My Interview with Forbes magazine [Part 1]
Today and on Monday, I’ll be featuring an interview I did at Forbes with Rich Karlgaard.
Below, you will find part 1 of this series. Keep scrolling…
Q: Is technology progress accelerating or decelerating at the level of society?
It’s continuing to advance, accelerating in some areas, such as cryptography and sensors, and bogging down in others, such as semiconductors and “clean energy.” We don’t even have robust distributed power. I completely agree with Peter Thiel on the essential thesis that technology progress is not inevitable. It’s the product of human creativity, which always comes as a surprise to us. If creativity didn’t come as a surprise, we wouldn’t need it, and socialism would work. Today we need creativity across the board.
Q: What do you mean by that?
I like to tell the story that Margaret Mead told, of these mariner tribes that once made their living building streamlined canoes to go out and catch fish in huge volumes, but over time just forgot how to make the canoes. They forgot the crucial factor in their prosperity. When Mead found them, they were sitting on the beaches gazing glumly out at the ocean. They were on a path to extinction with no idea that streamlined canoes were the solution to their problem.
Q: But today learning is captured and stored forever on billions of devices. It’s not going to disappear.
We’re still at risk from this kind of amnesia. We’ve forgotten the real entrepreneurial sources of creativity and progress. In my last book, The Scandal of Money, I talk about governments having forgotten what money is for and how it works. As a result, they’re issuing more and more of it, on the assumption that somehow money constitutes wealth, instead of realizing that money measures wealth. Now, the biggest industry in the world economy is the $5.1 trillion per day currency-trading carnival, which, in the end, doesn’t even yield stable currencies. It doesn’t even provide a measuring stick for entrepreneurial activities. So I think it’s perfectly possible for people to blind themselves to the real sources of their progress and prosperity.
Q: Well, the government can inflict damage at the margins and not see the boiling frog problem. The slow growth coming out of the 2007-09 recession showed that. As Scott Grannis and others have pointed out, the US today would be a $21 trillion economy instead of an $18 trillion economy, if only we’d grown at 3% per year during the recovery. But to the government, the difference between 2% and 3% growth in any given year doesn’t look like a big deal.
I think that’s all true. However, measuring progress through GDP is treacherous. GDP is a general measure with a dollar index, and I don’t think it captures the qualitative nature of technological progress. All real increase in human welfare derives from invention and creativity, which is summed up in technological progress. Now, the great recession of 2008–12 or 2013 was a really serious event, despite the so-called stock market boom that went on.
Q: So-called boom? Stocks have more than tripled since March 2009!
Which, I think, is nullified by the drastic shrinkage in the number of public companies. Since the 1990s there has been a 50% drop in the number of public companies, and a 50% drop in the number of shares, plus a real dearth in IPOs — a 90% drop in the average annual number of IPOs. So-called Communist China now has twice as many IPOs as we do, and a smaller government measured by share of GDP.
If you consider the entrepreneurial doldrums instead of GDP, we’re not making progress at the rate we did in the 1980s and 1990s. However, the sources of revival are very much present. There’s a worldwide eruption against U.S. stagnation in the crypto-currency movement, which is a global campaign, and many of its leaders are outside the U.S. It’s providing alternatives to this daily $5.1 trillion in gambled money. It’s providing alternatives to today’s porous, insecure Internet, in which Equifax or Yahoo can lose hundreds of millions of items of personal data and the reaction of the big five Internet leviathans is merely to demand more passwords. They make our computers increasingly inaccessible to us but not to the pop-up malware minuses called “ads.” All of this is being remedied through the new crypto-currency movement that began in 2009 with Satoshi and bitcoin.
Q: In fact, blockchain is much bigger than crypto-currency.
Absolutely. A totally insecure Internet is being addressed globally by the movement toward blockchain: distributed security, a “layer-eight” new security architecture for the Internet. A Blockstack to replace the increasingly perforated Internet stack. So, yes, I think that the foundations for an era of very rapid growth exist, which is what my book Life After Google is all about.
But for the last ten years we’ve actually been moving backward in some crucial measures. It’s not good to have most of the stock market’s advance be in five companies, which buy back their own stock and buy up the shares of their rivals. I’m talking about Google, Apple, Facebook …
Q: Amazon and Microsoft.
Those companies are supremely great companies, but they’re going over the hill.
Q: I want to get back to blockchain, but first finish your point about small business stagnation. The Kauffman Foundation agrees. It studies a broad base of small businesses and startups, not just the glamorous unicorns in California and Seattle, and has concluded the same thing: Business formation has really slowed down.
And these are all bad signs. They don’t represent some fundamental change in technology. They reflect an attack on the educational system by foisting the smothering $1.5 trillion burden in loans on students to support a ridiculously overwrought leftist bureaucracy of indoctrination. They also reflect an expansion in the administrative state through massive increases in regulations, rules that really favor big companies. And not because of their alignment with technological opportunities, but because of their abilities to lobby, lawyer, litigate and find paths through the maze of rules.
Q: Let’s get back to blockchain. What have you discovered so far?
The blockchain field is an amazing efflorescence of creativity, entirely comparable to the dot-com eruption of the 1990s. It will similarly have a lot of losers, seminal losers like Netscape, as well as obscure, prospective giants like Amazon and Google.
Q: Are you ready to name the winners and losers?
I will be in about two months.
Stay tuned for more on this interview in Monday’s Daily Prophecy.
Editor, Gilder’s Daily Prophecy