Where Did the Future Go?
Summary
Torenberg examines the Great Stagnation — the slowdown in Total Factor Productivity (TFP) over recent decades — and argues we’ve been culturally brainwashed to believe growth and innovation are bad. The innovation deficit has concrete consequences: millions more people in poverty. Core mental models:
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The Great Stagnation. Someone born in 1900 living to the 1970s experienced radical transformation: antibiotics, airplanes, atomic bombs, cars, telephones. Someone born in 1970 got internet, mobile phones, and social media — real but less transformative. TFP has slowed, and the effects are real: we’d be 40% richer if growth rates held.
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Innovation Precedes Application. Google Maps is foundational but doesn’t appear in TFP figures. Technologies must be applied before they show up in productivity stats. Electricity didn’t register in stats initially — putting electricity in factories did. Computing’s productivity revolution may still be ahead.
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Output = Capital + Labor + TFP. TFP is “everything else” — usually technology or institutional quality. Same labor and capital produce different outputs in the US vs. Venezuela. Institutional decay is harder to see than technological progress but equally important.
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The Regulation Ratchet. Could America rebuild the interstate highway system today? Renew the energy grid? Launch a new Manhattan Project? Not with current regulation. We’ve shifted from “explore then regulate” to precautionary paralysis.
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The “Developed” Mindset Trap. We renamed “first world” to “developed” — implying there’s no more growth to go. We’ve internalized the idea that growth and innovation are suspect. This cultural shift is both cause and consequence of stagnation.
Relevance
- 06-reference/2026-04-03-existential-optimism — Torenberg’s argument is a call for exactly this: believing in the possibility of a much better future and working to build it despite institutional headwinds.
- 06-reference/2026-04-03-ladders-of-wealth-creation — The Great Stagnation makes climbing the wealth ladder harder for everyone. Innovation creates new rungs; stagnation removes them.
- 06-reference/2026-04-03-the-global-chessboard — The geopolitical dimension: nations that solve the stagnation problem first gain enormous strategic advantage.
Open Questions
- If computing’s productivity revolution is still ahead, what triggers the phase transition from foundational technology to applied transformation?
- Is the regulation ratchet reversible, or do democracies inevitably accumulate procedural friction until crisis forces a reset?