A new movement is taking shape around the idea of restoring "abundance." Uniting thinkers from across the political spectrum — including "supply-side progressives," "conservative futurists," and "state capacity libertarians" — the movement aims to jump-start technological and economic progress by removing artificial constraints on supply and improving the quality of government. For this episode of The Permanent Problem podcast, I spoke with a leading analyst and advocate of abundance: Eli Dourado, chief economist at the new Abundance Institute and an expert on policy barriers to the emergence of new technologies. Discussing the "great stagnation" in productivity growth, we focus on how most of productivity growth occurs outside the R&D lab, and how therefore broad institutional and cultural factors weigh heavily in determining an economy's overall vitality. Sharing an interest in the work of anthropologist Joseph Tainter, a leading theorist of civilizational collapse, we also discuss our modern technological civilization's vulnerability to decline and cataclysm — and how an abundance agenda can reduce that vulnerability.
Below is a lightly edited transcript of our conversation.
Brink Lindsey: My guest today is Eli Dourado, who's chief economist at the Abundance Institute. You can also follow him on Twitter and Substack. Eli, wonderful to have you on the program.
Eli Dourado: Been great to be with you, Brink. This is great.
Lindsey: I like to start off these discussions with some biographical background of the guest. I always find that lends interesting perspective on the ideas we're talking about. So tell me, where were you born, and where'd you grow up?
Dourado: So I was born in Brazil, in Rio de Janeiro. I lived there until I was about four years old, and then my family moved to Europe.
We did a year and a half in Greece, and three and a half years in Portugal, and then, moved to the States when I was nine years old. So lived in New Jersey in late elementary, middle, and high school.
Lindsey: Are your parents Brazilian, or were they Americans living in Brazil?
Dourado: So my mom is American, my dad's Brazilian...
Lindsey: Did you grow up bilingual, with parents from two different languages?
Dourado: Yeah, pretty much. When I was living in Brazil, up until age four, I mainly spoke Portuguese, so it was my first language. And actually, I would go visit relatives in California, or whatever, and I spoke English with a horrible accent that they said I would never get rid of.
My parents always spoke to each other in English, but I always spoke Portuguese, and all my friends spoke Portuguese, and everyone I talked to spoke Portuguese. And my parents would speak to me in English, and I would respond in Portuguese.
And then, when I moved to Europe, I started attending American schools, instead of Brazilian schools, and those were all in English. I just did a complete flip, and I didn't want to speak Portuguese anymore, and mainly wanted to speak English, and it's pretty much been that way ever since.
Lindsey: But you were in Portugal, until you were nine?
Dourado: Yeah, that's right.
Lindsey: Okay, okay. So you have clear memories. You're old enough to have memories of growing up abroad, and being different, when you got to the United States. So how does that carry through into your thinking today? Do you have noticeable things, where you think about things differently in your work than others, because you come from a different background?
Dourado: That's a great question. I'm not sure. I mean, it definitely is a different experience, growing up overseas, you're part of the expat community. It's relatively tightknit, but transient. So people coming in, coming out, et cetera.
And it was a little bit of a culture shock, coming to the U.S. It was a little weird. I always thought of myself as American because I had an American passport, and my mom's side of the family was in California, so I kind of affiliated with the California part of the country.
But then, coming to the US, it was a little different, and I felt like I had all this experience that my peers as a fourth grader did not have. So I think it just maybe got me started off on a little bit more of a international perspective, and maybe a bigger-picture perspective, than I otherwise would have been.
I mean, even growing up, when I lived in Portugal, I remember being very interested in a lot of international comparison data, right? So I would look at the World Almanac, and look at GDP per capita. It was kind of funny, I'd look at those statistics and extrapolate forward. So I was doing forecasting, economic forecasting as an eight-year-old. So in that sense, maybe it has, I'm still thinking about GDP, many years later.
Lindsey: And so, when you moved to the States, where did you grow up?
Dourado: In North central New Jersey. So very suburban, suburb of New York, but very idyllic suburbs, basically.
Lindsey: Did you have bookish intellectual tendencies from the get-go, or did they come upon you later?
Dourado: Fairly nerdy, but I also really enjoyed sports. I would say, the nerdinesss really manifested when we got a computer. I was hooked, and this is the early days of the web, and I made a GeoCities page, learned basic programming and stuff like that. And then, I always enjoyed reading, at that age, mostly fiction, but these days, obviously, more nonfiction.
Lindsey: What year were you born?
Dourado: 1980.
Lindsey:
Okay. All right. So where'd you go for college?
Dourado:
I went to Furman University, which is a liberal arts school in South Carolina. Wanted to get out of New Jersey, basically. It was a very beautiful campus, if you've ever been there, and wanted a more generalist liberal arts education, that was appealing to me, at the time. I was very strong in math in high school, but had no desire to ever take a math class again, and wanted to do the liberal arts thing.
Lindsey: So where did the focus on technologies of the future come from – how did that start?
Dourado: It was very organic. I followed technology trends even as an undergrad – there's this website called Slashdot, that had all the tech news and stuff like that. I would read that, and just follow it, tinkering with things, like installing Linux on my computer, did that, and just followed all of that. I think there was a big long period of time, where that was what I considered to be technology – the digital technology stuff.
Lindsey: You're in high school during the internet gold rush, so that experience had a big impact on your worldview, right?
Dourado: Yeah, absolutely. I mean, it was just this huge thing, transformative. I mean, it's kind of funny in retrospect, we know the internet was not that big economically. It did not increase productivity.
I guess Bob Solow knew this beforehand, but it felt very big. It felt very big at the time.
Lindsey: Yeah, sure.
Dourado: And it was. Obviously, culturally, it was very big. And so yeah, always tinkering around online, I would say, throughout my high school era, and then, early adulthood.
Lindsey: And your ideological orientation, was it always libertarianish, free-market-oriented?
Dourado: I wasn't self-consciously libertarian, until late college. I think. In my sophomore year, I was reading through Communist Manifesto, and just reading it for myself, to figure out what I thought. I think, my freshman year, I was mostly taking poli sci classes, sophomore year, I discovered econ, and thinking logically about economics made me more libertarian, made me think about questions like, "Well, should drugs be illegal?,” and stuff like that. And that brought me to libertarianism, less self-consciously, at first, but then, over time, more, I would say. By a year or two out of college, I was pretty self-consciously libertarian.
Lindsey: Okay, and so, what were you doing? What was next after Furman?
Dourado: First thing was, I got a job on the Hill, as a staff assistant and legislative assistant. Didn't actually last that long. My college sweetheart was in law school at UVA, so I left to move down there. We got married, and I just had a crappy job at UVA Medical School.
When she graduated, we moved up to DC, where she had a job at a big law firm. And I got a job at the Bureau of Economic Analysis, because I was like, I did the Hill for six months, and that was plenty, and now, I want to do something economics-related, and I didn't know where to begin. BEA seemed like a okay place to start, so I did that.
Lindsey: And then, how did you get to Mercatus?
Dourado: Even from there, it was kind of a long path. As I mentioned earlier, I was not interested in math in college, so I had to take, as I was at UVA thinking about, "Well, maybe I should go to grad school," I had to take some night classes to get my prereqs up. There's this thing called the blogosphere, which you may remember-
Lindsey: I remember fondly, yes.
Dourado: I started at BEA in 2004, and I was just hooked on Marginal Revolution, an econ blog, and a few other blogs. And I was like, "Well, these guys are all at George Mason, I got to go there. And it was local, and the BEA said that they would pay for that. I applied for my PhD, intending to go part-time, but got in full-time, with money. So I was like, "Well, Sayonara, BEA, thank you for paying for my prereqs."
Lindsey: Nice.
Dourado: And then I started working on my PhD there. I think it was not the most well thought-out plan, because I didn't actually know – I didn't have any academics in my family, no background on this at all.
Lindsey: No one to blaze a trail for you, yes. You're stumbling.
Dourado: Yeah, so I knew my professors in college, but didn't really know any other professors. Anyway, along the way, I realized I did not want to do this very fine, narrow academic work, and was struggling with my dissertation, and blogging about tech stuff on the side.
I got in touch with Jerry Brito at the Mercatus Center, who brought me on, had me do a project for them, and that went well. I thought, "Hey, maybe this would be an okay path," and they brought me on full-time. So that's where I made my way into things.
Lindsey: Okay. And how long were you with Mercatus?
Dourado: About five years.
Lindsey: And then you went from there to Boom, the supersonic startup.
Dourado: Yeah, while I was at Mercatus, I was there the first two years under Jerry's tutelage, in the Tech Policy program. In 2014, Jerry left to go start Coin Center, so I was suddenly put in charge of the Tech Policy Program. I had no management experience or anything like that, so I was trying to think about what I wanted to do, and I was directing my own research at that point.
At the same time I read Peter Thiel's Zero to One, and I was thinking, "This digital tech stuff is the past, this is not where I want to spend the rest of my career. I want to do more hard tech stuff." And so, I did.
I was in charge of my own research plan. So I did a bunch on drones, and we were doing drone policy work, before there was really a drone industry to defend themselves, so we were commenting on FAA policy. We presented a paper at NASA, which was really fun.
But anyway, it got to the point where I had done what I wanted to do on drones, and was talking with my research assistant at the time, Sam Hammond, and was like, "We really should do something else on FAA that's not drones." So we kind of tossed around a few ideas, but we kept coming back to supersonics.
And so we wrote a paper on supersonics called Make America Boom Again. This is in 2016. We were expecting Donald Trump to lose the election, but we thought it was a fun tongue-in-cheek title. Obviously, he ended up winning, and the paper circulated within DOT and elsewhere.
To work on that paper I had gotten in touch with Blake Scholl, the CEO at Boom, and he had talked to us about what their obstacles were, and so on. So anyway, I kept doing some press around supersonics, and why we needed to prioritize this.
And he just calls me up one day and says, "Hey, we love what you're doing. Great if you want to keep doing it at Mercatus, but would you want to do it in-house full-time, at Boom?" And I said, "Yeah."
They flew me out for an interview, and I got the job, and so I entered Boom as head of global policy and global communications. And man, I knew very little about airplanes at the time, it turns out.
It was shocking how little I knew, in retrospect. But I studied a lot, and learned a lot, and-
Lindsey: How long were you there?
Dourado: I was there two and a half years.
Lindsey: So then you returned to the world of research and issue advocacy, with the Center for Growth and Opportunity, which is affiliated with Utah State.
Dourado: Right.
Lindsey: Utah State doesn't have much of a national profile. How did this organization come about, and how did you hook up with them?
Dourado: So the real reason I went there, I took six months off after Boom, just to decompress. I was doing a little consulting, so I didn't have a huge time crunch on finding another job. But former Mercatus colleague, Chris Koopman, who had been in the office next to me at Mercatus, was out in Utah, doing this thing.
And I had said, "Well, maybe I would do something part-time, or whatever, on top of consulting. I could piece together a couple jobs that way." So I had just been talking with him, and then, at one point, it was just, "Well, maybe I'll just come on full-time."
That was the discussion, and once we were ready to pull the trigger, it happened very fast, because we had already been talking for a couple months.
Lindsey: And now you two are still together, but at the Abundance Institute?
Dourado: That's right, yeah. So we just launched the Abundance Institute in April. It's narrowly focused on, how do we win on emerging technologies, and more heavily regulated technologies as well? So our two initial verticals are AI and energy. Probably we’ll will add one or two more over the next year or two. But yeah, I guess we think of it as sort of a self-disruption.
Things were going well at CGO. It was not a bad situation, by any means, but I think we thought we could do something even better. So, started the Abundance Institute, to do that.
Lindsey: Very good. So before getting into more details, you've been studying tech and tech policy for decades now. Are there intellectual or ideological frameworks, or even just sort of big picture propositions that you used to hold, that you now reject, or that you used to reject, that you now hold, things that you started out opposing, and now accept, or vice versa? How has your intellectual toolkit developed or changed over time?
Dourado: I think the main thing is that as I've gotten older, I’ve gotten less dogmatic. So I went into this field, like I said, pretty self-consciously libertarian, and I still think I have obviously libertarian impulses. I think the real strength of libertarianism is understanding that the state is coercive. And if you say, "Well, we're going to pass a law here," then you're ultimately underpinning that with a threat of force, and that entails some moral risk.
So if you end up doing the bad thing, a bad thing using coercion, it's like doubly bad. So you should be really skeptical of that. But other than that, I think my basic tenet that I would hold right now is not, human liberty as the foundation, but rather, a broader conception of well-being, and concerns about more broadly shared conceptions of well-being.
I do think I've become more concerned about – I mean, we can talk about this later, because we both have an interest in it, but this idea of collapse, and whether we can have a stable society. So I really think it's important that prosperity be broadly shared. That is more the north star for me these days, rather than any axiomatic human liberty starting point, and then just reasoning from there.
Lindsey: Our worldviews have been caught in similar currents, and drifted in similar directions over the years.
Dourado: Yeah.
Lindsey: So as I see it, the context now for your work is the Great Stagnation – that we've been in a multi-decade period, a half century of depressed productivity growth, at least depressed relative to the glory years after World War II. And there are a whole host of broader social ills that maybe are associated with this productivity slowdown, both contributing to it, and being affected by it.
But now, here in 2024, there are visible green shoots, after the long innovation winter. So we’ve had this period, where really the only real dynamism was in IT, in information technology, in the world of bits, while in the world of atoms there was real stagnation in technological developments and in measured productivity growth. But now, in a whole host of areas, in energy and transportation, and healthcare, and of course, in AI, we've got dazzling possibilities, but especially, the new thing is this possible hard tech renaissance.
So that sound correct? Is that how you see the context for the work you're doing now?
Dourado: Somewhat, but I would emphasize a few different things. So I think people are too quick to look at promising ideas, and take them as a sign that we could be on the cusp of exiting the Great Stagnation.
I think there is an idea ... I'm sure you're familiar with this economics literature, of just starting with Solow, and total factor productivity, and what is it? Then you have Paul Romer in, I guess, was it 1970, looking at it through an R&D lens, and looking at research productivity, and number of researchers, and so on. Okay, what are they producing? They're producing ideas. Ideas are non-rival. They're the thing that drives growth.
But I think, maybe we’ve have always had a lot of good ideas. And the question really is, can you deploy them at scale? Can you iterate on them? There are all these institutional questions, that I think I have increasingly put to the foreground in my thinking. And they make the questions of whether there is a promising idea – not that it's not interesting to me, but it's it's only the first step in many steps that need to happen, for us to get out of this stagnation.
Lindsey: I want to play that out at greater length, as we go along. But just to establish the stylized facts here. So yes, we have had a productivity growth slowdown over the past several decades. There are some who dispute that, who say that in the Information Age, so much of productivity growth is unmeasured. But I don't buy that at all. And I take it, you-
Dourado: Yeah. I agree with you.
Lindsey: In fact, to me, there's a very good argument the unmeasured consumer surplus of yesteryear was even greater than today. There's one paper by Kevin Murphy and Robert Topel in 2005, on the value of health and longevity, which calculates that the life expectancy gains between 1900 and 1950, if you play out the value of human life, the way economists calculate it, works out to about equivalent welfare gains to stated GDP. So it's basically doubling welfare...
Dourado: Pretty massive.
Lindsey: So we've got all kinds of unmeasured productivity gains happening right now, thanks to the internet, and so forth, but we've always had them, and I don't think there's any good case that they're bigger now. So to me, even if the absolute numbers are wrong, the directions are reliable, in my view.
Dourado: Yes, I completely agree with that. The way I sometimes talk about it is, from 1920 to 1973, we had this great period of growth, some of is caused by World War II, but that it started earlier and was actually strong even during the Great Depression, like total factor productivity growth kept going up. And then, a pretty significant drop-off in 1973. So we went from 2% annual TFP growth, to about 0.5%, and then a brief boom during the decade of 1995 to 2005, which I think is interesting. So when I was learning macroeconomics, this was already being discussed as an undergrad, like, "Oh, maybe we're back." And then, in 2005, just this drop-off, to 0.3% TFP growth, which is what it's been ever since. So, just abysmal.
And yes, we've had huge improvements in the manufacturing of computing. If you just think about semiconductors, right, huge, huge improvements there, complementary industries, like software. And then, the other bright shoot in the last two decades is fracking.
So we've had this huge increase. In the US it went from net deep net energy importer, import dependent, to net energy exporter, and it's just a remarkable transformation. So that would be, going into the current moment, that was one of the only two bright spots, is tech and fracking.
Lindsey: So let’s talk about whether ideas are getting harder to find or not. You already alluded to the fact that you're skeptical of that, and you think it's a lot more about deployment, and getting to scale. And I agree that's where most of the prize is to be had.
But on the first part, there are arguments that not just productivity growth, but actual scientific progress, has been slowing down, that there's been more marginal careerist tinkering at the margins of what superstars are doing, rather than plowing virgin new fields, and so forth.
That literature is necessarily qualitative, and I don't know how much confidence I put in it. You've studied it and thought about it more than I have. What's your take?
Dourado: So my bottom line is, I view science as just like another industry. And so, if we just take a look at it through that lens, and we say, "Okay, we're struggling and all of these different industries, we're struggling in health, we're struggling in housing, we're struggling in energy deployment, we're struggling in transportation infrastructure, and we're also struggling in science," I think that many of the pathologies in science actually are the same as in those other industries.
On the question, narrowly, of are ideas getting harder to find? I think clearly, in some fields, like fundamental physics, it's very hard to make new gains at this point. On the other hand, biology, I think, is the opposite, right? Where we've had creation of incredible platform technologies that do a lot of abstraction, which mean that a single PhD grad student in a bio lab can do way more than a team of the best world renowned scientists 50 years ago.
So ideas are getting easier to find in biology, harder, maybe in fundamental physics. And I think you have to ask this question of, "Well, what are the abstractions that we have available?" Say, in computer science, it's very easy to make progress, and you don't, even as a programmer, you don't need to know really how a computer works. Before, in the past 30 years ago, you had to basically know how a computer works, to be a programmer.
Today, you don't. So it's that level of abstraction, the development of tools, et cetera, that controls whether ideas are getting easier or harder to find, I think, at a field-by-field level.
Lindsey: Yeah, so I think of it as field by field. Once a field has emerged, to where you call it a field, almost from point forward, it's subject to diminishing returns. That is, the next research dollar is going to buy somewhat less than the one before.
But in those early days, of discovering a whole new field of inquiry, and establishing foundational new concepts, that sort of expansionary universe, there are just huge gains right at the get-go. I don't think it's inevitable that ideas are going to just be getting harder to find monotonically, or getting easier to find monotonically. There are rough patches, and then there are gold rushes.
So I think it's possible that we were, in addition to the institutions of idea generation and deployment gumming up, that we were in a relatively dry patch. I'm agnostic about that, but you lean much more heavily on the idea that it’s our capacity to turn ideas into actual life-changing innovations, that are deployed on the ground at scale, that's where the big problem lies.
Dourado: Yeah, I mean, I would point to a few things. So one is thinking just narrowly, in terms of science for a moment, the separation of research from deployment, right? And separation of concerns between, we're going to have some people specialize purely in the basic science, without any regard to seeing this become a product.
So that, just separating out, "Oh, all I do is publish papers," and we all know, nobody reads a lot of these papers. We know IBM is still the leading patenter in the US. There's not been an important innovation that's come out of IBM for a long time.
So we have a lot of research activity, but I think there is a value in having some of those same people, maybe not everybody, but some of those same people, involved in the translation, and involved in the business aspect, and they learn things.
They would learn a lot about, if they're learning about the needs of their customers, they're going to produce more valuable innovations, as well. So I think that's one reason to think the problem is not that we can't generate enough ideas. It's that we're not doing this in a fertile way, if that makes sense.
It's like we've reduced the value creation in science, more than we've really reduced science, per se. And then, I think the other question is, if we have an innovation, can we deploy it, in a way that it can make contact with the real world, that it can be iterated on? I think that's such an important part of innovation – the innovation, or the iteration, after the initial contact with the real world.
The rate of iteration is one of the most critical variables that I look at, when I'm looking at a hard tech startup. It's like, how quickly are they coming out with the next thing that they're going to test, or the next product, or whatever? Then you've got to deploy at scale, for it to meaningfully affect GDP, obviously.
The P in GDP is product, and so, you have to have a product that is on the market, that is bought and used by millions and millions of people, or else it, by definition, can't affect GDP very much.
Lindsey: Right.
Dourado: So it's scaling, it's scaling and deploying.
Lindsey: There are so many factors totally outside the academic lab, or the corporate R&D lab, that are of ultimately decisive importance, in determining whether or not promising ideas get commercialized at scale. And we see NIMBYism, and the proliferation of the so-called vetocracy, and bureaucratic sclerosis, and state incapacity – these are larger social frictions, which don't have anything to do with the productivity of researchers.
So the paper, Are Idea Getting Harder to Find?, by Bloom and Jones and others – it’s a great paper, very provocative, interesting. They say, "Okay, we've been basically doubling the number of researchers every 13 years or so, and keeping productivity growth, just barely keeping its head above water," and pointing out that the last iteration of Moore's Law took 18 times as many engineers as the first one, as an early one did.
So the burden of continued innovation is, you can see it vividly in some places. And then, more broadly you can see this idea, that the bang we're getting for the buck of innovative activity is going down. That is, we have a much larger absolute number of researchers and engineers and scientists, and a much larger percentage of the workforce accounted for by such people, and we're still in a productivity slump. Butt that doesn't necessarily have anything to do with what they're doing. It could be something completely outside of their competence, and their scope of their responsibilities.
That brings me to an essay you wrote on your Substack, Heretical Thoughts on AI. So there's a lot of buzz about AI since ChatGPT debuted and caused such shock waves of excitement And lots of hyperventilating speculation about the possibility of hypergrowth, that if AI can automate everything, including innovation, you can get 30% growth a year, and crazy stuff like that.
Dourado: Yeah.
Lindsey: That, of course, presumes that you can automate all the people who show up at the land use zoning meeting, and ...
Dourado: Exactly.
Lindsey: And all of their equivalents, who are gumming up the works, in a million different ways every day of the year. So you went through big industries, where you could think about "Could AI have revolutionary potential?" And you come with, "Nah, or maybe, but the real holdups seem to be elsewhere."
Dourado: Yeah, I think there are some where, clearly, it could have a big effect. I think I would point to health as the number one thing. We could replace a lot of doctors with AI doctors.
Lindsey: And conceivably, you could accelerate drug development.
Dourado: They could accelerate drug development. We'll try to do that. I mean, that's very hard. The bottleneck is not discovering new candidate molecules. That is not the current bottleneck in drug development. But at minimum, we could do a lot in health delivery. A lot of times, people have questions. We could answer their questions, using LLMs. We could reduce the burden of paperwork on doctors. The question is, will we do these things? And if you look at, even something like telemedicine where, during the COVID pandemic, we decided, "Okay, we're going to allow telemedicine across state lines." And then, after the pandemic, we went back.
Lindsey: Right.
Dourado: We went back to not allowing this, right? It's the craziest thing. We're just deliberately restricting supply, for the benefit of very highly paid professionals, the doctors, and we're restricting supply to prop up their wages. And so, if we have a new technology, that could also ...
Lindsey: It was a magical moment. I had a couple of office visits during that time, where you check in on your laptop, and they ding you when you're ready.
Dourado: Yeah.
Lindsey: You do what you do, you don't have to go anywhere. And it's just, oh goodness, why can't we do that all the time?
Dourado: And it's funny, because what I've been reading about, I read this a month or two ago, that in the UK, they have this huge crisis of healthcare provision with the National Health Service. So. A lot of people, they're now going to do telemedicine in Singapore. They're calling Singaporean doctors, paying 12 pounds for a visit, and it's very cost-effective. But I don't know if they have prescribing rights in the UK, et cetera, right?
But there's a lot we could do, even without AI, to lower the cost of healthcare delivery. It's not clear that anybody, even on the consumer side, we're not really agitating for it. And on the provider side, they all want to stop it, because they want to prop up their wages.
Lindsey: So there’s one particular productivity growth mystery that I wonder if you've delved into, and have thoughts on, and that is the decades-long, measured negative productivity growth in the construction industry. That, to me, is just deeply profoundly baffling how, in a market economy, you can have sustained negative productivity growth. I just don't get it.
Dourado: It's not just construction. I mean, healthcare is another ones, like hospitals. I have a breakdown, I have the data somewhere on my computer. There's a number of industries, where we've had negative productivity growth. I mean, and again, this is a consequence of, TFP is not equal to ideas. TFP is some function of ideas and institutions.
I think this is clearest, actually, if you look internationally, right? Getting back to international comparisons that we talked about earlier, ideas are basically the same, everywhere on the globe. To some extent you have trade secrets, or national security secrets or something like that, but for the most part, ideas are the same everywhere. Yet we have huge disparities in productivity across countries, just massive ones. Every economist, if you ask them why that is, they say, “institutions,” they have what I consider the right answer.
But then, if you look at it intertemporally, why is this industry declining? It's like, well, it must be ideas getting harder to find, right? No, your first instinct, cross-sectionally, should also be probably your first instinct, intertemporally. And I think there's this sort of accumulation of rules in a lot of industries, including construction and healthcare.
And it becomes increasingly, the more regulated it becomes, the more specialized the regulations become, the more of a thicket it is to get through, the more it's just completely opaque to outsiders. And so, to some extent, the answer, "Oh, this is the way and we have to do it this way,” just becomes more and more true, the more complex the regulation is. So I think it's something along those lines. It's obviously not a technology thing.
I think the Baumol effect is real, right? So things that still require human labor, in the face of average labor productivity growth, if your productivity growth is lower than that, you still have to pay a wage to keep, to equilibrate the labor market. So that can be part of it.
Lindsey: Right, there's a self extinguishing dynamic to productivity growth, that the reward of productivity growth in a particular industry is that that industry's share of GDP shrinks.
Dourado: Yes.
Lindsey: And so, you ultimately, over time, your economy consists mostly of your least productive sectors.
Dourado: Yes, exactly.
Lindsey: So this wheels us around to what was the specific catalyst for our conversation. Ever since I started my Substack, I wanted to do a podcast, and I always thought you would be an obvious person to have on. But then you wrote an essay back in May, I guess, about Joseph Tainter, who's an anthropologist, who is the leading theorist these days on civilizational collapse.
So if abundance is sort of your polestar, increased mastery over nature, in service of broad-based human flourishing, that's where you're headed, then the nemesis at your heels is collapse, just a devastating retreat.
Dourado: Yes.
Lindsey: That's certainly possible, right? So I mean, we got through a Cold War, where really, there were two or three occasions where it was just dumb luck that we didn't have a catastrophe.
Dourado: Yes.
Lindsey: So the idea that there could be a global catastrophe has been with us now since Hiroshima, and there are many different permutations, but the general through-line that Tainter sees, in his analysis of precipitous collapses, where social orders just shrank dramatically, rather than being taken over by another polity, and he very calmly and methodically goes through a bunch of alternative explanations. But his through-line is basically declining marginal returns to social complexity. You want to play that out a little bit, and explain how this grabbed you?
Dourado: Yeah, absolutely. I started thinking about this question because, I was-
Lindsey: And it just occurred to me, right before we started this conversation, that Tainter is at Utah State, which is where you were affiliated.
Dourado: Yes, where I was, just until recently, yeah. Yeah, I went out to campus a couple times a year, and I didn't go since I really started diving into his work. But yeah, I would love to chat with him, and get his thoughts on the current situation.
So I started thinking about this question, just in terms of, if we keep going down the current road, is that really sustainable? If technology allows it, we can keep growing. I think we kind of understand how that works. But the question of, can we have an economy where, year after year, for at least some chunk of the population, life doesn't get better anymore, right?
Lindsey: Right.
Dourado: And it's above subsistence, but it's stagnant, and some people are getting more, but a lot of people are just getting the same, no hope of getting more, year after year, or generation after generation. And I started thinking about this as a cause of the nihilistic populism that we see, well, maybe on both sides, but particularly right now on the Republican side. And it was just concerning to me, that this sort of populism is taking hold.
I started to think, really, abundance is the antidote to this. And if we actually were delivering more broad-based human flourishing to the entire income distribution, including the bottom half of the distribution, then maybe this populism wouldn't be so bad, maybe it wouldn't be so dangerous, maybe we would be more stable.
So that was sort of the premise going in. And then, Tainter's work was obviously published before this current moment, in 1988, so not at all informed by current events. I just kept seeing in the analysis ... First of all, the analysis is, I think, very strong, for an anthropologist. I don't know how many anthropologists you've read, but I don't see a lot of them thinking, grappling with questions of marginal returns, and the work of Mancur Olson, that was cited in there, and really, just thinking rigorously about the cross-sectional variation.
This was something, that when I was in grad school, that Tyler Cowen drilled into me. "You've got to think about the cross-sectional variation, and you've got to be able to explain that." And Tainter did it shockingly well, for a field that at least my – I haven't read widely in anthropology or archeology, but my prior was, "Oh, these guys, they're not really rigorous social scientists a lot of the time." And he just did it amazingly well.
Through his analysis. I saw some scary similarities to the current moment, where he talks about the Roman peasantry, and not just the peasantry, but actually, many elements of Roman society, where it wasn't so much that the barbarians invaded, and these people were overrun. It was that they just decided not to fight, is that there's an apathy and a cynicism that develops.
And I see that in our current moment, in spades, and it feels like it's growing. And I think that lack of shared prosperity, maybe it’s a component that is driving that. So it's made me much more conscious of things like the pre-tax income distribution.
So just, obviously, we can talk about post-tax, I'm fine with some redistribution to make people's lives better, but really, we need to be thinking about, how can we make everybody feel like they're bought in, and that they're a productive part of the society, and that we're all in this together?
So I think that this relates to the focus on productivity that I've been chewing on for a decade or so. The other part of that is, productivity growth is very uneven, as we've discussed. We've had computers and fracking, I think, as the two big gains. Well, that has geographic inequality consequences, that has sociological inequality consequences. There's just a huge part of the country, huge parts that are being left behind. And the cause is, it's not the successes of that tech industry or the fracking industry, it's the lack of productivity in the rest of the distribution that concerns me.
And to your original point, Tainter sees this complexity building, and sort of growing as a system. So you need another bit of complexity to deal with your past complexity. So if you have to raise taxes to hire more administrators for something, well, then, you also have to pour resources into legitimation of the taxes, and tax collection, and so on.
So the system just keeps growing. And I think it's that increase in complexity, that is simultaneously pushing down productivity in a number of sectors, and then also fueling the cynicism we see, and that is driving the dangerous populism that we observed.
Lindsey: So, I should have mentioned at the outset, you wrote this essay about Tainter, but I had also written an essay about Tainter on my Substack, about precisely a year before. So he's been on both of our minds.
Dourado: Yes, so you were way ahead of me, Brink. I should have known.
Lindsey: All civilizations before this one were agrarian, and so they were under Malthusian constraints. The story Tainter tells it again and again, when civilization is in an expansion phase, it's got loot and plunder. So there's growing returns to increasing complexity of a bigger army, right?
So you have increasing returns, until you reach the maximum point of imperial expansion, where your lines of communication are too far, you run up against a peer power, or something, and you got to stop. Once you stop, then you got to start putting in more, the bureaucracy naturally grows, and so, taxes have to go up, and that makes the subject populations restive. Security forces have to go up, so taxes have to go up, and you start to go into this, you get vulnerable. You get vulnerable to shocks. But the inescapable source of the vulnerability in the agrarian world was the inability to produce wealth in modern fashion. The only way to really produce over the course of a lifetime was to steal it from somebody.
Dourado: Yeah.
Lindsey: Supposedly we've broken out of this, and so all of this decline and fall stuff is in our rearview mirror. That's how I had always thought about things, until recently, always knowing, of course, that there was a possibility for cataclysm. But seeing our political problems led me to think that we had deeper social problems than I had previously believed, and that got me thinking about the health of our civilization.
We're nowhere near actual decline, in terms of shrinking. We can picture shocks that can send us into collapse, but they're not on the horizon. But what we're already maybe in is a period of diminishing returns to complexity. Our social order is too baroque, it's too Rube Goldbergesque.
All of these choke points and veto points, and sort of sources of sclerosis have built up, and they don't get torn down. It's the Mancur Olsonian dynamic of barnacles growing up on the ship, so that all is going on, and that can produce a restiveness in the population, and the culture, that can manifest in very dysfunctional, acting out, terrible ideologies, ultimately, in ruinous conflicts, crazy death cults that learn how to engineer super viruses, all kinds of things.
And just the challenges of dealing with climate change, and future pandemics, if our dysfunctions keep growing and deepening, they will swamp our technological capacity to stay ahead of them. So we're just sitting ducks for something to come along, some asteroid to come along, and knock us for a loop. That's how I see things right now. That we’re vulnerable.
Dourado: Yeah, I think there becomes a social unwillingness to address new problems. That if we had a crisis that necessitated a level of national cohesiveness in our response, we just don't have that anymore. And it may not overwhelm us technologically, but we just won't do it, we just won't respond, is the problem.
Lindsey: The movie Don't Look Up was made as a parable about climate change, but it was so much more apposite about the pandemic, because that was something that was like an asteroid. It's coming right now.
Dourado: Yes, yes, yes.
Lindsey: But that cultural self-blindness, the desire not to look up, the willingness to evade uncomfortable realities, is manifest all over the place, and is a driver of this growing kludgeocracy that we have. But it's-
Dourado: Yeah, don't look up, to own the libs, right?
Lindsey: That's right. In my writing on my Substack, The Permanent Problem, which is about if we're so rich, why aren't we happier? Our technology and organizational prowess have brought us within view of a world of widespread human flourishing, but we're not there. In fact, we seem to be drifting away from it -- what's going wrong? So that's what got me thinking about Joseph Tainter.
I see the excess complexity bilaterally. We've just been focusing on the state side, the growing sclerosis of the state. But I would argue that hypertrophy of consumerism is evident, as well, most obviously in the fact that having children has gone from one of life's inevitabilities, and just something you do, to one very extravagant consumer choice, among others. And as a result, the opportunity costs are leading people – thinking about family formation in terms of consumption and opportunity costs is a significant factor in why much of the world now is not making enough babies to keep the population stable.
And more broadly, I would say, in a world where we're so insulated from the physical world. It used to be, that that was the game. Solving problems in the physical world was what you did. It was physical survival. Even when we had some breathing space during industrialization, it's still farming and manufacturing, and working with the physical world.
But we're now so insulated, that our economic job is not problems in the physical world, but problems with other people. And our ultimate problems are problems inside our own heads. So the whole focus of our culture is not oriented towards the instrumental rationality of the physical engineering mindset, of solving problems effectively, but is much more in this kind of bouncy castle where you can just do anything you want to, and not get hurt, and have all kinds of crazy dysfunctional ideas, and not get immediate feedback from the world from it. So you produce a population that maybe doesn’t have the kind of dynamic go-getters that thrill to the vision of a technological future that thrills you and me.
Dourado: Yeah. I mean, I would also point to the educational system. I think we're maybe really handicapping people, by putting them through an educational system that makes them not curious, and not want to learn, and not motivated.
There's a lot of people who graduate high school with a lot of cynicism already, and it's a real stain on our civilization. We're running a state-run program to make people more cynical, and less interested, in-
Lindsey: In the world.
Dourado: ... in learning, and in the world, and in achieving something.
Lindsey: Yeah. So we know that our parents and grandparents, and great-grandparents, believed things and did things that we now consider utterly appalling, which means, we're doing stuff now that our grandchildren and great-grandchildren are going to be horrified by. And so, the guessing game is what is it?
One of my leading contenders is warehousing children with a bunch of people of their same age, just so that mimetic contagion can run rampant. It's just probably the most unhealthy way to structure human development that we could come up with. But that's the one we're on right now.
Dourado: Yeah, so there's probably a lot of things we're doing wrong. I think about fertility, and the housing market. If you need to get established enough as a household, to be able to have children, to feel like you can have children, or to be able to afford a house with a spare bedroom, so that you could have a child in there. And if that just costs a lot more money than it used to, well, maybe you still have children, but you have children later in life, you get started later, and that translates to fewer kids per couple. There's a lot, I mean, we could point to individual examples, but it's this big morass of institutional qualities or dysfunction, that I think all play on each other, and that can compound and make each individual one worse.
That's where the diminishing returns maybe comes in, is that it's the pebble in the stream argument, right? Okay, if this one pebble was there, maybe it wouldn't be such a big deal, but if you have a mountain of pebbles, then it becomes a dam, right? And it's the compounding qualities of our institutional dysfunction.
Lindsey: So I am inclined to believe in the bicycle theory of civilization, that you got to keep moving forward, or things fall apart.
Dourado: Yeah.
Lindsey: So, I view the work you're doing to be of profound importance, because we have two options to organize our culture. We can organize it around making a better world for all of us, or we can organize it around playing games, where different groups of us are trying to boost our relative status at the expense of other groups.
And the first game is a game that nobody ever played until a couple hundred years ago. It's a weird novelty, and we're not very good at it, but we stumbled into it, but it's not the default. The default setting is zero-sum. And so, people have to actually, they don't start out believing that the solving problems together for all of us is possible. They have to see it to believe it.
So, if we go some period of time, where it doesn't look like progress is possible, I think if there aren't people with living memories of it, that dies. So we really are, if it's not abundance or collapse, it is abundance, or a very ugly kind of stagnation, with ever present vulnerability to an unhappy ending.
Dourado: Yeah, there's a pair of NBER papers that came out last year, which you may have seen, about positive sum attitudes versus zero-sum attitudes. And is absolutely the case, it seems, from data, using the World Values Survey, so across humanity, but also, other, more narrow surveys in the US and in Africa, that the amount of economic progress that you see in your formative years affects your attitudes.
And I just think, "Okay, if we get to a point where people have zero-sum attitudes, that isn't a zero-sum world, that is a negative sum world," Because the causality runs in both directions, right? If everybody had a zero-sum attitude, we'd be back to subsistence, I think, at some point.
It might not be the exact Tainter story, but you don't keep growing when everybody has a zero-sum attitude. So it is, like you said, it's like a bicycle. We’ve got to keep moving forward.
Lindsey: Well, you've got your feet on the pedals, so keep pedaling. You're doing the Lord's work. In your online bio you call it a sacred quest to increase the pace of economic growth. I think you say that maybe tongue in cheek, but maybe not entirely tongue in cheek. At any rate, it's great talking to you, and I'm excited to see what's in store at the Abundance Institute.
Dourado: Thank you, Brink. You're very kind, and I really enjoyed the conversation.
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