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Green Economy recession cause

Published on October 31st, 2011 | by Guest Contributor

10

Great Recession? My Fault.

October 31st, 2011 by  


recession cause

From one of the 400.
To the other 399.

The great recession is my fault.

This was the news flash that dawned on me in January this year.

Ok, its not just me, but it is the fault of somewhere between just 0.008% of the US population on the high side and 400 American individuals on the low side. It’s us, the tiny percentage of all Americans that are prolific inventors.

As an inventing nation we are #1 with more that 60% of the patents worldwide.

With that much raw material, we should be the manufacturing center of the planet, No?

What if some percentage of American inventors suddenly picked up a new trait?

Nationalism.

What would our manufacturing base look like then?

Since the 70s, there has been a search for why America’s great middle class of manufacturing has been destroyed to be reconstituted by our trading partners with their citizens.

Is it the fickle US Consumer that insists on buying the lowest cost product? No.
Greedy US business owner that ships the jobs to the lowest bidder? No.
Shortsighted US board that demands the last bit of margin from its executives? No.
Passive US shareholders that demand the best return and don’t care how? No. No. No…

It is a fairly unique trait of American inventors that we do not care where anything gets made. Once we conceive of it, we have not considered it our job what happens next. Most inventors I know are in it for the accomplishment of creating something unique, something that did not exist before.

In my circles I am considered a bit materialistic because I am part of the less than 1% of prolific inventors that actually create companies. Mostly, we just let someone else figure out where to create the jobs. Even in my case, the business culture strongly suggests “let the investors choose where to build it, it’s their money.”

A patent can only be issued to a human. For 20 years, it conveys the exclusive right to: make, have made, sell, or use the patented invention to that individual.

At that moment, between conception and disclosure, 60% of all the patents on earth are exclusively American.

But then the moment passes. Over 85% of all American patents are issued to employees of US enterprises and virtually every enterprise requires, as a condition of employment, that the inventor execute an “invention assignment agreement” conveying all rights in the invention to the Enterprise.

At the moment that all rights pass to the Enterprise, competitive forces dictate that the invention MUST be built at the lowest labor and capital costs. Period. If the inventor does not decide, the market will.

What if some American inventors picked up a new trait?

What if American inventors became, Nationalistic.

What if the standard form of invention assignment was that for the first 7 years of an invention’s existence, it must be Made in the United States, by Americans.

The free market still functions. It is just that for the first third of an invention’s existence it must be made in the US.

What happens to an invention is an individual human choice.

For our country to get back in the game, no treaties must be negotiated, no laws need be changed, no meddling in the markets.
It may be simply each American inventor making a choice, for the sake of the other 99.992% of Americans that depend on them. The 99.992% of Americans that created the opportunity for each inventor to practice their gift.

Would US enterprises go along with an inventor whose position was: “Make anything I conceive of in the US for the first seven years”? I think yes.
It is a matter of supply and demand. The very limited supply of prolific inventors and the demand for the enterprise value they create.

In 1995, Narin and Breitzman published “highly prolific inventors.” In it, they state, “One, two or three individuals are really driving their laboratory…companies should make effort to retain and nurture these key contributors.”

In 1998, the USPTO published a paper listing all the inventors worldwide that had accumulated 70 or more patents between 1988 and 1997. 40 were Americans. (Source: PROLIFIC INVENTORS RECEIVING UTILITY PATENTS 1988 – 1997, 1998 By US Patent & Trademark Office)

In 2010, ICR published a paper that set the threshold for prolific inventor at 15 patents (5 times the average) between 1975-2002. The paper counted just 26,279 Americans (0.008% of the population of the US). (Source: PROLIFIC INVENTORS: WHO ARE THEY AND WHERE DO THEY LOCATE? EVIDENCE FROM A FIVE COUNTRIES US PATENTING DATA SET, Working Paper No. 14/2010)

The same paper describes: “The distribution is skewed to the right with a long tail (but rather thin).” “The main characteristic of ‘long-tailed’ distributions is that a high-frequency or high-amplitude population is followed by a low-frequency or low-amplitude population, which gradually ‘tails off’ asymptotically.” Prolific inventors are in the tail of the distribution of all inventors.

My own calculations based on publications are that, if my 43 were the bar between prolific and ordinary, just 400 Americans would reach that level between 2001 and 2011.

What I am proposing is not new. It an updated version of Henry Ford’s “Fordism.” In my version:

“If a good depends on labor for its demand, the labor that produces the good must be capable of acquiring the good.”

This presents a simple test: If none of the people who make the goods for an economy can afford to buy the goods they make, there will ultimately be no demand and the economy will fail.

-QED (thus it is proven)

Kent Kernahan
Managing Partner, Locally Grown Power 
http://www.linkedin.com/pub/kent-kernahan/4/b50/516

Creative Commons License
Great Recession? My Fault. by Kent Kernahan is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Permissions beyond the scope of this license may be available at kent@kernahan.org.

Image via Students for Liberty


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