William Janeway: Can China Innovate at the Frontier?


The Institute for New Economic Thinking has the article and video William Janeway: Can China Innovate at the Frontier? The sections that I have chosen to excerpt below do have a decidedly American focus. For those who have doubts that China can become an innovator at the frontier, view the video below. It won’t answer the question, but I hope it will make you less sure that you know the answer.

At the frontier, economic growth has been driven by successive processes of trial and error and error and error: upstream exercises in research and invention, and downstream experiments in exploiting the new economic space opened by innovation. Each of these activities necessarily generates much waste along the way, such as dead-end research programs, useless inventions, and failed commercial ventures. In between, the innovations that have repeatedly transformed the architecture of the market economy, from canals to the Internet, have required massive investment to construct networks whose value in use could not be imagined at the outset of deployment.
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The U.S. is suffering the consequences of a generation-long effort to render the state illegitimate as an economic actor. Moreover, the nation is uniquely distinguished by the widespread denial of the reality of climate change and the rejection of global warming as a motive for aggressive state action of any sort. And Europe, where climate change and the need for a state-sponsored response are both generally accepted, remains mired in its self-contradictory commitment to “expansionary fiscal austerity.”


                                                                                

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