4 ms·

Many people assume that we can spend money we don't have today because we will just earn more tomorrow. This is especially true on capitol hill, but you can see

by s_tec 14y ago

Many people assume that we can spend money we don't have today because we will just earn more tomorrow. This is especially true on capitol hill, but you can see the assumption pretty much everywhere. Thiel's is basically pointing out that this assumption may no longer be true. Without technological progress, tomorrow won't be better than today. If a society borrows from the future in times of growth, the additional prosperity will cover the debt payments and nobody really suffers. If society borrows from the future in times of stagnation or decline, however, both the debt payments and the cost of living now come from the same fixed income, so the quality of life suffers. This not only applies to financial debt, but to infrastructure, educational, and other kinds of non-monetary debt. In other words, Theil's piece is a warning that we need to get our act together. We re-start the technological growth engine, stop borrowing from the future, or tighten our belts and prepare for a general decline in our standard of living. We may not be at the tipping point yet, but it is coming if we don't change course.

makomk 14y ago
Funny. There are actually a whole bunch of libertarians of Thiel's ilk whose views have the same flaw but in reverse. They assume that if they can stop the government from "debasing" money and "devaluing" their savings, they can sit on money today safe in the knowledge that it will be worth more tomorrow. Of course, without technological innovation that won't happen either. Worse, if this were possible it'd be far more toxic to technological progress than any "welfare state" could ever be; taxes merely make it slightly less profitable, whereas this libertarian idea is pretty much guaranteed to drive returns on all but a handful of investments into the negative compared to just sitting on the money. With no financial incentive to innovate, why bother?
- seanmcdirmid 14y ago
  Exactly. What libertarians want sounds very similar to a feudal society where the landed gentry are able to live comfortable lives on their perpetual (across generations) investments while the have nots (and there have to be many of these...) become virtual serfs just to survive. A dynamic economy where you can't just sit on wealth is necessary to promote technological innovation as well as economic mobility. If you look at history, we didn't really start moving forward very quickly until we got that (around the renaissance time frame).
  - oelewapperke 14y ago
    Does this even matter ? "Average" income hasn't been growing now in America for about a decade. If you look closely there are 2 factors at play : 1) increase in population 2) stagnant (not decreasing) wages (even inflation adjusted it's a tossup at this point) Combined these lead to decreasing average wages. Not all that many people have really lost income, but there are more people for the same jobs, so many people have lost jobs entirely. There are more people with essentially zero income. The easy solution, stopping 1) from happening (immigration controls, population controls, ...) won't work due to massive state obligations (some inflation-adjusted to make matters worse) to the soon-to-be-pensioned. It's even impossible to stop immigration and replace it by increased fertility because increased fertility is a net-cost to society until 20 years pass. Even putting aside the morality questions, (almost) stopping immigration might have worked 10-15 years ago, but today, it seems it will make matters worse, not better. Worldwide the situation is even more striking : 1) massive rise in average incomes (factors, 2,3,4 depending on how far you go back) 2) more massive rise in population (let's say about 1.5*income rise) For close to the last 4 decades, 2 has outstripped 1 to the point that a lot of people are claiming that we are within 10% of the planet's carrying capacity with abundant energy sources (read : cheap oil). Jee, I sure hope nothing happens to that cheap oil ... Oops. Very funny way to make the point, if you realize that this problem has nothing to do with America, beyond the idea that America is somehow supposed to solve it : http://www.thedailyshow.com/watch/wed-june-16-2010/an-energy-independent-future http://www.thedailyshow.com/watch/wed-june-16-2010/an-energy... Unfortunately renewable energy suffers from the reverse problem of immigration : right now, we have renewable energy with a EROI factors of 2-3 over a period of 2-3 decades. That means that for the first 10 years renewable energy INCREASES our dependance on fossil fuels. The only energy type that doesn't suffer this problem is nuclear energy, and it has other problems.
- spiffage 14y ago
  Most libertarians I know are fully aware that they can't stop the government from debasing money and devaluing savings anytime soon.

by s_tec 14y ago

makomk 14y ago

Funny. There are actually a whole bunch of libertarians of Thiel's ilk whose views have the same flaw but in reverse. They assume that if they can stop the government from "debasing" money and "devaluing" their savings, they can sit on money today safe in the knowledge that it will be worth more tomorrow. Of course, without technological innovation that won't happen either. Worse, if this were possible it'd be far more toxic to technological progress than any "welfare state" could ever be; taxes merely make it slightly less profitable, whereas this libertarian idea is pretty much guaranteed to drive returns on all but a handful of investments into the negative compared to just sitting on the money. With no financial incentive to innovate, why bother?

seanmcdirmid 14y ago
Exactly. What libertarians want sounds very similar to a feudal society where the landed gentry are able to live comfortable lives on their perpetual (across generations) investments while the have nots (and there have to be many of these...) become virtual serfs just to survive. A dynamic economy where you can't just sit on wealth is necessary to promote technological innovation as well as economic mobility. If you look at history, we didn't really start moving forward very quickly until we got that (around the renaissance time frame).
- oelewapperke 14y ago
  Does this even matter ? "Average" income hasn't been growing now in America for about a decade. If you look closely there are 2 factors at play : 1) increase in population 2) stagnant (not decreasing) wages (even inflation adjusted it's a tossup at this point) Combined these lead to decreasing average wages. Not all that many people have really lost income, but there are more people for the same jobs, so many people have lost jobs entirely. There are more people with essentially zero income. The easy solution, stopping 1) from happening (immigration controls, population controls, ...) won't work due to massive state obligations (some inflation-adjusted to make matters worse) to the soon-to-be-pensioned. It's even impossible to stop immigration and replace it by increased fertility because increased fertility is a net-cost to society until 20 years pass. Even putting aside the morality questions, (almost) stopping immigration might have worked 10-15 years ago, but today, it seems it will make matters worse, not better. Worldwide the situation is even more striking : 1) massive rise in average incomes (factors, 2,3,4 depending on how far you go back) 2) more massive rise in population (let's say about 1.5*income rise) For close to the last 4 decades, 2 has outstripped 1 to the point that a lot of people are claiming that we are within 10% of the planet's carrying capacity with abundant energy sources (read : cheap oil). Jee, I sure hope nothing happens to that cheap oil ... Oops. Very funny way to make the point, if you realize that this problem has nothing to do with America, beyond the idea that America is somehow supposed to solve it : http://www.thedailyshow.com/watch/wed-june-16-2010/an-energy-independent-future http://www.thedailyshow.com/watch/wed-june-16-2010/an-energy... Unfortunately renewable energy suffers from the reverse problem of immigration : right now, we have renewable energy with a EROI factors of 2-3 over a period of 2-3 decades. That means that for the first 10 years renewable energy INCREASES our dependance on fossil fuels. The only energy type that doesn't suffer this problem is nuclear energy, and it has other problems.
spiffage 14y ago
Most libertarians I know are fully aware that they can't stop the government from debasing money and devaluing savings anytime soon.