One Deep Cause of the Financial Crisis

A major underlying cause for the financial crisis has been unexpected and repeated failures in nonfinancial innovation over the past ten years. These disappointments, in the aggregate, undercut the long-term growth rate, and gradually dragged all those leveraged bets into the red.

The technological failures continue, unfortunately, as per this story in this morning’s NYT:

The era of personal genomic medicine may have to wait. The genetic analysis of common disease is turning out to be a lot more complex than expected.

Since the human genome was decoded in 2003, researchers have been developing a powerful method for comparing the genomes of patients and healthy people, with the hope of pinpointing the DNA changes responsible for common diseases.

This method, called a genomewide association study, has proved technically successful despite many skeptics’ initial doubts. But it has been disappointing in that the kind of genetic variation it detects has turned out to explain surprisingly little of the genetic links to most diseases.

Growth runs on successful technological innovation, which translates into economically compelling products and services. The massive spending on healthcare research in recent years has produced enormous gains in scientific knowledge—and a relatively paucity of “Big Things.”

I’m almost ready with my next post in the “reverse Black Swan” series which bears on this question.

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