Feb 15, 2012 4:20 AM GMT
This is a key insight. World War II and the Cold War incentivized the federal government to force the pace of scientific innovation, nowhere more obviously than in the realm of nuclear technology. But as the totalitarian threat waned and then expired, government turned from research and development to health and safety. Redistribution and regulation took over and, as they did so, the sci-fi dreams of the 1960s faded into a stagflationary reality. In 1964, when I was born, Popular Science magazine could seriously ask: “Who’ll Fly You at 2,000 m.p.h.?” Instead, I have lived to see the Concorde decommissioned and coal-carrying railroads reopened.
We aren’t moving faster. We haven’t freed ourselves from fossil fuels. Life expectancy still rises, but at a slowing rate. Only in Palo Alto—the realm of Moore’s law on the recurrent doubling of computer processing power—has progress persisted. The rest of us have had to rely on leverage, aided and abetted with financial technology, to maintain the illusion of rising real incomes.
As for globalization, it just took established Western ways of making stuff and spread them to the East and South. Worse, when leverage combined with globalization to produce a massive financial crash, we fell back on Keynesian deficits plus money printing in the mistaken belief that they had saved us before. They hadn’t. It was technological innovation, accelerated by government, that produced the economic miracles of the 1940s, ’50s, and ’60s.
To listen to Thiel is to hear an alternative economic history of the past hundred years. It is also to hear a rather bleak prophecy about the next hundred. He and his friends will continue to innovate, no doubt; but they will focus their energies on the few relatively unregulated sectors. The rest of us will remain mired in a stagnant politicized economy of regulation and redistribution, vainly trying to divert a fraction of the innovators’ billions our way.
So now you know: Peter Thiel is smarter than you, too. Damn.