INNOVATION has been accelerating since the invention of the steam engine, and the pace is increasing. Consider the telephone: it took 56 years for Alexander Graham Bell's invention to reach half of US households; by comparison, smartphones took seven years to hit the same adoption rate.
Innovation could be defined as the application of invention (think about the 12-year gap between the accidental discovery of penicillin and the first patient treatment with penicillium). Today's low-growth disinflationary period mirrors the great deflation of 1873-96, a period of high innovation as entrepreneurs sought to lower costs and widen markets.
Why should investors care about innovation? Technological change...
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