What the Wright Brothers Taught Us About Government Innovation

“Human flight by a machine will occur between one million and ten million years from now,” estimated the New York Times on October 9, 1903. Coincidentally, on that very day, Orville Wright wrote in his diary, “We started assembly today.”

Ten weeks later, the Wright Brothers flew!

The New York Times mistaken prediction was prompted by a spectacular failure. Two days previously, Smithsonian scientist Samuel Pierpoint Langley attempted to launch an aircraft from a modified houseboat on the Potomac River. It fell to the water like a brick.

After repeated efforts and modifications, he gave up on aviation all together.

It is estimated that Langley spent some $70,000, including $50,000 contributed by the US government in the production of his prototype. The Wright brothers took off nine days later, having invested a total of $1,000 of their own money which included travel from their home in Dayton Ohio and Kitty Hawk.

Langley was one of the most prestigious scientists of the time; the Wright Brothers were high school graduates who ran a bicycle shop.

Many lessons can be learned from this chapter of history, but two stand out:

  1. When government attempts to pick winners in the private sector (the emerging technologies and innovators), the government tends to get it wrong
  2. Individual initiative – even from the most un-tutored innovators – is responsible for the innovations that vault the economy and even our quality of life into new, significantly better dimensions.

There really seem to be two economies. One is vibrant, entrepreneurial, risk-taking, innovating; we call this the private economy, which is epitomized by everything from the Wright Brothers to the Apple Watch. This is a world where incentives matter, and where financial and human capital flows to areas of superior return. It’s a virtuous cycle: more innovation yields greater rewards, which encourage even more innovation.

The other economy is that of government attempting to solve the same problems entrepreneurs face with regulation, laws, taxes, borrowing and re-distribution as their tools. They often have the unintended effect of hindering progress, not helping it. One example: after huge investment in Langley’s flight experiment, the government refused to buy the Wright Brothers airplane on several occasions. *

The government has a track record of falling behind the curve. They never act in anticipation – rather they react to what has happened. Yet we’re told day in and day out about the next greatest solution proposed by the goons on Capital Hill. The ensuing bickering receives more airtime on news networks than it deserves, ultimately drowning out ideas proposed in the private sector.

That’s one of the reasons we encourage our clients to ignore the media noise. We sort through the babble in an effort to find news meaningful to you. So many of our plans fall back on a simple principle – stay the course. It’s our job to remind our clients of this every time the outlook gets rocky.

That is what we at Prosperion do – listen, develop a personalized financial plan, with investment strategy that will help you to pursue your goals and objectives. We are excited about the future, excited about the innovators that power our economy, our country and our world forward. We welcome a conversation about your future.

Thank you for being a client of Prosperion Financial Advisors.

Steve Booren

Steve Booren

Steve Booren is the Owner and Founder of Prosperion Financial Advisors, located in Greenwood Village, Colo. He is the author of Intelligent Investing: Your Guide to a Growing Retirement Income and a regular columnist in The Denver Post.

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The opinions voiced in this material are for general information only and are not intended to provide specific advice for any individual, and do not necessarily reflect the views of LPL Financial.

Sources:
Inspired by Nick Murray 6/2015 Which Economy are your worried about?

*The Wright Brothers – David McCullough