Paul Romer presents A Theory of History, with an Application to the Long Now Foundation:
Go ahead and skip the intro, but watch the whole video. Enjoy the iconic graphics. I’ll wait.
His first point is that the relationship between people and physical property like land is almost the exact opposite of the relationship between people and ideas.
Adding more people adds no more land, so we have less land per person — but adding more people does add more ideas, and ideas are easy to share, so we have more ideas per person.
His second point is that technical ideas aren’t the only ideas that matter for economic progress. Institutional ideas matter at least as much, and the two interact. Sometimes technical innovations lead to new rules, and sometimes rules lead to new technologies.
And this brings us to what Will Chamberlain calls bloodless instability — the ability to create new countries without resorting to conquest — because institutional innovation is crucial to economic growth. As Romer says, imagine a world with no new companies — and realize that we live in a world with no new countries. Where is the innovation going to come from?
Romer doesn’t explicitly mention Mancur Olson, but it wouldn’t be surprising to find out that he has read him. At the end of the talk, Romer cites Cardwell’s law, which states that ” every society, when left on its own, will be technologically creative for only short periods.” In The Rise And Decline Of Nations, Olson provides an excellent explanation for Cardwell’s law, which is that as time goes on, distributional coalitions form and squelch technological innovation and economic growth, by perverting specific rules so that they gain at the expense of the broader public.
(Hat tip to Arnold Kling.)