American Innovation: It's the Best of Times and the Worst of Times

Two radically different ways to view the state of innovation in America.

The fabulous rise of wireless communication allows us to video chat across continents for free. Then again, we still don't have flying cars.

Notes from the Aspen Ideas Festival -- See full coverage
If you want to have a polarizing conversation about the state of American innovation, you can do no better than sitting down George Mason University professor Tyler Cowen, who thinks the last 40 years of innovation have been "meh," and MIT's Andrew McAfee, who's adamant that technologically innovation is accelerating at a pace most people aren't even comprehending. That's what happened today at the Aspen Ideas Festival in Colorado.

In Cowen's opening remarks, he compared the technological changes in the second half of the 20th century to those of the first half. "In 1900, most American lived in farms," he said. "By 1950, we had a fundamentally different world." If he were to introduce his grandmother to a modern American kitchen, it wouldn't be all that earth-shattering for her, he insisted. "My grandmother, who was born in 1905, spoke often about the immense changes in electricity, automobiles and household appliances," he said. "We have simply not had that many life-altering innovations since 1973."

On the flip side, McAfee insisted that Cowen's grandmother would practically lose her mind if shown a modern day smartphone. That's a "tough lady to impress," he said, if she's not bowled over by the ability to video chat "with someone across the world for free" or look up an answer to almost any question in the universe. The awesome march of technological innovation, in McAfee's view, is best crystalized in his new book, Rage Against the Machine, which was reviewed in the Financial Times here:
Computers now exhibit human-like capabilities not just in games such as chess, but also in complex communication such as linguistic translation and speech. These new abilities stem from "pattern recognition" technologies - the same techniques that underpin, for example, the Siri voice recognition tool in Apple's iPhone 4S.

Pattern recognition ... will quickly allow machines to branch out further. Computers will soon drive more safely than humans, a fact Google has demonstrated by allowing one to take out a Toyota Prius for a 1,000-mile spin. Truck and taxi drivers should be worried - but then so should medical professionals, lawyers and accountants; all of their jobs are at risk too.

Meanwhile, Cowen's views on innovation can best be summarized in his book, The Great Stagnation: 
Although America produces plenty of innovations, most are not geared toward significantly raising the average standard of living. It seems that we are coming up with ideas that benefit relatively small numbers of people, compared with the broad-based advances of earlier decades, when the modern world was put into place. If pre-1973 growth rates had continued, for example, median family income in the United States would now be more than $90,000, as opposed to its current range of around $50,000.

Will the Internet usher in a new economic growth explosion? Quite possibly, but it hasn't delivered very good macroeconomic performance over the last decade. Many of the Internet's gains are fun -- games, chat rooms, Twitter streams -- rather than vast sources of revenue, and when there have been measurable monetary gains, they often have been concentrated among a small number of company founders, as with, say, Facebook. As for users, the Internet has benefited the well-educated and the curious to a disproportionate degree, but apparently not enough to bolster median income.

So which do you think it is?

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