Innovation Is At Our Peril

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of the ideas which now pass for brilliant innovations and advances
are in fact mere revivals of ancient errors, and a further proof
of the dictum that those who are ignorant of the past are condemned
to repeat it.

~ Henry Hazlitt, Economics
in One Lesson

everywhere you go you hear how important it is to be innovative.
Things must be done in new ways, and above all, new things must
be done. It almost seems that everything older than 5 years is way
out of date and must be replaced or simply just thrown out.

October I attended an annual conference here in Norway. Each year
the conference challenges a myth in an attempt to crush it, or at
least that’s the intention. It sounds quite nice. After all that’s
part of the business LRC
is in, taking care of myths and attempting to put an end to them.
However, I don’t think last October’s conference was such a great
success. The theme was the Norwegian innovation system. Actually,
this ill-sounding term is not something confined to Norwegian or
Scandinavian society. At this conference a representative of the
OECD had a lecture on the comparison
with other nations. The term “innovation system” is an established
term in the OECD. The term has a “5-year plan” ring to it. Let’s
consider the mentality it represents. We have an innovation system,
and it determines the innovation in a society. If there’s a problem
with too little innovation, let’s just fix the innovation system
a bit; let’s just adjust this and this parameter. This is an extremely
dangerous mentality. To paraphrase a recent American president;
the system is not the solution to our problems, the system is the

is worrisome that such a conference can be held without being able
to pinpoint the main problem, namely the system mentality. However,
it is perhaps no more than one could expect given the low participation
from entrepreneurs and industry representatives. It seemed more
like an interest group gathering, mostly interested in what the
government can do for innovation, and quite little interested in
the government getting out of the way, which became clear when there
was a vote on whether we should have a cabinet secretary for innovation.
The result was overwhelmingly pro. Quite disappointing. Some time
ago there was a renovation at the Royal Palace in Oslo. One of the
subprojects was expanding the Council of State Hall. It was too
small for Cabinet. Of course, the problem was, and still is, that
the Cabinet was too large, not that the room in which it met was
too small.

Erik M.R. von Kuehnelt-Leddihn told us in National
in 1992 in his article Why
socialism refuses to die

In our democracies
certain political parties buy votes with handouts of public money.
Thus we get Santa Claus parties all over the world; they are not
easily defeated at the polls and, if they are defeated, the tighten-your-belt
parties rarely have the courage to undo their work and to stop
the bribery of the masses. If they did, they would not have the
slightest chance of being re-elected.

Norway, what comes closest to a tighten-your-belt party is the “Conservative”
Party. In addition to the mentioned lack of courage and the inherent
handout problem of all modern democracies, comes a third problem;
with the exception of about 2 years, ever since 1935 when this party
has been in Cabinet, it has been in a coalition Cabinet. In a coalition
Cabinet party interests play a crucial role when cabinet secretaries
are appointed. A new coalition Cabinet never reduces the number
of cabinet secretaries. The number is often increased though when
a new coalition Cabinet is appointed.

to the conference. After the pro innovation secretary vote an under
secretary held a lecture. He had an opening comment on the vote.
He said that if innovation is to get going, another cabinet secretary
is not necessarily the answer. I actually believe he meant it. However,
in a democracy good intentions are not enough. The power of bribery
and interest groups is immense. Another under secretary presented
the Cabinet’s “holistic plan for innovation," trying to emphasize
the government getting out of the way, but still there is a government
plan for it. Of course, interest groups blamed the Cabinet representatives
for not taking “their” responsibilities seriously.

lecture was by a representative of the Norwegian business Ekornes
and an Ekornes family member. His entire lecture was cleansed of
talk about what the government should or should not do. A questioner
afterwards asked him about this, whereupon he replied “I do not
trust politicians.” He also commented that constant change was a
threat to business. It was quite obvious that he didn’t believe
in lobbying. If all businesses operated by the principle that they
should be independent of politics, which you can’t rely on anyway,
we would see less lobbying. Of course, it isn’t easy for business
to stay out of politics as long as politics doesn’t stay out of

is nice to see a representative of an industrial company give a
lecture on how sound innovation is brought about at a conference
where almost everyone is interested in systems, models for innovations,
and government responsibility and action. This gives hope in a land
where there is a government agency for nearly everything, even for
entrepreneurs. It seems the government wants everyone, entrepreneurs
included, to be its clients. There are not only government information
agencies for entrepreneurs. There are also grants.

innovation is debated in Norway it is often in a context that we,
as a collective, need to make an effort to provide for our welfare
state after the black gold off our shores is gone. In other words
it is a collective issue. In a way I hope there will be no solution
to our innovation problem. The lack of a solution will bring the
Norwegian welfare state down. I look forward to seeing the long
faces of the leftists in America and elsewhere who have looked up
to the Scandinavian welfare state model, when it falls. Of course,
that will only be a result of the castration that the welfare state
and the oil wealth have led to.

of the last lectures at the conference had the translated title
“An Innovationless Innovation Policy?” The theme was the lack of
innovation in the production of policies. It seems innovation is
good wherever it takes place and whatever the result is. This is
of course not so. Too much innovation in government offices represents
severe danger. Changing policies every other month because the policies
of yesterday by definition are out of date is hazardous. No one
knows what to relate to from the government. As von Mises told us,
when the government plans it makes it hard for individuals to plan.
Government policy innovation must not be encouraged. There are too
many creative minds in government offices. They should be elsewhere.
Now, I’m not saying that changes in government policies cannot be
for the better, but more often than not this is not so, and more
often than not the best change is to get completely out of the way.
That doesn’t take much innovation.

is good when it is of the right kind, when it takes place in the
right places, and when government gets out of the way instead of
trying to make it work. Otherwise, innovation is at our peril.

5, 2004

K. Baltzersen [send him mail]
is a senior consultant of information technology in Oslo, Norway.


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