Incomplete thoughts on Delong's question
Wouldn’t risk averse agents insure against this randomness in firms that pool the results of intellectual inquiry (with properly designed contracts to incentivize effort, i.e. make tenure, become partner)? Isn’t this almost exactly the MSFT business model?
This sort of model would have to be extended further, but I suppose it could be possible to pay everyone, from gardeners to geophysicists, for their time spent thinking in the shower, on the chance that they will come up with a great idea. I envision firms that could rate people as efficiently on prospects for invention as they can now with prospect for default, competing against each other for the marginal inventor/citizen. A sentence that uses the word blogs and/or blogads should be in this paragraph.
The questions that remain are why is this process so slow, what is the role of government, and would it make more sense for entities like GOOG to manage it or the Government?