Vertical agriculture, cultured meat, automation and amplification of intelligence, age reversal, fusion and solar (virtually free power), automation of travel... there are many revolutions happening very quickly right now that will drastically improve quality of life in the areas Gordon is claiming stagnation.
Most major technological breakthroughs are preceded by "experts" giving a dozen legitimate reasons why said breakthrough won't happen or it won't be that great. Wilbur Wright said in 1901, 2 years before the first human flight, that human flight wouldn't happen for 50 years. 2 months before the Wright brothers' first flight, there was an article in the New York Times saying human flight would take millions of years. Yet, in less than 70 years, we were flying 3000 ton objects (basically 30 story buildings) at hypersonic speeds and using them to put humans on another celestial body, 250,000 miles away. Makes me take pessimism with a grain of salt
Optimists usually have the upper hand, Joey. Thanks for the reminder. It is interesting to see Gordon lay out the argument for improvements of travel that have occurred, but counter it with the fact that the SPEED of travel hasn't necessarily improved. Additionally, he talks about the fact that planes are less comfortable, and more crowded, today than they used to be which could be seen as a degradation of quality. Lots to think about.
Artificial intelligence PLUS robotics is the basis for why the US economy will continue to grow at a torrid pace. I’m surprised Gordon doesn’t have the vision to see this.
Interesting point, Jonny. His main point is that those innovations are important, but they pale in comparison to the creation of the automobile or electricity. We can debate whether he is right or not. I tend to be more of a techno-optimist (his words), so it is interesting book to read from that perspective.
I am doing the Fiat Standard course with Saifedean Ammous and we are covering all the reason why Gordon is right!
As rightly mentioned, since 1970, we are living in a Fiat standard, and everything is controlled by our governments. They control everything! From our health, food, education, and our science!! As mentioned in your letter, most of the greatest inventions were created by entrepreneurs, inventors...
In our days, the governement decide what science should be invested in by supporting nonsense stuff which is destroying our life! We are no longer evolving… we are going down... People are going to freeze to death this winter... we are in 2022.
There is an argument that government intervention is a key inhibitor (I would agree to an extent), but there is a nuanced point that Gordon makes around how many more things are there to invent? You can only invent electricity once. You can only invent automobiles once. His comment about the speed of travel not changing since the 1950s was crazy to think about.
There are so many things that can be invented I believe... A bit like when trying to write a song and say that there are none left!
The speed of travel is actually going down. I used to fly Paris to New York on Concorde in 3 hours... I cannot anymore because of the CO2 hysteria none sense
I think what the “income stagnation” charts miss is the incredible shifting of compensation costs from cash payments to benefit (think medical or retirement) payments. I believe that most of the”income” statistics ignore benefits. Per employee medical costs can easily be $15,000 a year.
imagine your employer also provides housing... provided by a large corporation that owns multiple buildings across the country in a 10x10 room with a shared bathroom for each floor... and the housing company charges your employer $150,000 a year... and you make $15.00 an hour...
you are broke. and your employer is paying too much for the quality of housing he's getting for his employees...
because he has no choice. much like we have no choice in healthcare. the supply of doctors is controlled. nurses and army medics who sewed humans back together in iraq or afghanistan are not allowed to check my blood pressure so my employer has to work with whoever the insurer says... and that will cost me, him or the government.
and once the government is paying... the price goes through the roof. every business dreams of government contracts for this reason.
my employer paying $15,000 to a large insurance company for me to go to the doctor twice a year and say "ahhhh" should hardly be considered part of my income.
if i am given $15k to spend on BTC or beer or health care... then that is income.
that $15,000 is should go under "insurance scamming the employer" and not "employee income"
I think you are missing the point. If an employer is paying so much for medical benefits, that leaves less room for paying wages or salaries. The employer is basically ambivalent between the two as they both go into the actual cost of an employee. Back in 1971, the cost of medical benefits was basically nil; that is no longer the case of course.
Growth is dead sounds like a nostalgic assessment of good old times. Apart from historic bias, reading the present is harder as you move with the present time. It is difficult to see the speed from inside the vehicle you travel with.
What happened after 1970? So much:
Internet has change the world immensely. Think of the massive productivity gains, the closeness of all people around the world, acceleration of innovation. We created a vaccine in one year!
What else: genetics, modern biotechnology and Pharma. Space! How could Gordon have missed that? Think Starlink. Starship. Moon & Mars expeditions being prepared as we speak.
What about EV revolution? Ten years ago people were laughing at Musk, and here we are in the middle of an EV explosion all around the world. All in such a short period of time.
Renewables. What a remarkable transformation. Yes, not enough, but you see where it is going.
Hydrogen. OK, this is a prediction, but check out the speed with which is happening.
Other transformation are in the pipeline: quantum computing, metaverse (OK, laugh if you wish, thinking of Zuckerberg, right? Check out Matterport to see where this is going. Or Nvidia's omniverse.
Neuromorphic computing. The wave of IoT transforming agriculture.
How can Gordon make this claim that growth stopped in 1970? It may be a stirring point for debate, but I find it absurd.
This erroneous assertion also points out, inadvertently, that we have a problem with the way we measure productivity and growth, probably for the same reason we have missed the economic value of mothers supporting families at home (household maintenance, care, child rearing, etc.): we are focused too much on formal business and less on what is actually happening in real life, in society.
I love your analysis. The internet was a pretty big deal :) And you mention a lot of different new technologies that are going to be amazing to see come to fruition. The future will hopefully be wild
One glaring mistake in the statement below --- 0.06% growth compounded annually (1.0006)^100 for a century is ~82% growth over 100 years, not 6%.
“According to the great historian of economic growth, Angus Maddison, the annual rate of growth in the Western world from AD 1 to AD 1820 was a mere 0.06% per year, or 6% per century.”
Hey Pomp, you’re an entrepreneur who has probably created many jobs for many people, which means your productivity via the internet has exponentially increased the productivity of the people you’ve employed. For example, last year you Tweeted about a job opening at BlockFi, so I applied, and got the job. Your productivity increased my productivity.
On the other hand, someone like me, I’ve never created a job for anyone, but I’m still quite productive via the internet. Maybe someday I’ll have enough capital to create jobs for people. Now I’m starting to see, productive people with capital exponentially increase the productivity of others. I’d love to see you write about your firsthand experiences increasing the productivity of others.
The ideas of leverage and productivity via the internet are still drastically misunderstood. I like to think of the pace of change, as much as the direction of change, because it signals a compounding that is hard for humans to think about with our linear brains.
Mind-blowing stuff we’re about to experience in the next two decades. I’m curious how fast bitcoin adoption will grow once people realize what we’ve understood for years. Say the word right now Pomp, and I’ll drop everything I’m doing in New York to work for you in Miami.
1970s is an important point in time. The welfare state began. Redeploying assets and productivity into a less efficient space, redistribution of wealth by the government. Undoubtedly tremendous amount of innovation in the past 50 years which would lead one to believe a tremendous amount of unprecedented growth productivity and efficiencies . This is evidence of a large government impeding growth.
Second: I believe in automation as a tool to boost productivity / help us work less for the same output (This is my business, literally). Main limitations I see: not enough people with business problems know how to automate their tasks, most developers/engineers do not know what business problems is worth solving, most AI projects I have worked on or heard of under delivered.
Third: I also think that the level of growth we experienced was an anomaly (due to transportation innovation, sure, but paired with cheap energy). I don't think energy will ever be as inexpensive as it was - this probably makes me a pessimist.
Lateral thoughts: Climate change is destroying a lot of economic value we take for granted (crop yield, for instance) which will cost energy and work to balance out. More work and resources for a similar output does not seem ideal for stellar growth.
If you're interested in economic growth read Stubborn Attachments by Tyler Cowen. Much shorter read that makes a compelling and hard to argue against case for economic growth.
I have nothing in particular to say about this email/post, but I just want to say thank you Pomp for your constant drive to learn...it makes me want to learn more, and this book seems to be full of knowledge...can't wait to start reading it myself. Bang bang!
Hi Anthony, very interesting that Gordon concluded 1970 was the end of hyperbolic growth and change. The biggest change of all started in 1971 with the invention of the microprocessor simultaneously at Intel and Texas Instruments. Since then, the digital economic efficiency revolution has proceeded in several major phases: a microcomputer on every desk in the 1980s (eg IBM PC and Apple MAC), connecting them all together worldwide with the internet in the 1990s (eg Cisco routers and communications infrastructure), a supercomputer in everyone's pocket in the 2000s (eg iPhone and Galaxy), and a microcomputer in everything in the 2010s (eg Internet of Things). The productivity boost from all this computing power in every area of the economy is continuing at an exponential rate. The pandemic expedited the adoption of the remote work organizational model enabled by these technologies, and for a large sector of the jobs market this will lead to far less commuting, shorter working hours, and better quality of life for many families. 1971 and the invention of the microprocessor was the beginning of a whole new era of productivity and change just as big as the ones that came before then. Good post, thanks for starting the conversation.
1. Seems nobody else mentioned the oil crisis as one of the resasons.
2. I wonder if Gordon would still explore this narrative of declined growth after covid.
Just imagine how the pandemic would go 30 years ago. And how we actually coped with it.
He writes there was no progress in food, clothing, etc. But the progress on (online) availability of food and clothing is a tremendous progress for the humanity.
Great article. Rule of law, labor flexibility, capital flexibility and availability, concentration of great universities, innovation, quality of life (stock of housing, leisure activities, personal mobility) and incredible hormetic nature the economy, society and political discourse are amongst America's greatest strengths ...and the gap with the rest of the world is accelerating. The 2020s will be America's decade.
1. A book I do know you read, The Price of Tomorrow, emphasizes the deflationary forces of tech to be what will save our economics. I agree, thinking its not a "How much can we grow?" but "How can we do more with less?".
2. Have you read Matt Ridley's "How Innovation Works: And Why It Flourishes in Freedom"? Think it would be a good companion to this book on how to foster innovation we need if growth is indeed floundering.
Both great books, Ryan. And it is interesting nuance between growth and doing more with less. I think this is an important point, and one that gets lost in the conversation. Both are important in my opinion. Will reach out to Jeff Booth and see what he thinks of Gordon's book.
I have not read the book (or even heard of it until now) but you have sparked my curiosity in it. I was wondering if you where going to bring up the shift to soft money and believe this had a dramatic effect on useful innovation. Fiat breads useless inventions where hard money breads large impact innovation. I also believe inventions and innovation happen in cycles just as most things do, hard times create hard men, hard men create good times, good times create weak men….
Cycles definitely occur, Justin. Gordon has made me think more deeply about the innovation cycle between 1870 - 1970 though. The challenge for today's entrepreneurs is to create new inventions that can improve human lives as much as the inventors during that past time period. It is possible, but relies on people having the courage and determination to do the work.
Vertical agriculture, cultured meat, automation and amplification of intelligence, age reversal, fusion and solar (virtually free power), automation of travel... there are many revolutions happening very quickly right now that will drastically improve quality of life in the areas Gordon is claiming stagnation.
Most major technological breakthroughs are preceded by "experts" giving a dozen legitimate reasons why said breakthrough won't happen or it won't be that great. Wilbur Wright said in 1901, 2 years before the first human flight, that human flight wouldn't happen for 50 years. 2 months before the Wright brothers' first flight, there was an article in the New York Times saying human flight would take millions of years. Yet, in less than 70 years, we were flying 3000 ton objects (basically 30 story buildings) at hypersonic speeds and using them to put humans on another celestial body, 250,000 miles away. Makes me take pessimism with a grain of salt
Optimists usually have the upper hand, Joey. Thanks for the reminder. It is interesting to see Gordon lay out the argument for improvements of travel that have occurred, but counter it with the fact that the SPEED of travel hasn't necessarily improved. Additionally, he talks about the fact that planes are less comfortable, and more crowded, today than they used to be which could be seen as a degradation of quality. Lots to think about.
Total agreement!
Artificial intelligence PLUS robotics is the basis for why the US economy will continue to grow at a torrid pace. I’m surprised Gordon doesn’t have the vision to see this.
Interesting point, Jonny. His main point is that those innovations are important, but they pale in comparison to the creation of the automobile or electricity. We can debate whether he is right or not. I tend to be more of a techno-optimist (his words), so it is interesting book to read from that perspective.
Great one Pomp!
I am doing the Fiat Standard course with Saifedean Ammous and we are covering all the reason why Gordon is right!
As rightly mentioned, since 1970, we are living in a Fiat standard, and everything is controlled by our governments. They control everything! From our health, food, education, and our science!! As mentioned in your letter, most of the greatest inventions were created by entrepreneurs, inventors...
In our days, the governement decide what science should be invested in by supporting nonsense stuff which is destroying our life! We are no longer evolving… we are going down... People are going to freeze to death this winter... we are in 2022.
There is an argument that government intervention is a key inhibitor (I would agree to an extent), but there is a nuanced point that Gordon makes around how many more things are there to invent? You can only invent electricity once. You can only invent automobiles once. His comment about the speed of travel not changing since the 1950s was crazy to think about.
There are so many things that can be invented I believe... A bit like when trying to write a song and say that there are none left!
The speed of travel is actually going down. I used to fly Paris to New York on Concorde in 3 hours... I cannot anymore because of the CO2 hysteria none sense
wtfhappenedin1971.com
charts for days my dude.
One of the best websites in the world to understand how much things have changed. Appreciate you sharing it here for everyone :)
I think what the “income stagnation” charts miss is the incredible shifting of compensation costs from cash payments to benefit (think medical or retirement) payments. I believe that most of the”income” statistics ignore benefits. Per employee medical costs can easily be $15,000 a year.
imagine your employer also provides housing... provided by a large corporation that owns multiple buildings across the country in a 10x10 room with a shared bathroom for each floor... and the housing company charges your employer $150,000 a year... and you make $15.00 an hour...
you are broke. and your employer is paying too much for the quality of housing he's getting for his employees...
because he has no choice. much like we have no choice in healthcare. the supply of doctors is controlled. nurses and army medics who sewed humans back together in iraq or afghanistan are not allowed to check my blood pressure so my employer has to work with whoever the insurer says... and that will cost me, him or the government.
and once the government is paying... the price goes through the roof. every business dreams of government contracts for this reason.
my employer paying $15,000 to a large insurance company for me to go to the doctor twice a year and say "ahhhh" should hardly be considered part of my income.
if i am given $15k to spend on BTC or beer or health care... then that is income.
that $15,000 is should go under "insurance scamming the employer" and not "employee income"
I think you are missing the point. If an employer is paying so much for medical benefits, that leaves less room for paying wages or salaries. The employer is basically ambivalent between the two as they both go into the actual cost of an employee. Back in 1971, the cost of medical benefits was basically nil; that is no longer the case of course.
Growth is dead sounds like a nostalgic assessment of good old times. Apart from historic bias, reading the present is harder as you move with the present time. It is difficult to see the speed from inside the vehicle you travel with.
What happened after 1970? So much:
Internet has change the world immensely. Think of the massive productivity gains, the closeness of all people around the world, acceleration of innovation. We created a vaccine in one year!
What else: genetics, modern biotechnology and Pharma. Space! How could Gordon have missed that? Think Starlink. Starship. Moon & Mars expeditions being prepared as we speak.
What about EV revolution? Ten years ago people were laughing at Musk, and here we are in the middle of an EV explosion all around the world. All in such a short period of time.
Renewables. What a remarkable transformation. Yes, not enough, but you see where it is going.
Hydrogen. OK, this is a prediction, but check out the speed with which is happening.
Other transformation are in the pipeline: quantum computing, metaverse (OK, laugh if you wish, thinking of Zuckerberg, right? Check out Matterport to see where this is going. Or Nvidia's omniverse.
Neuromorphic computing. The wave of IoT transforming agriculture.
How can Gordon make this claim that growth stopped in 1970? It may be a stirring point for debate, but I find it absurd.
This erroneous assertion also points out, inadvertently, that we have a problem with the way we measure productivity and growth, probably for the same reason we have missed the economic value of mothers supporting families at home (household maintenance, care, child rearing, etc.): we are focused too much on formal business and less on what is actually happening in real life, in society.
I love your analysis. The internet was a pretty big deal :) And you mention a lot of different new technologies that are going to be amazing to see come to fruition. The future will hopefully be wild
Great book review.
One glaring mistake in the statement below --- 0.06% growth compounded annually (1.0006)^100 for a century is ~82% growth over 100 years, not 6%.
“According to the great historian of economic growth, Angus Maddison, the annual rate of growth in the Western world from AD 1 to AD 1820 was a mere 0.06% per year, or 6% per century.”
Great catch, Tommy. My guess is that they were not calling out the compounded growth, but I'm not positive that is true.
You may want to try a compound interest calculator such as the one at moneychimp. 6% is the correct answer.
6% growth over the century is actually the correct calculation.
Hey Pomp, you’re an entrepreneur who has probably created many jobs for many people, which means your productivity via the internet has exponentially increased the productivity of the people you’ve employed. For example, last year you Tweeted about a job opening at BlockFi, so I applied, and got the job. Your productivity increased my productivity.
On the other hand, someone like me, I’ve never created a job for anyone, but I’m still quite productive via the internet. Maybe someday I’ll have enough capital to create jobs for people. Now I’m starting to see, productive people with capital exponentially increase the productivity of others. I’d love to see you write about your firsthand experiences increasing the productivity of others.
- Saltoshi
The ideas of leverage and productivity via the internet are still drastically misunderstood. I like to think of the pace of change, as much as the direction of change, because it signals a compounding that is hard for humans to think about with our linear brains.
Mind-blowing stuff we’re about to experience in the next two decades. I’m curious how fast bitcoin adoption will grow once people realize what we’ve understood for years. Say the word right now Pomp, and I’ll drop everything I’m doing in New York to work for you in Miami.
1970s is an important point in time. The welfare state began. Redeploying assets and productivity into a less efficient space, redistribution of wealth by the government. Undoubtedly tremendous amount of innovation in the past 50 years which would lead one to believe a tremendous amount of unprecedented growth productivity and efficiencies . This is evidence of a large government impeding growth.
First: Great article!
Second: I believe in automation as a tool to boost productivity / help us work less for the same output (This is my business, literally). Main limitations I see: not enough people with business problems know how to automate their tasks, most developers/engineers do not know what business problems is worth solving, most AI projects I have worked on or heard of under delivered.
Third: I also think that the level of growth we experienced was an anomaly (due to transportation innovation, sure, but paired with cheap energy). I don't think energy will ever be as inexpensive as it was - this probably makes me a pessimist.
Lateral thoughts: Climate change is destroying a lot of economic value we take for granted (crop yield, for instance) which will cost energy and work to balance out. More work and resources for a similar output does not seem ideal for stellar growth.
If you're interested in economic growth read Stubborn Attachments by Tyler Cowen. Much shorter read that makes a compelling and hard to argue against case for economic growth.
I have nothing in particular to say about this email/post, but I just want to say thank you Pomp for your constant drive to learn...it makes me want to learn more, and this book seems to be full of knowledge...can't wait to start reading it myself. Bang bang!
Hi Anthony, very interesting that Gordon concluded 1970 was the end of hyperbolic growth and change. The biggest change of all started in 1971 with the invention of the microprocessor simultaneously at Intel and Texas Instruments. Since then, the digital economic efficiency revolution has proceeded in several major phases: a microcomputer on every desk in the 1980s (eg IBM PC and Apple MAC), connecting them all together worldwide with the internet in the 1990s (eg Cisco routers and communications infrastructure), a supercomputer in everyone's pocket in the 2000s (eg iPhone and Galaxy), and a microcomputer in everything in the 2010s (eg Internet of Things). The productivity boost from all this computing power in every area of the economy is continuing at an exponential rate. The pandemic expedited the adoption of the remote work organizational model enabled by these technologies, and for a large sector of the jobs market this will lead to far less commuting, shorter working hours, and better quality of life for many families. 1971 and the invention of the microprocessor was the beginning of a whole new era of productivity and change just as big as the ones that came before then. Good post, thanks for starting the conversation.
1. Seems nobody else mentioned the oil crisis as one of the resasons.
2. I wonder if Gordon would still explore this narrative of declined growth after covid.
Just imagine how the pandemic would go 30 years ago. And how we actually coped with it.
He writes there was no progress in food, clothing, etc. But the progress on (online) availability of food and clothing is a tremendous progress for the humanity.
Great article. Rule of law, labor flexibility, capital flexibility and availability, concentration of great universities, innovation, quality of life (stock of housing, leisure activities, personal mobility) and incredible hormetic nature the economy, society and political discourse are amongst America's greatest strengths ...and the gap with the rest of the world is accelerating. The 2020s will be America's decade.
The importance of education can't be understated, Brian. Thanks for calling that out. The more things change, the more they stay the same.
1. A book I do know you read, The Price of Tomorrow, emphasizes the deflationary forces of tech to be what will save our economics. I agree, thinking its not a "How much can we grow?" but "How can we do more with less?".
2. Have you read Matt Ridley's "How Innovation Works: And Why It Flourishes in Freedom"? Think it would be a good companion to this book on how to foster innovation we need if growth is indeed floundering.
Both great books, Ryan. And it is interesting nuance between growth and doing more with less. I think this is an important point, and one that gets lost in the conversation. Both are important in my opinion. Will reach out to Jeff Booth and see what he thinks of Gordon's book.
I have not read the book (or even heard of it until now) but you have sparked my curiosity in it. I was wondering if you where going to bring up the shift to soft money and believe this had a dramatic effect on useful innovation. Fiat breads useless inventions where hard money breads large impact innovation. I also believe inventions and innovation happen in cycles just as most things do, hard times create hard men, hard men create good times, good times create weak men….
Cycles definitely occur, Justin. Gordon has made me think more deeply about the innovation cycle between 1870 - 1970 though. The challenge for today's entrepreneurs is to create new inventions that can improve human lives as much as the inventors during that past time period. It is possible, but relies on people having the courage and determination to do the work.