A Counterargument From David Beckworth to Larry Summers’ “Secular Stagnation” Thesis

Now, thinking about a counterargument to Larry Summers’ “secular stagnation” thesis from .

In this interpretation, there is no secular stagnation, there was just a crisis and then a slump, which is already ending.


Source Tweets: 1,2,3,4,5,6,7,8,9,10

Larry Summers’ “Secular Stagnation” Thesis

: “Secular stagnation is an economist’s Rorschach Test. It means different things to different people.” Contrary to a lot of public discussion, Larry’s thesis is about interest rates and supply/demand of capital, not technology change.

To quote Notorious BIG, “mo money mo problems“. In this case, mo money equals not enough productive places and projects to put it. As economists do, Larry then proposes a series of reforms to address the dynamic, few of which seem politically likely.

Can the goal be to get to normal if there is no normal? Or should the goal be something else?

Source Tweets: 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16,17

The Second Industrial Revolution Offers Insight Into Technology-Driven Economic Change

Over the last 2 days I’ve been tweetshotting excerpts from David Wells, “Recent Economic Changes“, 1890. For background reading on the economic period of ~1870-1890: Second Industrial Revolution.

This period is not a direct historical analog to ours, but it’s probably as close an analog as there is, along with the 1920s-1930s. Each of the three periods struggled with serious macroeconomic crises, albeit substantially different natures. It’s hard to compare those.

People of that time did wonder the same questions that are being so frequently asked today: What is the nature of technology-driven economic change and creative disruption? What is the future of income and wealth distribution and returns from progress — for labor and for capital? How do present changes compare to those in the past, and what can be forecast about the changes yet to come? What kind of world are we building, and what kind of world will we leave for our children and grandchildren?

Wells, writing in 1890, would have been wholly gobsmacked at the widely distributed gains of the next 100 years! It may not surprise you that I think we are going to repeat what Brad describes in Slouching Towards Utopia? in this century again. But, we actually have to prove it, and do it.

Source Tweets: 1,2,3,4,5,6,7,8,9,10,11,12


The Secular Stagnation Hypothesis From The Bank of Italy

Fascinating overview of the secular stagnation hypothesis from the Bank of Italy (In English).

After reviewing recent long-run projections, we argue that similar warnings were issued in the past after all deep recessions.


Interestingly, pessimistic predictions turned out to be wrong neither because they were built on erroneous theories or data nor because they failed to predict new tech, but because they underestimated the potential of the technologies that already existed.


These findings suggest that today we should not make the same mistake and undervalue the effects of information technology.

This matches my personal belief: Much current economic commentary is the result of living through a 15 year down cycle, which will change.

Interestingly, our friend Larry Summers on CNBC today conceded secular stagnation may be more a Europe/Japan issue than a US issue. If the US economy is indeed at the front of a broad-based recovery, as it appears, it will be interesting to see where this issue lands.


Source Tweets: 1,2,3,4,5,6,7,8

New Inside Growth Round for Mixpanel

Today, we @a16z are proud to announce we are leading a new inside growth round for Mixpanel. Mixpanel, led by Suhail Doshi, is one of our fastest-revenue-growth companies, and has been profitable since we invested 3 yrs ago.

In fact, Mixpanel is unusual in that the new investment round will not go to accelerating growth, opening international offices, or the like. Mixpanel generates cash internally to fully fund continued expansion of its current business. Rather, Suhail has more ambitious goals.

We originally invested in Mixpanel because it makes state-of-the-art mobile/web analytics easy for every company in the world. Mixpanel lets you track actions not just pageviews (The smartest entrepreneurs pitching us were showing us their data thru a MP dashboard).

The broader goal: Help the world learn from its data – to bring data science to every domain, to fundamentally improve how things work. Mixpanel will use the new financing to build new products, acquire, break into new markets – and take crazy risks that may work or fail. Mixpanel will go straight after the goal of predicting the future with data – what we think is the next phase of analytics.

And always, Mixpanel will be about merging the best of what machines can do with the best of what people can do: processing + judgment. We’re thrilled to double down on our support of Suhail and the Mixpanel team. Follow them at @Mixpanel and @Suhail!

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11


The Christensen Style Disruption Idea

Few intellectual concepts in our time have been mangled by observers more than Clay Christensen’s disruption idea. Some thoughts:

A disruptive innovation gives new consumers access to product historically only available to consumers with a lot of money or skill. Disruptors offer a different set of product attributes valued only in new markets remote from, and unimportant to, the mainstream. – Clay Christensen

The key attribute of disruptive innovation is a new product for a previously underserved market, typically cheaper than an existing product. This is inherently pro-consumer: Disruptive innovation only works if customers buy it and if they do, lives are improved vs prior status quo. Similar, disruptive innovation is only funded by investors who believe underserved market exists, customers will buy it, lives are improved.

It’s a fabricated myth that disruptive innovation is about destruction: It’s about the creation of new products, new choices, for more people. Later, of course, the new product often evolves to squarely take on incumbents serving established customers which is cheaper and better for them too! Disruptive innovation shrinks inequality, by bringing to lower-income consumers things that only richer consumers had access to before.

If you are reading this, many of the things you own that make your life better are the result of prior disruptive innovation. The printing press disrupted books from scribes; recorded music disrupted live concerts in homes, washing machines disrupted live-in maids. Rich people always had books, music, clean clothes, etc.; disruptive innovation made these things available to many more people.

In the exact same way, sub-$50 smartphones are disruptive innovation to PCs bringing computing and Internet to far more people than status quo. To be FOR disruption is to be FOR consumer choice, FOR more people bring served, and FOR shrinking inequality. To be AGAINST disruption is to be AGAINST consumer choice, AGAINST more people bring served, and AGAINST shrinking inequality.

If we want to make the world a better and more equal place, the faster we have more Christensen-style disruption, the better!

References: Disruptive Innovation, The Innovator’s Dilemma, Clayton Christensen Responds to New Yorker Takedown of ‘Disruptive Innovation’

Source Tweets: 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16,17

Powerful Essay by Steven Johnson

A powerful essay written by Steven Johnson, we’re living the dream; we just don’t realize it.

Over the past two decades, what have the US trends been for the following important measures of social health: High school dropout rates, college enrollment, juvenile crime, drunken driving, traffic deaths, infant mortality, life expectancy, per capita gasoline consumption, workplace injuries, air pollution, divorce, male-female wage equality, charitable giving, voter turnout, per capita GDP and teen pregnancy?


The answer for all of them is the same: The trend is positive. Almost all have improved by more than 20% over the past two decades. Many Americans are convinced that ‘half of marriages end in divorce’: which is not the case since the early 80s, they have declined by almost a third.


Even though the world’s population has doubled over the past 50 years, the percentage living in poverty has declined by 50% over that period. Positive trends in our social health are coming from a complex network of forces [vs big-bang tech breakthroughs].


No one takes out a prime-time ad campaign to tout the remarkable decrease in air pollution that we have seen over the past few decades. Curmudgeons, doomsayers, utopians and declinists all have an easier time getting public relations than those who celebrate slow and steady improvement.


In the long run, media bias against incremental progress may be more damaging than any bias the media display toward the left or right. The media are heavily biased toward extreme events and they are slightly biased toward negative events though in their defense, that bias may be a reflection of the human brain’s documented propensity to focus more on negative information.


We underestimate the amount of steady progress that continues around us and we misunderstand where that progress comes from. We should celebrate stories of progress, not to rest on our laurels but so we can inspire the next generation to build on that success.


Source Tweets: 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16

Hedge Fund Baron Paul Singer

Hedge fund baron Paul Singer: “London, Manhattan, Aspen, and East Hampton real estate, and art, prices [show] leading edge of hyperinflation.”

There are a bunch of reasons to believe that his theory is wrong, but one that I think is under-appreciated is this:

Those are specific markets seeing a dramatic influx of ultra-high-net-worth buyers from overseas–China, Russia, and certain other nations. You can see this vividly in this week’s art auctions in New York, and it’s been obvious in London real estate for some time.

Another: “30% of all apartments 49th-70th Streets between Fifth and Park are vacant at least 10 months a year.”

So price rises in these specific assets can likely be explained by simple supply and demand without requiring inflation, hyper or otherwise. Therefore, price rises in these assets do not necessarily indicate much of anything about the domestic macroeconomic situation.

In fact, an obvious “bullish on America” argument here: Capital fleeing other countries and landing specifically in US (& UK!) real estate. Further, these asset prices may be explainable quite independently of the various QE and inequality debates happening within the US.

On a global economic scale, the total value of this specific real estate in addition to art is not that large. Prices are easily altered by capital flows.

Source Tweets: 1,2,3,4,5,6,7,8,9,10

Net Neutrality

Enough people asking what I think of net neutrality so I will attempt to answer, but warning, I do not have a clean and simple answer!

I think the permissionless innovation, nondiscriminatory nature of Internet is of critical importance and must be maintained or strengthened. I also think telco/cable companies need incentives to build far more/better net infrastructure than we have now and be able to make money on it. Due to the economics of network businesses, I think these are extremely difficult principles to reconcile and I don’t envy the regulators.

I further worry about the simplistic and politicized nature of much of the debate, which I think is not conducive to navigating complexity. And I further still worry about the sausage-making of any regulatory process and the likelihood of unanticipated and undesirable outcomes.

And generally, I try to spend my time trying to figure out how to bring more/better/faster Internet to more people in new/different ways.

Source Tweets: 1,2,3,4,5,6,7


Title II FCC Regulations Were Created in 1934, Based on 125+ Year Old Railroad Regulations

Title II FCC regulations were created in 1934, based directly on railroad regulations from 1887, 125+ years ago. Here are some other things that happened in 1887, same year railroad regulations, that then became telecom regulations, were designed:

  • In 1887, Arthur Conan Doyle’s detective character Sherlock Holmes makes his first appearance, in the novel A Study in Scarlet.
  • 1887, the earliest constituent of the U.S. National Institutes of Health is established in Staten Island as the Laboratory of Hygiene.
  • In 1887, construction of the iron structure of the Eiffel Tower starts in Paris, France.
  • In 1887, Gottlieb Daimler, the cofounder of the company that now makes Mercedes cars, unveils his first automobile.
  • In 1887, the cornerstone of the new Stanford University, in northern California, is laid (the college opens in 1891).
  • In 1887, the Giuseppe Verdi opera Otello premieres at La Scala. In 1887, Emile Berliner is granted a patent for his Gramophone, the flat-disc phonograph.
  • Finally, in 1887, Chester Greenwood patents earmuffs.

These and many more described here.

Source Tweets: 1,2,3,4,5,6,7,8,9,10, 11