Categories:
Economic Growth
In an interview, Thiel says,
the problem was that everybody had tremendous expectations that the country was going to be a much wealthier place in 2010 than it was in 1995, and in fact there’s been a lot less progress. The future is fundamentally about technology in an advanced country — it’s about technological progress. So a credit crisis happens when the technological progress is not as good as people expected.
Did he get an advance copy of Tyler’s new book?
READER COMMENTS
volatility bounded
Jan 20 2011 at 9:18pm
Kling has it backwards. Thiel was saying this before Cowen, and losing some bets due to poor timing.
Tyler Cowen
Jan 20 2011 at 9:23pm
I credit Peter in the book and in fact I dedicate it to him, so am I a Thielian?
M.B. Drapier
Jan 20 2011 at 10:58pm
Michael Mandel was floating the idea in 2009.
I’d suggest that overoptimism about coming technologies could have been a consequence instead of (or as well as) a cause of the credit bubble, as venture capital funds had to find places to spend all their money. (A look at WP suggests that US venture capital levels between the end of the Internet bubble and the financial crisis were still much higher than in the 1980-1995 period. I welcome correction from the better-informed.) Though I think that indeed this was not the only cause of overoptimism about the commercial prospects of genomics R&D, at least.
I am also not convinced that the credit bubble would not have happened had people made better-judged or more accurate forecasts of the economic impact of technological progress. My guess is that in that case, the money not spent as VC would just have gone on real estate instead.
Doug
Jan 20 2011 at 11:47pm
Thiel’s hedge fund Clarium has been getting clobbered, even in the past year when hedge fund and market performance have been pretty good. Given the emphasis that people in this section of the blogosphere place on the value of betting and objective measures of beliefs doesn’t this downgrade one’s weight on Thiel’s insight into the current state of the economy?
Steve Sailer
Jan 21 2011 at 1:27am
Where’s my flying car?
MernaMoose
Jan 21 2011 at 5:32am
C-R-A-S-H-E-D
Ted Craig
Jan 21 2011 at 6:50am
We look around and we think we live in a technologically advanced society – look at all the smartphones. But those who worked in computers in the ’50s consider these the lowest form of computing – nothing but databases. Our problem is the main focus for years has been on consumers – consumer electronics, houses, etc.
fundamentalist
Jan 21 2011 at 9:10am
Thiel: “What we want to suggest is that there are some very smart and very talented people who don’t need college.”
He won my undying admiration with just that thought.
Thiel: “here’ve been a whole series of these booms or bubbles in the last few decades, and I think it’s a very complicated question why there have been so many…”
Actually, we have enjoyed at least one such bubble and bust every decade for the past 300 years.
Thiel: “My orthogonal take is that the whole thing happened because there was not enough technological innovation.”
There is sufficient confusion among economists on the causes of the business cycle that Thiel has every right to make up his own. However, it happens to be the opposite of Schumpeter’s. Both can’t be right.
MernaMoose
Jan 21 2011 at 8:54pm
Ted,
Our problem is the main focus for years has been on consumers – consumer electronics, houses, etc.
Not sure what you mean by that, there’s been more than enough happening in the commercial and industrial sectors too.
Somehow I don’t buy the line that technology has, or is, or is even about to, stall. That people expected more progress than we got — well, maybe. But I believe the current problem is elsewhere.
I think the truth is that some bubbles are more economically destructive than others. The housing bubble was a huge economic hit to consumers and that’s about all there is to it.
Consumers are going to have to re-accumulate wealth, somewhere other than the housing market, and with enough accumulation to absorb the losses they’ve taken in the housing market, before things are going to better.
That’s a all order.
Comments are closed.