Biden and the New Roaring '20s; supersonic airliners; the 21st century slowdown; Musk, Grimes and AI; bullet trains; and more ...
“I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that. I wish I had more years left.” - Thomas Edison
In This Issue:
📈 Is Joe Biden unaware of the Biden Boom and the New Roaring ‘20s?
✈ A new age of supersonic flight may finally be taking off
📉 The 21st-century productivity slowdown
💻 Elon Musk, Grimes, and AI-powered communism
🚄 Best of the pod: Where do bullet trains make sense?
📈 Is Joe Biden unaware of the Biden Boom and the New Roaring ‘20s?
The Great Influenza of 1918 was followed by the Roaring Twenties, a period of fast productivity and economic growth. Might the Great Pandemic of 2020 be followed by the Roaring Twenty-Twenties? Between that handy historical parallel and some substantive reasons for optimism (advances in AI, CRISPR, spaceflight, and, of course, vaccine development), it’s a notion that’s definitely in the air. And the media has picked up on it. Here are just a few recent headlines:
“The Coming Technology Boom” - The New York Times (2/11/21)
“The 1920s Roared After a Pandemic, and the 2020s Will Try” - Bloomberg (1/26/21)
“Why a dawn of technological optimism is breaking” - The Economist (1/16/21)
“Goodbye virus-ridden 2020, hello Roaring Twenties” - Financial Times (1/01/21)
So it is with some disappointment that the new Biden budget seems to forecast more “new normal” stagnation than acceleration. Sure, it predicts rapid growth this year and next thanks to a tsunami of stimulus cash and a reopened economy where people are spending again and businesses are investing again. (This what most people are referring to when they talk about a “Biden Boom.”) After that, however, it’s back to the historically slow economic growth we’ve seen since the Global Financial Crisis — but worse. The U.S. economy grew by 2.3 percent from 2010 through 2019. Here are Biden’s economic assumptions:
So not even a 2 percent economy going forward. The Wall Street Journal editorial page jumped on these numbers: “A Future of Secular Stagnation: The Biden budget predicts a not very Roaring Twenties.”
That’s not really how I see it, however. Some thoughts: First, those GDP numbers are actually a touch better than the CBO’s most recent long-run forecast, and in an economy as big as America’s, every tenth of a point matters a lot.
Second, while those growth numbers may seem underwhelming given an expensive and expansive Biden economic agenda that promises to "reimagine and rebuild a new economy," it’s almost certain — given the budgetary process — that the forecast is not including any potential growth impact from the passage of his policy ideas. Indeed, the budget makes a point of saying the Biden agenda “would yield significant economic returns — boosting productivity and economic growth.”
Third, growth is a lot harder than it used to be given demographics. As the Obama economic team declared back in 2013, “In the 21st Century, real GDP growth in the United States is likely to be permanently slower than it was in earlier eras because of a slowdown in labor force growth initially due to the retirement of the post-World War II baby boom generation, and later due to a decline in the growth of the working age population.”
You can see how those factors play out in this CBO chart:
So pardon me if I repeat the oft-repeated line from economist Paul Krugman: “Productivity isn't everything, but, in the long run, it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.” For the modern American economy, that’s never been more true. And policy success in boosting long-run productivity growth will be a key measure of success for this president and his successors.
✈ A new age of supersonic flight may finally be taking off
It took 66 years to get from the Wright Flyer to the Concorde. And maybe 66 years after the first flight of the delta-wing supersonic airliner — or maybe a bit earlier — deep-pocketed passengers will again be able to zip from New York to London in about three and a half hours. United Airlines says it will buy 15 small supersonic jetliners, capable of flying at Mach 1.7, being developed by Boom Technology — if the plane meets safety, operational, and sustainability standards. “Boom hopes to fly a scaled-down prototype later this year or early in 2022, with the full-size, 88-seat version targeted to carry passengers by 2029,” according to The Wall Street Journal.
The news was greeted with excitement by airplane enthusiasts, as well as many techno-optimists. What surer sign of a new Roaring Twenties can there be than innovation in transportation, moving around atoms rather than bits? Dreams of rapid global transport were a key element of the positive futuristic vision that marked the immediate postwar decades. Yet since 1973, “airplane manufacturers have innovated on margins other than speed, and as a result, commercial flight is safer and cheaper than it was 40 years ago,” notes a 2016 Mercatus Center paper. “But commercial flight isn’t any faster—in fact, today’s flights travel at less than half the Concorde’s speed.”
So better late than never, I guess. But the news is also kind of depressing. One way to look at old sci-fi films is as alt-histories that never happened. After all, we are a long way past the eponymous year envisioned in 2001: A Space Odyssey, and we recently moved beyond the timeline of the original Blade Runner, set in the Los Angeles of 2019. Among the many differences between our present and those imagined futures is one both films share: the continued existence of the Pan Am airline. Its logo can be spotted a couple of times in Blade Runner, while the (almost assuredly nuclear-powered) space plane arriving at the spinning space station at the beginning of 2001 — right after that epic flash-forward — sports the iconic blue ball on its tail. For audiences of the day, the branding lent an air of verisimilitude to the scene. Of course, it would be a Pan Am vehicle taking passengers to orbit. The airline was at its peak during the era and widely known as an innovator. It led the U.S. airline industry into the jet age with the first purchase of the Boeing 707.
So not surprisingly, then, it was Pan Am that was “the lead customer in line with fifteen orders for the Boeing 2707, a supersonic transport that was to be America’s answer to the European Concorde.” By 1967, there were 74 orders from 16 different airlines for the joint Anglo-French project — the Apollo program for those countries. But the 1970s oil shock and volatile economic situation led all those airlines — with the exception of British Airways and Air France — to cancel those orders, led by Pan Am. That’s why that Boeing addendum is so critical. Orders are options to buy, not guarantees to take delivery.
Of course, the Concorde’s American rival never flew. (And its safety-plagued Soviet competitor rarely flew.) Citing budgetary and environmental concerns, the House and Senate both voted to cancel federal funding for the SST program in May 1971. In 1973, just four years after the British-French Concorde started flying, the FAA banned supersonic flight over the continental United States. Indeed, notes the WSJ, “Boom has said that its aircraft won’t be noisier than typical jets around airports and that sonic booms will at first only occur over the ocean, though United and Boom hope that policy makers will eventually approve supersonic routes over land.” I hope so, too.
📉 The 21st-century productivity slowdown
Typically when economists talk about the Great Stagnation, they are referring to the slowdown in productivity growth seen across advanced economies starting in the early 1970s. (I call this the Great Downshift.) But this slowdown can be divided up into two phases: before and after the 1995-2005 productivity Blip that started with the IT revolution. One way to look at the post-Blip downturn is to see it as the reemergence of underlying secular trends, namely the full exploitation of the great inventions of the late industrial revolution and big game-changing ideas getting harder to find without more resources, including researchers. Like the first phase, the second phase was also global, as these two graphics show:
Both graphics come from a new analysis in VoxEU, “Re-evaluating the sources of the recent productivity slowdown” by Ian Goldin, Pantelis Koutroumpis, François Lafond, and Julian Winkler. So what happened? To evaluate causality, the researchers started with three basic criteria: scale (“the cause needs to be commensurate to the extent of the slowdown”), scope (“the slowdown needs to have affected most OECD countries”), and sequencing (“to account for the slowdown the change needs to precede its onset”). Based on that third factor, GKLW immediately rule out the Global Financial Crisis.
But here’s what they rule in: “We are able to explain the labour productivity slowdown as primarily attributable to a combination of mismeasurement, slowdowns in capital deepening (for cyclical and structural reasons), spillovers from intangibles, trade integration, and the contribution of allocative efficiency.” And here’s how those factors break down by country (as taken from the paper that the VoxEU analysis was based on — though keep in mind the results are limited to the explanations that they thought were able to be evaluated quantitatively):
And what about technological progress, a key productivity driver? The researchers took a pass on siding with one of two arguments: Either new tech isn’t as transformative as old tech, or we need complementary investments, such as training, to reap big productivity gains out of new tech. (The former is the argument of economist Robert Gordon, the latter of economist Erik Byrnjolffson.) Of course, technology is interwoven throughout the growth process. Globalization, for instance, is a lot easier to pull off thanks to the IT revolution.
One final interesting note: Had that 1996-2005 productivity growth pace been maintained, US per capita GDP would be $13,000 higher.
💻 Elon Musk, Grimes, and AI-powered communism
I feel as if Elon Musk already achieves too much attention in this newsletter. So, yeah, I feel odd writing about something his girlfriend, singer Grimes, said in a TikTok video. But since the topic of what’s been termed “fully automated luxury communism” comes up frequently when discussing technological progress and economic growth — the subject of this newsletter — let’s go there. Grimes:
I have a proposition for the Communists. So typically most of the Communists I know are not big fans of AI, but if you think about it, AI is actually the fastest path to communism. So if implemented correctly, AI could actually theoretically solve for abundance. Like, we could totally get to a situation where nobody has to work—everybody is provided for with a comfortable state of being, comfortable living. AI could automate all the farming, weed out systematic corruption, thereby bringing us close as possible to genuine equality. So, basically, everything that everybody loves about communism but without the collective farm, 'cause let's be real, enforced farming is really not a vibe.
I certainly understand why this would annoy some leftists. First, she’s the girlfriend of the second richest man on the planet who spends a lot of time thinking about how to leave the planet. Second, she seems to be saying that the best path to communism is through, well, Muskism, or technologically productive capitalism that solves problems, creates new problems, and then solves those, too.
None of that stuff bothers me. What does bother me is that we are getting way ahead of ourselves. AI has gone through booms and busts. And right now it’s starting to look as if we’ve again overestimated what it can do, at least when it comes to driverless vehicles, one of the most high-profile applications. (And again, it’s strange to be musing about a jobless future when we had the lowest jobless rate in 50 years right before the pandemic.) I think a lot about this quote from roboticist Rodney Brooks:
This is a problem I regularly encounter when trying to debate with people about whether we should fear artificial general intelligence, or AGI—the idea that we will build autonomous agents that operate much like beings in the world. I am told that I do not understand how powerful AGI will be. That is not an argument. We have no idea whether it can even exist. I would like it to exist—this has always been my own motivation for working in robotics and AI. But modern-day AGI research is not doing well at all on either being general or supporting an independent entity with an ongoing existence. It mostly seems stuck on the same issues in reasoning and common sense that AI has had problems with for at least 50 years. All the evidence that I see says we have no real idea yet how to build one. Its properties are completely unknown, so rhetorically it quickly becomes magical, powerful without limit.
Nothing in the universe is without limit.
Watch out for arguments about future technology that is magical. Such an argument can never be refuted. It is a faith-based argument, not a scientific argument.
🚄 Best of the pod: Where do bullet trains make sense?
And speaking of magical thinking, perhaps you’ve seen this example of wishcasting:
Keep it in mind as you read this bit on high-speed rail from my recent podcast chat with infrastructure expert Rick Geddes, a professor of policy analysis and management at Cornell University and AEI visiting scholar.
Pethokoukis: Do you have any thoughts about whether the US should have a high-speed rail system?
Geddes: Yeah, it’s interesting. Today, we’re in a different world. Back when, say, the Transcontinental Railroad was built, it was pretty much the only way of getting across the country. But now in the Northeast Corridor, for example, there’s a whole bunch of competing modes. So if you want to get from Washington to Boston, you could drive, you could take an airplane and shuttle, or you could take Amtrak. And so now the issue is: How does high-speed passenger rail fit in with the other modes? Now, it’s very much dependent on the density of people in a particular area around the station as well as distance. And there are some destination pairs which make no sense in the United States for a high-speed passenger rail.
But I believe that the Northeast Corridor — down to Richmond and up to Washington, Philadelphia, New York, and Boston — is an ideal route to show that the United States can do effective high-speed passenger rail. You have the old urban core with those centers, and you have the density of population in that corridor. And you have the right-of-way already there, so you could turn that into a showcase of where high-speed passenger rail would work. There are a number of changes in delivery that have to take place. Maybe you bid that out, so that it would be a concession where different companies (including Amtrak, by the way) could bid for the right to serve that route for a particular period of time — which is what many other countries do.
But I think that’s the route where it would make sense. And again, the key thing is it’s not a panacea. It’s a new mode that fits in with a whole bunch of existing modes that would work only in highly specific situations, but I think there are cases where it would work.
Pethokoukis: Are there some other obvious cases besides that Northeast Corridor?
Geddes: I think maybe Houston-Dallas is one case. Certain routes in Florida make sense. But again, it’s hard to know what the market is, right? Until you try it, you have to discover what the demand is through a market-discovery process. But I think there are a few other routes that look good.
But as you increase the distance from origin to destination, you start to be dominated by air travel. If it’s San Francisco to LA, for instance, that is served by a number of different air shuttles, and that’s a pretty long distance for a passenger rail to travel. And so as that distance between the origin and the destination grows, air travel starts to dominate passenger train travel as the preferred mode — for benefit-cost reasons, particularly when you include the full cost. And I’m laughing, because sometimes the costs numbers — both the capital costs and the operating and maintenance costs — for a high-speed passenger rail system can be very high.
⬆ Former Treasury Secretary Larry Summers on Inflation Worries, Cryptocurrency - Time | “Look, the blockchain is a fundamentally important innovation that will be part of our economy for a long time to come. It will be to the 21st century what alternating current was to the 20th century, something that makes all kinds of things possible.”
⬇ Self-Driving Cars Could Be Decades Away, No Matter What Elon Musk Said - Christopher Mims, The Wall Street Journal | “Today’s deep-learning algorithms, the elite of the machine-learning variety, aren’t able to achieve knowledge-based representation of the world. And human engineers’ attempts to make up for this shortcoming—such as creating ultra-detailed maps to fill in blanks in sensor data—tend not to be updated frequently enough to guide a vehicle in every possible situation, such as encountering an unmapped construction site.”
⬇ New study finds most adults would not take a life extension pill, even if it existed - Psych News Daily | “A new study of about 900 U.S. adults has found that only 33% would use a hypothetical life extension treatment that would allow them “to live forever,” even if it were available today. About 42% said they would not use it, and 25% said they were unsure. The study, published by University of Texas researchers Michael Barnett and Jessica Helphrey, appeared in the Journal of Aging Studies on April 21.”
⬆ It’s Time For Congress to Support Fusion Energy - U.S. Representative Don Beyer, Scientific American | I’m just happy that policymakers are talking about a technology of both great potential and that pushes the debate toward one of abundance rather than scarcity.
⬆Scientists develop ‘cheap and easy’ method to extract lithium from seawater - Mining | “Previous efforts to tease lithium from the mixture the metal makes together with sodium, magnesium and potassium in seawater yielded very little. Although the liquid contains 5,000 times more lithium than what can be found on land, it is present at extremely low concentrations of about 0.2 parts per million (ppm).”
⬆ In the War on Cancer, Science Is Winning - The Wall Street Journal |
• “New vaccines against human papillomavirus, which causes cervical and throat cancer, are in late-stage trials. Scientists are also testing vaccines for melanoma, leukemia, lung and renal cancers.”
• “In five years there may be a simple blood test costing less than $500 that can detect 70% of all cancers in the earliest stages. When patients with breast, prostate and thyroid cancer spot the disease early, their five-year survival rate is 99%.”
• “New Crispr gene-editing technology deploys a molecular defense system borrowed from bacteria, which use this system to kill invading viral cells by unzippering their DNA to rip it apart. Scientists are using Crispr to repair or rewrite flawed genes. The therapy cured sickle-cell anemia in the first three patients to receive it, and soon it will take on cancer. Many trials of Crispr therapies in the U.S. now are in phase 2 for leukemia, lymphoma, myeloma and more. In China, Crispr is showing promise against lung cancer.”