Holman Jenkins of The Wall Street Journal interviewed Peter Thiel, a German-born, Stanford-educated, American investor about the role of technological innovation in our economic woes (Holman Jenkins, Jr., "Technology = Salvation", The Wall Street Journal, Saturday, October 9, 2010). Thiel argues that the American economy has not been, for the last generation, an era of technological innovation. The only major innovation has been computer based process controls and internet based communication. Identifying technological innovation as the basis of productivity increases in the economy, he argues that the lack of technological innovation is the reasons for the the collapse of Western economies in the recent decade (since the dot com bubble burst at the end of the 1990s). Jenkins presents Thiel's thesis with a bit of caution, as if Thiel is a wild-eyed capitalist thinker; but Thiel reflects the consensus of historians of technology, however he obtained his insights. (See, for instance, Thomas P. Hughes, American Genesis: A Century of Invention and Technological Enthusiasm, 1989, especially as it relates to the final quotation in this article, below.) When one reflects over the past 300 years of Western history of science and technology, one sees an extraordinary burst of innovation in which three elements were tied together: scientific revolutions in physics and chemistry; technological innovation based on the results of research in physics and chemistry, with feedback from industrial technology to science (as in theoretical thermodynamics); industrial productivity. From the application of Newtonian mechanics to steam power and the invention of steam powered machinery in the coal mines and textile mills in the eighteenth century, to Lavoisier's discovery of the chemical exchange in combustion and the chemical revolution which led to the chemical and medical industries of the nineteenth century, to Faraday's and Ampere's electrical discoveries which led to the electrical industries of the twentieth century, Western economies rode a historic wave of gains in industrial productivity--the production of pure wealth that created great clean cities, raised standards of living, created the enormous middle class, made social welfare possible. Since 1945 there have been major scientific advances, but they have not produced similar advances in our economies. The quantum theory of physics, which led to splitting the atom and discovery of atomic energy, has not led to a burst of economic productivity. Everyone is so afraid of atomic energy that industrial utilization has been dampened. The discovery of DNA and biochemical advances in understanding biological processes of living beings have not produced a similar revolution in our economy. The promise of new medicines, for instance, sputters. Even invention of the semiconductory industry, computers, and the Internet have not, some argue, produced the economic advancement that previous centuries saw. Why? No one knows for certain, but I have argued before in this blog, as a few other researchers have argued, that governmental regulation has absorbed most of the economic revolutionary potential of these two great developments, just as they dampened the potential of nuclear physics.
This frustrated revolution in scientific based technology in the economy is certainly part of the reason that the US has not invented new industries where the labor class could find employment, as it found employment in the textile mills, the steel mills, the chemical plants, the automobile factories, and aircraft manufacturers of the 250 years before 1950. Government, which has invested trillions in education and research, has effectively stiffled the engine of innovation which it hoped to power up.
With this background in mind, here is a telling, if mangled, quotation of Theil in Jenkins' interview:
"Some companies and countries will do better than others. 'In China and India,' he says, 'there's no need for any innovation. Their business model for the next 20 years is copy the West.' The West, he says, needs to do 'new things.' Innovation, he says, comes from a 'frontier' culture, a culture of 'exceptionalism,' where 'people expect to do exceptional things'--in our world, still an almost uniquely American characteristic, and one we're losing'."
We are losing this culture of exceptionalism because of a profound shift in our nation's dominant political paradigm. The Marxist vision of the New Left 1960s, of power to the people, has finally, after forty years of gestation, brought into political power a Leninist political elite which has no faith in people at all, certainly not faith in their exceptional qualities, but sees them only as victims of the scientific, technical, industrial revolutions of the past 300 years. And this elite, with Obama at its head, wants only to "redistribute wealth", without any understanding of where this wealth, any wealth, comes from, in a series of socialistic schemes where the government in effect owns private enterprise through regulations, taxation, and public administration. He, and his cohort of radicals, don't know that they are burying the exceptional genius of America, just as their European models buried the exceptional genius of Europe, bankrupting not only our national economy and government, but also our culture.