Innovation

Policy makers should recognize information technology as the centerpiece of economic policy and develop their plans accordingly, concludes the Digital Prosperity study published this week by the Information Technology and Innovation Foundation.
“In the new global economy information and communications technology (IT) is the major driver, not just of improved quality of life, but also of economic growth,” writes Foundation president, Dr. Robert D. Atkinson, author of the study.
Atkinson is a widely respected economist who formerly served as project director of the Congressional Office of Technology Assessment, and is the former director of the Progressive Policy Institute’s Technology and New Economy Project of the centrist Democratic Leadership Council.
Based on reviews of other studies, and Atkinson’s own research, the report maintains, “IT was responsible for two-thirds of total factor growth in productivity between 1995 and 2002 and virtually all of the growth in labor productivity” in the United States.

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EUROCHAMBRES, the association of European chambers of commerce, has a new report out measuring the EU’s progress achieving its ambitious plan of becoming “the most dynamic and competitive knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion, and respect for the environment.” Unfortunately, the report concludes that the EU is still losing ground. In two years’ time, the gap EU-US (sic) has widened for all economic indicators: Income (GDP per capita). The current EU level for income was achieved by the US in 1985. Since the first edition of the study, the time gap has increased by 3 years; Employment and R&D. Both the current EU levels for employment and Read More ›

Patients, adept at using the internet to schedule travel, conduct business, and access information with the click of a mouse, are now driving changes in the way state and federal policymakers address health care reform.
“Health IT” is the new buzzword for health care, and information technology proposals for healthcare reform are sprouting like daffodils in April!

Tennessee Gov. Phil Bredesen
So far this year, the National Governor’s Association has announced the creation of the State Alliance for E-Health, co-chaired by Tennessee Gov. Phil Bredesen and Vermont Gov. Jim Douglas. Their purpose is to bring together office holders and policy experts to, “address state-level health information technology (HIT) issues and challenges to enabling appropriate, interoperable, electronic health information exchange (HIE)”.
As quoted in the National Journal’s coverage of the event, Gov. Bredesen explained, “…the states can move much more quickly….I don’t trust the federal government to actually do anything on my watch.”

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Eli Lilly CEO Sidney Taurel’s observation about the effects of price controls in the pharmaceutical industry in a recent Wall Street Journal interview is worth remembering. I’ve seen the bad effects that government policies of price controls and overregulation can have. When you look at Europe 30 years ago, that was where most of the innovation in pharmaceuticals used to take place. When I joined the industry the No. 1 was Roche and then it was Hoechst and Bayer and all these companies, which today are not as big. What 30 years of price controls have done is more and more of the research has come here. I think only about 25% of the total research in the whole industry Read More ›

At Discovery Institute, we are promoting transportation technologies that can help the United States break free from dependence on volatile parts of the world for oil and gas. (See this post at DiscoveryBlog.org) Computers and network servers use enormous amounts of electricity, so prudence requires support for conservation–and major new sources of energy–wherever possible.

Economist Larry Hunter, an old friend, zeroes in on the real threat posed by the Medicare Part D prescription drug benefit — price controls. Potential House Speaker Nancy Pelosi doesn’t call them prices “controls” of course. She calls them “negotiations” and says she’ll institute the change in her first 100 hours in office. Hunter reminds us of past intrusions into the crucial information-processing realm of prices: These “negotiations” would have terrible consequences: They would create shortages, stunt new development, generate red tape, increase government intrusiveness into patients’ health-care decisions and eventually raise drug prices. The historical record is clear: Price controls always have the opposite of intended effects. Airfares were higher, not lower, after price controls were imposed in 1938. Read More ›

Yesterday, Ned Phelps of Columbia won the Nobel Prize in economics for his critique of the Philips Curve, one of the worst (and still persisting) ideas in the sad history of 20th centrury macroeconomics. Read Phelps’s terrific celebration of dynamic capitalism — and powerful critique of European style corporatism — in today’s Wall Street Journal. -Bret Swanson

Microsoft’s legal challenge to the European Commission’s antitrust ruling got underway this week in the European Court of First Instance. At issue on the first day of the hearing was the requirement that Microsoft separate its media player from its operating system. The commission’s ruling and subsequent enforcement gets more absurd every day, and I can’t imagine it would have been taken seriously by any competent court of law in the U.S. Jean-Francois Bellis, an attorney for Microsoft, told the court that 1,787 versions of Windows without Media Player (Edition N) have been ordered, compared with 35 million versions of Windows with Media Player, the Financial Times reports. The lawyer for the European Commission conceded that “I am afraid we Read More ›

Microsoft has been warned by Commissioner Neelie Kroes of the European Union that there are some features it should not bundle into its new operating system (see, e.g., “European regulator warns Microsoft about new operating system“ from European Business News Online). The EU’s competition directorate has already decided that competition could be costly and involve risk for Microsoft’s competitors. Yes, it sounds ridiculous — but essentially that’s what it is. Kroes’ warning may indicate that Microsoft is losing its freedom to innovate and in effect will now be required to obtain preapproval from the EU for any new product design. If so, the EU could be doing to Microsoft what the FCC did to the Regional Bell Operating Companies by Read More ›

Yesterday the Supreme Court heard arguments in eBay v. MercExchange, where both sides agree that the courts nearly always issue an injunction anytime a patent is infringed. It is argued by Nathan Myhrvold (see “Inventors Have Rights, Too!” in today’s Wall Street Journal) and others that without a strong presumption in favor of injunctions in patent cases, big tech companies would “stall and drown the little guy with legal fees.” This is a variation on a familiar argument: Litigation normally isn’t cheap; it isn’t “predictable.” So we should just get rid of it, right? The convoluted logic of tort reformers is now the convoluted logic of defenders of a questionable patent system. Patents exist to promote innovation, but lately they Read More ›