This weekend I finished reading Matt Ridley’s excellent How Innovation Works, which makes a compelling case in favour of leaving innovation largely to the free market, rather than having it guided and supported by government.
Ridley is a great storyteller and appears to have a story to illustrate every point. For example, Ridley illustrates the general superiority of private-sector-led innovation by describing the UK Government’s experiment in the 1920s whereby it commissioned both a private sector company and a government ministry to develop an intercontinental airship. The Vickers-built R100 was a well-built airship which flew to Canada and back without incident. In contrast, the R101 was built by the Air Ministry, was afflicted by a range of problems, and tragically crashed in France in October 1930 on its maiden overseas trip, killing 48 of 54 people on board, with the Air Minister Lord Thomson among the dead.
Apparently, the notoriety of the R101 airship is due partly to author Nevil Shute, who wrote about it in his autobiography The Slide Rule. Shute, who spent his last decade in Australia, also wrote On the Beach, the 1959 film adaptation of which incidentally contains some brilliant black-and-white footage of empty Melbourne CBD streets after the fallout cloud eventually reaches the city and kills all the inhabitants. I remembered that scene as I watched the news reports from Melbourne during the stage 4 restrictions to combat the COVID-outbreak.
In How Innovation Works, Ridley brilliantly showcases what may be considered as rather prosaic innovations which turn out to be unlikely heroes, such as corrugated iron, which sits atop many Australian houses. Ridley writes (on p. 161):
By 1885 Australia was the largest market for the stuff in the world, and in the 1970s it was an Australian firm, BHP, that patented Zincalume steel…Recently, corrugated iron’s place in Australian history has made it a trendy material for architects and artists: the opening of the Sydney Olympics included a specially-composed ‘Tin Symphony’ in its honour, while the artist Rosalie Gascoigne used the material in her sculptures.
Ridley’s book contains some other fun facts relevant to Australia. For instance, Ridley discusses the domestication of dogs (and other animals) as an important innovation, and in his discussion of how dogs came from wolves, he observes (on p. 223):
Dogs made it to Australia with one wave of people, probably not the first wave, and re-wilded themselves as dingoes.
Ridley’s breadth of knowledge and research is astounding, and there are plenty of fascinating facts and stories like those I’ve mentioned above sprinkled throughout the book.
How Innovation Works should be read by anyone working on industry and innovation policy. It contains a strong critique of current intellectual property laws and regulations more broadly which are stifling innovation. In his conclusion, Ridley writes (on p. 373):
Somehow we must find a way to reform the regulatory state so that while keeping us safe it does not prevent the simple process of trial and error on which all innovation depends.
Innovation is the child of freedom and the parent of prosperity.
This book gets five stars from me, and if you haven’t read it yet I fully encourage you to do so soon.
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