Month: February 2026

Entrepreneurs Make Leaps: A Critique of the Theory of the Adjacent Possible (TAP)

In my Openness book, I argue that the innovative entrepreneur is a key agent of the innovative dynamism that brings us the new goods and the process innovations through which we flourish. The Theory of the Adjacent Possible, devised by Stuart Kauffman, Roger Koppl, and collaborators, and popularized by Steven Johnson, aims to “deflate” the innovative entrepreneur, and argues that technological progress is an inevitable result of a stochastic process. I have written an extended critique of the TAP, and have posted the latest version to the SSRN working paper archive. In some ways the working paper, especially the last half, can be viewed as further elaboration and illustration of some of the points made in Openness.

The citation for, and link to, my working paper is:

Diamond, Arthur M. “Entrepreneurs Make Leaps: A Critique of the Theory of the Adjacent Possible.” (Written Jan. 26, 2026; Posted Feb. 18, 2026). Available at SSRN: https://ssrn.com/abstract=6166326

My book mentioned in my initial comments is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.


“Several Biting Critiques of the Red-Tape State”

I have been so intrigued by reviews of books by Philip K. Howard that I have bought four of them. I am chagrined to admit that I have not yet read any of them–I am a slow reader, and have a long to-do list. But when I saw Howard’s suggestions of books that critique government red-tape, I made the to-do list even longer.

(p. R5) American government is overdue for a spring-cleaning, so I was delighted to read several biting critiques of the red-tape state, especially Marc Dunkelman’s “Why Nothing Works” and Ezra Klein and Derek Thompson’s “Abundance.” What’s needed is a philosophical shift toward human agency and accountability. In “The Origins of Efficiency,” Brian Potter reveals the role of human ingenuity in refining modern technologies. In “Humanocracy,” Gary Hamel and Michele Zanini describe how decentralizing individual responsibility helps businesses thrive. Barry Lam’s “Fewer Rules, Better People” shows why fairness requires judgment on the spot. Without human oversight, systems always take on a life of their own.

The source for Philip K. Howard’s book suggestions is:

Philip K. Howard. “Who Read What in 2025: Philip K. Howard.” The Wall Street Journal (Saturday, Dec. 13, 2025): R5.

(Note: the online version of Howard’s suggestions has the date December 12, 2025.)

The books suggested by Howard are:

Dunkelman, Marc J. Why Nothing Works: Who Killed Progress―and How to Bring It Back. New York: PublicAffairs, 2025.

Hamel, Gary, and Michele Zanini. Humanocracy: Creating Organizations as Amazing as the People inside Them. Revised & Updated ed: Harvard Business School Press, 2025.

Klein, Ezra, and Derek Thompson. Abundance. New York: Avid Reader Press, 2025.

Lam, Barry. Fewer Rules, Better People: The Case for Discretion. New York: W. W. Norton & Company, 2025.

Potter, Brian. The Origins of Efficiency. South San Francisco, CA: Stripe Press, 2025.

Minimum Wage Advocates Forget That When the Price of Labor Rises, the Quantity Demanded Falls

George Stigler and many others point out that no law in economics is as certain as the Law of Demand: if the price rises, the quantity demanded falls. That applies to goods and labor too. In principles classes I would illustrate the law in several ways, including applying it to the effects of increasing the minimum wage. Much of the empirical work on minimum wages has been done by David Neumark. In December 2025 he posted a revision of his co-authored paper “Minimum Wages and Race Disparities.” Below is the paper abstract:

We provide a comprehensive analysis of the effects of minimum wages on blacks, and on the relative impacts on blacks vs. whites. We study not only teenagers – the focus of much of the minimum wage-employment literature – but also broader low-skill groups. We find evidence that job loss effects from higher minimum wages are more evident for blacks – and more so for black men. In contrast, they are not very detectable for whites. Moreover, the effects of minimum wages are often large enough to generate adverse effects on earnings (and relative earnings) of blacks. Given strong residential segregation by race in the United States, the race difference in the effects of minimum wages implies that the adverse impacts fall on areas with a high black population share. We also find evidence that minimum wage effects are more adverse in black areas, regardless of individual race, which accentuates the concentration of the adverse effects of minimum wages in areas where blacks are a very high share of the population.

Neumark’s co-authored paper is:

Neumark, David, and Jyotsana Kala. “Minimum Wages and Race Disparities.” National Bureau of Economic Research Working Paper #33167, Dec. 2025.

“The Future Doesn’t Belong to the Fainthearted; It Belongs to the Brave”

(p. C5) Thirty-five years ago . . ., on the morning of Jan. 28, the U.S. space shuttle Challenger exploded just over a minute after its launch from Cape Canaveral.

. . .

Reagan postponed his State of the Union address, which had been scheduled to take place that evening, and set out to craft a speech to the nation that would especially reach the hundreds of thousands of schoolchildren who had watched the disaster on live TV in their classrooms.

. . .

. . . the middle of the speech, where Reagan addressed himself to the schoolchildren of America about the harsh lesson of human tragedy, is where the important message is conveyed: Risk is a part of the human story. “The future doesn’t belong to the fainthearted; it belongs to the brave.” Reagan spoke to the families of all the lost astronauts over the following days; they all told him our space program must continue.

. . .

The aftermath of Challenger, which saw a special commission set up to investigate the causes of the disaster through public hearings, points to one of the continuing challenges posed by modern complexity. The Rogers Commission, which issued its report that June, was harsh in its assessment of NASA’s negligence in risk assessment and launch decision-making.

. . .

The usual response to such lapses is to add more layers of bureaucratic review and decision-making. But that is a two-edged sword. While reducing risk, it can also lead to soaring budgets, rigidity, groupthink, and less creativity and innovation. Just compare the cost and progress of NASA’s current rocket and spacecraft designs to recent private sector space efforts.

For the full commentary, see:

Steven F. Hayward. “The Enduring Lessons Of the Challenger Disaster.” The Wall Street Journal (Saturday, Jan. 30, 2021 [sic]): C5.

(Note: ellipses and bracketed year added.)

(Note: the online version of the commentary was updated January 28, 2021 [sic], and has the title “The Challenger Disaster and Its Lessons for Today.”)

Hayward is also the author of:

Hayward, Steven F. The Age of Reagan: The Conservative Counterrevolution: 1980-1989. New York: Crown Forum, 2009.

We Do Not See the Benefits That Regulations Block

We owe to Henry Hazlitt the insight that we do not see what wonders would be, if the government was less active. We see the bridge that the government builds with our tax money. But we do not see the refrigerators, televisions and vacations that the taxpayers would have had if they had not been taxed to build the bridge. The same insight applies to government regulation.

The CEO of Oura, an increasingly popular ring that collects health data, has penned a brief op-ed, telling us a couple of features that Oura would now have if they were regulated less:

With a reformed regulatory structure, Oura customers could already be benefiting from a range of advanced features, including screening for high blood pressure. Hypertension is one of the most significant risk factors for heart disease and stroke, while high blood pressure in pregnancy can signal pre-eclampsia, a complication that endangers mother and baby. Another primed capability, sleep-apnea detection, would give users an early-warning tool for a condition that often goes undiagnosed and can lead to serious complications.

The CEO of Oura’s op-ed is:

Tom Hale. “With Less Regulation, Your Oura Ring Could Do More.” The Wall Street Journal (Sat., December 20, 2025): A11.

(Note: the online version of the op-ed has the date Dec. 19, 2025, and has the same title as the print version.)

Henry Hazlitt’s great little book, mentioned in my comments, is:

Hazlitt, Henry. Economics in One Lesson. Irvington-on-Hudson, NY: The Foundation for Economic Education, Inc., 1952.