Tim Harford has written a new book called “Adapt” . I haven’t read it but this NY Times blog piece has a suggestive quote; “You’re saying, in essence, that society doesn’t do enough trial and error.” The economics of “adapting” is pretty straightforward. If you enjoy a secure monopoly niche, then you face no competition and you don’t need to learn and experiment. You can be lazy and stick with the status quo. If you don’t face an expected threat (whether it is climate change or resource scarcity or war or Google entering your product market), then you are unlikely to change your game. In the late 1970s, General Motors and Ford learned a hard lesson about the need to continuously improve their core products and to avoid complacency. Universities could learn this lesson as well. Today, China’s exports are nudging Western economies to continue to adapt. I’m a big fan of this paper investigating how Western European firms have adapted to the threat of Chinese import competition.
I argue in my Climatopolis that individual and firm level adaptation to climate change will help to protect urbanites from this emerging threat. Matthew Kotchen’s thoughtful review of my book is posted here.