More Tournament Madness
Ever since economists startled me by dissing tournaments, I have been fascinated by their ubiquity and utility as well as their potential for waste. Of course the whole panoply of life is a tournament of sorts, but let's consider one that was important in the development of the modern world: the invention of aircraft.
We have wanted to join the birds in the air at least since ancient times, but no real progress was made on making machines fly until the beginning of the nineteenth century. Not at all coincidentally that was the same time at which another great tournament was picking up speed - the industrial revolution. In the late 1790s, Sir George Cayley, 6th Baronet, Member of Parliment, and prolific inventor turned his attention to flight. His experiments were models of ingenuity, and he discovered many key principles of lift and flight. He designed and built the first successful manned glider and created the basic aircraft design that is used today.
It took more than another century before the Wright brothers were able to develop true powered flight, but the intervening period saw a great contest that steadily advanced the cause of flight. It was not a cheap contest, costing the lives of several of the pioneers, including the great Otto Lilienthal, but no economist should dare to call this contest wasteful just because in the end there was only one, or rather two, winners. Love for the contest is an intrinsic part of human nature, and that love probably costs us a certain amount of economic waste, but it's also the main driving force behind progress.
The Wright brothers, Lilienthal, and Cayley were not motivated by the prospect of making a buck, but by the dream and the contest. The same is true of the developers of most of the fundamental technologies that made the modern world.
The tournament is a fundamental part of our character, sometimes bearing valuable fruit but also loaded with risk. Financial markets are a tournament too, and taking unreasonable risks may be as much feature as defect - efficient markets and rational actors be damned.