the supposed cutting edge of capitalism is increasingly defined by technologies that have almost arrived, business models that are on their way to profitability, by runways that go on and on without the plane achieving takeoff.
Today is the publication date for Douthat’s The Decadent Society. So by the time you read this, I should have read some the book.
Also sharing Douthat’s viewpoint is the blogger It’s Only Chemo. Pointer from Tyler Cowen, who we know is of a similar persuasion.
Earlier in the month, there appeared The Future is Faster than you Think by Peter S. Diamandis and Steven Kotler, which takes the opposite position. They talk about what has almost arrived with excitement, not with irony. They sound to me like venture capitalists who believe every pitch they’ve ever heard.
I fall somewhere in between, but I lean more toward Diamandis and Kotler.
Yet, while I languish,
Everywhere countless
Prospects unroll themselves,
And countless beings
Pass countless moods.
-Matthew Arnold
You are a poetic correlation machine, Edgar. You might be the key to my finally appreciating poetry since it forces me to slow down and find the correlation I know you see but my natural reading pace/style/brain rarely grasps.
Thanks for your kind words. Glad that you enjoy.
And there, as the music changes,
The song runs round again.
Once more it turns and ranges
Through all its joy and pain,
Dissects the common carnival
Of passions and regrets;
And the wheeling world remembers all
The wheeling song forgets.
-Alfred Noyes
I’m not sure my enjoyment today comes from the poems as much as from solving the puzzle of why, in my youth, I quickly skipped over the lyrics/poems in J.R.R Tolkien’s books which I otherwise loved. If you read the same books, you no doubt lingered over the poetic parts.
At least these two poems follow the same structure that hints at how I need to parse the semantics underlying the meter. I don’t know if my brain was always been wired this way or if my recent troubles are due to an oversensitivity to formatted computer code but the solution clicked for me today. I have to rewrite the poem (in my head) to extract the proper sentences (and thus meaning) which do not match the rhythm and rhyme based formatting. I guess this is one of those Coffee Cup Guitar Blues moments that Eric Weinstein is famous for.
I do not struggle with song lyrics, it is only written poems and lyrics that are opaque to me until I hear them sung by someone else. Perhaps I should write a little utility to reformat poems in a way that instantly clicks for me and others with the same brain [dys]function.
I think we are failing to engage the systemizer part of our brain. We are missing the obvious model of how innovation and growth are intertwined. Growth follows an “S-Curve” (mathematically a Logistic Growth Curve) whose Rate of Growth is the “Bell Curve” (mathematically a Gaussian Curve).
Economists live and breath the Normal Distribution and naturally think about standard deviations but they don’t correlate these critical milestones in the Bell Curve with the Total Growth points in the S-Curve and its capacity of K. In business terms, K is the total market size and the mainstream growth (68% of total) for any business/technology occurs between -1 SD (Standard Deviations) and +1 SD of the maximum growth midpoint. The time to Market Saturation is about 6 SD. K for Facebook is approximately 85% of the global population.
Venture Capitalists and technologists fall into the true Malthusian Trap, assuming that the early high growth phase of an S-Curve is exponential. Growth levels off. This is the happy equilibrium of most of life as it approaches K. The disequilibrium that leads to S-Curve “disruption” is rare and represents Schumpeter’s Creative Destruction. Paul Graham’s analogy for technical innovation is a Fractal Stain that grows/changes at the edges. S-Curve Creative Destruction occurs at the edge of this Fractal Stain.
Cowen and Douthat make the mistake of lamenting about the stable equilibriums found throughout the Fractal Stain and fail to see the incredible dynamism at the edge. Diamandis confuses any technological advancement without considering how the technological innovation fits into the Fractal Stain and what the emergent K value is for the resulting Product-Market Fit and how long this will take (< 6 SD).
Venture Capital constantly misapplies a simple heuristic chasing after Unicorns ($1B Revenue) that reach -1 SD mainstream growth and a Liquidity Event within 5-10 years of their investment. Businesses in +1 SD slow growth phases self-destruct trying to reproduce their early growth instead of embracing decades of unchallenged toothpaste-industry-like profit. Douthat's quote "business models that are on their way to profitability, by runways that go on and on without the plane achieving takeoff" is specifically addressing this pathology.
If you think about S-Curves and Bell Curves on a timeline of years, the world starts to make much more sense.
>Growth follows an “S-Curve” (mathematically a Logistic Growth Curve) whose Rate of Growth is the “Bell Curve” (mathematically a Gaussian Curve).
I can’t believe no one has ever pointed this out to me before (or I’ve never noticed). It actually is much more intuitive to understand that the rate of progress is a bell curve. The S curve is the integral, the sum of progress over a period.
Doffs cap in appreciation.
That is the way I always think of it too. Everett Rogers’ Diffusion of innovations is well known from his 1962 book, especially in the business world, and has resulted in many non-mathematically oriented interpretations and extensions, such as Geoffrey Moore’s “Crossing the Chasm” series of books. All of these get caught up in the psychological labels Rogers attached to each standard deviation. It’s a shame, really, since the mathematical model gives you a great deal of predictive power; or at least a very good Fermi Estimate.
Clayton Christensen’s “The Innovator’s Dilemma” famously shows innovation as a series of overlapping S Curves but no one takes these curves literally nor associates them with the Bell Curve derivative.
Population Biology has long had a generalization of r-selector species that exhibit exponential growth and k-selector species that exhibit Logistic growth when introduced to a new ecosystem. Thomas Malthus, the father of population biology, missed the mark on his assumption that humans exhibit exponential growth and this bad assumption has been repeated as truth for over 200 years. I’ve never seen anything from biologists that associate Logistic growth with the easy to understand heuristics we appreciate with the Bell Curve.
The tech startup community treats business growth as exponential which is obviously false. I don’t know why they don’t make the leap to the model I’ve described; it seems natural and obvious to me.
I would say the modern has very exaggerated sense of past realities versus a weird gloominess of our present that the post Great Recession probably had a bigger on average people than we give credit for.
1) Probably the worst exaggerated past is we forget more families lived like the Bunkers in 1971 than the Cleavers. (Please throw out the cultural battle that are hard to watch today) Housewives dressed Edith not Mrs. Cleaver and most households were significantly smaller (1,200 sq ft. so even Bunker house was too big.) I believe that was All In The Family secret sauce in early 1970s, because a lot of Americans saw families living like them for the time since The Honeymooners & early Ricardos in 1955.
2) We way underestimate the failures of crime of 1970s/1980s and how bad the poor lived back then. The African-American workers literally did face 20%+ unemployment in the early Reagan years and took decades to recover from that. High school students are actually better behaved today than earlier generations but they are struggling post High School years.
3) It does seem like all long term successful capitalist nations have Malthus Middle Class reality. (We solved for hunger but not healthcare) And this Malthus Middle Class reality seems more evident with the Japanese economy and culture. It still amazes me that the Japan Inc. boom of 1980s which was the biggest economic growth model ever in history would turn into a lost economic decade and falling population a generation later. (Although you could argue late 1990s US economy topped Japan Inc. but no other economy has matched either of optimism growth.)
I still believe all nations economically grow long enough, they still end up similar to the Japanese economy the last generation.
A point against Douthat: go back 50 years, 100 years, 150 years and read about what people thought the future would be like. Many, maybe most of the big things that were anticipated never ‘took off.’ And yet, as we know in retrospect, that’s not because they weren’t on the cusp of tremendous progress; it’s because it happened in ways that were not anticipated. Most of the specific planes in the proverbial runway today may never take off, and that still isn’t convincing evidence that progress isn’t being made. One might imagine a Ross Douthat from 50 years ago predicting stagnation looking at the world today and saying “still no flying cars, I told you so.”
Been watching the globeleza broadcasts of the samba school parade competitions in São Paulo and Rio de Janeiro on via Globoplay this past week. Not sure what additional technology anyone would want or need.
How about the ability to nip a new pandemic in the bud? We are far from that point.
+1
I think all this stagnation or decadence or whatever term you want, is a product of stable middle class or higher incomes for at least half the population and lack of an existential threat. It is relevant that the long century of fast growth and innovation — roughly the 1860s to the early 1970s was a period of war, revolution, rapid demographic change, and generally disruptive social conflict.
The bubble is assuming that the Pax Americana since WW2 will last forever. China, Russia, and the Middle East will make it clear that one day this will all end. And it will surprise the world more than a supercharged version of a viral pandemic. Perhaps it begins with a superpower conflict that the US loses or only wins with great losses. Perhaps it begins with backing off then needing to compensate dramatically. Only time will tell.
I’m more on the Douthat side of things. I’ve long been an autonomous vehicle skeptic and I’ve not changed my mind (as the dates — predictably, imho — keep getting pushed back). To the extent that Uber and Lyft cannot become profitable w/o self-driving vehicles, I’m skeptical on them as well. I think a couple of things are becoming pretty obvious at this point:
1) The size and impact of new tech business is shrinking. We’ve seen nothing like Google, Amazon or Facebook for a long time — Google and Amazon are over 20 years old and Facebook is getting close. I thought this was a pretty interesting interview with the guy who started comma.ai.
2) The impact of new products is also shrinking. Improvements in digital products have become incremental (when is the last time a truly new capability was added to laptops, smart-phones, or digital cameras?) and recent products that were touted as revolutionary (personal assistants, drones, 3D printers) have proved not to have anything like the general impact of earlier inventions.
Amazon AWS is still in a high growth and spectacular innovation phase. Perhaps what is new is that the new breed of American and Chinese Web/Mobile/Cloud mega-corps are very good at building new businesses internally instead of simply buying innovation. I am impressed that Amazon Alexa/Echo and Amazon Prime Music/Video are so successful despite their humble fast-follower beginnings.
Today, Let’s Encrypt announced A Billion Certificates Issued with some impressive scale numbers:
Innovation is lumpy.
On “technology”, there is plenty of steady progress being made, but it will mostly be making what we mostly have now even better and/or cheaper.
Note that “quadrophonic” did not improve music sound over stereo enough to justify its price/ hassle. The conveniences of digital has not yet made vinyl analog acoustically obsolete, nor has it given better music.
But it’s not as big a change as no radio – AM radio – AM/FM radio & stereo records.
The real reason the pessimists are more correct is not explicitly mentioned in the articles – human desire to enjoy without working, altho itsonlychemo notes:
aren’t going to accept the hard work that continuing to improve civilisation involves.
We are not changing human nature, and the limits to enjoying uneven civilization wealth are based on those natures and behaviors.
I see this in the attraction to Bernie’s socialism – free stuff for all from the gov’t.
Also in Arnold’s support, among others, for UBI – basic income for all so that none need to work.
On the positive side, much of the world’s standard macro-economic growth has been happening in the less developed and undeveloped countries, so there is less absolute poverty. For them to catch up, the poor have to grow richer much faster than the rich. Many groups of them are doing so, part of why the current rich groups have been growing richer more slowly.
Finally, the seemingly inevitable an unstoppable growth of gov’t and regulation lead towards more pessimism – Trump and any who are successful at deregulating help provide more optimism.