Fauxnovation

I couldn't quite decide how to connect this to my post about innovations in crayons, so I decided to just split them into two. This is a more negative take on the innovation that the market forces. Krugman on financial creativity:

At this point, there is no reason to take it on faith that cleverness in the financial industry is a net social good. Unless you can provide some clear evidence of productive innovations since regulation began to unravel -- and ATMs don't count -- the balance of the evidence suggests that smart people have been devising ingenious ways to concentrate risk and direct capital to the wrong uses.

So innovation and creativity certainly drive the markets, as everyone is into growth and if you can't find new things to sell folks it's hard to grow. But I often wonder whether in the end it's really "good" (though I guess that's not really a fair question, since I like living in a prosperous country ... and do work for companies that rely on just this sort of "creativity"). Is this sort of innovation really the best engine for growth? I mean I know there are other models (service pops to mind first), but this seems to be the dominant business strategy. I guess R&D-based companies would be another type, but so many of those get sucked in by this sort of fauxnovation (again, see: five blades).