From the interview: "Lighter taxes on investment will lead to higher worker productivity, which in turn will lead to higher wages for workers."
That has not proven to be true in the US. Search for "productivity vs pay united states" and see for yourself! Productivity is at an all-time high and wages are stagnant. This fact makes me extremely critical of the rest of the interview.
Acknowledging that it's a "quick questions" interview, I support Strain's perspective from the piece you shared:
"that does not mean wage gains have been equally distributed across workers. Indeed, they have not been. Half of workers do not reach typical compensation levels (when defined as median compensation), and many workers do not reach average compensation levels. Public policy acknowledges this and has taken steps to correct it through the tax and transfer system …
But more should be done. Given the strength of the link between pay and productivity, it is important for public policy to attempt to make workers, particularly low-wage workers, more productive. Policies to increase the skills of, and training available to, workers—for example, reforms to our K-12 education system and the expansion of apprenticeships and other forms of work-based learning—should be enacted. Earnings subsidies should be expanded to draw more people into the workforce. Policies to encourage business investment should also be considered. Labor market regulations that serve as barriers to workers and reduce the quality of matches between workers and jobs should be removed."
So it sounds like the quick take of 'tax investment less' is actually much more nuanced, and does indeed support more funds to support workers (e.g. education). Which, IMHO, might come from taxes.
David Thomson wrote a book called "Blueprint to a Billion" which observed that of the companies that made it to > 1B in market cap, the time varied greatly from start to 1B. Specifically it varied greatly from 0 to 20M, but then it was consistently 7 years +/2 to 1B.
I see innovation as the intersection of Invention and Customer Demand. When the two are in sync, productivity flourishes. We often think of the need for more research to generate more productivity. Perhaps we need more matching of demand and supply. For every great innovation, how many similar innovations occurred (Telephone, TV, polio vaccine, etc) but failed?
Going back to Law of Accelerating return - the process of "word of mouth" and establishing "dominate design" (Steering wheels should be on the left side of car, computers should run on DOS) allows the market to agree and accelerate. My guess is if we built a system dynamics model of this the boom bust component of waves would be closely tied to information gaps signally a new evolution of technology.
Arguing against this point, there is also a David/Goliath element to entrepreneurial focus. Clay Christensen noted "New Starts" win when the Y access of "Value" changes. i.e. we use to care about speed of computers, now we care about how long they run on battery. Driving the new variable means the New Start needs to be better than baseline. So there is a selection bias to entrepreneurs capable of very high performance that overcomes incumbent advantage. This step function could easily trigger a bust in a dynamic system (on big step change).
My reading of Schumpeter and Hayek (Perhaps the whole Austrian school) is the view that the interface between customer and technology, and unmet needs in the market place, have a lot to do with the boom bust of innovation markets. While the "Natural rate" of innovation is perhaps unchangeable, the speed of information flow to establish dominant design could be muted by poor capital allocation, regionalization, rent seeking, regulatory capture, etc.
If the barriers to signaling are high, then it takes an extra special entrepreneur and customer, and time, to build up enough energy, to punctuate dominant design and establish a new order at a better, more productive, valence level.
From the interview: "Lighter taxes on investment will lead to higher worker productivity, which in turn will lead to higher wages for workers."
That has not proven to be true in the US. Search for "productivity vs pay united states" and see for yourself! Productivity is at an all-time high and wages are stagnant. This fact makes me extremely critical of the rest of the interview.
(Edit—Here's a source for my claim: https://www.epi.org/productivity-pay-gap/)
https://www.aspeninstitute.org/longform/expanding-economic-opportunity-for-more-americans/the-link-between-wages-and-productivity-is-strong/
Acknowledging that it's a "quick questions" interview, I support Strain's perspective from the piece you shared:
"that does not mean wage gains have been equally distributed across workers. Indeed, they have not been. Half of workers do not reach typical compensation levels (when defined as median compensation), and many workers do not reach average compensation levels. Public policy acknowledges this and has taken steps to correct it through the tax and transfer system …
But more should be done. Given the strength of the link between pay and productivity, it is important for public policy to attempt to make workers, particularly low-wage workers, more productive. Policies to increase the skills of, and training available to, workers—for example, reforms to our K-12 education system and the expansion of apprenticeships and other forms of work-based learning—should be enacted. Earnings subsidies should be expanded to draw more people into the workforce. Policies to encourage business investment should also be considered. Labor market regulations that serve as barriers to workers and reduce the quality of matches between workers and jobs should be removed."
So it sounds like the quick take of 'tax investment less' is actually much more nuanced, and does indeed support more funds to support workers (e.g. education). Which, IMHO, might come from taxes.
Thank you for your thoughtful response. I should probably include more links in these Q&As!
David Thomson wrote a book called "Blueprint to a Billion" which observed that of the companies that made it to > 1B in market cap, the time varied greatly from start to 1B. Specifically it varied greatly from 0 to 20M, but then it was consistently 7 years +/2 to 1B.
I see innovation as the intersection of Invention and Customer Demand. When the two are in sync, productivity flourishes. We often think of the need for more research to generate more productivity. Perhaps we need more matching of demand and supply. For every great innovation, how many similar innovations occurred (Telephone, TV, polio vaccine, etc) but failed?
Going back to Law of Accelerating return - the process of "word of mouth" and establishing "dominate design" (Steering wheels should be on the left side of car, computers should run on DOS) allows the market to agree and accelerate. My guess is if we built a system dynamics model of this the boom bust component of waves would be closely tied to information gaps signally a new evolution of technology.
Arguing against this point, there is also a David/Goliath element to entrepreneurial focus. Clay Christensen noted "New Starts" win when the Y access of "Value" changes. i.e. we use to care about speed of computers, now we care about how long they run on battery. Driving the new variable means the New Start needs to be better than baseline. So there is a selection bias to entrepreneurs capable of very high performance that overcomes incumbent advantage. This step function could easily trigger a bust in a dynamic system (on big step change).
My reading of Schumpeter and Hayek (Perhaps the whole Austrian school) is the view that the interface between customer and technology, and unmet needs in the market place, have a lot to do with the boom bust of innovation markets. While the "Natural rate" of innovation is perhaps unchangeable, the speed of information flow to establish dominant design could be muted by poor capital allocation, regionalization, rent seeking, regulatory capture, etc.
If the barriers to signaling are high, then it takes an extra special entrepreneur and customer, and time, to build up enough energy, to punctuate dominant design and establish a new order at a better, more productive, valence level.