Bring back the confidence in the future and the joy of life

From The Economics of Creativity and Innovation by David P. Goldman.

If Phelps is right, we are in deep trouble. What economists call endogenous innovation arises from curiosity, love of adventure, the desire for self-fulfillment, and ambition, he argues. Yet the generation now entering the workforce is the least risk-friendly in American history. “Likely due to their risk aversion, iGen is actually less likely to want to own their own business than previous generations: only 30% of high school seniors in 2016 believed that being self-employed was desirable, down from 48% in 1987. Instead, iGen wants stable jobs in enduring industries,” argues Professor Jean Twenge of the University of California San Diego.

America used to have a spirit of adventure. The Apollo program of the 1960s and the defense-led digital revolution of the 1970s presented a surfeit of new inventions to a generation primed for great transformations. The Reagan tax cuts directed a floodtide of capital into new companies. America enjoyed the longest peacetime expansion in its history.

If there is one important element missing in Phelps’ account, it is the source of the inspiration that elicits creativity and innovation. JFK’s Moonshot and Ronald Reagan’s Strategic Defense Initiative provided a bully pulpit to summon Americans to do great things. The rousing rhetoric, moreover, was backed by substantial federal support for research and development. The federal development budget under Reagan exceeded 1% of GDP; today it is a third of a percent of GDP. More than anything else, America requires leadership that rouses our desire to create and provides the resources to sustain it.

I would wager that the plunge in totality fertility rates are also related to this loss of cultural confidence and aversion to risk.  The culture of doom and victimhood is inherently toxic and becomes self-fulfilling.