Mark Lutter on progress studies and charter cities

A little while ago I recorded an interview with Mark Lutter, founder of the Charter Cities Institute, to talk about progress studies generally and a bit about charter cities. Topics:

Transcript below.

Jason: [00:00] Hello, my name is Jason Crawford, and I am the author of The Roots of Progress, and I am here with Dr. Mark Lutter, founder and executive director of the Charter Cities Institute. Mark, thanks for taking the time.

Mark: [00:12] Thanks for having me.

The idea of progress studies

Jason: [00:14] Mark and I recently had an interesting conversation about the budding progress movement, and what it could be and where it could go. I wanted to expand on those thoughts with him here, and also talk a little bit about the Charter Cities Institute. So, Mark, let’s start with progress. I’ll just ask you again the question I asked you before that sparked an interesting conversation. What potential value do you see in the progress movement?

Mark: [00:39] So one, is it the “progress movement” now? I find that a little bit amusing. But second, more generally, if you look at statistics over the last 40, 50 years, economic growth has been somewhat stagnant. This is sort of Tyler Cowen’s thesis. If you look at the period from about 1850 to 1900 or 1910, you see this really rapid economic growth in terms of discovery, innovation, it’s averaging about 3% annually. You see the creation of all of these new technologies from airplanes to internal combustion to electricity to indoor plumbing, that really transformed the world. So if you take somebody from 1900 and put them in a house in 1950, everything will be completely different. But then if you take somebody from 1950 and put them in a house today, everything will be relatively similar, with the exception of electronics. They won’t really know what to do with computers, but other than that it will be relatively similar, in terms of indoor plumbing, in terms of there being a refrigerator and microwave, etc.

And so what I see as the idea of the progress movement, of progress studies, is saying, okay, we’ve had this slowing rate of innovation where now innovation tends to be concentrated in atoms. It’s unclear what exactly is causing this slowing rate. Maybe this slowing rate is being caused by just heterogeneity of capital, of innovation. Some innovation is easy to produce and some innovation is difficult to produce, and we’ve produced all of the easy innovation, and now we’re in the difficult phase. So it’s natural that they would slow down.

Another potential hypothesis is government. Government has effectively, through regulation, made it very difficult to innovate in the atoms space, while it’s relatively easy to innovate in the bits space. And so because of that, innovation has slowed down. When there was less regulation in the late 19th and early 20th century, that’s when we saw a lot of innovation happening, and current governments can be thought of, if you’ve read The Three-Body Problem, as like a “sophon lock”, where government basically says, okay, let’s prevent any innovation, any technological innovation. Because with that we can keep the existing power structures in place, which keeps the rent streams intact.

A third potential hypothesis is culture. To innovate, you just need a culture of innovation. So if you want to read, for example, Anton Howes is great on this, looking at the start of the Industrial Revolution and looking how it was sparked by people who develop this culture of progress, this idea: you can improve things. And so this hypothesis would go something like, okay, for whatever reason, in the 19th or early 20th century, there was a culture of innovation. And then we became complacent. We realized, okay, we’re doing relatively well. We just want to lock in our gains and we want to live happy lives. The average age in most Western countries has increased, which tends to decrease risk taking. And the result is stagnation. People are no longer willing to make these big bets, people are no longer willing to do these crazy things. If you actually read stories of innovators, of entrepreneurs, in the 19th century, they’re all completely insane. They make current startup founders look relatively normal by comparison, and so we’ve just lost this sort of cultural edge that wants innovation, that has led to the stagnation.

And so those are basically three hypotheses for why we do not have as much innovation today. And what progress studies says is, okay, why don’t we try to solve this problem. And more specifically, to solve this problem, let’s look at the history of progress. Let’s look at where progress has been successful before. Let’s look at areas and time periods and locations that had this bursting of human flourishing.

So for example, Scott Alexander has a great post on the atomic bomb, and he basically describes it as, the atomic bomb is a Hungarian science fair exhibit, because a lot of the top scientists in the Manhattan project grew up in Hungary, in Budapest, in the pre-war era, pre–World War II era, and he hypothesizes that basically you had this loosening of persecution, of restrictions on Jewish population, which led to rapid migration to cities of these very well educated, very smart people who, because of loosening restrictions as well as sort of loosening social norms, they were no longer legally restricted from doing things, but they were also no longer socially restricted from only studying the Torah. And that led to this really huge explosion of ideas in physics that led to the production of the atomic bomb. If you look at Venice, at the turn of the century, there were the logical positivists. There were the Austrian economists. Hayek, Mises. There were the psychologists, I mean, Freud, and so if you look—you can also look at, for example, ancient Athens.

So progress follows a power law distribution, certain time periods in certain places because of this right mix of ingredients led to these huge explosions in ideas, in innovation, that have these massive downstream beneficial effects for humanity. And the idea of progress studies is saying, one, so here’s this challenge that we’re facing, that progress has slowed, where you only see as much innovation as has been happening. And then, two, we also see that innovation in different places is happening more or less rapidly. So what can we look at? How can we study these past examples of explosions of human flourishing, explosions of innovation? What can we learn from these? And then after studying them, after learning from them, how do we apply those lessons to today to help to restart innovation, to restart this cycle of growth.

The stagnation hypothesis

Jason: [06:17] So let’s back up a little bit. I want to go back to this stagnation hypothesis.

There’s this theory that economic growth has slowed down. I know Peter Thiel is a proponent of this. Maybe it goes back, there’s a book by Robert Gordon, The Rise and Fall of American Growth. Let’s talk about this a bit.

So I’m still looking into this, and I personally don’t actually have an opinion yet on whether growth has slowed down or not. I’ve seen some evidence that it has. I’ve also heard a lot of anecdotal evidence that I don’t know what to make of. So you mentioned some of the anecdotal evidence, like, most of the progress recently has been in computing. And if you look around the home, other than the computer and electronics, most things haven’t changed that much, that visibly.

Let me just play devil’s advocate here and make a bit of a counterargument. One of the things, if you look at economic progress over centuries, you see that it comes in waves. There’s this theory, like long wave theory, I think it’s called, you know, first there was a big burst of canal building and stuff in the 1700s, and there was a different wave around electricity, and there was a wave around oil, and there’s a wave around mass manufacturing. These kind of big fundamental, transformative technologies. And so, all these things go in S-curves where they start out slow, then they have this explosive period, and then after a number of decades, they kind of level off. So, right now the last several decades, we’ve been on a really strong, steep part of the S-curve for information technology and computing technology, my sense is maybe that is approaching the bend in the S-curve where it starts to level off a bit, although it’s still going relatively strong.

Why isn’t this just sort of the normal and expected thing, that most of the progress in recent decades has come mainly in one area, isn’t that kind of how progress works? We sort of point the firehose at one area, and then the next frontier becomes something different. Why isn’t this just a natural, part of the—or, what’s the evidence, beyond that sort of anecdotal evidence, that there’s some slow down.

Mark: [08:05] So it might be natural. And I think that is an open question, but I think the default assumption is: growth is good and we should figure out how to get more of it.

And so to me, actually the anecdotal evidence is some of the most compelling. And so if we just think of, let’s just take the first half of the 20th century, and think about what technologies became widely available and specifically those technologies like cars, electricity, indoor plumbing, flight, internal combustion. All those basically went from like 0% of households or 1% of households having them in 1900 to, in 1950, 20% minimum of households having those items. And so that’s a huge change. And so if we’re looking at the last 40 years, 50 years, all right, we have information technology, but to me, electricity is somewhat obviously more important than computers. So electricity is more important than computers, that became widespread. And you have all of these other technologies: cars, planes, indoor plumbing that are all also extremely important. And over the last 50 years, we basically had information technology. And then what are the second, third… right?

We’ve seen some things become much more widespread. If you see, for example, air conditioning has become much more widespread. I think we have gotten materially richer, but we’ve gotten materially richer in terms of efficiency gains, not in terms of innovation gains. It’s become more efficient to produce all of these goods, but we’re not actually producing new goods.

To me that is relatively compelling. And there is an argument to make over what is the natural course that we should expect. And maybe this is the natural course, so there isn’t much course correction, but it’s at least not obvious to me that is the natural course. And then second, what evidence in addition to the simply anecdotal evidence is there to suggest that we are seeing a decline in these trends. And I’m not as familiar with this evidence, but my general understanding is that, if you just look at growth rates for from 1850 to 1950, my understanding is that they were averaging about 3% annually in the US and over the last 50 to 60 years, that rate has gone down to closer to 2%. So this is easy to check. So I’m just going to actually look this up now, but my understanding is if you look at the productivity statistics, there has been a noticeable, not huge shift, not as large of a shift as you might expect from looking at the anecdotal evidence, but my understanding is that there’s still a shift.

Jason: [10:38] Yeah. Another thing that I’ve heard, or another way to look at this, even within the context of the S-curves of different technologies, is that in the early part of the century, around, say, late 19th, early 20th century: yeah, there were S-curves. We actually had multiple S-curves all going on at once. Now at the end of the 20th and beginning of the 21st century, we’re down to one S-curve, and that’s information technology. And even that one, of course, at some point, maybe some point soon, it’s going to level off.

So let’s go back to some of the hypotheses on why this happens.

So you mentioned potential of low hanging fruit. I think that’s a real factor. There was a good article on Slate Star Codex by Scott Alexander where essentially he argued that exponentially increasing resources being required to continue a certain exponential growth rate should just be the norm, should just be the default that we expect to see. But what we’re seeing, I guess, if growth rates are actually slowing down, then what we’re seeing is, we’re not even managing to maintain the same exponential curve of growth rate. So I agree no matter what, and whether it’s natural or not, we should be motivated to find ways to keep this going and get the growth rates back up.

Optimism and culture

Jason: [11:46] So you mentioned government and regulation as a potential. You also mentioned culture. Let’s drill into culture a little bit more. One thing that I think just anecdotally is that, we have lost a certain, you know, our culture’s relationship to human progress has changed. And it feels that in the last 50 years or so, maybe longer, maybe going back to the 1960s, we have gone from a very optimistic, very pro-progress culture, to one that is wary, suspicious, not so celebratory, not so optimistic. What are your thoughts on that?

Mark: [12:23] I think that’s generally correct. I mean, it’s quite interesting to read Chinese science fiction today, for example, because generally science fiction just takes the last 20, 30 years or so of, I found the growth and the society that produced it, and assumes linear trend lines of that last 20 to 30 year period indefinitely into the future. And so if you look at Chinese science fiction—because the last 30 or so years have seen extremely rapid economic growth, namely with these massive engineering projects—Chinese science fiction today is basically similar to that. Like, okay, we’re just going to become really good at engineering and doing these huge things.

There’s a movie on Netflix called The Wandering Earth where the Sun is exploding, it’s a Chinese movie. And so they basically build these giant rocket thrusters in the Earth, turn them on so that the Earth becomes basically a spaceship, and build these giant underground cities that fling it to the next star system. And that sort of reflects this idea of growth. If you look at Chinese science fiction from the ’60s there were similar—because this was this era of optimism, because we were still doing big things, going to the moon, etc. There was this optimism in terms of the ability to build new projects, to accomplish great things.

And science fiction today in the US tends to be, it’s all basically techno-dystopian. Like, imagine if computers become really small and control everything and bad corporations are trying to destroy your life. And if you have a cybernetic leg, then you have to pay to have it charged, to use the IP that helps it function. And so it’s basically taking, alright, we’ve seen this massive growth in information technology over the last 20, 30 years and projecting that indefinitely in the future and seeing the outcome of that.

And so, I’m actually a little bit more skeptical of this, sort of, culture as a cause. I think there’s definitely a degree of truth to it, but my general prior is that culture is an output, not an input, of society. So, it’s not that—there is a reinforcing mechanism, right? Like pessimistic culture then drives pessimism. But generally I think the culture is the output. So a society that is growing will have an optimistic culture. While society that is stagnating will naturally have a pessimistic culture. And I think culture can also be thought of as heterogeneous.

And so if we look at how innovation spreads, Deirdre McCloskey, for example, argues that the Industrial Revolution was in large part due to the changing of culture to make being a merchant socially acceptable. And things like that. I’m a little bit skeptical of that account on some levels, but on another level, it is important to have positive social sanction for certain activities that are socially useful. Like entrepreneurship is generally socially useful. If we actually look at specifically entrepreneurship, it’s probably personally bad, in most circumstances, in the sense that most entrepreneurs are going to fail and it’s going to take a very high, both financial and emotional toll on the entrepreneurs. But of course, some of the entrepreneurs do succeed, and more importantly, the ones that do succeed tend not to capture all of the benefits that they produce. And so even though entrepreneurship in the vast majority of cases is personally bad, it leads to negative expected value for most individuals, as a social function, it’s probably good because the few individuals who do make it and are able to create these great things have these benefits that spread out. And so because of that, explicitly adopting a norm of, okay, let’s celebrate entrepreneurs, let’s celebrate people who create things, let’s celebrate inventors who build things, such that there are these people who are getting all of the social benefits of their output are compensated in these psychic manners that allow for the encouragement of these levels of production.

So as a meta-level narrative, I’m somewhat skeptical that pessimism is leading to this decline in innovation. I think it’s much more likely that declined innovation leads to this general pessimism. But on a more granular level, I think it is very important to hold these people, innovators, inventors, entrepreneurs, etc., in high esteem, because we do want our best and brightest going into these areas, to create, to build things. And so we want to create these cultures. And I think it is possible to encourage on a minor level while realizing that that’s probably not the ultimate lever that’s going to end up really changing things.

Physics tapped out; biology the next frontier

Jason: [16:50] When we had talked before, something came up in our conversation about, you made a comment along the lines of physics being tapped out and maybe the next frontier being biology, and that was relevant to your view of the future and of progress. You want to talk about that and elaborate on that?

Mark: [17:06] Sure. So if we look over the last hundred or so years, or 150 years, a lot of the progress that we’ve made in terms of material progress, in terms of innovation that has driven economic growth, has been the result of physics innovations, from electricity to radio to electronics to nuclear power. A lot of this resulted from basic research, to an extent. But if we look at where innovation is occurring today, most innovation that people are doing, in terms of drawing on physics, is drawing on physics that’s about 50 years old. And so it’s not drawing on the cutting edge of physics. It’s drawing on physics that was already discovered. But if we think about what investment in basic research will lead to the creation of new technologies that have the potential to change economic growth, physics seems unlikely, because most of the technological innovation that’s being done today is using old physics.

And if we think about biology, there is a space for innovation in biology. If we think about potentially the ultimate goal being to cure aging. But if we think about curing specific diseases. If we think about increasing healthiness, wellness. If we think about these things, then there is still a lot to be done. And in general, the technological innovations being done in biology are drawing on much more recent scientific innovations. So if we think about things like, 23 and Me, it was only what, 15, 20 years ago that they decoded the human genome for the first time. We think about things like CRISPR, they’re trying to figure out how to make this commercially viable, and that’s drawing on technology that’s less than five years old. And so if we think of, where is this new innovation coming from and where is pushing the frontier of science driving this new innovation?

There is new innovation coming from applying lessons of physics, but those lessons of physics have already largely been discovered. There is also new innovation coming from applying the lessons of biology, and that innovation is being done by discoveries in biology that are 20 years or less. And so if we want to then help to accelerate the progress of that, putting more money into physics is not going to accelerate the progress of technological innovation that draws on that research. But putting more money into biology could accelerate the progress of technological innovation that draws on cutting edge biological research.

What progress studies needs to do; “cause prioritization”

Jason: [19:33] What do you think are the implications of all this? For people who are interested in progress, do we need to actually shift the way things are funded? Do we need to encourage more young people to start studying biology? How do we navigate this transition?

Mark: [19:45] One, I mean, take the things I say with a grain of salt. I think we’re still early in the progress studies movement and I think we should continue to do more research and continue to think pretty long and hard about what those improvements are, before we really start pushing to have them executed.

But more generally, if we think about, rather than just biology versus physics, if we think more generally about progress studies and what does that look like for innovation. You can look at the history of social movements to see which have been successful and at what and how. So for example, you can look at recently the effective altruist movement, which progress studies is sort of adjacent to, and over the last 10 or so years, they’ve been very successful in doing several things.

One, in terms of defining what it is, creating an umbrella where people have a strong identity attachment to effective altruism. So people identify as an effective altruist and are willing to make meaningful sacrifices for that identity.

Second, they were able to unite several different factions under a single umbrella. The factions being existential risk, which is largely AI, but a little bit of, for example, a little bit of global warming, a little bit of asteroid protection, etc., animal farming, and then global poverty; and they were able to unite these semi-disparate things under a single umbrella to get all of this useful information sharing.

Then in addition to that, they were able to make effective altruism reasonably high-status. You know, it’s cool. They had people like Elon Musk come speak about AI risk at one of their conferences. Five or so years ago, they had major newspapers talking about it.

And lastly, they were basically able to secure specific funding streams. So they were able to identify people, high net worth individuals and foundations that were interested in effective altruism and would pledge resources to develop these areas, to help execute.

With progress studies, I think we’re still largely in the formational phase. There are these high level ideas floating around about like, here are some things to do, but I don’t think they really have coalesced it out strongly. So I’m able to give, for example—and I think I’m reasonably in touch with progress studies and where it’s going—a high level understanding of what these ideas are, but if we delve a lot deeper into them or even a little bit deeper, I’d be somewhat lost.

And to me, what that suggests is that there needs to be further research, further discovery, further understanding before really pushing these arguments all the way. For example, if we take something like, a sort of common argument, if we look at NIH, the average age of the recipient of an NIH grant has increased substantially over the past 20 or so years. And the idea is, when you fund younger people, it’s higher variance. A lot more projects will fail, but some will succeed. And the ones that succeed will be interesting enough to pay off for everybody else. And younger people tend to be less risk-averse and have bigger ideas, etc. So you want to fund young people.

And that’s an argument I’m quite sympathetic to, but my feeling is, to actually put these into place: One is, build some institutions. What does a progress studies think tank look like? How do you get professors at universities talking about progress studies? How do you really develop this into… And it started to happen when, for example, Tyler Cowen with Emergent Ventures, there started to be a self-identified community. But I think really continuing to build that, continuing to capture momentum, maybe having a conference, where people really build this identity around, “this is what progress studies is”.

And then maybe there is a discussion about “cause prioritization”. So, progress studies: The goal is to increase the rate of economic development, the rate of economic growth, mostly in high-income countries, specifically by changing the rate of technological progress by creating the possibility for these new entrepreneurs and new things. Okay. So that’s the goal. So then within that goal, what are the priorities? And there are several potential priorities.

One of the priorities might be to increase the rate of entrepreneurs, maybe the bottleneck is entrepreneurship. And so we need entrepreneurs to go into spaces like developing new carbon sequestration technology or developing new transportation technology. And so then what we want to do is, if that’s the goal, then setting up something like a Thiel fellowship, but instead of aimed at entrepreneurship generally, it’s much more specifically aimed at entrepreneurship and innovation that is technologically interesting. So not just creating a new click farm, but creating something, like Elon Musk, that adds to, improves our technological understanding. That’s one option. The entrepreneurs are the primary barrier.

Another option is, maybe invention is the primary barrier, so maybe it’s a little bit earlier than entrepreneurship; it is the invention of some of these technologies that basically needs to be subsidized, and so then the goal would be, like fellowships, make high-status invention, and try and create these networks of inventors, try to funnel resources to potential inventors, etc.

Maybe the binding constraint is government, maybe it’s government regulation, or maybe it’s that current government funds being allocated to innovation are being allocated poorly, and so they need to be allocated better. Then if that’s the binding constraint to technological innovation, then maybe what needs to be done is to fund think tanks that can say, “Hey, government, maybe if you make it legal to fly supersonic planes in the US there will be more investment in supersonic aircraft,” or “Hey, maybe if you earmark 30% of your grants to people 30 or under, you’ll boost the rate of innovation, because a lot more money will be flowing to younger and more creative people.” And so maybe that’s the binding constraint and then we need to have those conversations.

So, in my mind, this sort of sequencing of how to think about progress studies as a movement is to think about, okay, we have this, I think generally agreed-upon problem, which is the slowing rate of technological innovation; a general, agreed-upon solution, more technological innovation. But there hasn’t been that much discussion of cause prioritization. What are the binding constraints to technological innovation? Why are those the binding constraints, and then what are the intermediate steps that can be taken to remove those binding constraints? And so to me that is sort of a natural candidate for the next part of the progress movement, the progress studies conversation, is to begin thinking meaningfully about that rather than saying just, let’s put all our energy into X. Let’s first have a strong discussion of, why X? Why not Y? and figuring that out and really do the hard work and do the homework that can make ourselves really confident in our opinions that moving this needle will have an effect.

Jason: [26:37] Do you have a preferred hypothesis or, you know, a guess as to which of these various, potential causes is really behind the slowdown or what we need to do?

Mark: [26:48] I’m actually somewhat pessimistic in this manner in that I think part of it is just that it’s a natural slowdown. Like we’re on the wrong side of the S-curve, and we discovered all the low hanging fruit. And it’s going to be difficult.

Part of it is then also, I tend to also think government is a primary cause of the slowdown in certain respects. And so what does that look like specifically? I think it is regulation to an extent, but I think largely a limited extent; but then second, because government controls so many purse strings, just figuring out how to change government investing decisions to help accelerate technological innovation. And that can be things like NIH, that can be things like DARPA, right? Like thinking about these different resource allocation problems, because the government does invest so much money. To me, that’s probably where I would focus.

I think there should be discussion over, how to make entrepreneurship in “hard problems” that really lead to innovation, not just another click farm. How do you solve that problem? I think that should be done. But generally I think most of the focus should probably be on government with also, and this is sort of a meta-level point, I think that there needs to be some reasonably explicit, reasonably conscious, community-building attempts to make sure there is this self identified group, and really set out goals. What are the objectives for “progress studies” over the next five years, over the next ten years, what does that institutional arrangement look like?

And the growth is going to be to some extent, organic, right? People will have ideas. You can’t map it all out, but I think there should be serious thought about what that looks like, how to define it to really create a sustainable movement, a sustainable interest, because that’s how you capture that momentum. People aren’t going to be willing to commit a lot of time to it if in a year, in two years. nobody’s talking about it. Nobody really cares. Nobody’s gonna identify as it and dedicate effort and write blogs and do posts and tweet about it, if there isn’t a social infrastructure that makes doing those things high-status.

Progress studies and effective altruism

Jason: [28:53] Now, you made a comparison / analogy to the effective altruism movement. You said you see progress studies as being adjacent to that. What do you see as the differentiator for progress studies? You know, what can progress studies uniquely provide, or what hole can it fill?

Mark: [29:09] So, this was interesting because I think it was Patrick Collison who, in an interview with Mark Zuckerberg mentioned, “Look, we weren’t trying to start something. We were trying to give a name to something that already exists.” These networks already existed to large extent. People were already talking about these ideas. Alright, Tyler wrote The Great Stagnation, what, like, 10 years ago. But that was the first step, here’s what it actually is. Now let’s bring everybody together, and actually have this focus.

Jason: [29:35] Why is another thing even needed, or that angle on it, that’s bringing something to the world that doesn’t already exist with EA, or other kinds of communities and movements.

Mark: [29:44] So with EA, I tend to view that as, it’s, in my opinion, become a little bit siloed, in that it tends to focus, for instance—old joke about economists. There’s an economist who is looking for his keys at night. He’s on his hands and knees. Somebody walks out and says, “what are you doing?” “I’m looking for my keys.” “Where’d you drop them?” He points over in a dark alley, over there. “Why are you over here?” “Well, this is where the light is.” And I see EA as having fallen a little bit into that mindset, in that what they tend to focus on are things that are really easy to quantify.

So if you look at international development, almost all the international development—and we’re trying to change this at the Charter Cities Institute, with I think some success—all international development stuff is basically focused on randomized controlled trials. And you have seen, for example, GiveWell, they announced about a year ago that they wanted to start thinking about policy changes, etc. So they’re moving in that direction. If you look at animal farming, you just, because there’s such a high number of animals, you just add up all of the welfare losses from them and you get an easy number.

And so I see progress studies as, a little bit less, I dunno, you can’t, it’s much more difficult to get specific numbers out of progress studies. It’s more of, here is this innovation that leads to more economic growth. But even if you look at economic growth statistics, they can’t really capture what that innovation truly was, and what led to this change.

And then if you look progress studies, it does draw a lot from other disciplines. For example, from economics, from history, from sociology, from political science to a certain extent, that do have a lot of value to add. But I think having something that is specifically focused on progress per se, as well as something that’s not just focused on progress, but also focused on specifically learning lessons that can be applied to today that can help jumpstart or restart innovation, is something that’s new, and the fact that it’s, I think, been enthusiastically embraced by so many people suggests that there is something there that was missing before.

And I tend to interpret a lot of the strong reactions of, “Oh, isn’t this just history” or “Oh, isn’t this just economics.” Well, one, the fact that you have so many people saying, “Oh, isn’t it just X or Y or Z”, and there is X or Y or Z, suggests that it clearly isn’t captured by any of them, if everybody thinks it’s already captured in separate disciplines. And second, I think sociologically, a lot of it is just, I don’t know, defensiveness. The Academy tends to be relatively defensive, “No, you can’t come in. This is our field. We’re experts in it and we don’t want your outside perspective.” Some disciplines are better than others, but there is this, a little bit of elitism, like “we have our discipline and you can’t really come in unless you satisfy these specific career criteria to be able to add value to the conversation.” While progress studies I think is much more general.

Jason: [32:42] My hope is that progress studies will not be exactly a separate thing from history and economics and so forth, but that it will be, a certain kind of value framing, or, it’s a certain framework that you approach all of those things with, bringing to it some concepts of what’s important, what’s interesting, kind of what matters. And then the, “so what?”, like what do we do with all of this? I think bringing a certain framework to that, a framework that values human progress that sees it as something that’s real, important, good; even, in Tyler Cowen’s words, a moral imperative, and yet at the same time, something that is neither automatic nor inevitable. I think with that kind of general framework, you can come to history and economics and sociology and so forth, and do all of those things in a different light.

Mark: [33:33] Yeah, I think that’s accurate. And I think, that framing, like, to a certain extent, progress studies isn’t really a science per se. It is a, I don’t know, like a moral attitude that we sort of take… One, progress is good. And it’s important to think about that and to think about how to make more progress. Progress, as you mentioned, Tyler’s words, is a moral imperative. And so having progress studies not just being on the analytic side, but also having clear value statements of, like, you hold these values to be good.

So in that sense, it can be semi-analogized to libertarianism, for example, where libertarianism says liberty is good, and then has constructed this whole set of narratives, beliefs, understanding about the world based on that idea that effectively, liberty is good. And progress studies, it needs to do something similar with, I think the important aspect being to make sure that it stays focused on being grounded, being accurate, and helping to actually change the world to get more progress.

Intensive vs. extensive progress (zero-to-one vs. one-to-N)

Jason: [34:43] One more thing on progress. I want to talk about intensive versus extensive progress or, you know, zero-to-one versus one-to-N type of progress. When we had chatted before, I think you and I had a bit of a difference of opinion on this, so I just want to get you to elaborate on this a bit.

It sounds like, when you think about progress studies, you’re mostly thinking of that kind of frontier-breaking, zero-to-one, new technological innovation. When I think about it, I feel that both of those types of things are versions of, or types of, aspects, parts of progress. And so in my mind, both of those things are encompassed by progress studies. So why do you have the focus, am I right that you have this focus more on the zero-to-one? And why do you think that—if that’s the right scope for progress studies, why do you think so?

Mark: [35:24] So yes, I think that is right. We do definitely have a different perspective. Why? I think that the zero-to-one—I don’t want to say that the one-to-N is not important. If you look at just inventing, for example, the airplane or whatever, isn’t useful if it’s not widely used; then it’s just become sort of a hobby horse, or not a hobby horse, but just a silly thing. The Incans, for example, they invented wheels, but they only used wheels on kids’ toys, and they never actually used wheels to transport goods. And so, they got the zero-to-one in certain aspects, but they didn’t really get the one-to-N.

And so specifically, I think part of this is, we can think about, and then we can, in addition, differentiate between, what is the one-to-N? So when we’re thinking about the diffusion of technology, what actually is that? So taking electricity, for example. Electricity, right? Okay, you’ve got electricity. That’s great. And then you have it in like 10 households. And okay, those 10 households now don’t have to use lamps and can instead have lights. But electricity doesn’t really become useful until it becomes widely adopted, until it is used in factories, etc. That can really increase levels of productivity. And so I do think that diffusion of technology is important. And so we can think about that level of this diffusion.

And part of it is also, and I think this is the context of where this discussion came up in progress studies, in relation to economic development, more specifically economic development in emerging markets. And so typically the framing I use is that in high income countries, the rate of growth tends to be driven by technological innovation. And so progress studies thinks about how can we accelerate that technological innovation, increase the rate of growth in the United States. If we think about emerging markets, the rate of growth in emerging markets is not driven by technological innovation. It is driven by adoption of existing technologies. And so therefore, given that technological innovation is such a central focus of progress studies, I see economic development as largely different, as it’s focused on, not even the diffusing of technologies per se.

In my opinion, international development, it probably should be—it’s not really focused on this, but should be focused on the adoption of governance systems that allow the diffusion of technologies. Because once you figure out the governance systems, the technology is diffused relatively naturally. But if you have the wrong governance systems, the technologies can take decades, if not longer, to effectively diffuse. And obviously it’s different for different types of technologies. Health technology has been diffused relatively effectively, even with poor governance structures, but technologies that are thousands of years old, like roads, have basically not effectively diffused in some really low-income countries, because of the challenge of governance structures. And if the ultimate metric is standard of living, then the lack of being able to build and maintain roads or electricity in these emerging markets really has huge negative substantive effects on standards of living.

And so that sort of distinction of when we think about technological innovation and what it leads to in high-income countries versus low-income countries, that’s what leads me to, I think, have this difference of opinion with regards to intensive and extensive innovation.

Jason: [38:54] Yeah. I agree with you about the importance of governance structures. That’s pretty fundamental. Just to push back on this a bit though, can you really separate the intensive versus extensive technological and economic development? Because, it seems to me, if I just think about the 20th century—I haven’t looked into what affects the rate of diffusion of technologies throughout the world. But you’ve got to think that, like, containerization in the ’60s and ’70s leading to much, much lower transportation costs led to a more globalized economy. Information technologies, I mean, having electronic communications and now very high-bandwidth electronic communications and the Internet, all of that must lead to faster diffusion of all technologies around the world. So aren’t those things actually linked?

Mark: [39:37] So I think they’re definitely linked. Like, if we think about innovation, then when do we master electricity? Is it when it turns on the first light bulb, is it when it’s in 10 houses? When it powers a city? And it’s hard to say specifically. That being said, I think there can be specific understandings of whether this in X scenario will lead to benefits or not. And so, again, to go back to the emerging markets example, we can think of technologies that would be developed in high-income countries that would basically have zero effect in emerging markets. And so within that, if we get, for example—I mean, maybe zero effects is slightly overstating it, but if we think about self-driving cars, they’re going to be rolled out within high-income countries much more quickly than in low-income countries. Arguably by several decades. And that will, I think, have quite substantive effects.

But I guess it is somewhat of a continuum, so I don’t want to push the point super-hard, but I don’t know. Thinking about the primary drivers of economic growth, in which numbers I would flip in high-income countries, it would all be about technological innovation; but technological innovation would be probably, I don’t know, like fifth or sixth on my list of things to flip in terms of improving the lives of people in low-income countries.

Tinkerers vs. hierarchical innovation; relationship to regulation

Jason: [41:02] So, that’s a great segue. Let’s talk about your work. What is the Charter Cities Institute?

Mark: [41:07] Sure. So actually, before we go into this, I realized I forgot to mention something on progress studies a little bit earlier, and it’s just an idea we’ve been talking about in the office. And it relates to thinking about what blockers on innovation are. And I haven’t really seen it spelled out fully.

So, if we think about where innovation comes from, in different points in history, it basically comes from different sources. So if we think about early innovation, it was largely sort of the First Industrial Revolution from let’s say 1750 to around 1850. And it really led to steam, the car engine, etc. The innovation was largely driven by what might be described as tinkerers. So these were social networks of people that would all jointly, like, semi-collaborate on an idea. We can make this small improvement here, this small improvement there, etc, etc. And then the outcome is, there is an invention and it’s typically said, okay, this guy did the invention. But if you actually look at the progress of most inventions, there’s a group of like, I don’t know, 20-plus people who are all exchanging letters, who are all making various iterations. And then at one point, one gets good enough to commercialize and catch on, and that person is credited with the invention. And so that might be described as the innovation model of tinkerers.

Now, if we look at, particularly in the second half of the 20th century, what happened was, innovation tended to be hierarchical. More specifically, like, the atom bomb is sort of the classic example of this, where the US government says, okay, we’re going to devote a number of resources, I think at its peak it was around 2% of annual GDP, to developing the atomic bomb, and we’re going to have this plan set out. We’re going to tell everybody approximately what to do. Obviously there’s still the figuring-it-out aspect. But it’s a really top-down process of innovation. And this is also the case if we think about modern airplanes, right? Like, a corporation decides we’re going to build out the next type of airplane, and then spends a lot of resources doing it.

And what happened is our regulatory system evolved in the first a little bit, the first half of the 20th century, but mostly in the second half of the 20th century, to deal with hierarchical innovation. So our regulatory system was built in order to manage this type of innovation that was taking place primarily in corporations or in governments.

And what we’ve seen, I think somewhat recently, is that we’re going back to this tinkerers idea of innovation. And so, for example, there’s things like, an automatic pancreas where people are taking insulin pumps as well as insulin monitoring devices, hooking them up to each other, and then having it so if your insulin ever drops below a certain level, then you get the automatic insulin injection. So then you don’t have to wake up every six hours to check your insulin levels. Like this basically is a social network, that formed to continuously improve, and the plans are open source, and we’re seeing that with a number of things also in terms of like 3D-printed limbs, etc. And so at least I think in some parts of the world, we’re moving a little bit back towards this tinkerer model of innovation, away from the corporate hierarchy model.

And one of the challenges is, because our regulatory system is built for the corporate hierarchy model, it effectively serves as a relatively strong block to the tinkering model for innovation. And so we’re seeing probably less innovation in several specific sectors result from this corporate hierarchy model.

Jason: [44:38] So what does that imply? Should we be changing regulatory structures? Do we need to do something different?

Mark: [44:44] I think generally it means we should change regulatory structures and have it at least be per-industry. If there is a lot of tinkering going on, then you create a sort of, I don’t know, set of exemptions that allow for that tinkering to occur and small-scale commercialization until it’s maybe proved safe to scale it up. Maybe it means you have, potentially, zone-based reforms. This has been done by the FAA with regards to drones. So you can have experimentation in limited geographic areas with new technology. And then if those are successful, you scale it up.

I’m not exactly sure what set of regulatory reforms would be ideal. But I think it is important to think about the nature of innovation, how the regulatory system interacts with it, and when that nature of innovation changes, making sure a regulatory system is kept up to date to help encourage some of those changes, that innovation, that otherwise might not be occurring without a specific regulatory regime.

Charter cities

Jason: [45:41] And is this concept of innovation zones part of what got you interested in the idea of charter cities?

Mark: [45:47] So, I see it as adjacent. We did a business plan contest on innovation zones that got a degree of interest, but we got a lot more interest with charter cities. And while the general narrative is like, how do you rethink regulatory structures to improve economic development, economic growth, that narrative wasn’t, I guess, sticky enough. It wasn’t interesting enough. So we ended up shifting focus, or not really shifting focus, but concentrating our focus, entirely on charter cities.

And so to back up briefly, I founded the Charter Cities Institute a little over two years ago. We’re a nonprofit that is trying to help build charter cities, a charter city being a new city with a special legal system, a special jurisdiction, that allows it to adopt a much more competitive business environment.

So the idea is, over the long term, the primary determinant of economic growth tends to be laws and regulations. So how do you create a legal system that encourages investment, entrepreneurship, job creation, etc? And in emerging markets, it can often be very difficult to do that on a national level, but on a local level where there aren’t as many special interests, it can be possible to get a deeper set of economic reforms, and these economic reforms, these governance reforms, can then become a very competitive place to do business and to really create a thriving city. And so if we look at, for example, the history of cities in the post-war era, some of the most successful cities—Singapore, Hong Kong, Shenzhen, Dubai—all to varying extents, had their own legal and regulatory systems and were able to really become successful because they created these incentives, because they had created these laws, that really encouraged innovation, entrepreneurship, and economic development.

And we think that model is broadly replicable in emerging markets. And so what we do is, we work with a new city developers, folks that are already building new cities, to help them create legal systems that can accelerate development.

Historical precedents for charter cities

Jason: [47:47] What are some of the best, historical precedents for anything like the charter city concept, has anything like has been done?

Mark: [47:53] Sure. So as I mentioned recently, Singapore, Hong Kong, Shenzhen, Dubai. Shenzhen, one of my favorite examples: in 1980, it was a fishing village with about 30,000 residents. And it emerged basically because, one, Deng Xiaoping took power, and he wanted to be more pragmatic than Mao; second, the wages were rising in Hong Kong, so Hong Kong merchants wanted to be able to fill factories with lower-wage workers. And this combined to create this special economic zone that pioneered labor market reforms, it pioneered land market reforms, it pioneered reforms of the state-owned enterprises, and later spread throughout the rest of the country. And it transformed from a fishing village of 30,000 to the manufacturing capital of the world, that has a population of 12 to 20 million (depending on whether you count the illegal migrants).

Historically, another example is the Hanseatic League. So the Hanseatic League is this group of city-states, basically a political group, association, that banded together to work together in terms of exports, imports, creating a common set of laws. This was started by German merchants who would go found new cities. A lot of them adopted—the sort of leader of the Hanseatic league is a city called Lübeck. And, they adopted the Lübeck Law, and this was subsequently adopted by a lot of the other members of the Hanseatic League. They ended up actually even fighting a war of aggression against Denmark to force the Danish to open their markets to goods from the Hanseatic League.

Jason: [49:22] Fascinating. When did all this happen?

Mark: [49:24] It started in sort of the 12th century, lasted to about the 16th century. That peak was 14th and 15th centuries in the Baltic region.

Jason: [49:34] Wow.

Mark: [49:36] So, there has been this history of very successful, rapid urbanization combined with sort of the intentional creation of new legal systems to become more amenable to investment, economic development, trade, etc.

The Charter Cities Institute

Jason: [49:49] And in terms of activities, what is the Charter Cities Institute doing today?

Mark: [49:54] So we’re doing a number of things. We’re working with several new city developments. The winner of our recent business plan contest is a new city in Nigeria called Enyimba Economic City. They’re building it for 1.5 million residents, on 95 square kilometers. So we’re really excited about that project.

We are developing a Charter Cities Handbook which is going to be, okay, you’re creating a new legal system from scratch. Here’s a step-by-step guide. So what we’re doing is, we’re looking at the best legal systems around the world, benchmarking who has the best labor law, tax administration, etc. Primarily focused on emerging markets, having it reviewed by experts, because right now, nobody really knows how to actually create a legal system from scratch. So we want to make that information a little bit more accessible.

We’re going to be relaunching our podcast, hopefully Q1 2020, but maybe Q2…. We have a number of other papers that we’re working on in terms of, one, what Africa can learn from Shenzhen. Additionally, We’re we have a paper out that looks at charter cities in the effective altruist context.

So what we’re trying to do is really spread the idea, get folks interested, and hopefully overcome some of the political barriers which we currently see as the binding constraint to charter cities, to get political leaders interested in new set of reforms that can hopefully then lead to economic development and poverty alleviation.

Charter cities and social freedoms

Jason: [51:20] So, I think Shenzhen is an amazing story. and the world could totally use more of them. At the same time, I feel there was also, in decades past, there was this idea that, “Oh, you know, if China were to get a taste of capitalism…” that it would kind of infect them and spread and become political freedom, essentially. And it seems to me that today that theory is not playing out, right? I think we’re seeing the failure of that theory in that China has remained quite authoritarian, maybe even getting more so. They’re kind of using all the prosperity from loosening economic regulations to just sort of help the authoritarian regime.

That doesn’t mean the economic growth by itself isn’t good, but I think I and a lot of the other people who are sympathetic to this kind of effort would also like to see all kinds of freedoms spread and grow from this. It’s a little sad if you sort of get one city and then it’s almost just milked like a cow, rather than any sort of idea or broader principle of liberty being spread. What are your thoughts on that?

Mark: [52:18] So I’m sympathetic to that, though, I—China has lifted 800 million people out of poverty. So even though they’ve taken a much more authoritarian turn over the last about 10 years, I still think it’s a huge success story in terms of human welfare. And I think it’s probably, it’s not as bad as the excesses of Mao by any stretch. So even though there are definitely certain negative aspects, I think the positive ones vastly outweigh them.

And then more generally, while I’m quite sympathetic to you on this broader notion of human flourishing that doesn’t include just economic freedom, it also includes social freedoms and things like that—I’ve been quite sympathetic when we’re thinking about charter cities because the primary barrier is politics. We generally find that people are more receptive to the economic reforms than the social reforms, because social reforms tend to be a little bit more threatening to existing power structures than economic reforms.

One example actually where this sort of zone-based approach to social reforms is taking place is in Saudi Arabia, where they’re building a new city called Neom for $500 billion. And they’re basically proposing that it would have, like, women would be able to wear Western clothes there, maybe alcohol is available, etc. A little bit more flexibility in that.

Generally I think city life does bring the sense of liberal cosmopolitanism, in terms of being more accepting of different lifestyles, of things like homosexuality. So even if there isn’t this broad formal liberalization that occurs, I still think there’s this informal liberalization that naturally occurs if you have successful cities, because it’s much easier to be anonymous.

And so I am sympathetic to your point of, here’s a risk about making sure that there is some of this social and political freedom as well as just the economic aspects and the wealth creation. But for now, the Charter Cities Institute is primarily focused on the economic freedom and the wealth creation in part because we see that—not as a necessary, as a prerequisite—not that it always leads to the social freedom, but it often does. And also just because at this stage we think it’s a bit more politically feasible, given some of the conversations that we’re having.

Jason: [54:44] Putting this a different way: If there had been a charter city in the Soviet Union, before that regime fell, would that have hastened the downfall of the Soviet Union, or would have prolonged the regime?

Mark: [54:56] Hard to say. I think that is one of the potential critiques… The positive argument for charter cities is it’s a way to insert liberalization, like before it otherwise would’ve been inserted. The critique of charter cities is that it’s a way to release the pressure valve of liberalization to allow for controlled liberalization without disrupting the whole system.

And I think the answer to that question is quite contextual. If we’re thinking specifically about the Soviets, that’s contextual, if we’re thinking about China as well, but if we’re thinking about emerging markets, that oftentimes—it’s not really a system of control per se that’s in place. It’s this ineffective bureaucracy that isn’t really designed, but has just sort of evolved and is keeping people down, and there, I think, the case is much stronger that it is a mechanism to introduce liberalization, not to have a pressure valve to sort of control it.

Jason: [55:57] Cool. Well, I think it’s a really interesting experiment. So, definitely wish you all the best. I’m going to be following it closely. If people want to learn more or help out, where should they go?

Mark: [56:06] So we have a Facebook page. We have a Twitter, @CCIdotCity. Also feel free to email me, I’m mark@cci.city, I usually respond if you have a question. And yeah, we’d love to engage with more people and build the idea.

Jason: [56:26] Awesome. Well, thanks a lot for taking this time. This has been a really interesting conversation.

Mark: [56:30] Great. Yeah. Thanks for having me.

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