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Innovation Economics

Posted by: Michael Mandel on September 11

I just did a cover story on innovation economics which appears here.


More later..I’ve got to recover.

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Reader Comments


September 12, 2008 03:53 PM

I would say the US is receiving a payout in R&D this way :

1) More technological innovation boosts productivity.
2) While this increases jobs in Asia more than the US, the rapid creation of a middle class in China and India, and previously in S. Korea and Taiwan, helps the US by buying US exports.
3) So, R&D spending helps create customers for US exports. That is what we see here.

Employment in cutting edge industries will recover in the US as wages in China and India rise to narrow the delta with the US (which is close to happening). Also, US immigration policy for highly-skilled immigrants is horrendous, and is keeping many skilled immigrants out (it takes 6 years to get a greencard, and you cannot change your employer during that time). So it is the US immigration policy that is preventing the US from getting a greater ROI on R&D spending, leaving us to depend on exporting to the middle class we are creating elsewhere.


September 12, 2008 05:44 PM

What do you mean by "highly-skilled immigrants"? Here in the San Francisco Bay Area all it takes is a B.S. to enter the workforce and thats what the majority of the immigrant workers bring to the table.

Americans could be easily retrained to take those positions. What would be the advantage of immigrants of relatively low skills taking the jobs over American citizens?


September 13, 2008 01:58 PM

The low point of the Kondratieff cycle?


September 13, 2008 10:03 PM

The US no longer has a comparative advantage in advanced education while India and China now have rapidly growing educational systems and the comparative advantage of poverty to keep wages low. If we can dream it up, so can they (and they are). We do not have a long term competitive advantage in education.

In the U.S. new 4-year degree holders have watched their salaries drop the past seven years. Computer software engineers have seen an 8% drop in real-after inflation salaries the past 5 years. We work harder to receive less - and is exactly what will continue as the US economy melts downwards until it meets the rising salaries of developing nations on their way up.

Only economists, with tenured "guaranteed for life" academic jobs believe that globalization is good for everyone. If its so good, will they be willing to give up tenure and compete with the rest of the world just like the working class?


September 15, 2008 06:23 PM

" What would be the advantage of immigrants of relatively low skills taking the jobs over American citizens?"

Have you learned nothing about economics, despite reading an economics blog?

"Here in the San Francisco Bay Area all it takes is a B.S. to enter the workforce and thats what the majority of the immigrant workers bring to the table."

Bull. Many Bay-Area immigrants from India and China have advanced degrees, often from top US schools like Stanford.

They are just as deserving of a high-paying job as a white person is. It is American to agree, and un-American to be a xenophobe protectionist. It is also dumb to keep out highly skilled people (while letting in unskilled people from Mexico).


September 16, 2008 04:31 PM


Get a grip on reality once in a while my friend.
I work in the sector and I live in Seattle, one of the hotbed of technology.
SOME immigrants under several visa classes (H-1B, L-1, etc..) have advanced degrees from top universities (not necessarely American by the way) but MANY MORE of them have just the equivalent of your average 4 year degree coming from any public college in US...
Finally, SOME have significant skill deficit compared to your average American CS bachelor holder...still they are able to make it here under the pretense of "skill shortage"...what skills exactly??
I work with immigrants in the tech field every day let's not spew cheap propaganda...


September 16, 2008 05:33 PM

KARTIK: Some prominent members of the local news media in the S.F.B.A. periodically run stories regarding the immigration and employment issue and they consistently report that most of the immigrant workers to the "high tech" industries posess a B.S. not an advanced degree.

Since you've launched a personal attack I'll give you some personal advice, go out and meet some Americans maybe they're not as bad as you think they are.

Brandon W

September 17, 2008 11:35 AM

Innovation only counts if intellectual property law grants private property rights to ideas. That is deteriorating. Open-sourcing - like Linux, BSD Unix (which sits at the core of MacOS X), and Firefox - takes away private property rights of ideas and shares them with the community of developers (producers). Creative Commons licensing has similar effects. What's more, nations like China and India have no motivation to respect our intellectual property (IP) law.

When innovative ideas are shared communally, the profit is in the production and service of the innovation, not in the original idea itself. America has sent the majority of it's production capability overseas. A small elite in the U.S. is really in a position to create innovation. They fight tooth-and-nail to retain that position through IP law. If IP law is circumvented via communal innovation sharing or ignored by foreign producers, that elite group that you argue should drive our economy is practically irrelevant.

We're a nation with nothing but "innovation" left as our only industry; an industry that will become increasingly commoditizaed and destroyed. What do we do as a nation when the only profit is in production, and we have nothing left with which to produce?

Thank you for your interest. This blog is no longer active.



Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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