Nuggets of Wisdom

Tuesday, May 16, 2017

Free-Market Capitalism Isn’t “Anti-Innovation”

While reading about politics weakens my faith in humanity, a little bit of that faith gets restored whenever I read about the advancements being made in science and technology.

The last few years alone have seen great leaps forward scientifically and technologically: virtual reality, 3D printing, artificial intelligence, voice-activated software and hardware, private space travel, and autonomous vehicles.

During dark political times such as these, it’s comforting to know that both science and technology provide somewhat of a silver lining with promises of a "great big beautiful tomorrow” brought about through innovation.

That is, unless you’re Ben Tarnoff of The Guardian. In that case, you believe that we’re actually witnessing “anti-innovation” that’s bringing about “economic suicide.”

In his Marxist screed (published in the same liberal fish rag that gave us such gems as “air conditioning is sexist”), Tarnoff wants us to believe that America is “anti-innovation” because of “free-market capitalism” and cuts to “public sector spending.”

His op-ed argues that “venture capitalists” make for "terrible innovators”, and that, of course, only the government is able to make investments into innovative research and development:
Contrary to popular belief, entrepreneurs typically make terrible innovators. Left to its own devices, the private sector is far more likely to impede technological progress than to advance it. That’s because real innovation is very expensive to produce: it involves pouring extravagant sums of money into research projects that may fail, or at the very least may never yield a commercially viable product. In other words, it requires a lot of risk – something that, myth-making aside, capitalist firms have little appetite for.
The problem with Tarnoff’s argument, as well as the rest of his op-ed, is that, like many other leftist polemicists, he provides no evidence to back up any of his claims. Later on, he argues that “nearly every major innovation since the second world war has required a big push from the public sector.”

What evidence does he provide to corroborate such a claim? Nothing. Not once does he cite a single “major innovation” that was created as a product of the public sector. (And no, the book he shills does not count as evidence.)

Of course, like any other statist, Tarnoff would have most likely cited the internet as an example of innovation created through government investment, arguing that the internet owes its existence to the government-created ARPANET.

Comparing the internet as we know it today to ARPANET is like comparing the iPhone 7 to Bell’s original telephone, or the Tesla Model S to the original caveman wheel. The two have no resemblance to one another, and the comparison ignores the many developments that occurred between the two.

Yes, the internet has its origins with ARPANET, but the early ARPANET was a cumbersome and crude packet-switching network used primarily for communications between major universities and military facilities.

Long story short, it wasn’t until the network was, to put it simply, privatized in the 1980s that it was transformed into the World Wide Web that we know today, providing countless services that cater to the needs of consumers rather than government bureaucrats.

As FEE's Andrew P. Morriss wrote in his piece on the subject: "The innovations in networking that produced today’s Net occurred as much despite government funding as because of it. If anything, therefore, the Internet represents the success of spontaneous ordering over central planning, not the successful design of a new technology by the state."

Going back to Tarnoff's claim that the government makes “better investments” than the free market, this argument is bold-face nonsense. In fact, one year prior to this op-ed, Prager U created a video that offers an excellent rebuttal and counter-argument: private investors, not the government, provides better investments into innovation.

In their video, Prager U cites the Transcontinental Railroad as an example. The railroad project relied on both public and private investors. Guess which investors actually helped complete it? (Hint: the exact opposite of what Tarnoff would say!)

As for the free market promoting “anti-innovation”, what example does Taranoff cite to support his audacious claim?

Juciero. Freaking Juciero!
Juicero is hilarious. But it also reflects a deeply unfunny truth about Silicon Valley, and our economy more broadly. Juicero is not, as its apologists at Vox claim, an anomaly in an otherwise innovative investment climate. On the contrary: it’s yet another example of how profoundly anti-innovation America has become.
No. Seriously. This is his evidence. Juciero. That big fancy machine that does nothing but squeeze juice from a bag and whose very existence wasted more than $120 million in crowdfunding.

You know, the exact same expensive juice-squeezing machine that everyone and their grandmother on social media pointed and laughed at. This is apparently "proof" that the free market doesn’t work.

No. Actually, if anything, Juciero proves quite the opposite. You create a shitty product. Other people criticize you for your shitty product. Your shitty product fails. That actually promotes innovation by eschewing bad ideas and rewarding good ones through the power of the customer always being right.

As for innovation promoted by the free market, look no further than the “ebil” venture capitalist Elon Musk. Through his many companies, Musk has helped develop:
reusable rockets that have helped to potentially re-vitalize the space program, and even stronger rockets that could potentially send people to Mars.
solar roofs that help generate electricity while being more durable and competitive than regular roof shingles.
electric cars that are more affordable and energy efficient than their fossil fuel counterparts.
• a revolutionary high-speed train that can travel faster than an airplane by traveling through a vacuum tube, all the while being more energy efficient.
• an automated underground car tunnel that could potentially alleviate traffic jams and allow cars to travel up to 125 mph.
Furthermore, the public sector has not only potentially hampered many of Musk's efforts such as the Hyperloop and car tunnel due to cumbersome government bureaucracy, but in many cases, has outright banned them such as with the direct sale of Tesla cars.

And that's not counting the many other ways that the government has stifled innovation through regulation, whether its by banning waterless urinals to appease plumber unions, regulating ride-sharing services and home rental services to appease cab companies and hotel industries respectively, banning renewable energy sources and restricting solar panels to appease utility companies, delaying the marketing of potentially life-saving drugs for the sake of "public safety", and seeking to tax robots in order to prevent them from "terking er jerbs!"

If America is “anti-innovation”, it is because of government bureaucracy, not the free market!

Also, as an end note, America currently ranks as the fourth most innovative country in the world. The Good Ol' USA may not be #1, but it’s hardly low enough to be considered “anti-innovation.”

Meanwhile, the #1 most innovative country, Switzerland, also ranks high in economic freedom. Gee, it’s almost as if the free market does promote innovation, after all!