[M]any 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
Almost 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 It almost seems that everything older than 5 years is way out of date and must be replaced or simply just thrown out.
Last 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 problem.
It 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 Review 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.
In 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.
Back 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.
Another 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 business.
It 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.
When 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.
One 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.
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.
April 5, 2004
