Podcast Summary
Economic stagnation and potential solutions through innovative technologies: Economist Eli Dorado suggests biotech, alternative energy, and space as innovative sectors to boost total factor productivity and reverse economic stagnation. Investors can stay informed and make data-driven decisions using Canalyst's company-specific models to react to market changes and contribute to economic growth.
We're in an economic stagnation, as indicated by low total factor productivity, and Eli Dorado, an economist and senior research fellow at Utah State University, believes innovative technologies in biotech, alternative energy, and space could reverse this trend. Eli is interested in this problem as it affects our economic output and the quality of ideas and institutions that determine how we combine labor and capital into output. Total factor productivity is a crucial measure of the residual output that can't be explained by labor or capital inputs alone. If we can achieve more output with the same amount of labor and capital, it's a significant win for the economy. Canalyst, a sponsor of this episode, offers detailed company-specific models for professional equity investors to react more quickly to market changes, including new IPOs and SPACs. By staying informed and making data-driven decisions, investors can contribute to breaking the economic stagnation.
Productivity growth has slowed significantly since the 1970s: Total Factor Productivity growth, a measure of civilization's progress, has slowed from 2% to around 0.3% since the 1970s, potentially leading to societal implications such as a zero-sum society and cultural shifts.
Total factor productivity (TFP), a key measure of civilization's progress, has slowed significantly since the 1970s. Once growing at around 2% per year, it's now down to approximately 0.3%. This stagnation has societal implications, potentially creating a zero-sum society and impacting culture and politics. The causes are multifaceted, including technological innovation and the quality of institutions. While some argue that we've exhausted major technological breakthroughs, others believe society has become complacent, focusing more on comfort and status than material improvement. Regardless of the cause, the slowdown in TFP growth has significant consequences.
Understanding Economic Growth: Levels and Change Perspectives: Output matters for living standards and societal stability, but regulatory barriers and complacency can hinder growth. Innovation and crises drive change, with mRNA technology leading to potential explosive growth.
The levels view and change view of economic growth are important perspectives to understand. The levels view emphasizes that output matters because it reflects our living standards and ability to choose our own lives. Society is more stable when it's growing, reducing conflicts over resources. However, regulatory barriers, such as NEPA, have slowed down the approval process for projects and limited growth. On the other hand, the change view highlights the importance of innovation and technological advancements. Despite the potential for rapid innovation in areas like biotech and health, complacency and prioritizing values beyond material growth may be holding us back. Crises, which breed invention, can also contribute to innovation but may also reinforce the complacency theory of stagnation. The potential of mRNA technology, which allows for the production of arbitrary proteins inside the human body, is particularly exciting as it can lead to the opposite of stagnation, an explosion of innovation in the coming decade.
Understanding Proteins: mRNA Technology and CRISPR: MRNA technology creates viral spike proteins to train the immune system and DeepMind predicts protein function for drug discovery, while CRISPR edits DNA to create specific proteins, revolutionizing gene editing
Proteins are the fundamental building blocks of life and understanding their structure and function is key to advancing various fields, including medicine. mRNA technology allows for the creation of viral spike proteins, which can be used to train the immune system to recognize and attack specific proteins, including those found in cancer cells. Protein folding, a complex process that determines a protein's function, was recently cracked by DeepMind, enabling the prediction and design of new proteins. This has implications for drug discovery and, in the future, protein design. CRISPR is a method for editing DNA, which in turn codes for proteins. Its ability to precisely edit DNA sequences has revolutionized gene editing and holds great promise for various applications, including disease treatment and genetic research. Both mRNA technology and CRISPR are important tools in the field of proteins, contributing to the understanding, manipulation, and design of these essential molecules.
Revolutionizing Genetics with CRISPR Technology: CRISPR technology, discovered in 2012, enables precise DNA editing in living cells with potential applications in producing beneficial proteins and removing harmful ones. Its impact on healthcare represents 18% of GDP, and investors are interested despite regulatory hurdles and high costs.
CRISPR technology, discovered in 2012, has revolutionized the field of genetics by enabling effective and precise editing of DNA in living cells. Its potential applications range from producing beneficial proteins to removing harmful ones, especially in cases of congenital diseases. However, the progress in using CRISPR for human clinical treatments is expected to be slow due to regulatory requirements, clinical trials, and expenses. This technology holds significant potential for improving overall health, which represents 18% of GDP, and reducing its impact on the economy. Many investors are showing interest in this area due to its enormous potential, despite feeling uninformed. The ultimate goal is to make this large chunk of the economic equation so productive that it barely registers, leading to substantial improvements in living standards.
Shifting focus to producing more energy at lower costs: Advancements in geothermal energy, particularly deep geothermal, could lead to abundant, reliable energy and innovations in negative emissions technology, material science, and agriculture.
We're at a pivotal point in energy production, where the focus is shifting from energy efficiency to producing more energy at lower costs. This mindset change could lead to significant advancements in various sectors, such as negative emissions technology, materials, industrial processes, desalination, and agriculture. Geothermal energy, specifically deep geothermal, is a promising source for providing both more and cheaper energy due to its abundance, replenishability, and the advancements in subsurface engineering. This shift towards abundant, reliable energy could lead to innovations in areas like negative emissions technology, material science, and agriculture, ultimately improving the quality of life and solving pressing global issues.
Deep geothermal energy and advancements in transportation: Deep geothermal energy is a promising development in the energy sector, with Sage Geosystems drilling the first demo well. Meanwhile, faster transportation like flying cars and supersonic planes could reduce travel costs and increase efficiency, with companies like Boom working on various models.
The energy sector is undergoing significant advancements, with deep geothermal energy being a promising development. Sage Geosystems in Texas is currently drilling the first demo well, and once it's producing, they plan to expand. While energy storage remains important, especially for less reliable renewable energy sources, batteries may be more valuable in cars due to production bottlenecks and increasing demand. Faster transportation, such as flying cars and supersonic planes, can also have a significant impact on economic activity by reducing travel costs and increasing efficiency. Companies like Boom are working on various supersonic models, including Mach 2, Mach 5, and Mach 12, but it remains to be seen which one will prevail. Overall, these innovations touch on various aspects of the economy and have the potential to increase productivity and efficiency.
The Challenges of Making Supersonic Flight Economically Viable: Despite the Concorde's success in proving supersonic flight possible, its high costs and limited scale led to its retirement. Future advancements in technology could make supersonic travel economically viable again, with potential targets of Mach 4 or Mach 5.
The Concorde's high maintenance costs and limited scale led to its demise, but with advancements in technology, including computational fluid dynamics, carbon fiber materials, and more efficient engines, supersonic air travel could be economically viable again. The Concorde served as an existence proof that supersonic flight is possible without requiring new fundamental science, but achieving it is a challenging business. Mach 5 is considered the practical limit for supersonic commercial air travel due to the need to spend time in subsonic regimes during takeoff and landing. Future generations of supersonic aircraft may target Mach 4 or Mach 5, utilizing new engine technologies.
Advancements in Transportation Technology: Faster Planes and Reusable Rockets: New technologies like faster-than-Concorde airplanes and reusable rockets are reducing travel time and costs, leading to increased economic activity and collaboration between regions. Materials like carbon fiber and stainless steel, along with iterative development, are making these advancements possible with lower costs.
The advancement in transportation technology, specifically the development of faster-than-Concorde airplanes and reusable rockets for space travel, has the potential to significantly reduce travel time and costs between different parts of the world. This reduction in time and cost friction could lead to increased economic activity, collaboration, and cooperation between different regions. The use of materials like carbon fiber and stainless steel, along with the iterative development approach, is making these advancements possible with lower costs than previous innovations. Ultimately, these advancements could unlock new opportunities for travel and trade, enabling people to go places faster and more frequently than ever before. Additionally, the reusability of rockets is a game-changer for space exploration, making it more economically viable to explore Mars and potentially other planets.
Revolutionizing Space Industry with Affordable Launch Costs: SpaceX's Starship project could make sending items to orbit as affordable as traveling to Europe, driving economic growth and enabling new industries in space
SpaceX's Starship project, with a potential launch cost of $1.5 million per 150 tons to lower orbit, could make sending items to orbit as affordable as traveling to Europe. This cost reduction would significantly increase economic activity in space, enabling more valuable goods to be sent and more industries, such as space manufacturing, human presence on other bodies, and resource extraction, to develop. SpaceX's competitors, like Blue Origin, are also working on large rockets, but their focus is on suborbital space tourism. The affordable launch costs could make it possible to use commodity hardware in space, leading to faster development and more powerful satellites. Overall, the potential for significantly lower launch costs could revolutionize the space industry.
Aerospace and IT: A Fascinating Intersection of Innovation: Advancements in aerospace and IT are leading to promising progress in various industries, including medicine, communication, and space exploration. Machine learning in protein folding and custom silicon in IT are key drivers of innovation. Potential space manufacturing could revolutionize production processes and reduce costs.
The aerospace industry is experiencing significant advancements and competition, with companies like Blue Origin, Relativity Space, SpaceX, and Acxiom making strides in rocket manufacturing, space travel, and space station development. Jeff Bezos' involvement in Blue Origin and his visit to Relativity Space fuel speculation about potential mergers and collaborations. Machine learning, specifically in protein folding, is showing promising results in surpassing human capabilities, while the custom silicon trend in IT is leading to more efficient and powerful computer components. The combination of these technological advancements could lead to significant progress in various industries, from medicine to communication to space exploration. Additionally, the potential for manufacturing and producing goods in space, such as fiber optic cables and pharmaceuticals, could revolutionize production processes and reduce costs. Overall, the intersection of aerospace and IT is a fascinating area to watch for future productive growth and innovation.
Innovations in custom silicon and Ethereum blockchain set to revolutionize industries: Custom silicon enables faster computing with densely packed components, while Ethereum offers a flexible platform for new applications like prediction markets for information. These advancements could boost productivity and change decision-making processes.
Technology innovation, particularly in custom silicon and decentralized blockchains like Ethereum, is set to exceed Moore's Law and significantly impact various industries. Custom silicon, as seen in Tesla's full self-driving computer, will enable more densely packed components, leading to faster computing. Ethereum, a decentralized blockchain, offers a flexible platform for building new applications and technologies, such as prediction markets for information. These advancements could revolutionize industries and boost total factor productivity, making the world a more interconnected and efficient place. Another intriguing topic discussed was the evolution of cryptocurrencies, particularly Ethereum, which holds potential for various use cases beyond digital currencies. Ethereum's smart contracts functionality, tokens, identity, and new applications make it a versatile platform for innovation. Prediction markets on Ethereum, for instance, could enable markets for information on any question, allowing users to infer probabilities of events based on market prices. This technology could change the way we make decisions and understand the world. Lastly, the importance of encouragement and support from others was emphasized. Encouragement from individuals early in one's career can set the foundation for future success and opportunities. These experiences have been invaluable and continue to inspire growth and innovation.
Revolutionizing Investment Industry with Consistent Data: Canalyst offers reliable data for 10,000 companies, streamlining workflow for investment analysts and PMs, enabling focus on high value-add tasks.
Canalyst, a company providing business-specific financial statement and KPI data, is revolutionizing the investment industry by reducing redundant work and offering reliable, trusted data for up to 10,000 companies. This covers a larger scope than traditional equity research shops, which often cover only 1500-2000 companies. By providing consistent, up-to-date data, Canalyst eliminates the challenge of updating models when companies report new quarters. Their technology seamlessly updates models within Excel, providing a variance report for easy comparison between estimates and actuals. In essence, Canalyst is streamlining the workflow for investment analysts and PMs, allowing them to focus on high value-add tasks.
