Innovation and Competition

Here in DC it is restaurant week, which can be a fun time of year. Normally high priced restaurants offer a three course fixed price (pre fixe if you must) menu for the comparably affordable price of $20/35 for lunch/dinner. I've been looking for a few good vegetarian options since my wife has been a lifelong vegetarian. Flipping through OpenTable's listing I was struck by how little innovation there is in the food industry at the moment.

First, I should say that it is nice that so many restaurants do offer at least some semblance of a veggie option, however the clustering was kind of shocking. Virtually every restaurant, almost regardless of the type of cuisine, is offering a mushroom risotto for its main course. Nothing against this, but would you really want to eat at six different fancy restaurants in search of the perfect mushroom risotto?

This isn't limited solely to vegetarian food of course. Virtually every self-respecting haute cuisine restaurateur is offering a beet salad now. It hits all the trendy points: it's seasonal, local, and in most cases organic. Since chefs are a transient lot they tend to incorporate many of their competitors' best dishes into their new restaurants, with a few modest modifications to avoid allegations of outright theft. Think pork belly too, which is now on the wane but was a de facto requirement on restaurant menus just a bit ago.

What's interesting from an entrepreneurial standpoint is that this situation is only a temporary equilibrium. It won't be long before some enterprising restaurateur recognizes the lack of novelty in restaurant menus today and will come up with something new and great. Or new and terrible - the restaurant industry is nothing if not volatile. Even at a small, local scale, entrepreneurial vision drives change and improves and enlarges the options that we as consumers can choose from. Or to borrow a phrase (thecomingprosperity):

... sustained prosperity depends on novelty. It depends on invention in the face of change. It depends on creativity with limited resources.

More fundamentally--most fundamentally--sustained and sustainable prosperity depends on entrepreneurs.

Some Recent Articles on Innovation

David Warsh's latest article on Economic Principals asks whether a new round of technical innovation can tackle problems of climate change. He answers this by reviewing the contributions of previous innovation theorists like Nelson, Rosenberg, and Arrow. Worth a quick read.

Elsewhere, the Minnesota Fed's quarterly publication The Region has an interesting survey article on the relationship between trade and innovative capabilities:

“For the last decade or so, the idea that international trade might have extra benefits because it stimulates innovation by firms that export has been a strongly held view among economists,” observed Minneapolis Fed consultant Andy Atkeson in a recent interview. “But what we’re finding, in fact, is that these ‘extra benefits’ don’t really exist.”

The Latest from Hans Rosling

Via Donald Marron

Making a Failure

According to Scott Sandage, an associate professor of history at Carnegie Mellon University and author of Born Losers: A History of Failure in America (Chronicle):

America's relationship with failure has evolved over time, noting that the word initially applied only to matters of business, not character. Up until the Civil War, he argues, people who suffered economic misfortune were described as making a failure, not being a failure. Sandage asks: "Why have we as a culture embraced modes of identity where we measure our souls using business models?"

From a longer article in The Chronicle of Higher Education on the importance of creativity. The pendulum certainly seems to be shifting back towards a conception of failure as a form of learning by doing. As a result, the stigma that's historically been attached to it seems to be fading.

The Labor-Leisure Tradeoff: Asia/Spain Edition

Against the backdrop of the latest French strike, Michael Schuman's latest post at the Curious Capitalist blog is worth pondering (Time):

Can the Spanish continue to enjoy their wonderful lifestyles as the world changes around them? In other words, can the people of Europe – and for that matter, everywhere else -- find the proper work-life balance in the increasingly intense country-eat-country world we live in?

When I compare lifestyles in a rising Asia and a struggling Europe, the answer seems to be a resounding no. In Hong Kong, the subways are crammed with people furiously emailing or talking business on their iPhones. In Spain, don't expect anyone to respond to your emails on Friday afternoons, or take a phone call during their long lunches. In South Korea, many Koreans consider it inappropriate to use their allotted vacation days, to the point where the government has had to implore them to take holidays. During the hottest weeks of summer in Spain, good luck finding people in the offices after 3pm. In Hong Kong, you can do some serious shopping at 10pm. While visiting the town of Jerez in Spain, I had a terrible headache but couldn't find an open pharmacy for an entire Thursday afternoon.

After my travels in Spain, there was little question in my mind why Asia is leaping from strength to strength while Europe is mired in slow growth and unemployment. According to statistics from the OECD, people from emerging markets or nouveau riche nations generally tend to work longer hours. The Koreans worked more hours in 2009 than anyone else in the OECD (2,074), followed by Poland and Mexico. The Spanish, by comparison, worked 1,615 hours, roughly in line with the British and Portuguese. The poorer countries appear hungrier. They want what the Spanish and other residents of the most advanced economies have had for decades, if not centuries.

The Sad State of Haiti

Even before the earthquake, progress in Haiti was not going so great. It has the dubious distinction of being one of only a handful of countries (six total?) to actually see its real per capita income decline between 1960 and 2007 (the only data available from the Penn World Tables). But as Denis O'Brien writes in the latest Innovations (pdf):

Analysis of where Haiti goes from here inevitably turns around the problems, over and over again. Haiti’s past is picked over, its failures held up to the light, each new dawn that didn’t deliver examined under the microscope as to find out what went wrong. And it is important that lessons are learned. But not enough attention is paid to the positives. Let’s for a change not get stuck in the detail and let’s look at what is right with Haiti.

That is the goal of the latest issue, released at the Clinton Global Initiative, 2010. Check it out.

The Valley of Death

It's well known that it can be very difficult to move from scientific invention to market. It's a Miracle has a humorous take on this phenomenon, couched in terms of things scientists say versus what they really mean. For example:

What they say: I think we’ve set the stage now and we’re actively looking opportunities to commercialize our invention.

What they mean: I think we can get a patent out of this, but I have no clue how an actual commercial entity works and what they look for in potential products.

The Global Canon

From the World Policy Journal:

Is there, as World Policy Journal suggests in every issue, a truly global network of creativity—not only in the written word, but in art, drama, music, film, television and beyond? The answers arrived and the results, we believe, will surprise and entertain. For the first time in our quarter century as a publication, we consider poetry, music, painting, internet art, film from Nigeria, plays from Peru—the entire gamut of human creativity—to arrive at the conclusion we suspected from the start: That today, for perhaps the first time in human history, a Global Canon has arrived.

The full contents are here, and the articles are currently free.

Soft Power

From the Department of State:

In a new initiative responding to President Obama’s June 2009 speech in Cairo, the U.S. Department of State is bringing 25 science teachers from as many countries to the United States for an International Visitor Leadership Program called “A New Beginning: Science, Technology, Engineering and Math (STEM) Education,” September 27 through October 15.

The teachers will engage in a professional, cultural and educational examination of the building blocks of STEM education at the primary and secondary levels in seven cities across the United States. Participants will visit several schools to explore how to nurture and support hands-on science education, how to demonstrate the relevance of science for children, and how to create a setting in which children actively engage in scientific learning.

This exchange will lay the groundwork for long-term relationships and foster international collaboration in an effort to develop rising leaders in the field of science and technology. After the teachers return home, their students and those of their American counterparts will be invited to take part in global “virtual” science fairs.

"The Agenda for Development Economics"

A special symposium in the Journal of Economic Perspectives. Apparently the agenda does not feature entrepreneurship. A quick word search reveals that "entrepreneur," or one of several derivations is used only once in the text of these articles - the article by Rodrik. Nor are these authors reading much about entrepreneurship - only two citations from these six essays include some variation of the word entrepreneur.