What caught my eye this week.
There hasn’t been much to cheer about recently, so I especially enjoyed Vanguard’s new paper How America Innovates [1] (research, PDF).
In it the authors track how scientific and technical innovation are diffused through different fields, which causes a chain reaction of further innovation.
And they argue we’re at an inflection point where several key discoveries are finally making their way into commercial applications.
This table simplifies how ‘innovation shocks’ in one field are causing ripples of progress in others, to yield new areas of research and application:
[2]
Source: Vanguard [1]
The authors conclude it’s all good for productivity – and for the American economy generally:
We now expect U.S. GDP per capita growth to average 2.0%–2.5% from 2020 to 2030, a pace we haven’t seen in decades and a positive development for wage growth, asset returns, and economic opportunity (Davis et al., 2020).
This productivity boom has been bubbling under the surface following the global financial crisis, supported by research in less visible upstream disciplines that needed time to permeate downstream and find their commercial utility.
And while the focus is on the US, there’s reason to be hopeful elsewhere too.
An additional thread in the paper is how distant researchers are more effectively collaborating, and how innovation is thus more geographically diversified.
Globalization and the Internet get the credit, and though the UK has been going backwards [3] in fostering international collaboration since 2016 [4], Britain remains an innovation powerhouse.
What’s more, productivity-boosting commercial applications will become available globally, regardless of nation state blundering.
All together now
Given the culture wars blighting all social media feeds, I was also pleased to see the empirical data showing more diverse teams (by gender and ethnicity) have coincided with greater innovation.
Getting more and different kinds of people doing great work isn’t just about virtue signalling. It means more and varied capable brains coming up with the ideas that we all benefit from.
I’m very interested in innovation, not least as an active investor. But with a shrinking and ageing population, productivity gains are something everyone should care about. Further improvements in wealth and our standard of living – not to mention staving off climate disaster – depend on it.
Summer is winding down. Enjoy a great – but not too productive – weekend.
From Monevator
SPIVA: the evidence against active funds – Monevator [5]
The hosepipe ban approach to big savings – Monevator [6]
From the archive-ator: a mortgage is money rented from a bank – Monevator [7]
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1 [8]
£1 buys $1.15. Are we headed for parity with the US Dollar? – This Is Money [9]
UK government wins pension fund legal challenge over change to RPI [Search result] – FT [10]
Leasehold scandal: thousands of homeowners to receive ground rent refunds – Which [11]
‘Festival of Brexit [12]‘ attracts 238,000 visitors, versus 66 million projected – Guardian [13]
Manager of Blue Whale fund says “most active fund managers should quit” [Search result] – FT [14]
The Great Resignation forced US companies to order a record number of robots – Fortune [15]
[16]
The return outlook for bond and multi-asset investors has improved – Vanguard [17]
Energy crisis mini-special
Switching to green fuel as urgent as Covid jab, says energy boss – BBC [18]
Eye-watering energy costs – FirevLondon [19]
UK households are worse hit by energy crisis in Europe, says IMF – Guardian [20]
Lights out for Britain’s industrial heartlands – This Is Money [21]
Britain in a mess, as ruinous energy bills meet austerity – Guardian [22]
Will Joe Biden’s gamble on Big Oil pay off in leveling gas prices? – Guardian [23]
Best appliances to save cash when cooking – Guardian [24]
Products and services
New lender Perenna has been granted a licence to launch a 50-year mortgage – Which [25]
Investec launches one-year fixed rate savings deal paying 3.3% – This Is Money [26]
Open a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor [27]
What is wrong with Inverse ETFs? – Factor Research [28]
Cheaper alternatives to Sky TV and Virgin Media – Be Clever With Your Cash [29]
Open an account with InvestEngine via our affiliate link and get £25 when you invest at least £100 (new customers only, T&Cs apply) – InvestEngine [30]
Homes for sale worthy of Grand Designs, in pictures – Guardian [31]
Comment and opinion
All the personal finance books are wrong – The Atlantic [32]
Workers also face sequence-of-returns risk – Morningstar [33]
Is it ever a good idea to stop paying into your UK workplace pension pot? – Guardian [34]
Inflation, debt costs and Truss’s pledges risk £60bn UK budget hole [Search result] – FT [35]
The tiniest violin for buy-to-let YouTubers – The FIRE Shrink [36]
Five uncomfortable facts about investing – Banker on FIRE [37]
Don’t fear the reaper – Sex Health Money Death [38]
Time to take your shot to get rich – The Motley Fool [39]
Why we collect – Humble Dollar [40]
Crypt o’ crypto
How did crypto go mainstream? [Podcast] – Which [41]
More than half of all Bitcoin trades are fake – Forbes [42]
Naughty corner: Active antics
Most of us are secret momentum investors – Behavioural Investment [43]
Risk versus uncertainty and investor behaviour – The Evidence-Based Investor [44]
Higher inflation is creating an opportunity in emerging markets [PDF] – Vanguard [45]
The Case for Long-Term Value Investing [46]: a review – Enterprising Investor [47]
Kindle book bargains
I Will Teach You To Be Rich by Ramit Sethi – £0.99 on Kindle [48]
How To Own The World by Andrew Craig – £0.99 on Kindle [49]
Quit Like A Millionaire: No Gimmicks, Luck, or Trust Fund Required by Kristy Shen – £0.99 on Kindle [50]
Way Of The Wolf by Jordan Belfort – £0.99 on Kindle [51]
Environmental factors
One in five new cars will have zero emissions by 2023 – This Is Money [52]
How melting glaciers fueled Pakistan’s fatal floods – Vox [53]
Museum collections show bees stressed by climate change – Imperial College [54]
The tide turns towards renewable aquaculture gear – Hakai Magazine [55]
Fearful cyclists in the UK are giving up riding their bikes – Guardian [56]
Financial markets are responding to climate risk [Research] – Alpha Architect [57]
Americans keep moving to where the water isn’t – Vox [58]
Off our beat
The most important forces shaping the world – Morgan Housel [59]
Quiet quitting: the workplace trend taking over TikTok – BBC [60]
Stable diffusion is a really big deal – Simon Willison [61]
The trait that ‘super-friends’ have in common – The Atlantic [62]
One data point can beat Big Data – Behavioral Scientist [63] [h/t Abnormal Returns [64]]
How America innovates [PDF, research] – Vanguard [1]
Amazon’s Lord of the Rings epic divides Tolkien fans – Guardian [65]
And finally…
“Mild success can be explainable by skills and labor. Wild success is attributable to variance..”
– Nassim Nicholas Taleb, Fooled by Randomness [66]
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