Is innovation Slowing the Pace of Innovation?

In a recent speech on Innovation and the Future of Finance, Federal Reserve Board Gov. Christopher Waller spoke eloquently about the role of innovation in society. And while he was focused primarily on the possibilities the blockchain and artificial intelligence bring to banking, he identified – perhaps unintentionally – a deeper issue regarding the limits of technology.

Acknowledging that innovation “generally has a positive connotation” and is “something desirable that we want to foster,” he also reminded attendees at the Cryptocurrency and the Future of Global Finance conference in Sarasota there is “a long tradition of viewing innovation with suspicion.”

This is nowhere more evident than in areas like AI and digital currencies especially considering it wasn’t that long ago when another innovation — mortgage-backed securities — fueled a financial meltdown that would become the Great Recession.

In a world still seeking a return to normality or at least a period of economic calm, the rise of innovative technologies that promise much but have yet to deliver substantive results has given consumers reasons to be suspicious of the “next big thing.”

In fact, we may be reaching a critical mass in the role of innovation in society – particularly in the case of economic innovation.

While ATMs and self-checkouts are the norm these days those technologies are easier to understand and don’t require an appreciation for the technicalities how the machines work.

But innovations like cryptocurrencies and artificial intelligence are altogether different. The nuts and bolts of the blockchain is beyond the ken of most people and the breathless revelations of new AI programs – think ChatGPT and others – is more than a little unsettling as machines learn to do more and more of what was once exclusively a human preserve.

Hesitancy to embrace these innovations will not only slow the development of these and related technologies, it could also make the very idea of innovation less appealing.

There will always be a segment of society that is uncomfortable with change. There are fewer baby boomers engaging on TikTok or living their lives in the swirl of social media than from GenZ with statistical surveys bearing out that the older a demographic, the lower its overall use of information technology.

But generational differences may not matter as much as new technologies that require a higher level of trust and confidence from the public continue to emerge at an ever-increasing pace. In some ways, we have become a society that prizes innovation for the sake of innovation rather than for any tangible improvement in our lives.

With digital currency still recovering from shocks and scandals in recent years and AI developments becoming eerily like science fiction tropes of the rise of machines and a robot apocalypse, the appetite for innovation and change may be fading. And since this new wave of technology is potentially more invasive than ever, there is no place for 21st century protestors to hurl their wooden sabots into the machinery as economic saboteurs to slow it down.

Perhaps innovation is inevitable, regardless of societal fears and popular culture bogeymen. But it should be equally inevitable that regulatory officials need to take a proactive approach to the introduction of innovations across society, but especially in economic and financial areas, to provide a measure of reassurance and promotion of a level playing field.

In that case, it would be wise to heed the sage advice Peter Parker received as he embarked on his superhero career: “With great power comes great responsibility.” Or more to the point, greater accountability.