Tag: Secular Stagnation

End Times

I have been End Times by Peter Turchin, finding it to be one of the most compelling political science books I’ve come across in quite some time.

Turchin is a pioneer in the field of Cliodynamics, having made a mid-career shift from theoretical biology with the aim of applying complexity science, vast databases and more scientific rigour to the study of history.

Prior to a recent mention in a Bloomberg article by Niall Ferguson on the new Sino-American Cold War, I was not familiar with Turchin’s work. For the purpose of this discussion, I will focus solely on “End Times” and not delve into his other works.

In “End Times,” Turchin highlights a significant and in my mind the most under-communicated challenge facing Western (and fot that matter Eastern) societies: Elite overproduction. Western societies have long prided themselves on meritocracy, where individuals can rise from humble origins to positions of power and prominence through the pathway provided by the education system. The traditional aristocracy and clergy have been largely replaced by a credentialed class.

However, a problem arises when there is an excess of elite aspirants graduating into a stagnating economy. Turchin’s extensive historical database reveals that such circumstances, coupled with widespread popular immiseration and record income inequality, inevitably lead to crises. Remarkably, Turchin predicted well in advance that the 2020s would become a period of political instability.

Unfortunately, historical evidence shows that finding a smooth exit from a crisis of elite overproduction is challenging, with only a few exceptions such as the reform acts in Victorian Britain and the New Deal period in the US. Typically, the surplus elites must be culled, either non-violently or, if necessary, through violence.

While Turchin doesn’t explicitly predict how or if Western societies will escape the predicament of an increasing number of credentialed aspirants seeking to join an increasingly gerontocratic elite that controls an ever-growing share of the wealth of economies which lack the dynamism and growth potential of the past, he is not optimistic in the near term.

Turchin’s concept of Elite overproduction should serve as food for thought for policymakers who still adhere to the previous success formula of pushing as many students as possible through the higher education assembly line without fully considering the consequences when these aspiring elites realise their prospects of joining the elite may not align with reality.

Is Harvard Studio 54? And Can America still make Airplanes?

Peter Thiel was speaking on American Democracy and economic stagnation at Harvard the other day, building on the themes he has lambasted for years. Thiel’s perspectives are as always lucid and contrarian and worth listening to:

  • The techno-optimists are wrong, the economy is in secular stagnation. The Kurzweilian “Google propaganda” of runaway progress towards Singularity is false. Progress is much slower today than 50 or 100 years ago.
  • Secular stagnation is primarily a supply-side problem, not a demand-side problem (as other stagnationists such as Larry Summers believe).
  • And the reason for that is CULTURAL not natural. Scientific breakthroughs are still possible, scientists are just too lazy, (Thiel thinks Western culture effectively was killed around the time of Woodstock in 1969).
  • Economic stagnation is a much bigger problem than economic equality – growth of 3-4+% would solve all/most problems.
  • The Big STEM lie: Outside computer science (and perhaps petroleum engineering) there are no well-paying science jobs, for PhDs physics, chemistry etc. Because not much new is happening in the world of atoms. People could just as well study the humanities, where at least there is no expectation of getting a well-paying job after graduation.
  • Women are not starting companies even if there are no societal barriers preventing them from doing so, (not what the feminists want to hear).
  • Society has given up on complex projects.
  • Startups only focus on really easy and trivial consumer internet apps. No willingness to take real risks and solve big complex challenges.
  • Has modern aircraft become to complex (as Donald Trump hinted at the 737 MAX 8), or is America simply not able to produce airplanes any more?
  • Communism with 5-year plans is better than Communism without 5-year plans (but still bad).
  • It is not a problem getting jobs in today’s economy, with unemployment at record lows at ~3,5%, but jobs are badly paid.
  • On average Americans are fine, but Americans are not average. The average house price in America is only 250k dollars. But that is as irrelevant as knowing the river you will have to cross is on average 4 feet deep. Americans are not average types existing in cyberspace. They either live in dysfunctional high-cost mega cities, with decent-paying jobs but still struggling to survive and having to endure dysfunctional 20th century public infrastructure. Or they live in flyover country where society stopped decades ago, where housing is cheap but wages even lower.
  • The US should be more decentralised, not concentrating “all” economic activity in 3-4 metropolises. The UK and France even more screwed with only one mega city each.
  • Should the US do like Brazil or Burma and “drain the swamp” by moving the capital city from Washington D.C?
  • Silicon Valley fast approaching breaking point. Real estate too expensive and public infrastructure bottlenecked, pushing people and companies to secondary cities. Next Google, Facebook likely to come from outside Silicon Valley.
  • Universities today are as corrupt as the Catholic Church in the 16th century. Harvard is basically an exclusive Studio 54 nightclub. Popularity of the institution only upheld by severly limiting access. The value of a Harvard education is not in its intellectual content (almost all of which are freely available online, or much cheaper at non-elite schools) but in the diploma/indulgence letter promising the holder a ‘fast-track’ to heaven, while those who don’t pay up will end up in a bad place.
  • Thiel considered launching a new university but concluded that all US universities established after 1900 had been failures. On the other hand old universities seem able to retain their stature, irrespective of the quality of their academic offering.
  • Even though the audio is bad most of the [Harvard] audience questions sound to be coming at Thiel from very woke angles, with more concern for social justice than economic stagnation, making one wonder for how much longer Ivy League diplomas can retain their illusional value?