Co-authored with Gale L. Pooley
At a recent conference at Stanford University, the American entrepreneur Peter Thiel poured ice water on the idea that humanity has made much progress in recent decades. Thiel, the brilliant billionaire who helped to start Facebook and PayPal, is famous for saying, “They promised us flying cars, and all we got was 140 characters.” At the Stanford conference, he doubled down on his pessimism, noting that “we’ve had this incredible stagnation for the last 50 years, and then we have unbelievable amounts of propaganda that this is not true.”
Thiel’s perspective appears to be driven by the supposed lack of progress in such areas as supersonic transport, biotechnology, and energy. Perhaps, but human flourishing consists of more than flying cars, life extension and nuclear fusion – all of which may yet come to fruition. And so, we would ask him to follow his fellow PayPal co-founder Elon Musk’s advice and “look at the numbers.” Hopefully, Thiel will reassess his attitude toward other types of progress experienced by the average person.
Consider resources. In our new book, Superabundance, we looked at a wide variety of commodities, including foods, fuels, metals, minerals and finished goods. What we saw was an incredible growth in abundance. More specifically, when we looked at the time prices of 50 basic commodities between 1980 and 2018, we found that the average fell by 71.6 percent. That means for the same time of work it took to earn enough money to buy one unit in the basket of our 50 commodities in 1980, people could get 3.52 units in 2018. That suggests a 252 percent increase in personal resource abundance.
Over the same period, the global population increased by 71.2 percent. In our framework, global resource abundance is equal to personal resource abundance multiplied by the population size. Based on that measure, the world saw a 4.84 percent compound annual growth rate, which means that resource abundance doubled every 14.66 years.
It’s not just basic commodities that are becoming more abundant. When we compared the time prices of 35 everyday items, such as appliances and clothing, between 1979 and 2019, we found that blue-collar workers in the United States saw their abundance increase by 261 percent. On average, a worker gets 3.61 units for the same length of work that was required to buy just one in 1979.
Thiel is right. We didn’t get flying cars, but we did get iPhones. Billions of them. For under 24 hours of work, an ordinary person can get a device that would have cost over $100 million in 1991. Would you rather have a flying car or smartphone? The truth is that many of us would choose the latter.
Thiel is somewhat dismissive of iPhones, sarcastically asking if “the flatness of the new iPhone is such a large hedonic adjustment that Grandma should be happy to eat cat food.” Peter’s been spending too much time listening to Senator Bernie Sanders. There’s a 75 percent chance that Grandma owns a smartphone and a 50 percent chance that she owns a cat. She also enjoys abundant food and a life expectancy of 80 years, up from 73 in 1960. Her smartphone has dozens of apps that help her talk to her grandkids, monitor her health, and entertain herself with puzzles and games.
At Stanford, Thiel also noted that “if you want to solve our macroeconomic problems in the United States, you could solve every problem in our society if you got to 4 percent GDP growth.” Our analysis of 18 different datasets with several of them going back to 1850 suggests that global resource abundance has been increasing at a compound annual rate ranging from 2.39 to 10.51 percent – with an average of 4.38 percent.
Progress has been especially good for the poor – especially when considering time inequality. A person in China working eight hours a day to earn enough money to buy food in 1960, would only need to spend around 18 minutes to do the same in 2021. For the time it took to buy one meal in 1960, he or she would get 27 meals in 2021. The Chinese gained 7 hours and 42 minutes a day to do with as they please. Indians gained 6 hours and 30 minutes a day over the same period. Some 3 billion people now have much more time to learn and contribute to knowledge discovery and creation.
While it is easy to be pessimistic if you compare today to utopia, a much better perspective is to look at yesterday and see how far we’ve come in our journey to lift everyone from poverty. We’re experiencing growth in material abundance, time abundance, and choice abundance. Welcome to Superabundance!
I'm largely sympathetic to this viewpoint, and the evidence seems clear-cut. Nevertheless, what I think people like Theil are alluding to, along with J. Storrs Hall in Where is my flying car, is that we could have had so much more progress (including flying cars, nuclear fusion, and supersonic transportation) if it weren't for some combination of regulations, communism, wokeness and "ergophobia" or environmental romanticism, etc. I'm broadly sympathetic to this view too.
Seems to me that at some level, it's true that we've had a lot of progress on a lot of important metrics, but also not as much progress as we really could have had in the world of atoms.
P.S, writing this from Sweden, where we're now seeing record high electricity costs (as much of the rest of Europe). What if we had invested more aggressively in nuclear power during the last 20 years rather than having started to shut down our plants?
I like this time-price comparison mechanism, because it looks like it will better for tracking human-level impact than money will. I am looking forward to the book!
Out of curiosity, what was the time price gain for the previous 40-50 year spans before the ones you mention? The stagnation claim isn't that progress is literally zero, but that the last 50 years has shown us much less than the 50 years before that, and the 50 years before that. Thiel's position is more specific to the United States, and I note that in the link you compare the Chinese, Indian and American cases:
The Indian case:
The American case:
7.7 hours and 6.5 hours are very different from 0.775 hours. This makes it look like the Chinese made just shy of 10x the progress America did, by time-price comparisons. Following on the roughly 50 year chunks, this means that China made 10x the progress America did over the last 50 years, by following the path America did the 50 years before that.
This seems consistent with the claims in The Rise and Fall of American Growth, which to oversimplify amount to most of the growth after WWII being due to fully capitalizing on all the inventions from the end of the 19th century, and that there are limits to that growth.
I don't think it makes sense to compare America's growth vs China or India's growth over this period.
Yes, the countries were adopting similar technologies, but when America was adopting them, they were adopting those technologies at the technological frontier. When China and India were adopting them, they were not. It's easier to grow by adopting already invented technologies than by inventing new ones. This is essentially the logic behind Solow-Swan convergence between rich and poor countries, which as an economic model has held up pretty well to what we observe in the real world.
As advocates of progress studies, we should be looking to see if it is possible to accelerate the rate of frontier growth. There are good reasons to think it might be. As others mentioned, J. Storrs Hall lays out some technologies that were not adopted for various reasons. AI could greatly accelerate technological and economic development. But also, we've also observed upshifts in economic growth in the past. Post-Industrial revolution, the economic growth rate, at the frontier and per capita, was about 1% a year, then about 1.5% a year after 1880, and about 2.5% a year after 1930 (I think - my memory is a little fuzzy on the exact numbers here). Thomas Philippon's paper (summarized by the author in Tweet form here) offers some interesting insights into why this might be. We've seen the story of accelerating frontier growth before - the question is why haven't seen it again in the past 50 years.
I agree that making direct comparisons don't make sense on their own merits; I used them as stand-ins for the previous period of American growth (which may be in the book, but were not in the link). I don't think the frontier-vs-catch-up distinction matters to the point argued in the post, though: I strongly expect the American technical frontier 1920-1970 period looks more like the China or India catch-up 1970-2020 period than it does the American technical frontier 1970-2020.
Phrased another way, the time-price method gives us the same stagnation story as the conventional methods do. This is a separate question than what is to be done to speed up frontier progress.
The tweet summary from Philippon is very interesting - I just pulled it from NBER, where the title appears to be Additive Growth.
"While it is easy to be pessimistic if you compare today to utopia, a much better perspective is to look at yesterday and see how far we’ve come in our journey to lift everyone from poverty."
It's easy to be pessimistic if we do the rational thing, and look at where we're going next.
There is exactly no chance that we can keep nuclear weapons around forever and never use them. We don't have the slightest idea of how to get rid of these weapons. And so we've decided to stop thinking about it.
Consider the man who has a loaded gun in his mouth, and is so bored by the gun that he's rarely interested in discussing it. Would you consider this man rational? Would you hand him another gun, or give him more power of any kind? Or would you dial 911 for an emergency intervention?
This is the species which Thiel and other 19th century thinkers want to give ever more power at an ever accelerating rate. They're insane. Just like the rest of us.
I dunno. To me, Thiel sounds like just another "expert" stuck in the 19th century. That mindset made perfect sense in the long era of knowledge scarcity. But we no longer live in that old era, but in a new era characterized by knowledge exploding in every direction. People like Thiel don't seem to grasp that we can't just take a philosophy from one era and slap it down on a very different era, and expect everything to continue working.
Superabundance can be erased in literally 30 minutes. A well established fact that we know intellectually, but seem completely incapable of facing emotionally. And so we just ignore it, and cling blindly to the hero stories of the 19th century.