Let's consider a positive-sum economy. Over time, the total amount of value in the economy grows. That additional value comes from innovation, but <i>whose</i> innovation?<p>I grew up in Australia, in the state of New South Wales. In the end-of-secondary-school exams, the most popular subject in NSW is English, because it's compulsory. The second most popular subject is Business Studies. There's an awful lot of entrepreneurial spirit there.<p>But the reality of the Australian economy is that its complexity is declining: the economic activity is ever more concentrated into fewer and fewer industries. Sure, there are some industries, like hospitality, where you can start your own business, but the bulk of the economy is dominated by a small number of large companies: a handful of mining companies, two supermarkets, and so on. Every now and then, there's a new government initiative, like the National Disability Insurance Scheme or the opening up of vocational training to private providers, and a few years later, there's a big scandal, because most of the companies providing these services turn out to be fraudulent. So much of Australia's economic activity is tied up in pre-existing businesses that it seems that the only way to do anything novel is to rip off the government.<p>There was a time when Australians started innovative businesses: Victa lawn mowers, the Hills Hoist clothes line, and so on. Ford Australia and Holden (owned by General Motors) competed to build the best cars for the Australian market. This was a time of optimism and increasing living standards, when impoverished workers were enticed to emigrate to Australia by the Great Australian Dream: a detached house and a car of your very own!<p>But now that airfares a cheap, talented Australians emigrate to the UK, the US, or the EU, and do their innovative work there. Thanks to tax breaks, the best possible investment you can make in Australia is to own someone else's home. The population is increasing faster than ever, but housebuilding is slowing down. The housing crisis has been building for twenty years now; anger turns to ennui. A belief that Australia has no future is slowly starting to coalesce. Australia has entered a zero sum death spiral.<p>The solution is to create an economy where the old bootstraps analogy actually holds: where simple, honest hard work actually improves one's lot in life. An economy where anyone can innovate, not just university graduates with millions in venture capital funding: the economy that the Baby Boomers grew up in.<p>If only we knew how to create those conditions without having to fight a world war first.