As Tyler tells the story, there is a progressive expansionary impulse to government, for which technological change creates opportunities, so government expands until those opportunities are fully exploited. Tyrone says his brother has the story backwards. Why, asks Tyrone, does government not only expand in absolute terms as a response to technological change, but also in relative terms? After all, as Tyler points out, private enterprise also has a natural expansionary impulse. With technological change, Tyler writes, “Everything was growing larger.” Yet, to the degree that we can measure it, government has grown dramatically in its share of the overall economy. Why does government win? Tyrone says government is a reluctant adopter of new technology (“Have you been to a government office?”), but that government outgrows the private sector despite this, because the concentration of economic power that attends technological changes demands countervailing state action if any semblance of broad-based affluence and democratic government is to be sustained. Tyrone (who is much more arrogant and less pleasant than his brother) proclaims this to be his “iron silicon law”: In (non-terminal) democratic societies, technological change must always and everywhere be accompanied by the growth of institutions that engender economic transfers from the relatively few who remain attached to older productive enterprises to the many who require purchasing power not only to live as they did before, but also to employ one another in novel or more marginal activities that were not pursued before. Inevitably those institutions develop in state or quasi-state sectors (which include the state-guaranteed financial sector and labor unions whose “collective bargaining” rights are enforced by the power of the state). Tyrone tells me that the only thing the post-Reagan “small government” schtick has accomplished is to push this process underground, so that covert transfers have been engineered by a “private” financial sector in ways that are inefficient, nontransparent, and often fraudulent according to traditional laws and norms. Some of these weak institutions upon which we relied to conduct transfers broke in 2008, so now we’re really feeling the pain. We’ll continue to feel the pain until we restore the ability of the financial system to hide widespread transfers, or until we employ some other sort of institution to provide a sustainable dispersion of purchasing power.

Argues that the state grows because technology disrupts widespread affluence and the state is stepping in to “preserve democracy”.
2012-12-10: See also: cookie cutter “innovators”.

2013-03-03: I like this hypothesis. I have yet to meet a MBA where that fly-by-night degree didn’t count against the person. MBAs are often seen as a miracle cure for ailing careers, or picking the wrong major in college, but really all they signal is that you don’t understand opportunity cost.

The business mentality that focuses on short terms profits is what is preventing the rollout of radical technology. The fault is regulation and regulators. If a company was truly innovating, then that company would outpace the regulators. If a company is moving so slow that they have not escaped the regulatory paradigm then they have not achieved a true moonshot technology. Masses of people with MBAs are managing companies for the last several decades. They focus on milking the profit of existing technology. They can milk a cow but they cannot generate a truly new cow.

2017-03-02: Americans are risk-averse

Americans have stopped taking risks, are too comfortable, and rely too heavily on incremental improvements of existing goods & ideas, which has resulted in a stagnation of our culture and economy.

2019-04-12: We might start to emerge from stagnation

We are now starting to get a hint of the future transformative technologies that you guessed were on their way in “The Great Stagnation”. You had not speculated on what they might be, but there are faint hints on what is likely to happen. I believe this article is one leg: extremely fast air travel. The second leg is the Hyperloop and similar: extremely fast ground travel. The third leg is synthetic biology. The fourth leg is quantum computing, which is finally starting to show that it might work. And the fifth, and final leg, is fusion energy, which looks eerily like it will actually come to fruition this time. Put those 5 together and you have the makings of a new economy, with a huge burst of growth to come for many decades. These are just faint hints, of course, but they’re starting to get increasingly clear.

2020-12-14: Perhaps Covid helps with ending stagnation

If the Great Stagnation is ending (we will see), it seems as if the COVID-forced remote work revolution has to have played some sort of role.

Speaking from personal experience as a white collar Exec, the productivity gains for our highest value workers has been immense. The typical time-sucks and distractions of in-office work have been eliminated, as have their personal time investments like physically visiting the grocery store or running errands. Mental focus on productive efforts is near constant.

Perhaps most importantly, work travel is not happening. Valuable collaborations with colleagues, customers, regulators or other partner companies aren’t delayed by the vagaries of the various groups’ availability to meet in person, navigating being in different cities, flights, hotels, etc. Collaboration happens as soon as you have the idea to meet via Zoom. And a lot more collaboration happens as a result. It may be lower productivity collaboration than meeting in person around a whiteboard (maybe), but the sheer quantity of it means on net there’s perhaps been a boom in cross-pollination of ideas.

2021-01-06: Software stagnation

Software is eating the world. But progress in software technology itself largely stalled around 1996.

2 possible causes come to mind: we’re in exploit, rather than explore mode (there’s an overhang of areas where we haven’t even applied our current software technologies, as the pandemic has demonstrated: Japanese companies still fax, checks are being mailed out, etc). And we have too much software, and don’t know how to replace / refactor it (think of all the systems still running on COBOL / Excel)

2021-11-05: Here’s a longer piece on COBOL:

The problem for banks, though, is that while their COBOL may be stable, their customers’ expectations aren’t. As you probably realize, the landscape of the financial industry is shifting quickly. Transactions are increasingly happening on Venmo-style apps that let people ping money to friends; services like Coinbase let people buy cryptocurrency; there are new lending apps like Tala and Upstart. People now expect ever-easier ways to manage their money via software. This is where banks, which should have inherited advantage in moving money around, have it harder. It’s difficult for them to roll out buzzy new features quickly, because they have to deal with their Jurassic “technology stacks”. Those old COBOL-fueled backends store data in disparate chunks — “they have a lot of silos”. And it’s dangerous, of course, to tinker much with the old code: “You’ve got resource pain, technical pain, operational pain, risk pain.” But a startup can do whatever it wants. There are no old systems. They’re in what programmers lovingly call a “green field” situation. Instead of buying hundreds of thousands of dollars worth of mainframe computers to store and process their data, they just rent space on a “cloud” system, like Amazon’s. They can write code in new languages, so they can hire nearly any eager young computer science student. And they don’t even need to build everything themselves: When Showoff is crafting a new fintech app, it might use an existing service to handle a tricky task — like using Stripe to process payments — rather than trying to create that software themselves.