What to do about Stagnation

For the last 6 years or so my expectation of the future direction of humanity has been dominated by “The Great Stagnation.”  In it Tyler Cowen clearly lays out the empirical case that economic growth has slowed significantly since the mid 20th century. While Cowen believed that growth would eventually return to the levels of the 20th century I was less sanguine. We know that 2% exponential growth cannot continue forever.  In 10,000 years at 2% average real growth we the world economy would be 10^86 times larger than it is now. 10^86 is around the number of atoms in the visible universe, so each atom would have to be producing as much economic output as the whole world does now. I find that implausible. So, the simplest model is to draw a line from our current level of growth down to 0. There should be some volatility around that downward sloping line but there is no reason to assume that it will ever return for a long period of time to the highs that we have achieved in the past.

When I put it that way, I still find it fairly persuasive. In the very long run we simply cannot have fast exponential growth. My personal and emotional takeaway from this fact was that I and my progeny should focus on zero-sum status games. In the long run, zero-sum games have to be much more important than progress. There is an infinite amount of fighting that can be done about how the pie should be divided but the size of the pie will always be finite. So doesn’t it make more sense to focus on doing well in the fight rather than trying to grow the pie? I’m not so sure anymore.

Consider Elon Musk’s accomplishment yesterday. He inspired the world by launching a car into space on a rocket that isn’t nearly as powerful as ones that existed 50+ years ago.  The main innovation that SpaceX has accomplished is to get rocket stages to do controlled descents that allow them to be reused. Its amazing to watch the booster rockets land and it should, in theory, lower the cost of delivering cargo to space, though not to the point where we can do a lot more useful things. Its not the kind of innovation that is going to add a lot to global growth, but it might inspire some people to buy Tesla’s and that would be a big win for Musk.  Innovation inspires people. It gives people hope. Its a great strategy for getting yourself a bigger piece of the pie. And beyond its effectiveness as a cynical mode of separating hopeful people from their money, its personally satisfying to feel like you are contributing to human progress. Waking up every day feeling like my only mission was to redirect resources to me and my kids was getting pretty old frankly. Time to start trying to actually make the world a better place.

 

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