I'm surprised that Thiel doesn't engage more directly the hypothesis that for the last century (or perhaps century and a half), the living standards in the Western world have been determined by the race between rapid technological progress and somewhat less rapid degradation in the quality of government. To me this hypothesis seems very plausible, even highly probable. Assuming it is true, the interesting question is whether the recent stagnation is due to technological progress slowing down, the quality of government deteriorating faster, or perhaps the quality of government reaching some low point at which even extremely rapid technological progress can't save the day.

Also, these two variables are by no means independent. At the very least, bad government creates perverse incentives that draw smart and entrepreneurial people away from pushing real technical progress and towards rent-seeking. And as another interesting question, could it actually be that technological progress somehow inherently exacerbates the trends towards bad government, thus planting the seeds of its own future doom? I can think of some scary hypotheses along these lines, although they are highly speculative.

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Why do you think there's been a degradation in the quality of government?

12[anonymous]9yI think this is intentional.
3ShardPhoenix9yUS tax revenues as a percentage of GDP have been fairly stable over the long term (IIRC), so if government's a problem it's not in the sense of government capturing all the resources. Regulation could be an issue.

Peter Thiel warns of upcoming (and current) stagnation

by SilasBarta 1 min read4th Oct 2011121 comments


SIAI benefactor and VC Peter Thiel has an excellent article at National Review about the stagnating progress of science and technology, which he attributes to poorly-grounded political opposition, widespread scientific illiteracy, and overspecialized, insular scientific fields.  He warns that this stagnation will undermine the growth that past policies have relied on.

Noteworthy excerpts (bold added by me):

In relation to concerns expressed here about evaluating scientific field soundness:

When any given field takes half a lifetime of study to master, who can compare and contrast and properly weight the rate of progress in nanotechnology and cryptography and superstring theory and 610 other disciplines? Indeed, how do we even know whether the so-called scientists are not just lawmakers and politicians in disguise, as some conservatives suspect in fields as disparate as climate change, evolutionary biology, and embryonic-stem-cell research, and as I have come to suspect in almost all fields? [!!! -- SB]

Grave indictors:

Looking forward, we see far fewer blockbuster drugs in the pipeline — perhaps because of the intransigence of the FDA, perhaps because of the fecklessness of today’s biological scientists, and perhaps because of the incredible complexity of human biology. In the next three years, the large pharmaceutical companies will lose approximately one-third of their current revenue stream as patents expire, so, in a perverse yet understandable response, they have begun the wholesale liquidation of the research departments that have borne so little fruit in the last decade and a half. [...]

The single most important economic development in recent times has been the broad stagnation of real wages and incomes since 1973, the year when oil prices quadrupled. To a first approximation, the progress in computers and the failure in energy appear to have roughly canceled each other out. Like Alice in the Red Queen’s race, we (and our computers) have been forced to run faster and faster to stay in the same place.

Taken at face value, the economic numbers suggest that the notion of breathtaking and across-the-board progress is far from the mark. If one believes the economic data, then one must reject the optimism of the scientific establishment. Indeed, if one shares the widely held view that the U.S. government may have understated the true rate of inflation — perhaps by ignoring the runaway inflation in government itself, notably in education and health care (where much higher spending has yielded no improvement in the former and only modest improvement in the latter) — then one may be inclined to take gold prices seriously and conclude that real incomes have fared even worse than the official data indicate. [...]

College graduates did better, and high-school graduates did worse. But both became worse off in the years after 2000, especially when one includes the rapidly escalating costs of college.[...]

The current crisis of housing and financial leverage contains many hidden links to broader questions concerning long-term progress in science and technology. On one hand, the lack of easy progress makes leverage more dangerous, because when something goes wrong, macroeconomic growth cannot offer a salve; time will not cure liquidity or solvency problems in a world where little grows or improves with time.

HT: MarginalRevolution