"Capitalism Without Capital" by Jonathan Haskel

We hope this book makes the case that those strategies that go with the grain of the long-run rise of intangible investment, such as those we set out here, are more likely to secure prosperity than those that go against it.

Firms using intangibles become more authoritarian; those generating intangibles will need more leadership.

As economies become increasingly intangible-intensive, esteem inequality rises as psychological traits like openness to experience become more important.

On considering what should be taught in schools: we should be somewhat skeptical about our ability to predict what skills the economy of the future needs and our ability to teach them.

More worrying is the use of innovation as an excuse when the value-for-money procurement fails ("we lost money, but we tried something new!").

The kinds of personnel wo are goo at getting value for money will often be different from those who are good at fostering wild breakthroughs.

Using procurement to encourage innovation involves a risk of failure.

When US military funded the development of the semiconductor industry in the '50s, they didn't just fund R&D. By acting as a lead customer, they effectively funded America's businesses to invest in intangibles needed to produce and sell chips.

On spillover effects from intangible investments in university research: the conditions in the local area had to be conducive to absorbing the research.

On the difficulty that businesses face in making intangible investments: This leaves government as an investor of last resort.

Once tax breaks for venture capital get beyond a certain level, they tend to encourage dumb investment; since the entire point of venture capital is smart investment, very large tax breaks are self-defeating.

Because companies can claim tax relief on interest payments but not on the cost of equity, debt is cheaper than equity for any given level of risk.

The more reliant the economy is on intangibles, the more the economy will lose out by restricting the opportunities for intangibles to cross-fertilize.

Assiduous: Show great care and perseverance
Fructify: To bear fruit or become productive

Vocabulary mega-boost!

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Good public policy should be just as assiduous about creating the conditions for knowledge to spread, mingle, and fructify as it is about creating property rights for those who invest in intangibles.

Because intangibles often have valuable synergies, they rely on norms, rules, and standards about how to bring them together.

In some cases, the potential productivity gain from synergies is sufficiently strong that there is a good case for weakening rather than strengthening IP rights.

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While it encourages investment by constraining the spillover effect, it hampers broader productivity gains by also limiting potential synergies. This is a real tension.

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A time-honored way to encourage investment in intangibles is to make rules to allow people and businesses to own them.

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Isaac Su

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