Poking around at NRO just now, I ran across some solid pessimism from PayPal founder Peter Thiel. In a piece called “The End of the Future“, he argues that the steady technological progress that pulled the world’s economy upward for a very long time has stalled. The essay seems a shade too gloomy, even for me.
We read:
When tracked against the admittedly lofty hopes of the 1950s and 1960s, technological progress has fallen short in many domains. Consider the most literal instance of non-acceleration: We are no longer moving faster. The centuries-long acceleration of travel speeds ”” from ever-faster sailing ships in the 16th through 18th centuries, to the advent of ever-faster railroads in the 19th century, and ever-faster cars and airplanes in the 20th century ”” reversed with the decommissioning of the Concorde in 2003, to say nothing of the nightmarish delays caused by strikingly low-tech post-9/11 airport-security systems. Today’s advocates of space jets, lunar vacations, and the manned exploration of the solar system appear to hail from another planet. A faded 1964 Popular Science cover story ”” “Who’ll Fly You at 2,000 m.p.h.?’ ”” barely recalls the dreams of a bygone age.
The official explanation for the slowdown in travel centers on the high cost of fuel, which points to the much larger failure in energy innovation. Real oil prices today exceed those of the Carter catastrophe of 1979”“80. Nixon’s 1974 call for full energy independence by 1980 has given way to Obama’s 2011 call for one-third oil independence by 2020. Even before Fukushima, the nuclear industry and its 1954 promise of “electrical energy too cheap to meter’ had long since been defeated by environmentalism and nuclear-proliferation concerns. One cannot in good conscience encourage an undergraduate in 2011 to study nuclear engineering as a career. “Clean tech’ has become a euphemism for “energy too expensive to afford,’ and in Silicon Valley it has also become an increasingly toxic term for near-certain ways to lose money. Without dramatic breakthroughs, the alternative to more-expensive oil may turn out to be not cleaner and much-more-expensive wind, algae, or solar, but rather less-expensive and dirtier coal.
Surely one should expect a stepwise climb, rather than a smooth upward slope, as new technologies open up previously uninhabited regions of the economic “fitness landscape”. Each major technological innovation — the discovery of oil, say, leading to the internal combustion engine — is as if a new geographical region, previously uninhabited by any species at all, is suddenly thrown open to colonization. At first there is a chaotic flurry of activity, then a process of speciation, competition, and the settling-down of new, stabilizing ecosystems as the various niches in the fitness landscape are found and occupied. (Using this metaphor, one might say that economic growth is analogous to an increase in total biomass.) Eventually the new landscape is thoroughly settled, and populated up to its carrying capacity; I’d expect that this should correspond to a leveling-off of the pace of progress. It’s only when something disruptively new comes along — either a major environmental shift that profoundly reshapes the fitness landscape, or the opening up of yet another unpopulated region through the arrival of some fundamentally new technology like the Internet — that one can expect to see the curve rising sharply again.
The thing about such disruptive changes, though, is that they’re almost impossible to predict. Very few people foresaw the advent of the personal computer, and then the Internet, as economic game-changers; even after the introduction of the World Wide Web in the early 1990s there were few who had any confidence that anybody would ever be able to use it to make money.
Mr. Thiel argues, though, that the rise of computers is something of an outlier, and is canceled out in economic terms by sluggishness elsewhere.
By default, computers have become the single great hope for the technological future. The speedup in information technology contrasts dramatically with the slowdown everywhere else. Moore’s Law, which predicted a doubling of the number of transistors that can be packed onto a computer chip every 18 to 24 months, has remained broadly true for much longer than anyone (including Moore) would have imagined back in 1965. We have moved without rest from mainframes to home computers to the Internet. Cellphones in 2011 contain more computing power than the entire Apollo space program in 1969.
From the perspective of Palo Alto, a return to the party year of 1999 appears almost within reach. All that glitters seems to be golden. Thousands of new Internet startups launch each year, and valuations of Web 2.0 businesses have surged; and not entirely without reason, as maybe two to six per year of these newly minted ventures will break into the billion-dollar-plus valuation zone within five years of their founding. In tandem with this new life for the new economy, Google has led a parallel move towards a near-doubling of wages for the most talented computer engineers, all in just the last three years. Beyond the dollars, one must look no farther than The Social Network to see the ways in which Facebook and its 750 million users have captured the new zeitgeist.
The economic decoupling of computers from everything else leads to more questions than answers, and barely hints at the strange future where today’s trends simply continue. Would supercomputers become powerful engines for the miraculous creation of wholly new forms of economic value, or would they simply become powerful weapons for reshuffling existing structures ”” for Nature, red in tooth and claw? More simply, how does one measure the difference between progress and mere change?
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If meaningful scientific and technological progress occurs, then we reasonably would expect greater economic prosperity (though this may be offset by other factors). And also in reverse: If economic gains, as measured by certain key indicators, have been limited or nonexistent, then perhaps so has scientific and technological progress. Therefore, to the extent that economic growth is easier to quantify than scientific or technological progress, economic numbers will contain indirect but important clues to our larger investigation.
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.
Mr. Thiel argues also that our lack of a foreseeable path upward in technology is at the root of our present credit crisis:
Like technology, credit also makes claims on the future. “I will gladly pay you a dollar on Tuesday for a hamburger today’ works only if a dollar gets earned by Tuesday. A credit crisis happens when earnings disappoint and the present does not live up to past expectations of the future.
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. On the other hand, the lack of easy progress also makes leverage far more tempting, as unleveraged real returns fall below the expectations of pension funds and other investors.
This analysis suggests an explanation for the strange way the technology bubble of the 1990s gave rise to the real-estate bubble of the 2000s. After betting heavily on technology growth that did not materialize, investors tried to achieve the needed double-digit returns through massive leverage in seemingly safe real-estate investments. This did not work either, because a major reason for the bubble in real estate turned out to be the same as the reason for the bubble in technology: a mistaken but nearly universal background assumption about easy progress. Without fundamental gains in productivity (presumably driven by technology), real-estate values could not go up forever. Leverage is not a substitute for scientific progress.
This is a good point, I think. Nevertheless, whether Mr. Thiel’s pessimism is fully justified ultimately depends on the actual future of technological progress, and if there’s one thing that we know about predicting the future of technology, it’s that you can’t. Is the current plateau (assuming that we actually standing on one) due to our having finally run up against inherent limitations in what is actually possible? Is there no more undiscovered geography out there? Perhaps, but there is ample reason to doubt it. Such an attitude was common in the late 19th century. In 1875 or so, for example, Heinrich Hertz wrote:
Sometimes I really regret that I did not live in those times when there was still so much that was new; to be sure enough much is yet unknown, but I do not think that it will be possible to discover anything easily nowadays that would lead us to revise our entire outlook as radically as was possible in the days when telescopes and microscopes were still new.
In 1894, Albert Michelson said;
The more important fundamental laws and facts of physical science have all been discovered, and these are now so firmly established that the possibility of their ever being supplanted in consequence of new discoveries is exceedingly remote…. Our future discoveries must be looked for in the sixth place of decimals.
And here’s Lord Kelvin, from 1900:
There is nothing new to be discovered in physics now. All that remains is more and more precise measurement.
Finally, as someone who reads several daily science and technology newsletters, I think it’s hard not to be struck by what certainly appears to be briskly accelerating progress in many fields, notably materials science, nanotech, biotech, and neurotech. How this will play out in what appears to be the advancing senescence of Western civilization, though, is anybody’s guess.
You can read Mr. Thiel’s essay here.
