Nobody wants geniuses

or inventors

From a comment on Rohit Krishnan's Strange loop cannon I made a few months ago:

No one wants geniuses or inventors enough to pay them a living. Who wants to hire people smarter than they are, particularly disagreeable people who will tell the boss that he's wrong and make him feel inferior? Geniuses don't like being subordinated to midwits, either.

Nor is independent inventing a viable path. If patents were as easy to get as copyrights, or even just as inexpensive, I'd have hundreds at least, but anyone smart enough to come up with many good inventions is too smart to play the game, the "incentives" for innovation are in fact nothing but severe impediments, even punishments. It's about the same penalty as a first-time DUI to file for a patent. Patents are around $10k, which only gives a license & duty to sue infringers, suing will cost about $1M - $2M per case, and has a poor win rate, at that. At least 98% of patents never earn out their filing fees, let alone attorney's fees.

The number of inventors that make a living at inventing is pretty close to zero, at least two orders of magnitude lower than the number of patent attorneys. There is no market for patents, let alone inventions.

Every invention is competing not only with every other method of doing the same thing that has ever been published, and specifically against the ways that market incumbents have sunk capital into, capital which will be stranded by innovation, but also against every potential way of accomplishing the task that might be conceived before the invention has a chance to earn out the investment required. The transaction costs for what sporadic patent deals do occur are far more than the inventor can expect to get. Any valuable patent will get reexamined until it's invalidated. (The still ongoing 33-year legal saga of Mike Doyle of Eolas, inventor of the browser plugin in 1993, as well as cloud computing on the web was what finally cured me of any desire to patent. Mike was also a fellow member of Ultranet, the Mega Society East mailing list in the early 2000s.)

And the worst thing is, even if you don't patent, but instead publish an invention, you effectively not only lose all rights, you taint the IP so that no one can seriously invest in it -- it's unpatentable (worse, the patent will probably issue then get invalidated after expensive litigation) and not a trade secret. The smart move for inventors is to keep valuable inventions secret, even if they can't develop them, so as not to spoil things for someone who could make a go of the idea later.

Which brings me to another problem, which is that a good inventor can come up with a dozen or more inventions per month, culled from hundreds of ideas, but the system has no real division of labor to allow inventors to just invent - no, to profit from any idea requires all the time and money investment and the traits and skills of a successful startup founder, which are mostly incompatible with such inventors' personality types. Even when such a rare Musk-monster is to be found, even when he isn't crushed by one adversary or another and manages to get access to capital on good terms -- there is only enough time in life to implement a very few innovations; spending the time on entrepreneurial / corporate / social BS instead of on the mind-play of invention costs that inventor -- and society -- nearly his whole output.

That comes far from exhausting the problems with the system, for instance the fact that universities usually claim rights to inventors' work, even for undergraduates who are paying the school. Businesses also regularly claim the right to legally take employees' patent IP without any compensation, even when not developed with company resources or at company direction. Inventors are either shut out of universities and large and tech companies, or they are exploited.

There is a systematic oppression of intelligence -- which is to say, of people with a literally exponentially higher likelihood of solving hard problems. (citations on Rasch measures omitted - see my second post) The correlation between income and IQ is less than 0.3 overall, and nearly 0.0 for intelligence in the top 10%. Those with top 1% intelligence are more likely to have financial hardship than average people.¹

This is not because smart people aren't more productive, Schmidt & Oh's 2016 update to Hunter & Schmidt's classic paper (which was perhaps the first meta-analysis) found IQ validity for predicting job performance is 0.67, vs. e.g. 0.0 for experience, 0.2 for education, 0.3 for biography. (Table 1, p.71). IQ is in fact the best single predictor of job performance, but it is not rewarded in the market, costing at least $3T/yr. in lost productivity in the US alone.²

Mispriced brains are the biggest economic inefficiency I know of. Putting people with exceptional intellectual ability in control of investment and innovation is the optimal strategy for both profits and doing long-term good.

1. "Do you have to be smart to be rich? The impact of IQ on wealth, income and financial distress" by Jay L. Zagorsky (2007, using NLSY data) PDF link.

2. “The Validity and Utility of Selection Methods in Personnel Psychology: Practical and Theoretical Implications of 100 Years of Research Findings” Schmidt & Oh, Working Paper, October 2016 0 PDF link The economic analysis depends on several factors, each of which has a range of plausible values, but I calculate the increase in net present value directly attributable to switching to hiring by IQ plus an integrity test to be between $100T and $200T. That’s $300k - to $600k per capita, or about triple that per household. Indirect effects such as from increased growth rates could be even greater.