It doesn't discuss some of the biggest bubbles, those in housing. The US, Japan, and China have all had housing and land price bubbles. They unwound in different ways. In the US it was primarily a credit bubble. Japan had a huge real estate bubble, and it collapsed so hard that the Nikkei index didn't recover for decades.
China's bubble resulted in large numbers of half-finished buildings. That's because China allows selling yet-to-be-built mortgaged apartments to consumers. In the US, you have to get construction financing at a higher rate, and can only get a mortgage on a completed structure. Banks that do construction financing pay out as work progresses, not all up front.
Fracking isn't a bubble. Fracking is a cost reduction technology in an existing market. No need to create a market.
Railways had the "railway mania" period, but track was laid and trains were run. More like a growth spurt than a bubble.
whall6 · 9h ago
Agree that housing was a missed bubble, but disagree that fracking shouldn’t be considered a bubble.
Fracking certainly is a technology, but the author is using the word to describe the very real market bubble that popped in 2016-2017. It wasn’t as apparent in the public markets (and it is no surprise why you may not have noticed it) but several private operators spent far in excess of generated cash flow, ran out of cash and defaulted. In turn, many of their private equity sponsors blew up or left the space.
Animats · 8h ago
Ah. Thanks. Did not know that the fracking people overdid it like that.
Centigonal · 9h ago
Great comment in general, but I have a minor correction: Railway Mania was definitely a bubble. Valuations were overinflated, investors were irrationally exuberant, charlatans funneled up a bunch of dumb money, many rail lines were ultimately not built, and the unwinding of the bubble wiped out many smaller investors and railway companies.
The resulting infrastructure created a lot of value for the UK (similar to the 90s telecom bubble in the US and Canada), but there was definitely a crash that destroyed a lot of people's bank accounts and represented a big dip in the value of the market.
WalterGR · 10h ago
American productivity had basically been flat since 1973
By all measures I’ve seen, “productivity” has almost doubled, and it’s wage growth that has been flat.
How does this journal measure productivity?
Animats · 10h ago
In the US, manufacturing and agricultural productivity did great. The result was manufacturing and agriculture dropping to around 10% of the work force.[1] Job growth is in low-productivity jobs. Largest area of growth is "healthcare support occupations".
So improvements in healthcare and the rapid surge in lifespans resulting from spending on medical care improvements so that more people could enjoy what they looked forward to for many years, a long, happy and healthy retirement, ruined America? This is the kind of perverse analysis that typically arises as an unwelcome emergent property of systems controlled by people facing inflexible deadlines to meet equally inflexible and arbitrary constraints and goals.
tuatoru · 7h ago
What long, happy, and healthy retirement? "Healthcare", like everything, is ironically named. It's actually sickness mitigation.
One of the things that economic demographers like to mutter about from time to time is that lifespan is going up, but healthspan is not. Women live longer than men, but approximately all of the extra is spent in a state of ill health.
stevenAthompson · 9h ago
The article says (paraphrasing Thiel): "The world of bits (information technology) may have been on an upward trajectory, but the world of atoms (physical products) had been stagnant for decades."
It's not wrong, but also there's a strange sort of value judgment hidden within the phrasing, and maybe within yours as well. We seem to be saying that this sort of growth is bad, or at least inferior to the kind where more "Stuff" is made. The article even directly refers to healthcare as "unproductive." It doesn't FEEL unproductive to the people who get to live longer, happier lives.
crq-yml · 5h ago
It's built into the premise of productivity, which ultimately derives from Locke's "labor theory of property" - if you put labor into something, you have a claim on its ownership. Later philosophers studying trade and economy built this up to mean: "if we can increase the quantities of things that are legible as assets, optimizing their production on the balance sheet signals increased labor productivity". We've been awkwardly gluing that concept onto everything ever since and trying to measure things like teaching, wildlife management and "designed in California" electronics as productive activities.
Locke was thinking in agrarian terms, about how farmers work the land, or how many ships a nation has in its fleet - he was building off the mercantilism of prior centuries which was also balance-sheet driven, but in a pure trading sense, with no connection between labor/ownership. That connection was important to ushering in coherent industrial policy, since it expressed the idea of importing raw materials and then exporting finished ones at a profit - when you come up with new categories of asset to sell, or optimizations on existing ones, the economy provides more goods and services, it experiences a gain in material wealth. The real limitation is that it's too localized: commons goods are persistently attacked by it because they don't figure into the balance sheet.
WalterGR · 9h ago
That may well be the case - but that’s not how the number called Productivity is measured.
eli_gottlieb · 3h ago
At that point, people might be more productive if we stopped forcing them to get jobs in healthcare support occupations and let them do something more interesting with their time.
tuatoru · 7h ago
It probably doesn't measure productivity; it probably takes numbers from FRED or the BLS like everyone else.
WalterGR · 6h ago
Both BLS and FRED show significant increases since the 70s. This article is using some other methodology (assuming they’re using any methodology at all.)
bamboozled · 9h ago
How can American productivity have doubled if basically everything American companies sell (and buy) is made in China et al?
stevenAthompson · 9h ago
Productive does not equal production.
*EDIT* To clarify, we can be economically more productive without physically manufacturing more widgets. Physical junk is only one small part of the economy.
bamboozled · 7h ago
What would the US economy look like without Chinese gains in productivity and quality?
tuatoru · 7h ago
Pretty much like it does now.
Over 80% of the economy is services - healthcare, education, law, banking, insurance, real estate, X as a Service, marketing, engineering design, sales, trucking (yes, moving stuff around is a service), construction (yes, piling stuff up so it doesn't fall down is a service).
Multicomp · 11h ago
I enjoyed reading this article, particularly it's review of the new lunar society book. That society reminds me of what excited me when I watched the Windows XP tour for the first time: this is a device intended to be a digital power tool for you to be able to do things you couldn't do before and do them better and faster and easier than before.
While Windows of today is deceptive and buggy, the value that it has is because it still has pieces of that now discarded design philosophy.
Zooming out from a particular technology platform, I don't know how to build that new lunar society but boy do I want to live in that world, innovation for its own sake to increase human flourishing so that we can all live the good life in a human focused technologically advanced world.
In short: building the sci Fi flying cars future.
CalChris · 9h ago
TL, did read. Cowan and Thiel were bummed that Obama was President. Hobart and Mindell are enthusiastic that America has seen the errors of her ways and embraced the new insanity.
FWIW, Cowan wrote an enthusiastic blurb for Boom.
CalChris · 7h ago
The point being that Cowan is no longer bummed.
yesbut · 9h ago
We'd all be better off if we just ignored the Doomer Techno-Optimism prophets and their visions of the future.
For one, they want to establish "Constitution Free Zones" outside of democratic control of nation states. All to create tax havens and increase their own profits.
These are scam artists. Reject them and their self-serving "vision of the future". You all are being had because you refuse to read history books.
keybored · 11h ago
> American productivity had basically been flat since 1973 and was under further strain from unproductive spending in government, health care, and education.
The last graph I saw showed American productivity going up at the same rate all since post-WWII to now.
Please don’t say that the stagnation refers to worker wages starting to stagnate sometime in the 1970’s.
It doesn't discuss some of the biggest bubbles, those in housing. The US, Japan, and China have all had housing and land price bubbles. They unwound in different ways. In the US it was primarily a credit bubble. Japan had a huge real estate bubble, and it collapsed so hard that the Nikkei index didn't recover for decades.
China's bubble resulted in large numbers of half-finished buildings. That's because China allows selling yet-to-be-built mortgaged apartments to consumers. In the US, you have to get construction financing at a higher rate, and can only get a mortgage on a completed structure. Banks that do construction financing pay out as work progresses, not all up front.
Fracking isn't a bubble. Fracking is a cost reduction technology in an existing market. No need to create a market.
Railways had the "railway mania" period, but track was laid and trains were run. More like a growth spurt than a bubble.
Fracking certainly is a technology, but the author is using the word to describe the very real market bubble that popped in 2016-2017. It wasn’t as apparent in the public markets (and it is no surprise why you may not have noticed it) but several private operators spent far in excess of generated cash flow, ran out of cash and defaulted. In turn, many of their private equity sponsors blew up or left the space.
The resulting infrastructure created a lot of value for the UK (similar to the 90s telecom bubble in the US and Canada), but there was definitely a crash that destroyed a lot of people's bank accounts and represented a big dip in the value of the market.
By all measures I’ve seen, “productivity” has almost doubled, and it’s wage growth that has been flat.
How does this journal measure productivity?
This is the conundrum of productivity.
[1] https://www.bls.gov/emp/tables/emp-by-major-occupational-gro...
One of the things that economic demographers like to mutter about from time to time is that lifespan is going up, but healthspan is not. Women live longer than men, but approximately all of the extra is spent in a state of ill health.
It's not wrong, but also there's a strange sort of value judgment hidden within the phrasing, and maybe within yours as well. We seem to be saying that this sort of growth is bad, or at least inferior to the kind where more "Stuff" is made. The article even directly refers to healthcare as "unproductive." It doesn't FEEL unproductive to the people who get to live longer, happier lives.
Locke was thinking in agrarian terms, about how farmers work the land, or how many ships a nation has in its fleet - he was building off the mercantilism of prior centuries which was also balance-sheet driven, but in a pure trading sense, with no connection between labor/ownership. That connection was important to ushering in coherent industrial policy, since it expressed the idea of importing raw materials and then exporting finished ones at a profit - when you come up with new categories of asset to sell, or optimizations on existing ones, the economy provides more goods and services, it experiences a gain in material wealth. The real limitation is that it's too localized: commons goods are persistently attacked by it because they don't figure into the balance sheet.
*EDIT* To clarify, we can be economically more productive without physically manufacturing more widgets. Physical junk is only one small part of the economy.
Over 80% of the economy is services - healthcare, education, law, banking, insurance, real estate, X as a Service, marketing, engineering design, sales, trucking (yes, moving stuff around is a service), construction (yes, piling stuff up so it doesn't fall down is a service).
While Windows of today is deceptive and buggy, the value that it has is because it still has pieces of that now discarded design philosophy.
Zooming out from a particular technology platform, I don't know how to build that new lunar society but boy do I want to live in that world, innovation for its own sake to increase human flourishing so that we can all live the good life in a human focused technologically advanced world.
In short: building the sci Fi flying cars future.
FWIW, Cowan wrote an enthusiastic blurb for Boom.
For one, they want to establish "Constitution Free Zones" outside of democratic control of nation states. All to create tax havens and increase their own profits.
These are scam artists. Reject them and their self-serving "vision of the future". You all are being had because you refuse to read history books.
The last graph I saw showed American productivity going up at the same rate all since post-WWII to now.
Please don’t say that the stagnation refers to worker wages starting to stagnate sometime in the 1970’s.
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