1/I want to do another thread about something I've tried unsuccessfully to articulate: Why a world of zero productivity growth is such a scary prospect.
I wrote about the stagnation hypothesis the other day, but didn't explain why it's so scary:
bloomberg.com/view/articles/…
I wrote about the stagnation hypothesis the other day, but didn't explain why it's so scary:
bloomberg.com/view/articles/…
2/I tried to write about it here, but to be honest I don't think I did a great job explaining exactly how stagnation could lead to zero-sum thinking and war: bloomberg.com/view/articles/…
3/Even if productivity growth vanished forever, that would NOT make the world actually zero-sum. Because HUMAN COOPERATION is positive-sum. War = destruction and waste.
We will never have a truly zero-sum world.
The danger is zero-sum THINKING, not zero-sum reality.
We will never have a truly zero-sum world.
The danger is zero-sum THINKING, not zero-sum reality.
4/When I was a kid in the 90s, practically everyone thought they would grow up and be successful in the capitalist system - get a good job, or start a company, or whatever.
Many didn't even think about the specifics (I certainly did not). They took the future for granted.
Many didn't even think about the specifics (I certainly did not). They took the future for granted.
5/In the 00s, faith in the capitalist system remained. If you were a middle- or working-class (white) person, your house would make you rich.
If you were smart and talented, you'd go into finance, be a trader, beat the market, make the big bucks, whatever.
If you were smart and talented, you'd go into finance, be a trader, beat the market, make the big bucks, whatever.
6/The 2008 crisis brought a decade of economic stagnation, and made a lot of people lower their expectations (except for those who were always shut out of the system, e.g. many black people).
It was a wrenching adjustment for many...
bloomberg.com/view/articles/…
It was a wrenching adjustment for many...
bloomberg.com/view/articles/…
7/There have been some gold rushes since the crisis. There was the Second Tech Boom. Bitcoin, of course.
But I think fewer people have felt confident that they could be part of these booms. They were smaller, more localized and isolated.
But I think fewer people have felt confident that they could be part of these booms. They were smaller, more localized and isolated.
8/With "good jobs" having been eliminated by the corporate changes of the 70s and 80s (in America; in Japan it was the 00s and 10s), and with fewer of the gold rushes that replaced "good jobs" as the ladder to success in the 90s and 00s, what will young people look forward to?
9/In a world of zero productivity growth, you see fewer and fewer tech booms. And the ones you do see are smaller.
Or they may be dominated by big companies like Amazon and Google (e.g. if machine learning has strong economies of scale related to data availability).
Or they may be dominated by big companies like Amazon and Google (e.g. if machine learning has strong economies of scale related to data availability).
10/Without gold rushes in tech or finance, and without the promise of secure well-paying jobs, you're going to see a lot more elite (educated, smart, rich) young Americans becoming "failguys". Falling off of a ladder they felt was their birthright.
11/And what will these "failguys" do? Will they quietly accept a stagnant, middle-class, shabby-but-educated existence, as stories of fabulously wealthy tech barons and lucky crypto billionairs flood their social media feeds?
12/Many will, but many will not.
A disaffected proletariat is scary, but a disaffected elite is scarier.
A disaffected proletariat is scary, but a disaffected elite is scarier.
13/I'll always think of the example of Hong Xiuquan, who failed the government service exams in 1830s China.
He went nuts, declared himself to be Jesus' little brother, and started a rebellion that killed 20 million people!
en.wikipedia.org/wiki/Hong_Xiuq…
He went nuts, declared himself to be Jesus' little brother, and started a rebellion that killed 20 million people!
en.wikipedia.org/wiki/Hong_Xiuq…
14/A disaffected proletariat - and the proletariat is always somewhat disaffected, because being the proletariat kind of sucks - needs a disaffected, angry, alienated elite to focus its rage into the kind of stuff (war, totalitarianism) that brings down societies.
15/Now, you might think a war or revolution is exactly what we need to make society more just.
The problem is that it doesn't end after just one.
With zero productivity growth, this pattern will repeat itself again, and again, and again.
The problem is that it doesn't end after just one.
With zero productivity growth, this pattern will repeat itself again, and again, and again.
16/It's VERY hard to create a system that distributes wealth in a zero-sum world to keep all the elites satisfied enough not to rebel.
Tokugawa Japan did it. Qing and Ming China both did it for a little while. Who else? Maybe the Ottomans?
Tokugawa Japan did it. Qing and Ming China both did it for a little while. Who else? Maybe the Ottomans?
17/To sum up: There's a possibility that productivity growth is necessary to satisfy the will-to-power of elites. Without productivity growth, therefore, there is the danger of war or other destructive social strife.
That's why I worry about long-term growth.
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That's why I worry about long-term growth.
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