BusinessWeek posted a Q&A with their chief economist Michael Mandel, who has just released Rational Exuberance: Silencing The Enemies of Growth And Why The Future Is Better Than You Think (excerpt here).

Mandel’s thesis: There’s a good chance we’ll get another tech-driven boom in the U.S., and that’s a good thing, even though such tech booms are turbulent for employees and even though technology in general makes economists uncomfortable. In his book (which I have not read) he talks about the relationship between growth, technology, financial markets, and politics. He says that politicians pay very little attention to technology and that neither Kerry nor Bush has a well-developed innovation policy. Having seen both Kerry’s and Bush’s innovation policy (well, technology policy) statements, I’m inclined to agree there.

Mandel defines “exuberant growth” as growth that’s driven by technological change as opposed to growth by capital accumulation alone. His vision of what a “real growth policy” would look like:

-- Better funding for R&D
-- Better funding for education of scientists and engineers
-- A general firming up of the innovation infrastructure
-- Maintenance of political support for technological change (which he defines as “helping people understand that when technological change comes, it’ll be fair, transparent, and that they’ll have some measure of security.”)

That last item would seem to be a very touchy thing. Is the government supposed to help people understand this – whether it turns out to be true or not – or is the government supposed to make this happen? It seems impossible for any government to be able to get far enough in front of a major technological change to make sure that there are policies in place for fairness and security. What constitutes fairness and security in terms of any particular technology probably won’t be known until after a significant mass of people adopt the technology.

This reminds me of the difficulties of being able to predict disruptive innovation. If an innovation is truly disruptive, it’s extremely difficult to predict a market for it. It will create its own market. If a disruptive technology, one big enough to fuel “exuberant growth,” comes along, it’s probably not going to be very predictable either. It won’t be “fair, transparent, and secure.” It’ll have to be put out there in all its wildness until it makes its place in our market-driven economy.