The risks of economic narrow-mindedness

It is all too tempting to judge an economy’s health simply by its growth rate. No big wonder then that many economic policies are devised with growth as their only goal. However, this approach grossly simplifies the complexity of an economy’s inner workings. Rather than searching for the one perfect signal of economic success, we should take the opposite angle and try to understand what could go wrong. Today, I’ll offer a more detailed sketch of this concept to illustrate how our own economic narrow-mindedness makes us susceptible to economic failure, i.e., how a singular focus on growth blinds us for many important aspects of economic health.

How economies fail – More from Jane Jacobs

How do you know that an economy is healthy? The standard answer to this seemingly simple question is: It grows! While growth is an important hint at economic success, making it the only indicator would be far too simplistic. But instead of searching for the one perfect signal of economic success, I suggest a comprehensive review of the different ways for an economy to fail: acknowleding what can go wrong in an economy thus becomes the starting point for a more nuanced and realistic picture of economic health. Today, I want to frame such a picture.

The Nature of Economies – What Jane Jacobs tells us about innovation

In ‘The Nature of Economies’, Jane Jacobs provides a view on a number of important aspects that often go unrecognised. Starting from her insights on an economy’s main processes, the control mechanisms at work, and the fitness of an economy, we can take a comprehensive look at innovation targets, i.e., the types of problems our society needs to solve.

Dealing with unknown problems

Over the past few weeks, I’ve discussed how our innovation endeavour has become too focused on known problems. We have submersed ourselves in the bubble of the known problems to an extent that we are largely unprepared to deal with the unexpected. And that self-imposed myopia creates serious challenges. My argument essentially went through three steps: our established structures work very well for […]

Tremendous resources – well balanced?

We commit tremendous resources to innovation, no doubt. Just look at the sheer size of the Research & Development departments of the big players across many industry sectors, and consider the multi-billion budgets they invest. For example, consider Samsung’s R&D budget for 2016 (around 13 billion US$) and compare with the Gross Domestic Product (GDP) achieved around […]