ Opinion** * **A $5,000 baby bonus won't raise birth rates \- FT** * **The trouble with MAGA's manufacturing dream \- Economist** * **America's Economic Tailwinds Will Override Trump and His Tariffs \- PS** * **GDP Drop Isn't as Bad as It Looks \- Bberg Opinion** * **2025 Is the Year of the Humanoid Robot Factory Worker \- Wired** * **Nvidia CEO Says All Companies Will Need'AI Factories,' Touts Creation of American Jobs \- WSJ** ### ▶ Business * **Huawei delivers advanced AI chip'cluster' to Chinese clients cut off from Nvidia \- FT** * **Samsung warns US tariffs will dent memory chip and smartphone sales \- FT** * **Google's Chief Says Breakup Proposal Would Hobble Business \- NYT** * **These Companies Were the Patent Powerhouses of 2024 \- IEEE** * **Meta Says It Anticipates Continued Growth Despite Tariffs \- NYT** * **Tesla Board Opened Search for a CEO to Succeed Elon Musk \- WSJ** * **Microsoft Earnings Report: AI Spending Slows as Profit Increases 18% \- NYT** * **Amazon Plans to Invest $4 Billion by 2026 to Speed Up Deliveries in Rural America \- WSJ** * **Meta lawsuit poses first big test of AI copyright battle \- FT** ### ▶ Policy/Politics * **Trump admin lashes out as Amazon considers displaying tariff costs on its sites \- Ars** * **Redrawing the Map: How Legal Decisions and Trade Policies Are Transforming Our Tech Ecosystem \- AEI** * **What If Bureaucracy Is… Good? \- Bberg Opinion** * **Exclusive: Trump officials eye changes to Biden's AI chip export rule, sources say \- Reuters** * **Gates Foundation Is Rattled by Trump's Threat to Its Mission \- NYT** * **Corporate America must stand up to Trump on US innovation \- FT** ### ▶ AI/Digital * **Meta Launches New Standalone AI App, Rivaling ChatGPT \- WSJ** * **OpenAI rolls back update that made ChatGPT a sycophantic mess \- Ars** * **Jekyll-and-Hyde Tipping Point in an AI's Behavior \- Arxiv** * **Harnessing Artificial Intelligence for High-Impact Science \- Berkeley Lab** * **Science, Promise and Peril in the Age of AI \- Quanta Magazine** * **Sam Altman's eyeball-scanning project World makes US debut \- FT** * **Microsoft's Datacenter Freeze - 1.5GW Self-Build Slowdown & Lease Cancellation Misconceptions \- SemiAnalysis** * **Google Places Ads Inside Chatbot Conversations With AI Startups \- Bberg** * **How China has changed the game for AI valuations \- FT** * **Anthropic is launching a new program to study AI 'model welfare' \- TechCrunch** ### ▶ Biotech/Health * **Humans' Wounds Heal Much More Slowly Than Other Mammals' \- NYT** * **How to Lead a Chronic Disease Revolution \- WSJ Opinion** * **RFK Jr. rejects cornerstone of health science: Germ theory \- Ars** ### ▶ Clean Energy/Climate * **Trump boots climate scientists from climate science report \- Vox** * **Fusion Breakthrough: Magnet Powerful Enough to Levitate an Aircraft Carrier Marks Final Step Before ITER Reactor Assembly \- The Debrief** * **A long-abandoned US nuclear technology is making a comeback in China \- MIT** * **White House plans high-tech NEPA reviews \- E&E** ### ▶ Space/Transportation * **The Cold War's Impact on SETI \- Supercluster** * **NASA's Psyche spacecraft hits a speed bump on the way to a metal asteroid \- Ars** ### ▶ Up Wing/Down Wing * **A Global Flourishing Study Finds That Young Adults, Well, Aren't \- NYT** * **Indiana Faces a Data Center Backlash \- Heatmap** * **How Nearly a Century of Happiness Research Led to One Big Finding \- NYT** * **How AI Is Helping Job Seekers Pivot to New Careers \- WSJ** ### ▶ Substacks/Newsletters * **How AI is Transforming Burnout in high-impact jobs \- AI Supremacy** * **The Case for the Dire Wolf \- Breakthrough Journal** * **What if the Good Samaritan Had Been in a Hurry? \- Conversable Economist** * **America Needs A NEPA Defense Exemption \- Green Tape** * **You Autor Know \- First World Problems** Faster, Please! is a reader-supported publication. 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