Land of the Dull

08.27.13

Is America Out of Ideas?

Taco Bell added some spice and declared the creation of a new taco. Obama got a second dog ... identical to his first. Even Apple may have hit a wall. Daniel Gross wonders if America is plumb out of ideas.

Is this the month America officially ran out of ideas? It sure seems like it.

Brainstorming, developing, and commercializing new ideas is vital for the American economy, and for our society at large. Earlier this summer, the government’s bureaucrats revised—upwards!—their estimate of the size of the economy based in part on the value of ideas generated over time. Sure, we have prodigious natural resources in this country. But at the end of the day, it’s the quality and quantity of ideas—content, patents, technology, new business models, companies—that will propel growth. Alas, there are signs that the stream of idea creation is dwindling to a trickle this August.

Exhibit A: Hollywood’s next brilliant idea seems to be making another Batman movie, only this time starring ... Ben Affleck?

Exhibit B: Miley Cyrus’s cringe-inducing performance on the MTV Video Music Awards on Sunday night.

But we have problems more serious than poor casting decisions. Fast-food innovation is a favorite topic around these parts. It’s a core American industry and speaks to many of our strengths, particularly branding and industrializing food. I’ve written about Taco Bell, whose last great innovation, Doritos Locos Tacos, may have lead to the creation of as many as 15,000 jobs. But this month it followed up with a pale imitation: the Fiery Doritos Locos Taco. Look, putting the mélange of ground beef, lettuce, and cheese inside a giant Dorito was brilliant, out-of-the-box thinking, a game changer, a stroke of genius. The new idea of making the said Dorito shell spicier and adding a splash of lime is derivative at best.

If you’re simply changing the flavor of the shell and not doing much to reengineer the stuffing, you’re not really moving the ball forward. Which seems to be what the ultimate American idea factory—Apple—is doing. Over the past decade, Apple’s facility with ideas has turned the also-ran computer maker into a device, content, app, and software company worth $461 billion. But Apple may have hit a wall. Its stock has slumped over the past year, off by nearly one third. Absent a big surge in the final quarter, 2013 could be the first down year for the company’s stock since 2008. And what’s Apple’s next big thing? A golden iPhone 5s. In other words, a phone that is quite similar to the one already on the market, but with a shimmering shell. As if on cue, Paul Krugman’s column on Monday wondered whether Apple today is in the same situation as Microsoft in the 1990s—a behemoth out of new ideas and not well equipped to thrive in the evolving world. “Anyway, the funny thing is that Apple’s position in mobile devices now bears a strong resemblance to Microsoft’s former position in operating systems.” Maybe Apple should just call its new product the Fiery iPhone 5s.

“But even as we focus on boosting the quantity of ideas generated, we have to keep in mind that quality matters, too.”

Yes, the technology world is developing apps and devices at a furious pace. But by one measure, we’re just not developing idea-based companies the way we used to. Trends in initial public offerings of stock are great proxies for the level of enthusiasm about new ideas. The number and value of initial public offerings is lower than in the past decade. So far this year, IPO proceeds are running at a rate 7.5 percent below that of 2012, even though the overall stock market remains buoyant. And many are coming from old economy firms. The Wall Street Journal noted Monday that technology firms account for only 16 percent of IPOs this year. “By that measure, 2013 could be the second-worst showing since at least 1993.” So far this year, there have been 22 tech IPOs, which raised $3.2 billion between them. By contrast, Facebook alone raised $16 billion in its May 2012 initial public offering.

Of course, to create and develop new ideas, you have to invest in them. Talk may be cheap, but great ideas are expensive. And America simply isn’t investing in the creative process the way it used to. The Battelle Memorial Institute, in its year-end summary on global research and development, notes that the U.S. is losing its global edge. R&D spending is failing to keep up with inflation, and, as a result, is falling in real terms and as a share of the economy. In 2011 the U.S. spent $412.4 billion on R&D, equal to 2.7 percent of GDP; for 2013, the figures are expected to be $423.7 billion, or 2.66 percent of GDP. In 2011 America accounted for 29.6 percent of global R&D spending; this year it will account for just 28.3 percent. It’s gotten so bad that columnist George Will lamented the sequester’s impact on National Institutes of Health research.

In Washington, nobody has any idea how to avert a repeat of the sequester. And nowhere is the decline in ideas more evident than among congressional Republicans. From 2009 through 2012, Capitol Hill Republicans were highly imaginative in their efforts to stymie President Obama. Unprecedented levels of filibustering. Negotiating over health care and then refusing to back a deal. Staging riotous town meetings to protest the Affordable Care Act. Fomenting a crisis over the debt ceiling that led to big budget cuts and the sequester. These were all new and confounding ideas. But now they’ve run out of steam. In the House, Republicans resort, almost weekly, to the same futile gesture. They vote to repeal Obamacare, and then do it again, and again, and again. The latest new idea Republicans seem to have is floating the prospect of impeaching a Democratic president in his second term, which is hardly a new idea.

President Obama, for his part, isn’t exactly a font of new thinking. Sure, he’s trying to reinvigorate his second term by talking up new policy proposals on immigration and college affordability. One classic way of trying to change the narrative and making yourself more likable in Washington is by getting a pet. Obama already had Bo, a neutered male Portuguese water dog. So what does he do? He goes out and gets another dog of the exact same breed.

Of course, there is constant innovation in America. People are still filing for patents at a healthy clip. The creative classes are alive and well. In their garages and shared workspaces, people are designing new products, writing new music, even coming up with new dance moves. The government and corporations should be supporting such endeavors. And so we shouldn’t lose heart.

But even as we focus on boosting the quantity of ideas generated, we have to keep in mind that quality matters, too. After all, somebody somewhere thought that Miley Cyrus plus twerking was a great idea.