Innovation + Equality sets out to discover whether innovation requires inequality, or whether it causes inequality. As with most of these discussions, the answer turns out to be ‘it’s a bit more complicated than that’. The authors are an Australian economist and a policymaker (Andrew Leigh is a member of the Australian Parliament, while Joshua Gans is a professor at the Rotman School of Management, University of Toronto), however, many of the case studies and statistics used are American. It is quite interesting to view the UK from this international perspective. At one point, there is a discussion of how much more efficient it would be to fund university costs through an ‘income contingent loans scheme’ (the technical description for the current English system). This makes more sense when your comparator is American tuition fees.
The authors’ central thesis about innovation is based on the idea of creative destruction and posits that successful innovation involves a ‘creation price’ (the value that it creates, which may accrue to a billionaire founder such as Mark Zuckerberg or Jeff Bezos) and a ‘destruction price’ (the value that it destroys). They argue that “technological change comes at a cost, and this cost should be shared by those who receive the benefits.”
Where the book is quite interesting is in the later chapters, which explore how inequality and innovation may interconnect. The authors use statistics to show that in America, the wealth of inventors’ parents is the key factor that influences how likely the children are to go on to patent an invention, even when educational levels are held constant. They also find that the type of product the children invent is influenced by the area where they live: “a child who grows up in Minneapolis is particularly likely to patent a medical device, while a child from Silicon Valley is especially likely to lodge a computing patent.” They point out that this kind of inequality probably means society is missing out on a lot of potential talent, or as they describe it, ‘lost Curies’.
The UK scores quite well against their list of 10 policy ideas to reduce inequality (notable exceptions being the first two: 1. Make teacher effectiveness the top schooling priority and 2. Boost the quality of vocational training) but not so well against their innovation policy shopping list. Here it is clear that one of the things (North) America has going for it is simply the size of their market, which amplifies the network effects that are so crucial to the success of many innovations.
I enjoyed this book, despite the naff subtitle, although if it had been an EPQ, I’d have told the student to focus on either innovation or equality. It felt at times as though these topics had been yoked together rather artificially and that there were two competing narratives. Also, the intended audience wasn’t clear. Although much of the book is about economics, the authors are careful not to use the language of economics, giving it the feel of one of those ‘economics beach reads’, but Gans and Leigh are not writers as engaging as the likes of Tim Harford or Hans Rosling.
When it comes to learning about innovation, students would be best advised to listen to some of Tim Harford’s ’50 Things That Made the Modern Economy’ podcasts and to view some videos on the Marginal Revolution channel on YouTube; these sources are mentioned in Innovation + Equality, as well as many others, but the originals are more lively. An Oxbridge candidate could be pointed towards Mariana Mazzucato’s recent book ‘The Entrepreneurial State’ (although even those ideas are covered succinctly in Tim Harford’s 10 minute piece about the iPhone). If students are interested in computer science – Gans and Leigh expend many pages on everything from Silicon Valley’s effect on rents in San Francisco, to the issues posed by the ‘winner takes all’ features of tech monopolies – Walter Isaacson’s The Innovators (2014) gives better insight into where these innovations came from and where they might take us.
However, Chapter 6 of Innovation + Equality could be worth reading for a student aiming at a business or management course, as it illustrates how networks and mentors can help new innovations get off the ground, while for teaching colleagues, the beginning of Chapter 7 contains some interesting views on the purpose of education and how it can be made fit for the 21st century. Finland is of course discussed (although with a bit of scepticism and a Monty Python quote), but the comparison of the German and Swiss vocational systems was new to me.
Josie Baker is Head of Economics at Queen’s College, London