🚀 Faster, Please! Week in Review+ #24
Has the Biden agenda been pro-progress?; the productivity plunge; the return of supersonic passenger flights; AI and the End of Labor; the future of manned space exploration
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In This Issue
Best of 5QQ
Best of the Pod
The Inflation Reduction Act marks the conclusion of a pretty remarkable run of economic legislation during the first half of Biden’s first term. I offer aquick Up Wing/Down Wing assessment of:
The American Rescue plan ⤵
The Infrastructure Investment and Jobs Act ⤴
The CHIPS and Science Act ⤴
The Inflation Reduction Act 🔃
Energy Permitting Reform ⤴
If you’re keeping score that puts us at Up Wing 3, Down Wing 1, Up-Down 1. (In the essay, I actually give, you know, reasons for the emojis.) But quality is more important than quantity. The ARP was a pretty big fiscal policy error that compounded a pretty big Fed error. But if Jay Powell pulls off his Immaculate Disinflation, the ARP will no doubt be judged less harshly. Also, these are snap judgments. We’ll see how they play out long term. If a more applied R&D policy is eventually matched with some needed metascience reforms to what and how research gets funded, that would be a big plus. Same with immigration to supply needed talent. And if we finally get a handle on anti-build regulation, that would be truly massive. The only thing I might almost guarantee right now is that the legislative calendar is unlikely to be as busy over the next two years as it was the past two.
Productivity, or nonfarm business employee output per hour, plunged at a 4.6 percent annual rate in the second quarter after falling at a 7.4 percent pace in the previous three months, Labor Department figures showed Tuesday. That marked the weakest back-to-back readings going back to 1947. Yes, these numbers are jumpy and are often revised significantly. Still, they’re pretty awful. So what’s probably happening here? I feel modestly confident presenting two cautious insights — one reassuring, the other somewhat less so. Let’s begin with optimism: There probably is a mismeasurement problem happening here, as suggested by the gap between gross domestic product and gross domestic income. Less good, however, is that the short-lived 2020 productivity boom doesn’t seem to have been caused by “automation, artificial intelligence, and a massive investment by households in the equipment and software needed to conduct work from home,” observe economists Robert J. Gordon and Hassan Sayed. I mean, I’ll take productivity growth where I can find it, but what we need is technological progress with sustained economy-wide impacts.
Echoing the Up Wing optimism of his famous “We choose to go to the Moon” speech, President John F. Kennedy said this to the US Air Force Academy’s graduating class in June 1963: “[T]his Government should immediately commence a new program in partnership with private industry to develop at the earliest practical date the prototype of a commercially successful supersonic transport superior to that being built in any other country of the world." The era of supersonic transport that emerged in the 1960s is a great example of how pro-progress economics, culture, and policy can function together to create something amazing. But then noise complaints and environmental concerns led the FAA to ban supersonic flight over the continental US in 1973. And that was it. For nearly 50 years, there’s been no supersonic airline industry here. We’ve wasted decades when we could have been researching and improving that technology — making it faster, safer, more affordable. It was a pretty big moment in aviation, then, when United Airlines announced last summer that it would buy 15 supersonic Boom airliners. While the Down Wing eco-pessimists killed SST 1.0 in the US, perhaps it will be tech progress that poses the biggest challenge to SST 2.0: city-to-city space passenger travel.
Best of 5QQ
▶ Anton Korinek is a professor in the Department of Economics and at the Darden School of Business at the University of Virginia. He is also a David M. Rubenstein Fellow at the Brookings Institution.
1/ The optimistic take on artificial intelligence is that AI will create more high-skill, high-paying jobs. But most Americans don't have a college degree. What can we do for them, besides a universal basic income?
Let me take this in two parts. First, it was true in the past few decades that technological advances created more high-skill, high-paying jobs and benefited people with college degrees. But it's yet to be determined if this will also be true in the future. Some are concerned that the most recent advances in AI may actually go primarily after what used to be called high-skilled jobs. If this happens, then all American workers will be pushed into lower-skilled jobs, and whether you have a college degree or not won't really matter.
Second, if automation does reduce the job opportunities and wages of large parts of the population, we need to think about big solutions if we want to avoid big social turmoil. A universal basic income is not the only big solution — we can also think of broadly distributed capital ownership, etc.
Best of the Pod
Almost 50 years ago, in December 1972, the Apollo 17 astronauts splashed down in the Pacific Ocean, marking the end of the Apollo program. In the half-century since, no crewed mission — not Americans nor anyone else — has ventured beyond low Earth orbit. Despite a series of presidential promises, NASA has yet to return to the Moon, let alone venture to Mars. And despite recent declines in launch costs, thanks in large part to SpaceX, NASA remains in many ways committed to the old, Apollo-style way of doing things. To learn more about why NASA's manned missions always seem to run over budget and behind schedule — and to get a sense of the way forward with commercial space companies — I speak Lori Garver in this episode of Faster, Please! — The Podcast.
Garver was previously Deputy Administrator of NASA during the Obama administration, from 2009 to 2013. Previously, she worked at NASA from 1996 to 2001 as a senior policy analyst. Garver is the founder of Earthrise Alliance, an initiative to better use space data to address climate change. She also appears in the 2022 Netflix documentary Return to Space. Her fascinating memoir, published in June, is Escaping Gravity: My Quest to Transform NASA and Launch a New Space Age.
What would things look like right now without SpaceX? I’m sure you know that SpaceX, as well as Blue Origin, there's a certain criticism that this is some sort of vanity effort by billionaires to take us to space. But I'm assuming that you don't view this whole effort as a vanity effort.
Yes. My book is called Escaping Gravity: My Quest to Transform NASA and Launch a New Space Age. And I'm very clear in it that there wouldn't be much transformation going on without SpaceX. So yes, they are absolutely critical to this story. It would've taken longer without them. We don't even have Boeing, their second competitor, taking astronauts yet to the station. But we would've had competitors. There were people before Elon. I think Bezos, and Blue Origin, is making progress and will do so. There are other companies now online, the Dream Chaser, to take cargo to the space station, private sector. But make no mistake, without them, without Elon and his vision and his billions, Artemis wouldn't be even more than a great name for a human space flight program. Because we didn't have the money for a lunar lander that anyone else bid, except for SpaceX. They have overachieved. They have set the bar and then cleared it. And every time they compete, they end up getting less money than the competition and then they beat them. So it's impossible, really, to overstate their value. But I still believe that the policies are the right ones to incentivize others in addition to SpaceX. And if they weren't here, we would not be as far along for sure.
Thanks for reading this far! Just a quick note for first-time visitors and free subscribers. In my twice-weekly issues for paid subscribers, I typically also include a short, sharp Q&A with an interesting thinker, in addition to a long-read essay. Here are some recent examples of those interviewees: