Bryan Caplan  

Rejoinder to Ridley on Innovation and Population

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Matt Ridley graciously replies to my critique of his Julian Simon Award Lecture in the comments.  Ridley's in blockquotes, I'm not:
First, I know of a lot of people who are not conventionally clever but who contribute to innovation by making tiny tweaks to machines or routines. That's very much my point, that innovation is not a series of intuitive leaps but often unplanned micro-steps that come together. (Kevin Kelly's book What Technology Wants is a brilliant addition to this literature.) I am thinking of one guy in particular who can adjust or mend almost anything, but could never pass an exam or hold much of a conversation. I just think there is a strong prejudice among academic types (of which I am one) to miss the point that most innovation consists of bottom-up infinitesimal cumulative improvements and to think in terms of big ideas: the inspiration, rather than the perspiration.
"Tiny tweaks" are great, but the idea that a significant fraction of tweaks come from people who "could never pass an exam or hold much of a conversation" is quite implausible.  Even most smart people are stuck in a rut.  And the less smart you are, the more likely your "tweak" is to actually make things worse.
As for small countries leading the world, I would argue it is almost the rule. To Athens, Genoa, Holland, let me add New York (for much of America was superfluous to America's economic explosion in the nineteenth century), San Jose, CA (for there was a remarkable concentration of innovation there in recent decades) Singapore, Hongkong, or going back in time Tyre, Sybaris, Pataliputra.
So the United States - the third most populous nation on earth - doesn't count against your view because the actual innovations tend to be concentrated in particular cities like New York and San Jose?  I say you have to step back and realize that the probability that an innovative city arises in a country depends on the country's (and, with immigration, the world's) total population.
Britain, when it embarked on the industrial revolution had less than half the population of France: this was clearly no disadvantage. I think it is rather striking how infrequently big countries like Russia, France, the Roman empire, the Ming Empire do lead the world economically.
Britain wasn't the most populous county in the world at the time, but it was one of them.  According to Angus Maddison's data, the only countries with higher population than Great Britain in 1850 were China, India, Russia, France, and Japan (and the countries that later became Germany, if you want to conceptually consolidate them).  I'm not saying that the population:innovation link is perfect, but it's fairly positive - as you can see when you check the correlation between population and almost any observable measure of innovation.  Challenge for Ridley: I know you don't like Nobel prize or patent numbers; is there any measure of innovation that you do accept that doesn't positively correlate with population?

Your counter-examples are definitely thought-provoking, but I still say you're missing the big historical picture: Most innovation has come from regions of the world with large, connected populations (especially Eurasia), and higher-population periods of human history are much more innovative than lower-population periods.
As for the notion that both population and connectedness matter, sure up to a point. To have 10,000 people is a lot better than to have 5,000. But to have a billion instead of 500m? I'm not convinced.
Suppose we randomly deleted half the countries on earth.  Would you seriously not expect innovation to sharply decline?



COMMENTS (16 to date)
KendallB writes:

Would not Simon then reply, "It matters which half you deleted."

Mark Plus writes:

Apparently Ridley hasn't absorbed the implications of the Pareto Distribution when it comes to innovation. If you deleted the 20 percent of the world's countries which produce 80 percent of the innovations, you wouldn't have much innovative capacity left in the remainder despite the greater numbers of humans living in those countries.

GIVCO writes:
Tiny tweaks" are great, but the idea that a significant fraction of tweaks come from people who "could never pass an exam or hold much of a conversation" is quite implausible.

It's highly plausible. Brute repetition and experimentation produced the neolithic package and a lot of the stuff that differentiates us from all the other species.

Shawn writes:
"As for the notion that both population and connectedness matter, sure up to a point. To have 10,000 people is a lot better than to have 5,000. But to have a billion instead of 500m? I'm not convinced."

The problem with Simon's argument is that he seems to believe that an increase in population is accompanied by an proportionately greater increase in innovation. But when taking that believe to its conclusion, that even larger and more interconnected populations are good, it conflicts with his believe that they are bad. So he acts dumbfounded and says "I'm not convinced" without providing any plausible explanation as to why.

And the less smart you are, the more likely your "tweak" is to actually make things worse."
Bryan I think you underestimate dumb people. Mistakes are very important to innovation. As Nassim Taleb calls them, via negativa. And the severity of the mistakes may be, like population increases, not proportionate in their impact. Think of entrepreneurs and start-up, most will lose money in the end, and isolated from everything else, they make the economy "worse off" then before.
Mike Rulle writes:

The idea that Ridley is a Simon supporter "except for his ideas on population growth" is like saying one is a supporter of Hayek "except for his ideas on spontaneous order".

My general rule of thumb on any idea with a whiff of Malthus in it is to ignore it completely. It is a waste of effort to cull out all the bad just to find something that may be interesting.

Also, to try creating some kind of geometric mean optimizer for "progress" based on population size is utterly absurd on its face.

greg writes:

You guys are talking in circles around innovation per person. Does it go up at the margin..

Matt Ridley writes:

But your challenge mistakes my argument. I have not argued that there is no positive correlation of innovation with population, only that, as population size increases, population size alone will become a diminishing influence compared with population interconnectedness. You are trying to push me into a rhetorical box I don't wish to occupy: that at some level population growth stops helping innovation or starts harming it. That may be a case somebody wants to make -- but it's not the case I've argued.

Instead I have argued that bigger populations will always be more innovative, of course. But once populations are large the most effective way to make them more innovative is not so much to make them larger as to make them more interconnected. It's a matter of enabling people's ideas to mix more. So you can have large populations, as in Ming China, that stagnate innovation-wise, because people are prevented from mixing, meeting, urbanising, communicating, travelling etc. Whereas America owes its lead in innovation in the 20th century -- as Britain did in the nineteenth -- more to its freedom of exchange than to its population size.

So I am combatting the idea that it's a matter of demographic statistics, that there's a better chance you'll get more geniuses because you have more people. Simon several times came close to implying this and it's a common argument put forward by various people today and I think it misses the point: that ordinary people able to exchange ideas produce a great deal of innovation. The more people the better, and the more exchange the better.

A genetic analogy might help. Bigger genomes get more mutations. But genomes that exchange genes more often -- ie, have shorter generation times -- innovate more, because they throw up more combinations of sequences. As you know, I think there is a pretty good analogy between the way sex accelerates evolution and the way exchange accelerates innovation.

Thanks for the exchange!

Peter Schaeffer writes:

"Suppose we randomly deleted half the countries on earth. Would you seriously not expect innovation to sharply decline?"

We actually have a "natural experiment" along these lines. The Black Death killed between 30% of 50% of Europe's population. It appears to have raised, not lowered, innovation.

It is very clear, that mass unskilled immigration (into the USA) reduces innovation. Why work on automation when illegals are cheap? Productivity rose after mass immigration ended around 1920 in the U.S.

By raising real wages, the Black Death appears to have had the same effect in Europe.

Peter Schaeffer writes:

From

"What the history of the electric dynamo teaches about the future of the computer"
http://www.slate.com/articles/arts/the_undercover_economist/2007/06/the_shock_of_the_new.html

"David showed that World War I, which led to immigration controls and choked off the supply of cheap but untrained immigrant workers, was one of the spurs to make these changes. U.S. productivity growth eventually leapt in the 1920s, four decades after the commercialization of electricity. Productivity growth rates in U.S. manufacturing in the 1920s were more than 5 percent per year, a rate that makes the "new economy" look laughable, at least for now."

JKB writes:

The first part of the problem is thinking those who can't pass a test or carry on much of your type of conversation as dumb. Some of the dumbest people I've met were in academia, had lots of pretty letters after their names and were champion test passers.

Much innovation comes not from brilliant insight but from daily exposure to the technology with a desire to avoid the mindless tasks or from the need to solve a new problem using the technology. Innovation comes from competition where the improvement brings market advantage.

One thing to keep in mind, the steam engine came about in large part due to the Oxbridge exclusion of some due to religious and other biases. This kept the innovators from being damaged by "academia" by either going into the trades or attending alternative schools.

As far as population, the larger population provides for more customers making innovations more profitable due to economies of scale. The Bessemer steel process hardly makes sense for a small production but in continuous operation with a large market, it is innovation itself. Or take nails, a few hundred are easily made by forging. But if you need thousands, time spent on inventing the nail cutting machine is worthwhile. At millions, the wire nail becomes even more profitable.

David Friedman writes:

"To Athens, Genoa, Holland, let me add"

Saga period Iceland.

50,000 people in a far corner of the world. And they produced at least five or ten books that are currently in print, more than seven hundred years later, in English paperback translations.

Jim Glass writes:
"Suppose we randomly deleted half the countries on earth. Would you seriously not expect innovation to sharply decline?"
We actually have a "natural experiment" along these lines. The Black Death killed between 30% of 50% of Europe's population. It appears to have raised, not lowered, innovation.
In the west of Europe. The reverse in the east.
By raising real wages, the Black Death appears to have had the same effect in Europe.
The reduction of the population increased the value of labor to the landlords. On the one hand this could increase the bargaining power of and thus price of labor -- but on the other hand it increased the incentives of landlords to use force to remove whatever rights laborers had to be able to extract even more from them.

In the west, with generally weaker feudal institutions and many more independent towns and cities to which laborers could flee, the first effect dominated. Real wages rose, feudal institutions were broken, and society took a step towards our modern world.

But in the east, with stronger feudal institutions and fewer towns and options for labor, the second effect dominated. Landlords succeeded and feudalism was reinforced -- laborers lost the rights they had been gradually gaining, and serfdom continued to the mid-19th Century, with consequences still felt.

The point is that propositions such as "an increasing population spurs/depresses innovation" are implicitly ceteris paribus -- when ceteris rarely is anything like paribus.

Jim Glass writes:

I know of a lot of people who are not conventionally clever but who contribute to innovation by making tiny tweaks to machines or routines. That's very much my point, that innovation is not a series of intuitive leaps but often unplanned micro-steps that come together ...

I just think there is a strong prejudice among academic types (of which I am one) to miss the point that most innovation consists of bottom-up infinitesimal cumulative improvements and to think in terms of big ideas: the inspiration, rather than the perspiration.

versus

"Tiny tweaks" are great, but the idea that a significant fraction of tweaks come from people who "could never pass an exam or hold much of a conversation" is quite implausible.

That "strong prejudice among academic types" is confirmed!

I'm entirely with Ridley on this one, and so is the biz school literature. His description of progress is spot on, IMHO. And a lot of the improvements that merely average people come up with are a whole lot bigger than mere "tweaks".

If one doubts the power of the bottom-up process improvements, look at the Kaizen production system – driven by contributions of production-line workers, IQs 85 to 115 -- that Toyota, Honda, etc used to drive by the Detroit Big 3, and which has since been copied and adapted by all kinds of industries all around the world. If one doesn't see it in the quality of the car one rides in today compared to 30 years ago, see it in the price of homes in Detroit.

the less smart you are, the more likely your "tweak" is to actually make things worse.

Not so. Random changes are likely to make things worse. "Tweaks" pass the natural selection test. If when proposed they are seen not to help, or when tested they don't help, they don't survive. Tweaks are all improvements.

Natural selection doesn't need any IQ at all to operate, and creates processes of amazing sophistication.

That average people, with no impressive IQ claims or special skills or knowledge -- except their detailed local knowledge of the immediate process at hand(!) -- could contribute "significant fraction of tweaks ... is quite implausible".

Really? I'm surprised by such condescension – on this blog of all places. I guess Keynes' belief that "the best people" really do it all for all of the rest of us lives on, in spite of so much.

That average people don't produce most of the tweaks under discussion is what seems "implausible" to me. Look at the sheer numbers of average people, IQ 85 to 115, with no special credentials, compared to the tiny number with econ professor-type 130+ IQs and fancy schooling.

I'd wager that through all history "average" folk produced the majority of the "tweaks" that compound into progress, via the natural selection process. Not just back in the pre-industrial agricultural era, but today too, off of all my years of working in business. Modern firms have institutionalized the old "suggestion box" into a sophisticated process, and get big returns from it. I can attest to that personally. And there is a big biz school literature on it, apparently not noted among econ faculties.

I'll go even further, out on a limb a bit. I'll guess that high-IQ credentialed people who have attained positions of authority and power have throughout history disproportionately obstructed innovations by their "lessers" to protect their own positions -- following the analysis for North and Co., Acemoglu and Robinson, etc.

Alex J. writes:

Saga period Iceland was largely settled by a self-selected group of Norwegians. So, for our purposes, it's more like a city in Norway than its own country. Even so, Norway was lightly populated at the time.

(Though according to wikipedia, this long held view is now being challenged.)

Pietro Poggi-Corradini writes:

Matt Ridley, you assume a society is large and under connected, then yes more connectedness would help. But you could also assume a society that is well connected and then a larger size might have much bigger, non linear effects. I'm thinking of the advantages to testing new products that come from having a large and dynamic consumer demand (Amar Bhide's point).

GIVCO writes:

Brian, the Annales school completely disagrees with your view of innovation, they see deeper, geologic and millennial processes behind Europe's greater innovation.

Europe, in their view, more than any other major landmass promotes easy interconnectedness because of easy water travel (the easiest, fastest, cheapest, and bearing the most tonnage). Europe is a peninsula, criss-crossed by large navigable rivers. Long river valleys and few impassable mountain ranges or jungles promoted mass migrations.

South America, China, Africa did not have these geological features and their preeminent civilizations were more isolated than Celt, Goths, Etruscans, Greeks, etc. Contemporary Incas and Mesopotamians rarely interacted. Chinese tried to create this water interconnectedness by massive canal building efforts; they understood the value of interconnectedness, but couldn't replicate Europe's natural features.

The neolithic package is really the start of modern man and Europe received it from Mesopotamia/Levant. But the neolithic package saturated Europe more quickly and thoroughly than other continents. From that pre-writing period to today, technical innovations in Europe surpassed the world's (especially during the so-called "dark ages").

I don't know what you consider great innovations, but our world was made by incremental adoption, adaption, and tinkering of little, forgotten things like lateen sails, rigging, navigation, water-energy, milling, domestic-animal energy, accessories and tack. All that leveraged by trade, travel, and voting-by-feet; all made easier by Europe's geographic features and the power of interconnectedness.

That's their story anyway.

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