Top critical review
16 people found this helpful
Poor presentation of an appealing view
on 9 October 2013
Could not be reading this book at a more appropriate time. Last week Merck announced they are firing some 7.500 scientists. This week it's Alcatel firing another 5,000. That's not any company, Alcatel, it's owned by Lucent, previously known as Bell Labs.
One of the main theses of the book is that business these days concentrates its efforts in bidding up the share price through buybacks, that it puts more emphasis on returning money to its shareholders rather than fostering the research that benefits all stakeholders and society in general. Government, on the other hand, can be and has been a patient long term investor.
My problem with the book is that it moves freely from facts to theories, from theories to conjectures, from conjectures to opinions, from opinions to pure ideology and from ideology back to facts. There are no clear demarcations here.
Example of a very powerful fact from the book: The NIH spends USD 30 billion per annum on research. To which my reaction is "wow, shame on me, I had no idea, that's massive"
Example of a well-accepted theory from the book: There are times when the government is best placed to step in. Market failures (example: lighthouse, air traffic control), national interest (the military springs to mind), externalities (example: curbing pollution, getting everybody to learn how to read and write). Few people dispute this.
Example of a conjecture in the book: The state is capable of kickstarting a green economy through 1. fostering the right collaborative environment for researchers in universities and the private sector and 2. through backing early initiatives with patient capital. (You'd have to agree, is my view, the question is what else that money could have gotten for you, of course.)
Example of an opinion from the book: Companies should not pursue profit maximization first and foremost. (For the record, I find the alternatives appealing, but ultimately romantic dead ends. There! How's that for an opinion?)
Example of (implicit) ideology from the book: Bottom of page 187 the author starts a sentence as follows: "While the classical economists (such as David Ricardo or Karl Marx) studied innovation and distribution together..." and it's a good thing she tucks that in so deep in the book rather than at the beginning, or I would have put the thing down. I genuinely don't think "classical economist" is the first description of Karl Marx that springs to anybody's mind.
Don't mean to subvert here, just to point out that the book definitely has an angle and plays around with facts, theories, conjectures, opinions and ideology.
I am a former entrepreneur, have suffered in the hands of the VCs the author has so little time for (the accusation is they find the ready work of government and jump in at time epsilon before there's any money to be made) and I'm extremely sympathetic to many of the arguments she makes. I really really wanted this book to be awesome.
It falls short.
The weakest part of the book is the case against Apple. I really could not care less that the government invented/fostered/supported technologies such as 1. The DRAM cache, 2. Lithium-ion batteries, 3. Signal compression 4. Liquid Crystal Display 5. Micro Hard Drives, 6. Microprocessors, 7. Click-wheel, 8. Multi-touch screen, 8. GPS, 9. The Internet, 10. Cellular technology, 11. SIRI.
I credit my wife with being an excellent cook. She goes to the same supermarket that's available to me. She can make a dinner to truly entertain ten people; I am merely qualified to poison them. It took a mad (and mad he was) genius to take all these technologies and put them in the palm of my hand. Perhaps I know this (and the author does not) because I'm a former entrepreneur:
Mariana, my friend, IT'S IN THE DOING. Steve Jobs did it. Thousands failed. So did he, at first. Ever played with an Apple Newton?
It gets better. Apple made millions, but others are now catching up. Pretty soon, unless it innovates again, Apple will be making "normal profits" on the devices it pioneered. Rich fellows like me paid 700 dollars for an iPhone, but in ten years' time everybody will be able to buy an iPhone equivalent for ten bucks, if the phone company is not already giving one away with the contract.
The other thing I found a bit disingenuous is the following: The ten inventions mentioned above were all fostered by the Department of Defence. Forgive me, but as far as I'm concerned, there is no worse den of inefficiency on the face of the planet. I know, this is ex-post. If we had the red flag flying here my feelings would be very different. We'll never know, because we don't have the "what-if" world to compare with.
But I've read the book and I'll be damned if the author disagrees with me that the DoD wastes tons and tons of money. They HAD BETTER be getting some type of dividend from their work. I don't think this can all be presented as some sort of triumph.
Moreover, if we spend on energy what we've spent on defence, I bloody hope we solve the energy problem forever. Funnily enough, the amounts the government has spent on defence since the end of the war are similar order of magnitude to the amounts the US has spent on energy.
China is presented as some kind of poster-boy for fostering green energy, except the very company the author decides to make an example of has gone bankrupt.
Don't get me wrong. Ultimately, I share the author's view that there's something fundamentally wrong with capitalism in 2013 versus capitalism in 1960. I also share the author's view that there is a clear role for government in innovation. The paper lists today who works for government because we're in the middle of the 2013 US government shutdown as I'm reading this. Away from the military, it looks bloody lean to me (and stop pelting me with rotten tomatos before you look at the numbers for yourselves!!!!)
There's one more thing here that's of interest. The author is an expert in mathematical models of growth and innovation. She refers briefly to the various "endogenous models" for innovation, but merely to mention they exist. Why not dedicate a chapter in the book to how these models work? Give us some credit, maybe we could read them and stay with you. I don't bear Stephen Hawking any grudge for that book I bought once, and he lost me pretty early on!
In summary, this is not a book that has served me a great deal of ammunition to fuel my prejudices. Which is a shame.