Weekend reading: Ideas to change the world

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 (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:

Source: Vanguard

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 in fostering international collaboration since 2016, 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

The hosepipe ban approach to big savings – Monevator

From the archive-ator: a mortgage is money rented from a bank – Monevator

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

£1 buys $1.15. Are we headed for parity with the US Dollar? – This Is Money

UK government wins pension fund legal challenge over change to RPI [Search result]FT

Leasehold scandal: thousands of homeowners to receive ground rent refunds – Which

Festival of Brexit‘ attracts 238,000 visitors, versus 66 million projected – Guardian

Manager of Blue Whale fund says “most active fund managers should quit” [Search result]FT

The Great Resignation forced US companies to order a record number of robots – Fortune

The return outlook for bond and multi-asset investors has improved – Vanguard

Energy crisis mini-special

Switching to green fuel as urgent as Covid jab, says energy boss – BBC

Eye-watering energy costs – FirevLondon

UK households are worse hit by energy crisis in Europe, says IMF – Guardian

Lights out for Britain’s industrial heartlands – This Is Money

Britain in a mess, as ruinous energy bills meet austerity – Guardian

Will Joe Biden’s gamble on Big Oil pay off in leveling gas prices? – Guardian

Best appliances to save cash when cooking – Guardian

Products and services

New lender Perenna has been granted a licence to launch a 50-year mortgage – Which

Investec launches one-year fixed rate savings deal paying 3.3% – This Is Money

Open a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor

What is wrong with Inverse ETFs? – Factor Research

Cheaper alternatives to Sky TV and Virgin Media – Be Clever With Your Cash

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

Homes for sale worthy of Grand Designs, in pictures – Guardian

Comment and opinion

All the personal finance books are wrong – The Atlantic

Workers also face sequence-of-returns risk – Morningstar

Is it ever a good idea to stop paying into your UK workplace pension pot? – Guardian

Inflation, debt costs and Truss’s pledges risk £60bn UK budget hole [Search result]FT

The tiniest violin for buy-to-let YouTubers – The FIRE Shrink

Five uncomfortable facts about investing – Banker on FIRE

Don’t fear the reaper – Sex Health Money Death

Time to take your shot to get rich – The Motley Fool

Why we collect – Humble Dollar

Crypt o’ crypto

How did crypto go mainstream? [Podcast]Which

More than half of all Bitcoin trades are fake – Forbes

Naughty corner: Active antics

Most of us are secret momentum investors – Behavioural Investment

Risk versus uncertainty and investor behaviour – The Evidence-Based Investor

Higher inflation is creating an opportunity in emerging markets [PDF]Vanguard

The Case for Long-Term Value Investing: a review – Enterprising Investor

Kindle book bargains

I Will Teach You To Be Rich by Ramit Sethi – £0.99 on Kindle

How To Own The World by Andrew Craig – £0.99 on Kindle

Quit Like A Millionaire: No Gimmicks, Luck, or Trust Fund Required by Kristy Shen – £0.99 on Kindle

Way Of The Wolf by Jordan Belfort – £0.99 on Kindle

Environmental factors

One in five new cars will have zero emissions by 2023 – This Is Money

How melting glaciers fueled Pakistan’s fatal floods – Vox

Museum collections show bees stressed by climate change – Imperial College

The tide turns towards renewable aquaculture gear – Hakai Magazine

Fearful cyclists in the UK are giving up riding their bikes – Guardian

Financial markets are responding to climate risk [Research]Alpha Architect

Americans keep moving to where the water isn’t – Vox

Off our beat

The most important forces shaping the world – Morgan Housel

Quiet quitting: the workplace trend taking over TikTok – BBC

Stable diffusion is a really big deal – Simon Willison

The trait that ‘super-friends’ have in common – The Atlantic

One data point can beat Big Data – Behavioral Scientist [h/t Abnormal Returns]

How America innovates [PDF, research]Vanguard

Amazon’s Lord of the Rings epic divides Tolkien fans – Guardian

And finally…

“Mild success can be explainable by skills and labor. Wild success is attributable to variance..”
– Nassim Nicholas Taleb, Fooled by Randomness

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Are we about to see a GDP-boosting wave of innovation gains? Plus the rest of the week’s good reads…
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