Innovation is the ultimate driver of economic growth. Innovations big and small are essential for us to be better off tomorrow than we are today. However, it is also critical to sort out good innovations from wasteful ones. Good innovations then have to be adequately financed and nurtured in order to develop to their full potential. Financing potential breakthroughs in technologies “like we’ve never seen before” requires expertise, vision, and guts, as most radically new ideas may initially sound like “crazy talk”.
All great truths begin as blasphemies.
— George Bernard Shaw
Let me start with the proverbial “Five Monkeys” story.
Start with a cage of five monkeys. Inside the cage, there is a banana hanging from the ceiling and a ladder placed under it. Before long, a monkey would go to the ladder and start to climb towards the banana. As soon as he touches the ladder, he and all of the other monkeys are sprayed with ice-cold water.
After a while, another monkey makes an attempt to reach the banana. Again, as soon as he touches the stairs, all the monkeys are sprayed with ice-cold water. This is repeated again and again until the monkeys learned their lesson: climbing results in ice-cold water for everyone, so no one climbs the ladder.
Houston, we have a problem…
There are many problems with American healthcare well documented in the popular press, but it seems that the main issue is the availability and (if it is available) the high cost of health insurance.
Let me begin by saying that the most common option in American health insurance system tied to employment is very weird. If you have a job that offers a group insurance plan, then you can join regardless of your current health and preexisting conditions. However, if your employer does not offer a group plan, or you’ve been laid off, or you are self-employed, or an entrepreneur, then you have to buy insurance on your own. In that case, you better be in excellent shape, with no preexisting conditions, because if you have health problems, then your premiums are going to be extremely high, or your particular condition is not going to be covered, or you may forget about insurance coverage altogether (if you have something really serious). This makes you think twice before switching jobs, or striking it out on your own.
I think that fixing the American health care system is, perhaps, the key issue for securing America’s economic future. As America cannot compete on wages or low-cost mass manufacturing against new vigorous economies like China or India, it is paramount to maintain America’s true competitive advantage. It is the entrepreneurial spirit and the propensity to efficiently innovate that put America in the forefront of the world’s economic development. The current system of health insurance locks people into jobs with particular insurance plans, thus inhibiting the entrepreneurial spirit of people trying new ideas and starting new companies. A truly portable health insurance independent of employment would provide the necessary mobility of talent and labor that underpins effective innovation and gives America an edge in global competition.
In recent days my friends have been asking me the same questions that we hear on TV many times a day… What is happening to the financial markets, and is it the beginning of the end for America? Below is just my personal view on the situation.
America as a nation has enjoyed vigorous economic growth for a very long period of time, going back to the 18th century. As the economy grew, Americans got wealthier, and now we enjoy one of the highest standards of living, as compared to the rest of the world. But what drives the underlying economic growth that makes us all richer in the end? It is the process of innovation and progress that drives economic growth. It is people coming up with new discoveries and technologies that provide more “bang for the buck”, and ultimately make our lives easier and more productive. America historically has been an innovator, with inventors like Edison, Westinghouse, and Ford revolutionizing technologies that made our lives better. It is the process of innovation that lies at the core of any economic expansion. That was then…