TCS Daily

Why is James Glassman Worried?

By James D. Miller - January 3, 2005 12:00 AM

So James K. Glassman, the founder of TCS and co-author of Dow 36,000, has actually gone pessimistic and worries that our children might not live better than we do.

Glassman's Fears

Glassman writes that the U.S. is developing a science gap. American-based firms and researchers may well be losing their overwhelming dominance of science, but this is a good thing for the U.S. economy. Scientific research conducted by one company benefits the entire world with the researching firm capturing only a small part of the gains. In the recent past everyone else was mostly free riding off of America's technological excellence but now other countries are starting to do their fair share. I want millions of Indian and Chinese scientists to make discoveries that would have otherwise escaped humanity; the extra knowledge will enrich the U.S. Furthermore, regardless of where the research takes place, U.S. firms are still best positioned to take advantage of the new technology.

Glassman correctly points out, however, that runaway lawsuits and new government regulations are retarding U.S. entrepreneurial spirits. But Americans still have a stronger entrepreneurial economy than that of almost any other large country. According to The Heritage Foundation's 2004 Index of economic freedom we have the 10th freest economy overall and the 2nd freest among nations with populations over eight million. Furthermore, our position might soon improve because President Bush's second term agenda of Social Security, lawsuit and tax reform has the potential to greatly increase our economy's competitiveness.

Also, as the importance of knowledge industries increases, our government will find it more challenging to regulate the economy. Environmental, safety and zoning rules, the mainstay of the regulatory state, have minimal applications to cyberspace. Furthermore, the ease at which companies can offshore the production of informational goods constrains regulators by creating a "race to the top," causing firms to locate in the countries most friendly to wealth creation.

Glassman also expresses concern about the declining number of workers to retirees in the U.S. population. Although the increasing number of retired Americans will soon strain our Social Security system, the U.S. is in a much better demographic position than most other developed nations.

But having a large retired population is actually a positive consequence of massive wealth generation. Leisure is one of the most valuable things that money buys. As America becomes richer we should expect people to use their new wealth to purchase leisure and spend a greater percentage of their lifetimes not working.

Why I'm So Optimistic about My Son's Economic Future

I have a six-week-old son, and I'm extremely confident that little Alex and his peers will someday live in an America vastly richer than it is today because of the likelihood of at least a few technological "miracles" occurring during Alex's lifetime. Carbon nanotube space elevators could cheaply open up new frontiers for economic development. Cures for cancer or heart disease would be worth literally trillions to our economy. Memory-enhancing drugs mitigating some of the harm of Alzheimer's disease would greatly increase the number of productive American workers. Even a safe weight-loss drug eradicating obesity would go a long way to reduce the economic harm of an aging population. But when considering advances likely to take place during my son's life those we can't even imagine today are likely to be the most important.

Moore's law means that during my son's lifetime computers will probably surpass today's humans intellectually. Of course, during this time human intelligence will probably receive a significant pharmaceutically powered boost. The wonders produced by enhanced human brains working with ultra-fast computers will, I believe, result in my son's generation witnessing more technological change than has occurred throughout all of previous human history.

James D. Miller writes The Game Theorist column for TCS and is the author of Game Theory at Work.


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