Niall Ferguson: Don't Believe the Techno-Utopian Hype

Newsweek Magazine

I had never previously appreciated the immense gap that now exists between technological optimism, on the one hand, and economic pessimism, on the other. Silicon Valley sees a bright and beautiful future ahead. Wall Street and Washington see only storm clouds. The geeks think we’re on the verge of The Singularity. The wonks retort that we’re in the middle of a Depression.

Let’s start with the technoptimists. Last Saturday I listened with fascination as a panel of tech titans debated the question: “Will science and technology produce more dramatic changes in solving the world’s major problems over the next 25 years than have been produced over the last 25 years?”

They all thought so. We heard a description of what Google’s Project Glass, the Internet-enabled spectacles, can already do. (For example, the spectacles can be used to check if another speaker is lying.) Next up: a search engine inside the brain itself. We heard that within the next 25 years, it will be possible to take 1,000-mile journeys by being fired through tubes. We also heard that biotechnology will deliver genetic “photocopies” of human organs that need replacing. And we were promised genetically engineered bugs, capable of excreting clean fuel. The only note of pessimism came from an eminent neuroscientist, who conceded that a major breakthrough in the prevention brain degeneration was unlikely in the next quarter century.

For a historian, all this technoptimism is hard to swallow. The harsh reality, as far as I can see, is that the next 25 years (2013-2038) are highly unlikely to see more dramatic changes than science and technology produced in the last 25 (1987-2012).

For a start, the end of the Cold War and the Asian economic miracle provided one-off, nonrepeatable stimuli to the process of innovation in the form of a massive reduction in labor costs and therefore the price of hardware, not to mention all those ex-Soviet Ph.D.s who could finally do something useful. The IT revolution that began in the 1980s was important in terms of its productivity impact inside the U.S.—though this shouldn’t be exaggerated—but we are surely now in the realm of diminishing returns (the symptoms of which are deflation plus underemployment due partly to automation of unskilled work).

The breakthroughs in medical science we can expect as a result of the successful mapping of the human genome probably will result in further extensions of the average lifespan. But if we make no commensurate advances in neuroscience—if we succeed only in protracting the life of the body, but not the mind—we will simply increase the number of dependent elderly.

My pessimism is supported by a simple historical observation. The achievements of the last 25 years were actually not that big a deal compared with what we did in the preceding 25 years, 1961-1986 (e.g. landing men on the moon). And the 25 years before that, 1935-1960, were even more impressive (e.g. splitting the atom). In the words of Peter Thiel, perhaps the lone skeptic within a hundred miles of Palo Alto: In our youth we were promised flying cars. What did we get? 140 characters.

Moreover, technoptimists have to explain why the rapid scientific technological progress in those earlier periods coincided with massive conflict between armed ideologies. (Which was the most scientifically advanced society in 1932? Germany.)

So let me offer some simple lessons of history: More and faster information is not good in itself. Knowledge is not always the cure. And network effects are not always positive.

In many ways, the discussion I’ve just described followed logically from the previous week’s widely reported spat between Peter Thiel and Eric Schmidt at the “Brainstorm Tech” conference in Aspen, where Schmidt took the technoptimistic line and Thiel responded with a classic depressimistic question: Why, if information technology is so great, have median wages stagnated in the nearly 40 years since 1973, whereas in the previous 40 years, between 1932 and 1972, they went up by a factor of six?

By the same token, there was great technological progress during the 1930s. But it did not end the Depression. That took a world war. So could something comparably grim happen in our own time? Don’t rule it out. Let’s remind ourselves of the sequence of events: economic depression, crisis of democracy, road to war.

Talk to anyone who manages money these days and you will hear a doleful litany: the global economic slowdown, the persistence of unemployment, widening inequality, the problem of excessive debt, the declining effectiveness of monetary policy, and the looming fiscal cliff. Only last week, Ray Dalio—founder of the mega–hedge fund Bridgewater—spoke of a “dangerous dynamic ... making a self-reinforcing global decline more likely.” With good reason, Dalio frets about the dangers of a “debt implosion” or currency breakup in Europe.

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