Daron Acemoglu: evaluation

Transcript context

…But say the Nordhaus paper, which suggests most innovators get only about 2 percent of the returns of their creation — doesn’t that mean the Mincer wage equation doesn’t pick up many of the benefits of cooperation? Right. For the very, very top innovators, there is clearly some externalities. I think the Nordhaus numbers are probably extreme because there’s also a lot of business stealing that’s going on at the top, meaning that when people innovate, they actually take other people’s markets. Google got an amazing value. It’s one of the most valuable companies that human history has ever seen. But some of it came because it actually took the market of other search engines, such as Yahoo or AltaVista. It also created value for its customers, and it’s also been pretty good at capturing that value. But the important thing, again, is those are very exceptional one or two innovations. When you say the average level of schooling increases from 10 to 11, we’re not really capturing that. Some of the people who innovate and capture such values are not the most educated ones, and they’re not educated in the US. One of the great things about US is, actually, we attract those talents, again because of the business environment, because of the institutional environment, as well as the teams that they can form when they come to the US. There’s another paper I’m sure you know, by Casey Mulligan and coauthors, and he even argues maybe having democracy doesn’t matter that much. It affects your political institutions, but if you adjust for demographics, that doesn’t predict your educational spending. If you look at either Chile pre- or post-Pinochet, Spain pre- or post-Franco, other than how politics works, most of the budget doesn’t change much. What do you think of that argument?…

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