Stasis precedes irrelevance, decline and ultimately death. This is the philosophy on the basis of which Jeff Bezos runs Amazon and became the wealthiest man on the planet. As indicated by the massive decline in innovation and economic growth, Western civilization has entered a period of stasis. What follows are irrelevance, decline and death. My thesis is that our decline in innovation and economic growth are primarily the result of growing inefficiencies slipping into our economic system. We have seen a tremendous increase in barriers to entry in many aspects of society, enacted by those who wish to keep out their competitors. Free competition ultimately reduces your profit margins to zero. An artificially constrained supply on the other hand, allows you to set high prices far above your actual incurred expenses. A rational businessman will embrace opportunities to legally reduce the supply of the particular product or service he delivers.
Just as the Wright brothers decided to simply start suing competitors whose airplanes resembled theirs, rather than focusing their effort on building better airplanes, many people in today’s society seem to insist on protecting their own territory from intrusion by others. Governments agree that lab-grown meat can’t be called meat, after lobbying by the cattle industry. Uber drivers are physically assaulted by taxi drivers, who had to earn expensive government licenses that serve to keep the supply of taxi drivers low and thus keeps prices high. Most 19th century Supreme Court justices never went to law school, but today you’re forced to go through an expensive four year law degree before you’re even allowed to do a bar exam.
Society as a whole is harmed by these developments, but individuals within the economic sectors benefit from barriers to entry and a constrained supply. If I own a slaughterhouse or a cattle ranch, my assets would become worthless if competitors emerge who can produce meat in Petri dishes at lower costs than my own production process. My own economic incentives now put me in direct opposition to progress and innovation.
If I work as an optician, I benefit from keeping new entrants out of my occupation. My job might be relatively easy, perhaps you could learn it in a few weeks of on the job training. If that’s the case however, my job won’t be particularly profitable. To increase my own profit, I need to reduce the supply of competitors. In the Netherlands, it’s perfectly acceptable for an optician to have no formal training. In some other countries, opticians get formal certificates that demonstrate they’re real opticians. What do you do if you’re a certified optician, looking to reduce the supply of competitors? You seek to generate the impression that you can’t be a competent optician without the proper certificates. Hence we find the following advertisement on TV. Middle-aged actors are paid to pretend to be shocked by the reality that an optician doesn’t need anything more than a bit of on the job training.
Multiply this process a few hundred times over the course of history and you arrive at today’s society, where 90% of high school students say they want to attend college. It was possible in the 19th century, to be a competent supreme court justice, architect, businessman or politician, without ever attending college. Today it’s not possible apparently to sell someone eyeglasses without a college degree. How many years should it really take before you’re able to measure someone’s eyes, using modern state of the art machinery? Should the construction industry hire some babyboomer actors, to pretend to be shocked by the fact they work and sleep in old skyscrapers built by architects who never went to college?
The economic damage that results from credentialization
To send an entire generation of young people off to college for four years of their life is not free of charge. For some jobs, it’s necessary to have such formal training. A surgeon needs to dissect bodies before operating on actual patients. Unless it’s absolutely necessary however, we shouldn’t send young people off to college as there are massive costs involved in education to society.
To start with, young people spend four years of their lives, stuck at a Potemkin village equivalent of a full time office job. Assuming 52 40-hour weeks per year, this leaves us with 2080 hours of your life, that could have been devoted to meaningful labor. Again, to reemphasize, this would be fine if such training were absolutely necessary. The problem we have is that college educated people find themselves applying to jobs that don’t require college degrees, or merely insist on the need for a generic “four year college degree”.
If you’re working at such a job, you need to acknowledge for yourself that you effectively had to throw 2080 hours of your life away, in addition to entering tens of thousands of dollars worth of debt. This is not necessarily your fault. You’re primarily the victim of the societal equivalent of a memory leak. We’re wasting resources, but we’re not really noticing it as we’re not paying careful attention.
How many people are affected by this issue? An awful lot. At my own office, half my colleagues have a college degree, another quarter dropped out. These colleagues are managed by a boss, who dropped out of college himself. It’s clear the job doesn’t require a college degree, yet we have employees with advanced degrees, in academic disciplines where the supply of graduates simply exceeds the demand. In 2010, 62% of American college graduates had a job that requires a college degree. In addition, just 27% had a job in a field that matched their college major.
How large is the economic waste generated by this problem? It’s very difficult to tell. One reason it’s difficult to tell is because employers practice degree inflation. Jobs that required a bachelor’s now require a master’s, jobs that required high school now require a bachelor’s degree. So, even though 62% of graduates might have a job that requires a degree, it’s not yet clear the degree itself is genuinely necessary. Demanding a master’s degree has become another way of saying “I need someone for this job who’s reasonably smart”. As an example, in 2015, 67% of production supervisor job postings asked for a college degree, while only 16% of employed production supervisors had one. The problem with this mentality is that the economic damage caused by forcing someone to spend 2080 hours of their life demonstrating a level of intelligence that could also be demonstrated through a fifteen minute IQ test is profound.
The decline in innovation that follows
What we’re doing is not just forcing young people into massive debts. We’re robbing them of the best years of their lives, by forcing them through a convoluted IQ test that takes up 2080 hours of their youth. In addition, we’re creating enormous barriers to entry, that exclude young people who haven’t graduated college. The economic damage is pervasive and extends far beyond just an unnecessary debt or a few hours that could have been spent doing meaningful work instead. The worst economic damage that results may be in the declining rate of innovation. We’re no longer advancing as a society, because we effectively socially exclude the people who produce the advances we need.
If you look at the world’s most innovative people, you’ll find they typically haven’t gone through the traditional college path. Aubrey de Grey has been a massively important revolutionary influence on health research. But what led him to become such a revolutionary force? He looked at human aging, not from the perspective of a medical scientist, but from the perspective of an engineer. He received a Phd degree in gerontology for a book he wrote. The book was written at a time when he had no formal medical or scientific training however.
For innovation, we need young people. Scientists agree that human intelligence can be categorized into different types. Crystallized intelligence refers to the ability to use skills, knowledge, and experience. Fluid intelligence refers to the ability to the ability to analyze novel problems, identify patterns and relationships that underpin these problems and the extrapolation of these using logic. It is necessary for all logical problem solving.
Crystallized intelligence is the kind of intelligence we associate with wise old erudite people. Why are Supreme Court Justices generally old men? Because they have had a lifetime of experience to rely on when making important judgments. Fluid intelligence is the kind of intelligence we associate with smart young people, who come up with revolutionary new ideas. It peaks when we’re young. Very young. Studies consistently show that your fluid intelligence peaks in your early 20’s. This is when your ability to solve problems reaches a height it will never again surpass. It’s not coincidence that Mark Zuckerberg, Bill Gates, Vitalik Buterin and so many other billionaires started out in their early twenties.
For some people, this is the time when they become entrepreneurs. They come up with revolutionary new ideas through their peak in problem-solving ability, then accrue the experience as they age that allows them to refine their novel ideas and put them into effective practice. In our society on the other hand, it’s a time when young people enter debts to earn the privilege of hearing post-menopausal ladies proclaim that skyscrapers are built to resemble penises to enforce patriarchal dominance.
It should come as no shock, that entrepreneurial innovation has come to a near standstill. Studies show the Millennial generation is the least entrepreneurial generation in history. The reason that tends to go unmentioned, is that millenials today are unable to start businesses, because they’re typically forced to go through college, before ending up burdened with college debt that leaves them unable to afford the costs to set up their business.
We need to reduce the barriers put up by society that prohibit young people from creating the type of innovations our society needs. There are a few intelligent people who understand this. Peter Thiel seeks out intelligent young people and offers them 100,000 dollar to drop out of college and focus entirely on achieving their entrepreneurial vision. Peter Thiel is deeply controversial in today’s society because he is a right-wing libertarian, but he brings to society the best quality of right-wing libertarians: Their optimistic belief in the human mind’s ability to apply reason to address novel problems for the benefit of humanity.
When we don’t keep moving we’re going to fall
There’s a fair argument to be made, that we don’t need economic growth. The problem with this argument is that no two economist are going to agree on the precise definition of economic growth. The concept of the economy, remains a vague term. What should be included as part of our GDP and what shouldn’t be included? Ask ten different economists and you’ll get eleven different answers. However, there is one thing every sensible person can agree on: We should use the resources we have at our disposal in a more efficient manner.
If we witness a failure to use our resources more efficiently, we’re going to suffer problems in the decades ahead. Our population is growing, while our fertile soils are eroding. The minerals we extract from the Earth are growing more scarce. The metal ores we need lie deeper in the ground and tend to be less pure than the ones we used in the past. Whereas we could once stick a spade in the ground and witness oil spewing forth from the ground, today we’re forced to set up expensive massive oil platforms on distant ocean floors. Whether we like it or not, we will have to use our resources more efficiently. To do so, requires innovation.
The big ecological and social problems of our era, will have to be solved through innovative thinking. There are challenges everywhere, waiting for solutions to be implemented. Concrete can be constructed in a manner that sequesters carbon dioxide. Feeding seaweed to cows can eliminate their methane emissions. Streets can be painted white, to reflect sunlight back into outer space. Iron dust can be introduced into the ocean, to stimulate algae blooms that generate clouds and sequester carbon dioxide. All available scientific evidence shows that none of these solutions on its own is sufficient to address our climatic catastrophe. Many of them applied together however, can prove sufficient to preserve a habitable Earth.
To apply many different creative solutions that together function to resolve a problem, that takes innovation. To produce such innovation, we need to learn to treat young people with the respect they deserve. They shouldn’t be required to earn four year college degrees for jobs their parents generation entered without one. They shouldn’t start out in life without any sort of assets that deliver them the ability to carve out their own path in life. A society controlled by old people is a society that succumbs to stagnation. A society that makes it possible for young people to pursue their vision is a society that has a chance of extending its lifespan.
Read Karl Polanyi to get some insight on this. Polanyi realized that frictionless capitalism would undermine the very social fabric that makes capitalism (and ultimately all of human society) possible. Thus, he argued that various groups would take the necessary steps to shield themselves from the effects of an unfettered “free” market. Not only workers but businesspeople as well, would find living under such conditions absolutely intolerable, and thus would take steps to rein it in. As he writes, “Paradoxically enough, not human beings and natural resources only but also the organization of capitalistic production itself had to be sheltered from the devastating effects of a self-regulating market. (p. 138)”
He called this the “double movement,” and pointed out that, unlike Classical Liberalism, it emerged as an unplanned grass-roots movement rather than a top-down government project. Hence his most well-known quote: “laissez-faire was planned; planning was not.” According to Wikipedia:
“The Double Movement …refers to the dialectical process of marketization and push for social protection against that marketization. First, laissez-faire reformers seek to “disembed” the economy in order to establish what Polanyi calls a “market society” wherein all things are commodified…Second, a reactionary “countermovement” arises whereby society attempts to re-embed the economy through the creation of social protections such as labor laws and tariffs. In Polanyi’s view, these liberal reformers seek to subordinate society to the market economy, which is taken by these reformers to be self regulating. To Polanyi, this is a utopian project, as economies are always embedded in societies…”
It also explains why libertarianism–that is a “pure” market society–is ultimately impossible. In Polanyi’s words, such an idea is a “stark utopia” which would result in nothing less than the “demolition of society” which is, of course, is exactly where we have been heading under forty years of Neoliberalism.
Your example of taxi drivers fighting against Uber is examplary of this Double Movment. Uber wants a desperate precariat at the mercy of the whims of unfeeling, impersonal algorithms. Thir drivers would prefer something else, like a modicum of fiancial security and stabilty.
Thus “the people” turn en masse the only means at their disposal to rein in the “self-regulating Market” and protect their society, which is democratic politics. Hence the populist and authoritarian/fascist movements we see in North America and Europe promising tariffs, closed borders, and mass deportations–identical to the pre-World-War-Two era.
Which brings us to the good Mr. Thiel. Mr. Thiel knows the above history, which is why he had publicly said that democracy and libertarianism are incompatible, and he’s exactly right. Thus, he has openly stated that democracy needs to be abolished. He is also one of the largest espionage contractors for the U.S. government, and is key in forging the digital panopticon, probably for this purpose (Palantir, etc.).
What this leads to is a society of pure Social Darwinism where the vast majority of people can’t keep up with the Market are exterminated like vermin. Expensive college assures that only the offspring of wealthy and influential will be able to pass through the sieve. That doesn’t include me, of course, which is why I’m not a fan of “Classical Liberalism” unlike most writers on the alt-right.
What you Europeans have figured out is that by decommodifying the basic necessities of life, it frees people to take more risks. That’s why Northern Europe is currently more entrepreneurial than the United States. An economy of privileged insiders and desperate serfs as the U.S. has become is not a dynamic or innovative one. Here, everyone is afraid of losing their health care or paying off their student loans.
Thanks, this makes a lot of sense. I do think that within societies where people have no safety net to fall back on, they can´t take the kind of risks involved in entrepreneurial activity.