FAQ on Themes and Ideas from "Boom: Bubbles and the End of Stagnation"

1. What is the central argument regarding technological progress in recent decades?

The core argument is that, despite appearances, the pace of transformative technological progress has significantly slowed since the 1970s. This is not to say innovation has stopped, but instead of building groundbreaking technologies, we are often better at creating increasingly realistic simulations and focusing on improvements within the digital realm rather than the physical one. This shift is partly due to a focus on bit manipulation and the hyper-real, leading to less radical change in tangible aspects of life. Furthermore, key indicators like top travel speeds have actually decreased, demonstrating that progress has not been uniform.

2. How does the current monetary system, particularly the fiat standard, contribute to economic instability?

The current fiat monetary system, established after the collapse of Bretton Woods, is described as a major driver of instability. The continuous devaluation of fiat currencies leads to increased "time preferences," meaning people prioritize immediate consumption over long-term investment. This forces investors to constantly chase returns, resulting in a cycle of financially damaging bubbles and crashes. Risk aversion, ironically, exacerbates systemic threats through risk-mitigating financialisation, which in turn makes bubbles more destructive. The enormous growth of national debt since 1971 is presented as a key example of this dysfunction.

3. What role do bubbles play in technological and scientific advancement, according to the book?

Far from being purely destructive, bubbles are presented as a necessary mechanism for technological breakthroughs. They provide the vast funding and risk tolerance needed for large-scale experimentation, iterations, and addressing path dependencies. Bubbles foster a mindset of "definite optimism," believing the future can be better due to specific, concrete reasons, which is crucial for radical advancement. These aren't merely financial events; they're dynamic periods that lower collective risk aversion, and they encourage people to discard traditional risk-benefit analysis. Importantly, they can lead to unintended but hugely valuable benefits.

4. How has the nature of scientific research changed, and what are the consequences?

Scientific research has become increasingly risk-averse and focused on incremental advancements rather than groundbreaking innovations. This is largely attributed to the dominance of citation-driven metrics and the bureaucratic structures that organise research, which reward orthodoxy and conformity. Over-specialisation, driven by the sheer volume of scientific knowledge, also contributes by increasing cognitive overload and hindering recognition of novel ideas. These factors limit the occurrence of "paradigm shifts" and make truly transformative discoveries less likely.

5. What is the concept of "inflection bubbles" and how are they different from "mean-reversion bubbles?"

The book distinguishes between "mean-reversion" and "inflection" bubbles. Mean-reversion bubbles are characterized by over-optimism about existing trends or assets, where valuations ultimately return to a historical average. Inflection bubbles, on the other hand, are driven by the belief that the future will be fundamentally different from the past, leading to the creation of novel technologies and business models that are not simply upgrades but rather transformative shifts. Examples of inflection bubble driven changes include the internet, the PC and the automobile which were all incomparably better on some dimensions than their alternatives.

6. How did Moore's Law act as a self-fulfilling prophecy and coordination mechanism?

Moore's Law, initially an observation about the doubling of transistor density on integrated circuits, became a self-fulfilling prophecy by setting expectations for the industry. It acted as a coordination mechanism, where chip manufacturers, software developers, and other tech companies all made strategic decisions based on the assumption that computing power would continue to improve exponentially and consistently over time. This created a virtuous cycle of increasing hardware capabilities and software demands that reinforced the trend.

7. What does the book suggest about the role of spiritual and ideological beliefs in technological breakthroughs?

The book posits that many major technological breakthroughs, even seemingly objective ones, are deeply influenced by spiritual, ideological, and religious beliefs. This "transcendent dimension" – a sense of purpose and belief in the possibility of progress – has historically fuelled the risk tolerance and ambition necessary for radical innovation. A modern decline in this dimension, the book argues, can contribute to a lack of vision and subsequent stagnation. In this view, meditation apps or other individual modes of spirituality, may be symptoms of a kind of collective depression.

8. How does the concept of “creative destruction” apply to the current economic landscape, and why has it become a “buzzword”?

The concept of "creative destruction," as originally defined by Schumpeter, refers to the violent upheaval of existing industries, infrastructures, and occupations that accompany major technological revolutions. It’s not about incremental improvements, but about the complete replacement of obsolete technologies and systems. The term has become a mere "buzzword" because policies are now focused on preserving or optimising abstract macroeconomic aggregates like "wealth" and "employment", rather than enabling the necessary destructive (and disruptive) element that allows new growth and innovation. This focus on preservation instead of disruption inhibits true progress.

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