Ignore the Intellectuals, 'America' Doesn't Need a Technological Edge

In 1902 Willis Carrier began developing what is now known as the air conditioner. What became the Carrier Corporation ultimately headquartered in Syracuse, New York, but it would be reasonable for some to speculate that the company was based in Florida. That is so because the mass production of the cooling technology that made Carrier rich helped author a great American migration to the south. With the region’s brutally hot and humid summers no longer as much of a barrier to individual comfort and productivity, people started moving down.

More broadly, readers might stop and think about how fatigued they feel after just a few hours or one sleepless night without air conditioning. Needless to say, the ubiquity of a once unfathomable technological advance has greatly increased human productivity around the U.S. (and world) in incalculable ways.

Crucial about all of the above from a trade perspective is that Carrier Corp. was once again based in Syracuse, but it was as though the advances hatched by Carrier and other air-conditioning corporations were achieved right next door to the millions (and eventually billions) around the world who benefited from cooler indoor air. Such is the genius of open trade: when people are free to exchange without regard to country borders the "where" of production is rendered irrelevant. 

All of which brings us to a recent Wall Street Journal essay by Richard Florida and Ian Hathaway. It’s a reminder that intellectuals don’t need to think clearly as much as they need to attract attention. Seemingly the best way for them to generate notice is to manufacture a crisis. For Florida and Hathaway the alleged “crisis” is the presumed erosion of “American innovation.” As the deep thinkers see it, “[T]his looming crisis of American innovation could undermine the nation’s long-running global advantage in bringing to market the next new technology, the next new industry, the next big thing.” Oh dear….

Ok, it should first be stressed that there’s no such thing as “American” innovation. If Florida and Hathaway doubt this, they need only spend the day in Palo Alto, and the evening in neighboring East Palo Alto. The contrasts are substantial, plainly can’t be fixed by an academic crowd always intent on “doing something,” and they’re a loud reminder that “American” innovation is very much a localized, individual thing. Individuals innovate, so if the goal is ongoing advance within these fifty states then the answers are easy: do nothing other than reduce the governmental barriers to individual achievement.

People are the source of advance, so the logical answer is more freedom. The U.S. has long been the center of innovation precisely because it’s a magnet for people who want to be free, personally and economically. Reducing this to what’s basic, Apple wouldn't exist today if Steve Jobs' father had stayed in Syria. In that case, reviving the U.S.’s historical openness to foreigners would pay dividends given the correlation between freedom and achievement. And in fairness to Florida and Hathaway, they plainly believe that keeping the U.S. open to foreign strivers is important. The problem is that they don’t stop there. Intellectuals rarely can. Openness to human capital is too simple. Intellectuals want to do things; usually with the money of others.

Florida and Hathaway offer up gauzy platitudes about how we must “double down on talent and innovation,” “continue to invest in our leading universities,” and “pump out new research…” Missed by the two academics is that the definition of entrepreneurship is for the individual to believe something deeply that just about everyone else disagrees with. That’s why new research and more money for academics amounts to such a colossal waste of precious funds. This matters because the only other barrier to innovation after a lack of freedom is a lack of capital. In that case, it’s crucial for advance in the U.S. and elsewhere that as little money be wasted as possible.

It’s also useful to reject the silly notion embraced by Florida and Hathaway that trade amounts to war. They laughably write that what threatens the U.S. “is a collective, multilevel assault on our high-tech dominance from scores of places – principally large, global cities.” Actually, what keeps Florida and Hathaway up at night is what should have those of us outside academia rejoicing. While the Indians and Chinese used to not be free economically, now they are. Amen to that! Indeed, it can’t be stressed enough that where the innovation happens is of no consequence. What matters is that more and more bright minds are free to innovate. If so, we once again benefit as though it happened next door.

To understand why the above is true, readers need only remember that “American” innovation is just that precisely because it benefits people from around the world. That’s the genius of trade. It improves people. Florida and Hathaway see trade in the way that Donald Trump does: it’s warfare that somehow weakens us. How very naïve. Apple is great for many reasons, but one big reason is that 20 percent of iPhone sales take place in China. The Chinese gain from an advance hatched in Cupertino as though it was engineered in Kashgar. Apple’s success hasn’t neutered the Chinese as much as it’s greatly strengthened them. Implicit in Florida and Hathaway’s naïve vision of looming trade warfare is that Americans will somehow be harmed by advances that don’t happen in the U.S.

As the academics put it, “[I]f the U.S. continues to lose its edge in innovation, our living standards will eventually decline.” My, how universities and think tanks can stifle thought! If Florida and Hathaway’s bleak vision of the world were correct, then the brilliant of achievements of Bezos, Gates and Jobs would have surely weakened the rest of the world as opposed boosting it, and they would have weakened Americans who don’t live in Seattle and Cupertino. That’s backwards. To read Florida and Hathaway is to think they’re bucking for spots in the Trump administration.

Exciting now is that what scares the academic duo will soon enough redound to those of us outside the thinking world. Per Florida and Hathaway’s Journal essay, the world’s talented will more and more be doing for the American people what the talented in the U.S. have long done for the world. In short, there are countless Willis Carriers around the world who are finally being matched with capital. Americans will achieve greater productivity as a result, and contra Richard Florida and Ian Hathaway, exponentially greater living standards thanks to innovations that will be achieved far from the U.S. Readers should beware individuals from the land of tenure promoting crisis.