🚀 Faster, Please! Week in Review+ #9
A new study shows why progress is hard; Elon Musk and Twitter; a deep dive into that Q1 GDP report; 5 Quick Questions for AI expert Avi Goldfarb and author Jimmy Soni; a discussion of the metaverse
My free and paid Faster, Please! subscribers: Welcome to Week in Review+. No paywall! Thank you all for your support! For my free subscribers, please become a paying subscriber today. (Expense a corporate subscription perhaps?)
Lots of Substack goodness this week. Just tons of it. I covered a wide range of subjects in the essays, Q&As, and micro reads on Monday and Thursday (as well as a paywall-free issue on Wednesday). Please, enjoy the summaries, recaps, as well as a bit of new content!
Melior Mundus
In This Issue
Essay Highlights:
— Progress is hard. And a new study suggests it might be even harder than we think. (April 25, 2022)
— 3 reasons why an Elon Musk-run Twitter might surprise both Left and Right (April 27, 2022)
— Blech, we’re halfway to a recession. But a deeper dive finds some good, pro-progress news in those Q1 GDP numbers. (April 28, 2022)
Best of 5 Quick Questions:
— Avi Goldfarb, economist, on machine learning as a general-purpose technology
— Jimmy Soni, author, on Elon Musk, Peter Thiel, and the founding of PayPal
⭐ Bonus: 5 Quick Questions for economist Mark Jamison on the metaverse
Best of the Essays
😤 Progress is hard. And a new study suggests it might be even harder than we think. | The past half-century of US economic history has been described as the Great Stagnation due to a downshift in productivity growth. The difficulty of generating growth is reinforced by the new working paper, “Additive Growth” by Thomas Philippon of New York University’s Stern School of Business. Since 1947, total factor productivity growth “increases each year by about 0.0245, i.e., 2.45% of its initial value, not 2.45% per year,” he writes. In other words, growth is additive rather than exponential — at least over the medium term. Philippon’s results suggest new ideas will deliver only constant productivity increments “with changes in the size of the increments happening only around the discovery of new GPTs” — widely used technologies with big spillover effects such as the electrification and the internet. Bottom line: Progress is hard, but not impossible. It requires advances both broad and deep, from AI-assisted research to greater robot integration to advances in biotechnology, energy, and space where all the uses cannot be predicted. But GPTs seem to be especially important. We need to engineer economic ecologies favorable to these disruptive bursts of progress.
🤯 3 reasons why an Elon Musk-run Twitter might surprise both Left and Right | Here are a couple of things for Musk’s critics and supporters to think about: Content moderation is super difficult. Perhaps more so than Musk realizes right now. For instance: A 2019 study found that of 22 “prominent, politically active” Twitter accounts suspended since the platform's inception, 21 were pro-Donald Trump versus one that was pro-Hillary Clinton. An obvious free speech problem, right? Anti-conservative bias, right? But those accounts weren’t suspended because they were pro-Trump or pro-tax cuts. Rather, they are a rogues' gallery of “outspoken or accused white nationalists, neo-Confederates, Holocaust deniers, conspiracy peddlers, professional trolls, and other alt-right or fringe personalities,” according to TechDirt. A lot of tough decisions ahead. Musk’s politics are far from simple. His Time magazine Person of the Year profile snarked that Mars-loving Musk has “disavowed terrestrial political affiliations.” Also in that Time piece, I am quoted on his politics: “The reason it’s confusing is it’s not on the traditional left-right spectrum. It’s a politics of progress. It’s a view that says the solution to man’s problems is growth and technological progress and maximizing human potential. It’s not a view fully represented by either side in this country.” Bottom line: I am ultimately far less interested in what Musk might do with the microblogging platform than what’s happening with Tesla and SpaceX — despite Musk’s bit about Twitter’s civilizational importance. I think what happens at those other two companies is what will determine the entrepreneur’s legacy, not to mention the state of our planet and our destiny beyond it.
🤨 Blech, we’re halfway to a recession. But a deeper dive finds some good, pro-progress news in those Q1 GDP numbers. | We’re halfway toward a recession, at least if you use the definition of a downturn as consecutive quarters of shrinkage. Now a recession is not the current expectation. Wall Street is looking for a rebound. (Back in 2014, a negative 1.4 percent quarter was followed by six years of growth.) A recession is never good, but getting one at this moment would be a gut punch as we continue to recover from the pandemic. So, thankfully, there’s some good news to be had. First, there’s the nature of the decline. Key internals were positive even with the bad top-line number. Generally, all the things you would want to be up were up. Both consumer and business spending added to the economy. The solid business investment numbers are especially important if we’re going to see a productivity boom this decade. Look, I don’t do quarterly or annual economic forecasts, and this newsletter isn’t meant to provide actionable investment advice. Yet I will say this: I prefer line up versus line down. And this newsletter is devoted to pushing policies that make the former happen a lot more frequently than the latter. Let’s hope this down quarter was just a one-off clunker.
Best of 5 Quick Questions
Avi Goldfarb is the Rotman Chair in Artificial Intelligence and Healthcare and a professor of marketing at the Rotman School of Management, University of Toronto. Avi’s research focuses on the opportunities and challenges of the digital economy, including the recent paper "Could Machine Learning be a General Purpose Technology?" co-authored with Bledi Taska and Florenta Teodoridis. With all the attention that's been given to artificial intelligence as the next general-purpose technology, including here at Faster, Please!, I wanted to get a better idea of how we can detect emerging GPTs, so I reached out to Avi for a quick Q&A:
Looking at the possibility of emerging GPTs like machine learning to generate productivity gains through innovation loops, how bullish are you on the prospects of a New Roaring '20s of accelerated productivity growth?
I am bullish about the potential for machine learning to accelerate productivity growth. Of the emerging technologies today, our research says it is relatively likely to emerge as a GPT. I am wary to say it will be a Roaring ’20s or Roaring ‘30s. Co-invention takes time. It was clear that electricity would be a transformative technology by the end of the 1870s. It didn’t hit half of US factories until the 1920s. It took decades to figure out how to build factories to take advantage of what distributed power could do. Hopefully the discovery process for the new systems to take advantage of machine learning technology will be faster than that, but there is no doubt that the necessary system-level change has a long way to go.
Jimmy Soni is an award-winning author. His book, A Mind at Play: How Claude Shannon Invented the Information Age, won the 2017 Neumann Prize, awarded by the British Society for the History of Mathematics for the best book on the history of mathematics for a general audience, and the Middleton Prize from the Institute of Electrical and Electronics Engineers. Soni’s new book is The Founders: The Story of Paypal and the Entrepreneurs Who Shaped Silicon Valley. My podcast with him comes out soon, but Faster, Please! paid subscribers get an advanced look at our conversation.
If you were a Twitter employee right now — given Elon Musk’s attempt to purchase the company — would you think “I’m embarking upon a grand new adventure” or “Better freshen up the resume”?
I think it's decidedly the former. And I should say, I hope that I would think that, and I think it's a good posture to think that. There are changes that are going to be made to the company and the product. And I think that you can embrace them and sort of hang on for the ride and do your best. It seems to me to be a good way to live your life in general. But if I were a Twitter employee, I would reframe the whole situation and think to myself, "One of the world's truly great innovators just purchased our company and wants to make changes to it. It will be a sight to see and something that we will never experience again. We ought to embrace it."
⭐ Bonus: 5 Quick Questions for economist Mark Jamison on the metaverse
Mark Jamison is the director of the Public Utility Research Center and Gunter Professor at the University of Florida’s Warrington College of Business. He’s also my colleague at the American Enterprise Institute. Mark has been writing about the metaverse’s emergence, the challenges it faces, and how regulators should respond. Recently, Mark joined me for a podcast chat to explain where the metaverse is headed. To supplement that chat, I asked Mark a few questions, just for Faster, Please! subscribers.
1/ You recently wrote that Elon Musk can have his cake and profits too, if he turns Twitter into a new kind of common carrier or some sort of decentralized platform. What do you mean by that?
So "common carrier" in the past has been about carrying things or information from one place to another: trucks, wagons a few centuries ago, telephones carrying information. What if common carrier, instead of being about carrying those packets of things, was also about carrying software, also about carrying transactions? Suppose that Musk said, "I'm going to have a platform that allows people to be able to develop their own algorithms that prioritize content, or maybe packages content together. And I have cryptocurrencies that enable all kinds of transactions." So if I'm going to read your really cool stuff, you'd probably charge me for that. But you might pay some really smart guy to read your stuff, because he would circulate it to other people. And you could do that if he had the right kind of software platform that enabled people to do it and a cryptocurrency to match.
2/ When you read journalists who cover the metaverse, are there things they get wrong all the time, or has it been pretty accurately reported?
I couldn't tell you for sure. Generalization would escape me. It's all pretty interesting, and do you hear a lot of different kinds of opinions. Now, there are some conclusions that I'm skeptical of. So the conclusions about, "Oh my gosh, this needs to be regulated because all these horrible things are happening." I'm not so sure the government makes things better. So I'm worried about that conclusion. I've also seen the conclusion that all these big platforms are just taking too much of developers' profits. Well, that's all yet to evolve as well. So I'm skeptical of the conclusions. The facts? That's hard to know.
3/ Do you think government will be interested in regulating the fees tech companies take from developers in the metaverse?
Absolutely. For anything that looks like a big number, the government's going to get interested in to try and understand, “Is that number necessary for the innovation that's happening?” That's beyond government’s ability to see, but they tend to believe that they can see it anyway.
4/ Looking back at non-fungible tokens (NFTs) a few years from now, will they look like an innovation or a fad?
They're going to be an innovation, and it's not because we got these cool images that look like my Nike sneakers or a shirt or something like that. It's because they're embedding smart contracts in them. For example: Something you produce can be turned into an NFT so you control who sees it, who gets to forward it, etc. Do they pay for it or do you pay them? Or is it a zero transaction fee? You can customize all of that. And that gives us a lot of opportunities. I listen to journalists talk about, "Oh gosh, these horrible social media companies have pillaged our business. We need government to subsidize us." They're missing the boat, because the metaverse creates all new business models for them. They now have greater potential than they had 50 years ago. And that'll all be done with NFTs and with cryptocurrencies, blockchains. That'll all be done that way.
5/ Given those innovations and the dynamism of the sector, will government be more cautious when trying to break up or regulate these companies?
I hope it does, but I'm not optimistic. If you look at the history of anti-trust, my impression from the readings I have done is that we tend to take on companies just when they've peaked and are starting to go down. That has just happened too many times. And I think that'll probably happen here, too. It wouldn't surprise me anyway.