Time is on our Side
My friend and indefatigable blogger John Mauldin is holding his Strategic Investment Conference these days online. No carousing in Starbucks with sultry Hong Kong Keynesians, or dancing with old friends from Dallas, or watching Seth Curry on the NBA playoffs on TV at the bar, or flirting with John’s pulchritudinous Shane. No early morning runs along the beach with surprised fans of Life After Google.
Streaming in over the antiseptic fiber are a pixilation of economists and financiers, from libertarian philosopher Matt Ridley, launching his new book on Innovation, to the shrewd and prolific Charles Gave, of GaveKal Research in Hong Kong, touting a shift toward Asian currencies, as the toilet-paper rotation of fiat monies hits high torque.
I’ll miss the in-person coruscation of the British viscount and the Hong Kong sage, among many other voices. But with the world wilting before our eyes, we will have to wait ‘till doomsday for the politicians and media pundits to admit the egregious mistake of quarantining the healthy in order to fecklessly protect the frail from at most a marginal 0.5% global rise in current historically low rates of mortality.
Seriously folks, if the panic mongers and coffin chasers had not held their daily public potlatch and caterwaul, no one would even have noticed a few hundred thousand line-jumping fogies in the global queue of life. And if they had not been locked in to their nursing homes and apartments, they would have done much better.
Oh well, life limps on…
But in response to the doldrums, Mauldin quotes Thomas Babington Macaulay, writing in 1830 in reply to pessimists of his day:
“We cannot absolutely prove that those are in error who tell us that society has reached a turning point—that we have seen our best days. But so said all who came before us, and with just as much apparent reason… On what principle is it that, when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?’’
Good question, John. Then Mauldin segues into a casual citation of time-prices without acknowledging that they refute nearly all the other economic data recounted at his conference.
John quotes from a famous essay by Nobel Laureate William Nordhaus of Yale. He got his Nobel in 2018 for a pandering poison ivy paper on climate change and carbon taxes. But in 1993, before his Nobel mistake, he made a true breakthrough. In a paper titled, “Do Real Income and real Wage Measures Capture Reality? The History of Lighting Suggests Not.”
“Real world GDP, after inflation, is up over 15X since [Macaulay] wrote that. The cost of a candle in 1800 that would let you read, however dimly, for one hour, was six hours of labor. Today that same amount of light costs about 3/10 of a second of human labor.”
So, which is it John? Real GDP up a mere fifteenfold? Or measured by time-prices — the number of hours and minutes a person has to work to earn the money to buy goods and services — is real output up some 72,000 times?
Time-Prices Meet COVID-19
Perhaps inspired by Ridley, John says it’s a transformation: “The current crisis won’t slow down the Age of Transformation. As many of the speakers have already pointed out, and others will over the next week, the crisis usually has the potential, if not the probable likelihood, to actually accelerate transformation.”
John continues: “As my dad used to say, ‘Necessity is the mother of invention.’ Or innovation.”
Your Dad was right. The insanity will pass and be followed by a stream of law suits. Then the innovations will begin to crowd in.
In order to anticipate the innovations, I recommend, sight unseen, the new book, Innovation, by Matt Ridley coming out any day now. Apart from his world-leading critiques of climate change angst, his two previous books, The Rational Optimist and The Evolution of Everything were both masterpieces of economic history and analysis. I indulge Ridley’s occasionally rather routine Darwinian mono-theory because he makes it into a libertarian poem of insights and revelations.
Ridley has long been on to time-prices. But as the readers of my prophecies know the current virtuosos of time-price data are Marian Tupy and Gale Pooley, who demonstrate that Nordhaus’s insight on the cost of lighting can be duplicated across the entire range of new technologies.
Time-prices show that real economic growth is several-fold faster than economists measure with their Consumer Price Indices, Purchasing Power Parities, Hedonic adjustments, and other federal deflator folderol. This means that real interest rates, adjusted for time-price gains, are normal rather than near zero as our debauched monetary indices depict. This means that after the politicians end their wild siege of economic self-abuse in the name of increased power for politicians and humiliation of the public, we will return to the rates of economic growth usual under capitalist freedom.
That’s why over the next decade or so we will have self-driving trucks (first driven from home as a new Swedish invention enables!) and then self-driving cars and self-driving planes. We will have giant integrated circuits on wafers that perform machine learning in seconds. We will have an array of new vaccines obviating the need to get sick in order get immune. We will have Strategic Investment Conferences in virtual reality zoom with haptic extensions for tele-dancing with Shane. And maybe we will have real life encounters again, as we escape Bill Bonner’s wandering regime of life lived between six feet apart and six feet under.
What we won’t have, I will prophesy, is a world beyond carbon. In order to achieve real artificial intelligence, we will enter a new carbon economy consisting of carboniferous chips with zettabyte connectivity. We will have random access low latency non-volatile carbon nanotube memories from Nantero. Escaping the ugly self-inflated fiasco of COVID-19, we will not close down the economy again for a fake crisis of climate. Greta Thunberg as Time’s person of the year in 2020 will signify the last great triumph of the climate cranks and weather bores.
We are in a pit today, but as Macaulay points out, we have been in such pits for most of human history and we will soon escape. Until then there are books to read and investments to contemplate in a world of transformation measured by time-prices still accelerating progress and, as Pooley shows, abating inequality everywhere.
Time is on our side.
Editor, Gilder’s Daily Prophecy