Creativity does not pay

(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: lawrence@krubner.com

Interesting:

For one thing, most new ideas are bad ones: the replication crisis in academia reminds us of this. Creativity doesn’t arise from a high or spark of genius, but from the dedication to keep going through the failures until you find the success. Thomas Edison, one of the most creative capitalists of all, said: “I have gotten a lot of results! I know several thousand things that won’t work.” That was why he claimed that “genius is 1% inspiration and 99% perspiration.” In the same spirit James Buchanan used to advise graduate researchers: “keep the ass in the chair.”

In this context, it’s apt that Andrew should mention Richard Branson “’birthing’ Virgin Galactic in a Necker Island hot-tub under the stars.” The important fact about Virgin Galactic is that it has so far failed to achieve what the USSR managed in 1961: putting a man in space. Grunt work matters at least as much as “birthing.”

Secondly, creativity is not the road to riches. As William Nordhaus famously pointed out, innovation isn’t often very profitable. And where it is, it is thanks to intellectual property laws and to monopoly power rather than to innovation itself. As Warren Buffett said, profits require economic moats – barriers to entry. The digital age has much in common with the feudal age: in both, wealth comes from the power to exclude others. Where this power is lacking, even the greatest creative talents find life “monetarily impossible.”

Thirdly, the binding constraint upon creativity is not so much our minds as our institutions. One of these is the intellectual property system. Another is access to finance. Danny Blanchflower and Andrew Oswald have shown that it is this (pdf), rather than character traits, that makes an entrepreneur – thus vindicating Kalecki’s claim that “the most important prerequisite for becoming an entrepreneur is the ownership of capital.”

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