While researching trends in innovation, I read an article that ran in The Atlantic earlier this year entitled “Bill Gates: ‘The Idea That Innovation Is Slowing Down Is … Stupid.” The title of the article is what caught my attention, as many analysts have been projecting that the rate of innovation is slowing down, but it was Gates’ comments on government and education that got me to click through to watch his full conversation with Jim Bennet, Editor in Chief at The Atlantic.
There’s no disputing Bill Gates’ contributions to humanity through the Bill and Melinda Gates Foundation and the success he’s had in business, but thirty minutes into the interview, the gentle, kind, giving genius and sage, transformed into a benevolent dictator and I realized that this was an impossible topic for him to not have a biased opinion. So I clicked out and continued my search on this topic for other points of view.
My search would eventually lead me to Phillip Coggan’s review of Thomas Piketty’s new book “Capital in the 21st Century” in The Economist, in which Coggan, columnist of Buttonwood’s Notebook, links history and economic data that supports Piketty’s points of view on economic growth, innovation and economic inequality. Coggan ultimately suggests that we are following in the footsteps of the Roman Republic, not post eighteenth century Europe, and we are marching towards our fall.
So, has the rate of innovation slowed down? It’s highly likely that it has and that there’s a correlation between economic inequality and the rate of innovation.
Piketty writes –
“in a quasi-stagnant society, wealth accumulated in the past will inevitably acquire disproportionate importance. The return to a structurally high capital/income ratio in the twenty-first century, close to levels observed in the eighteenth century, can therefore be explained by a return to a slow-growth regime. Decreased growth – especially demographic growth – is thus responsible for capital’s comeback.”
The present economic inequalities compared to other periods over the past three centuries has us on a trajectory similar to that of late eighteenth century Europe where a small aristocracy controlled most of the wealth. Thomas Piketty insists that a “return of the slow growth regime…is responsible for capital’s comeback.” The Digital Revolution in the post Great Recession era is benefiting a very small portion of the population. If you are reading this post it is likely that you are part of this new tech-savvy elite and would not identify with the others that have been left behind. To this much larger group, that continues to expand upward into the upper middle class, average is over, and the level of economic equality from the past is never coming back.
Phillip Coggan reminds us of history and suggests that we are living in a plutocracy similar to years that preceded the fall of the Roman Republic. So maybe we should care more about economic inequality than we do about innovation, because if we don’t we might be doomed to repeat the past.
Empathy should become part of the innovation conversation, because it is ultimately the human sense that failed societies lacked.
Video: New Thoughts on Capital in the 21st Century – Thomas Piketty
Piketty explains the simple, brutal formula of economic inequality: r > g (meaning that return on capital is generally higher than economic growth).