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Page added on February 23, 2014

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Innovation, Not Regulation, Will Increase Global Prosperity

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Everyone seems to have an opinion about the recent World Economic Forum in Davos, Switzerland and whether the conference demonizes those who are successful, or as Pope Francis said, promotes business practices that lead to “widespread social exclusion.” But bringing together powerful global interests to address social injustices is among the most effective ways to encourage the kind of innovation and investment that pulls people out of poverty. A rising tide lifts all boats, and if we want to see greater prosperity on a global scale, we must encourage success, not vilify it. A recent Slate column  by Matthew Yglesias perpetuates the dangerous, mushy thinking that says one person’s wealth automatically means greater poverty for everyone else. Yglesias suggests that innovation will suffer unless we equalize income. This mindset may seem reasonable on its surface, but if you break down the arguments they make little sense.

Innovation no longer requires wealthy venture capitalists to fund groundbreaking ideas. The rise of crowdfunding through websites like Kickstarter and Indiegogo is quickly democratizing investment, giving thousands of innovators the boost they need to create new products and services. Title III of the JOBS Act is due to go into effect this year, which will further open up the possibilities for funding disruptive innovation, regardless of income level.

Wealth is not a zero-sum game. Just because some people are rich, it doesn’t mean others must be suffering. Forty-eight billionaires on Forbes’ 400 Richest People in America list built their empires on technological innovations that have changed the way the world works, while creating jobs and launching entirely new industries. Allowing innovators to build and grow new businesses creates new jobs and in some cases entirely new industries. As David Brooks wrote in January in the New York Times, growing wealth and growing poverty are completely separate spheres. Wealth comes from various combinations of luck, success, public policy, tax laws, hard work, investing and inheritance. Poverty comes from various combinations of the breakdown of the family unit, illness, unexpected expenses, job loss, dependency and public policy.

Even the high price tags on new technology do not somehow prove that income inequality will cripple innovation. Historically, the best innovations are picked up by other businesses, which make lower-cost versions available to the masses. This has been true in products ranging from televisions to telephones, radios to autos, and tablets to computers. Today we are seeing it with Tesla’s electric car, Apple’s iPhone and Fitbit’s health tracker. While initial models are expensive, competitors jump in and make them better and cheaper.

Finally, there is the concept that somehow innovation is slowing down. This is absurd given the rapid developments in so many areas in our world, from 3D printing, Ultra HD, collision avoidance and health care to agriculture, transportation, biotech and genetic mapping. In 2013, the U.S. Patent Office issued a record 277,835 patents, about 10 percent more than 2012. And 45 U.S. companies were among the Top 100 Global Innovators in 2013. We are at the beginning of a major surge of innovation in several areas, and the world will benefit from it – provided unnecessary governments policies don’t get in the way.

Unfortunately, economic leaders around the globe and many of our policymakers in the U.S. – including President Obama – are basing their assumptions on a flawed premise. Let’s encourage policies that will help the poor lift themselves out of poverty, instead of forcing a state-mandated idea of equality on everyone through taxes and government handouts. We need to rethink our policies and agree on a national strategy focused on the power of innovation to create opportunities, bolster the global economy and improve quality of life for people across the world.

Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA)®, the U.S. trade association representing more than 2,000 consumer electronics companies, and author of the New York Times best-selling books, Ninja Innovation: The Ten Killer Strategies of the World’s Most Successful Businesses and The Comeback: How Innovation Will Restore the American Dream. His views are his own. Connect with him on Twitter: @GaryShapiro.

Forbes



8 Comments on "Innovation, Not Regulation, Will Increase Global Prosperity"

  1. DC on Sun, 23rd Feb 2014 10:05 pm 

    ROFL! Comedy gold…..

  2. kervennic on Sun, 23rd Feb 2014 11:40 pm 

    Free Bernard Madoff !

  3. J-Gav on Mon, 24th Feb 2014 12:03 am 

    Fortunately there’s a Gary Shapiro around to restore the American Dream! I was beginning to think no-one was going to take care of that …

    Funny thing about that ‘American dream.’ I swear I never even heard of it until I moved to Europe. But then I grew up in the sticks in Michigan …

    Why not leave dreaming for bedtime and keep doing for daytime?

  4. Davy, Hermann, MO on Mon, 24th Feb 2014 12:26 am 

    Damn, what a guy! He is obviously happy with the status quo of the new normal. Guys, I don’t want to bash the wealthy and capitalism in a pure sense of the way it was pre-financialization of the 80’s or so. There was a time when capitalism had some balance, was governed by fundamentals, and there was the rule of law. That is not present today. It is now a Ponzi scheme and a fleecing of the poor by the connected. The whole system of capitalism and democracy is no longer. They are shells. I will argue this is the product of a system that has climaxed and is ready to break to a lower level. The system is brittle and niches are full. Real innovation and growth are stagnant. In a finite world everything cycles. We can look at previous societies and see similar examples of decline.
    There was a time when this was true but not now:
    Gary Shapiro “A rising tide lifts all boats, and if we want to see greater prosperity on a global scale, we must encourage success, not vilify it”.

    Today wealth is in reality a “VIG” from those who have access to money last to those who touch it first:
    Gary Shapiro “Wealth is not a zero-sum game. Just because some people are rich, it doesn’t mean others must be suffering”.

    Yeap, we can blame it on society per our fat cat Shapiro. Probably never occurred to him that the system is rigged and these social ills are a product of a corrupt system of revolving door of patronage and connections.
    Gary Shapiro “Poverty comes from various combinations of the breakdown of the family unit, illness, unexpected expenses, job loss, dependency and public policy”.

    Please, your idea of innovation is completely off the mark. Real innovation occurred during the renaissance into the early 20th century. After that it was refining the basics that had been innovated earlier.
    Gary Shapiro “Finally, there is the concept that somehow innovation is slowing down. This is absurd given the rapid developments in so many areas in our world, from 3D printing, Ultra HD, collision avoidance and health care to agriculture, transportation, biotech and genetic mapping”

    This fat cat is saying between the lines “lets manipulate the markets, acknowledge corruption is good for all of us fat cats, and pull the wool over the general public’s eyes”. The handouts are to those who touch the money first. If you compare the amount of welfare to the amount of skimming going on through the finacialization of society turning public wealth into private wealth of few.
    Gary Shapiro “Let’s encourage policies that will help the poor lift themselves out of poverty, instead of forcing a state-mandated idea of equality on everyone through taxes and government handouts. We need to rethink our policies and agree on a national strategy focused on the power of innovation to create opportunities, bolster the global economy and improve quality of life for people across the world.”

  5. DC on Mon, 24th Feb 2014 12:44 am 

    Anytime anyone, especially someone connected to the computer electronics, web apps whatever etc, but it applies pretty broadly too to most other fields as well, uses the word ‘innovation’, hold on to your wallet-tightly, my advice. Or just ignore him\her and until they go away.

    ‘Innovation’, however you care you care to define the term, is now completely controlled and dominated by a tiny handful of globalist corporations. They decide what technologies we are allowed to use, what gets built-and what gets ignored-and even at what rate ‘innovation’ is doled out to the masses.

  6. Makati1 on Mon, 24th Feb 2014 12:48 am 

    The Techie religion has to get more vocal just like all the others. ALL of them are fading into the sunset under the weight of reality.

    Perhaps the ones who worshiped nature had the right idea? They had respect for the system that kept them alive. We don’t.

  7. meld on Mon, 24th Feb 2014 3:11 pm 

    It’s true innovation in permaculture will bring less from more. New passive solar cooking and heating systems and no dig, no pesticide, no fertiliser, no machinery agriculture using systems theory to work with natural flows of energy will bring about huge innovations in the billion or so peeps who are left in 100 years.

  8. meld on Mon, 24th Feb 2014 3:13 pm 

    End of the day if it’s a choice between eating or Ultra HD TV, 3d printing and apps that make farty noises I’m pretty sure where my money is going.

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