Sunday, January 31, 2010

The first principle of Invention

Greg Mankiw, professor of economics at Harvard and the author of one of the most popular economics blogs, cites Ten Key Principles of Economics. The first principle includes this piece of common wisdom:

There is no free lunch. There is always a trade-off.

Thanks to prof. Mankiw, I can now formulate the first principle of Invention:

A breakthrough invention must violate the first principle of economics, i.e. break through a commonly accepted trade-off.

For example, when everybody thinks that a good reliable car must be expensive, Henry Ford comes up with a system that allows him build inexpensive reliable cars. When everybody thinks that an inexpensive reliable car must be black, GM and DuPont come up with a color enamel that makes it possible to have a car of any color. When everybody thinks that to provide a wide selection of books you have to have lots of retail shelf space (remember Barnes&Noble), Jeff Bezos of comes up with a way to sell an almost infinite amount of books with zero shelf space. When everybody thinks that web and application experience on mobile phone must include a trade-off between the number of apps or pages and number of clicks through complicated menus, Steve Jobs of Apple comes up with iPhone that lets people access lots of information through a simple intuitive touch interface that need no menus whatsoever.

Finally, when everybody thinks that green energy must be expensive, somebody has to invent a way to make it cheap. After all, sun and wind are free, aren't they.

tags: trade-off, course, example, economics

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