Last year I reflected on how our world was becoming exponential, and what were the consequences of living in this world. Namely,
- Need for deep expertise
- Importance of cybersecurity
- Rise of mental health products
In that post I shared graphs of world GDP per capita, scientific output, and other such data points showing that the world is now ‘exponential’.
In light of new information, I am modifying my opinions on this topic. While noise is increasing exponentially, true innovation is not. In fact, apparently, we are going through stagnation. We saw much better, faster growth of technology in the 1930s, than in the last 2 decades. This tweet by Florent Crivello captures it:
This data seems anecdotal-ish, but has solid foundations. The central thesis of the book, The Great Stagnation by Professor Tyler Cowen is that economic growth has slowed in the developed economies due to slowing down of the pace of innovation. The author argues that the low-hanging fruit of innovation has been picked up and we are not innovating enough, leading to poorer productivity growth.
(Basically, productivity means how much output do we get at something with same amount of input. So if you are innovative, you can make more for less.)
And while developing countries are picking up ideas from developed countries and deploying them in their home markets (as they should), they are not innovating enough to help the developed markets.
Peter Thiel has of course been saying this for quite a few years now, that we have too much money, too little ideas. From this interview at 21:58, he says:
Both the utopian and dystopian stories [about technology] are that things are happening so fast… the concern I have on the technology side, is that things are not happening quickly enough.
He goes on the say that how the cellphones – where innovation has been fast – distract us from our surroundings and stop us from noticing how slow the innovation has been in things around us. I recommend the watching the whole talk.
I worry about this trend, as some people also correlate it with the global political unrest. If the pie is not growing fast enough, people will lose hope, and thus divide themselves. We need to keep growing. As Yuval Harari mentions in his book Homo Deus:
The modern economy needs constant and indefinite growth in order to survive. If growth ever stops, the economy won’t settle into some cosy equilibrium; it will fall to pieces.
While I was familiar with these ideas, it was this recent essay in the atlantic which made me sit up and write this. Not only is technological innovation stagnant, Science itself is ‘stagnant’ since past few decades. The authors of the essay analyse scientific work via Nobel Prizes and find that last few decades have poor showing across Physics, Chemistry and Medicine. It has been so poor that:
The 1990s and 2000s have the dubious distinction of being the decades over which the Nobel Committee has most strongly preferred to skip, and instead award prizes for earlier work.
Yes, they did not even give the prizes in 1990s and 2000s for work done in those decades because nothing was worth it.
The one field where innovation has happened is of course computer science (blockchain and machine learning come from the world of bits). Browsing our social feeds, we hear a barrage of stories of innovation in this area, forgetting the important areas (like air travel, automobiles) where there is not enough innovation.
This is a gigantic problem for society and we need institutions to pay more attention. I do not currently have a mental framework to address this.
But things are not so bleak, I think. For one, VCs like Chamath Palihapitiya and Peter Thiel himself are trying to go after bigger challenges. And of course we have Elon Musk leading the way to the future. The new frontiers they are approaching are space, climate change, and diseases like diabetes.
There are more reasons for optimism, cautious optimism, and I will cover them soon. Hint: They will cover the techno-financial framework of Carlota Perez.