The Great Stagnation is reflected, not healed, by the current crop of startups

(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: lawrence@krubner.com, or follow me on Twitter.

In terms of economic growth, in the West, the period since 1973 has been a pale shadow of the transformation seen from 1870 to 1970. Tyler Cowen call these last 40 years The Great Stagnation. Others have commented on this trend, or rather, the absence of any trend. Since 1980, clothes have stayed about the same, hair styles have stayed about the same, music has stayed about the same, and technology has been moving in slow motion, compared to the great leaps of the earlier period. In fact, since 1980, it is impossible to think of any new technologies (though some, like IP/TCP was only an academic toy before 1980, and of course it has since had a big impact in the world).

It would be nice if the current startup scene was going to change this, but for now every startup that I know is chasing the diminishing returns of the great revolution unleashed by IP/TCP. Startups that want to cure cancer, stop aging, colonize Mars or create telepathy are few.

This is well said:

From Cowen’s perspective, personal computing hasn’t broadly improved society’s standard of living. He says we’ve “plucked all the low-hanging fruit.” Today, innovation takes more effort. Some of the most successful technology companies haven’t done much for job growth: “Take the ubiquitous iPod. It’s created less than 14,000 jobs in the U.S., Internet giant Google, 20,000 employees, Twitter, a mere 300” (Author’s note: Cowen’s figures have obviously changed since that quote.) In fact, the net creation rate of jobs has been on the decline since the 1970’s.

We’re now faced with consumption-biased technological change: “technology that benefits mainly the highly skilled workers, but hurts the less-skilled, average person.” For those in information jobs, it’s an exciting time. Growth and jobs are plentiful. For those outside, though, their quality of life isn’t near as great, and it hasn’t improved much over the past few decades. The median income has stagnated, we’re mainly adding “McJobs” to the economy, and close to half of US is in a very fragile financial state—which is a “visible symptom of Great Depression–era level inequality.” We’re also seeing a “dumbification” of society, where media misinforms and more people seem to be aware of what’s happening on reality TV, than in reality.

Yet, exciting new products are released every day that promise to improve our lives. Are they fulfilling that promise? Are we? We make outlandish claims—like one brand of chewing gum will help you get a kiss from a beautiful woman—in order to differentiate. Umair Haque says this is an industrial age model of product creation: “We have to move from differentiation, to actually making a difference—to people, communities, and societies. Mattering in human terms. I think the key words, when it comes to making a difference, are: human potential.”

In short, if software is truly eating the world, then it needs to be more meaningful.

Post external references

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    http://www.getfinch.com/2012/08/startup-stagnation/
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