Innovation is called "Creative Destruction" for a reason: it relentlessly destroys business models built on older technologies. If you see a major wave of innovation coming, this means a major destruction is underway somewhere else. People who happened to be on the wrong side of innovation are going to lose big in the process of restructuring. In his book The Great Stagnation, Tyler Cowen argues that America has been stagnating (since the early 1970s) because there was not enough innovation. I think it is a bit misleading.
There's been tons and tons of innovation, but, as a side effect, there's been tons and tons of destruction. For example, the revolution in container shipping of the 1960s enabled transfer of manufacturing jobs first to Europe, then to Asia. Similar creation-destruction cycles happened in communications, capital and knowledge transfer. As a result, American workers today have no productivity advantages over their foreign counterparts in terms of education, capital equipment, software, communications, business methods, government institutions, and etc. Long-term population trends (the baby boom related growth) created demand for housing that masked the ongoing destruction of competitiveness. Now, when the housing bubble is gone, the lower middle class has nowhere to go. Even the "green jobs" program turned into an employment disaster because it was more efficient to create those jobs elsewhere (the Solyndra vs Chinese manufacturers case).
Innovation by itself is not going to pull the country out of this hole. What we need is long-term program of innovations that do not result in the import of destruction.
tags: creativity, economics, trends, education, system, model, battle