This week I was listening to an interview by Tucker Carlson. He was interviewing Peter Walker, an ex-executive at Mckinsey & Company, a world famous consulting firm. In the interview, Carlson primarily questions Parker about his praise for the CCP and whether he regrets Mckinseys role in de-industrializing America. Mckinsey & Company has a reputation for advising businesses to relocate manufacturing over-seas, this strategy can decrease costs and increase profits. In addition to Carlson interview with Parker, the cultural atmosphere has changed. Many people are are upset that Americas industrial capacity has been handicapped, and this got me thinking about Peter Thiels critique about innovation and technological progress.
In numerous interview across the World Wide Web, Peter Thiel asserts that technological progress has stalled in America. Of course he is not referring to computer and digital technology, but the physical world around us. Thiel often illustrates his point by asking listeners to think about a bedroom or living form the 1970’s. Aside from extra screens like phones and computers, there has not been much transformation in the physical world. He further illustrates the point by contrasting differences in the physical world from the 1920’s – 1970’s, and the 1970’s – 2010’s. Thiel points out that radical physical transformation across the country had taken place throughout the last one hundred years, but we have not seen the same radical physical transformation in the last fifty years.
While reading Thiels book Zero To One , he noted the that in the modern world economic growth primarily comes from technological innovation and globalization. Innovation creates new industries and production capacities previously unavailable. With innovation we can develop new types of energy production, access new types of energy, create products that were impossible before, and radically expand economic capacity. Some examples of this would be the combustion engine, cars, techniques to manufacture stronger metals, airplanes, and computers. On the other hand, growth through globalization does not rely on radical new invention but on trade, it takes ideas and technology from one part of the world and brings them to another.
We have all heard the saying “necessity is the mother of invention.” In our modern world, globalization may have killed Americans perception of “necessity. I believe Thiel is correct, that radical physical change has not been occurring, and that it is because of our reliance on globalization.
Over the last fifty years production and consumption have become global. Therefore, companies can see growth by producing in one place and selling in another. This has created many cheap products for Americans. We have cheap goods of all types. Walk into a Walmart and you will find a plethora of inexpensive toys, clothes, and gadgets. Also in America, if you cannot afford something nice like a new car or house, it is easy to get credit. In America it has become relatively “easy” to acquire many of our modern conveniences, so where is the necessity? The necessity for companies and individuals to innovate new industries is not so high when they can continually market cheap new gadgets and toys at low costs. As long as Americans can pay for the new toys and gadgets or take out loans, the economy keeps on moving. However, since the low-cost production strategy has now put America in a bad strategic position with China, globalized economic growth is at risk. And as the economic crisis brought on upon America by the CCP virus unfolds, we may be forced to create economic growth through new physical innovation, not merely through creating and trading new and marginally interesting gadgets.