Popular culture does not know how to handle scientists and inventors. Some books and movies portray them as “mad scientists,” for example, Robert Louis Stevenson’s Dr. Jekyll and Aaron Sorkin’s Steve Jobs. Others trumpet their clever tricks, for example, Revenge of the Nerds, Mr. Robot, and a dozen television shows depicting code-breaking kids in hoodies. In my book New Ideas from Dead CEOs I portray wily tech leaders like David Sarnoff (RCA), Akio Morita (Sony), and Thomas Watson (IBM). Morita was especially tricky. In the early 1950s, he promised the world a “pocketable” radio. But when Sony’s engineers couldn’t shrink the radio small enough, Morita bought his salesmen new shirts — with oversized pockets! Voila! The radio fits!
Recent economic studies show that scientists and inventors are certainly wily about taxes. A study of inventors living in Europe and North America found that when a country cuts tax rates by 10 percentage points, the number of inventors leaps by 38 percent. Within the U.S., states that cut income and business taxes attract more scientists. Research by Enrico Moretti and Daniel Wilson revealed, for example, that when New York State cut the marginal tax rate from 7.5 to 6.85 percent in 2006 the number of “star scientists” climbed by 2.1 percent. Remember that when scientists and inventors move to a new location, they bring new jobs with them – lab assistants, researchers, marketers, etc. (Moretti and Wilson define “star scientists” as the top 5% of patent recipients, averaging 1.5 patents per year.)
Here’s the upshot: top STEM people are tops in mobility, too. When offered a better deal, standout inventors can easily pack up their bags, beakers and megabytes, and move on to more attractive climes. Go ahead, call scientists “mad” — but you can’t call them stupid.