Sunday, December 18, 2011

Book Review (Kindle Single edition) Launching the Innovation Renaissance - Alex Tabarrok

Launching the Innovation Renaissance: A New Path to Bring Smart Ideas to Market Fast by Alex Tabarrok. What do Dean Baker (of the Progressive left) and Alex Tabarrok (of the Libertarian right) have in common?  Both want to change the patent system in the U.S. to eliminate needless monopolies and foster more innovation. Both want to reform our visa system to allow more high-skilled workers in to end protectionism for the elites.

Tabarrok's Single has received bipartisan praise and the only major criticism seems to be that the book is too short-- I agree. My other criticism would be that he didn't distribute it for free, as Baker did his.  The George Mason economist and Principles textbook co-author begins his book by focusing on problems with the U.S. patent system. How instead of creating incentives for innovation, our patent maze creates incentives for rent-seeking behavior.  Billions of dollars are wasted in legal battles as firms like Google try to buy up patents that they could be sued over later if they innovate in an area that some patent troll has broadly staked a claim on.  These wasted resources hurt our productivity growth.

Immigration reform is also a necessity, the U.S. allows in a ridiculously low number of high-skilled immigrants.  Tabarrok doesn't focus as much as Baker does on how this is equivalent to trade protectionism for high-skilled workers, but shows how this is hurting U.S. productivity growth.

Education is another of Tabarrok's targets, famously showing how college is oversold and how the U.S. is turning out only as many, if not fewer, math and technology graduates as it did 25 years ago, even though demand for these positions has soared. The heavily-subsidized U.S. education system is turning out too many workers in fields like English and Psychology for which there are few jobs available. These graduates end up taking lower-skilled jobs that they did not need their degrees for, hence wasting both their own and taxpayer dollars. Tabarrok would like to see better teachers at the secondary level and takes on the teacher unions that oppose any type of merit pay system and make it notoriously difficult to fire even teachers with criminal offenses.

The problems he points out are clear-cut, backed up by plenty of evidence, and the solutions he gives are relatively straight-forward and often peer-reviewed.  You can read it in one sitting, and I highly recommend it.

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