What's the bottleneck that limits making innovative American companies? Why wasn't something like SpaceX made earlier? Why is new advanced manufacturing being done in Asian countries instead?
it's not capital
America
now has more wealth than any nation that ever existed. Interest rates on
Treasury bonds have recently been lower than inflation, and savings accounts
at banks have had interest rates close to 0.
it's not engineers
American
universities produce relatively few graduates in fields like material
science, chemical engineering, and aerospace engineering, but there have
still been more graduates than jobs. Many people with Bachelor's or even
Master's degrees in those fields have had to go into other areas they're
less interested in.
Of course, that doesn't mean companies say "it's
easy to hire people". Have you ever seen stories about Americans in some
field being particularly easy to hire? I've only ever seen stories about
"shortages".
When there's more supply than demand, companies don't hire quickly - instead, they become more selective. Things you see include:
- only hiring people with some years of experience, not people from other
fields or fresh graduates
- higher credential requirements: a Master's for what used to require a
Bachelor's, and a PhD for what used to require a Master's
- not hiring
people over 50
- several interview stages over a long time
- not hiring people with
anything weird about their resume or career path
Companies hiring people on H1B visas doesn't mean there's a shortage, either. It's usually about cost, control, count, and/or caste.
- cost: Sometimes it's
significantly cheaper to hire a H1B than an American citizen. Yes, companies
are required to "try to hire an American" first, but it's not hard to
pretend to do that. I, personally, was once told in a job interview that the
interview was a sham being done so the company could bring in a H1B
employee.
- control: People on a H1B visa often have to leave the country
if they lose their job, and would have worse job prospects than an American
citizen. That gives their employer much more power over them than normal.
Management likes this.
- count: Managers will say things like "we have a
team of 20 PhDs" to justify their budget and importance, as if PhDs are both
fungible and a different species from people with other credentials. For
this purpose, someone on a H1B visa with a PhD from a diploma mill is better
than someone with a Master's from CalTech. Here's a little "secret" for
those managers: a PhD involves studying something very specialized, and
doesn't mean someone has a good understanding of that entire field.
-
caste: A notable special case with H1Bs is Indian-Americans trying to hire
people from the same caste and region, especially at tech companies.
Politicians usually hang out with journalists, CEOs, major investors, and other groups of people with little idea of what's actually going on at a low level, so it's pretty common to hear American politicians say something like "we just need more STEM graduates".
it's not ideas
If you go to
investors, they don't want to hear about your idea.
If you become a
grad student, your professor will probably be more interested in having you
work on an existing project that got grant money than in you working on your
own novel idea.
If you talk to CEOs or directors, they don't really
want to hear about your brilliant idea.
Does that sound like an idea
shortage?
the legibility bottleneck
Investors and executives rely on the university system to evaluate the
technical competence of people. When technical knowledge is critical for
something, they like to hire PhDs or professors, and get evaluation from
other PhDs and professors. The problem is, that doesn't work.
Theranos had a
Stanford professor on its board, and it was a scam. (It had a bunch of
influential non-technical
people, too.)
If you invest in whatever has a lot of papers published on it, you're
gonna have a bad time.
If you try investing in technologies noted in
MIT press releases, you're gonna have an even worse time.
So,
what are investors supposed to do? What they're actually doing is: give up
on technical due diligence and invest in whatever surface aspects they think
will appeal to later investors.
Well, what alternative do they have?
Learn about the technical details of a field starting from nothing, and use
that to do their own evaluation? That sounds absurd, but that's exactly what
Elon Musk does, and it's worked out reasonably well for him, in multiple
disparate fields.
A common response to that is: "Elon Musk is a
unique genius, and you can't expect other people to do something similar."
That's not correct, but:
- People
working for him will kiss his ass sometimes by overstating his
understanding.
- If Elon isn't actually that unique, that makes CEOs and
directors look bad.
- If it's possible to do better than relying on
university credentials by doing things yourself, that makes universities
look bad.
For those reasons, lots of powerful and skilled
people have been incentivized to overstate Elon's abilities, but his actual
ideas have been rather bad - not that many current American leaders are able
to evaluate them, of course. Personally, I think his enthusiasm for working is more of an
outlier than his technical understanding. CEOs that can't do the same thing
for a single company and a single field are either just not particularly smart or very specialized in doing...something else.
Elon Musk is significant because
he's at the bottleneck of innovative industry in the USA: the legibility
of technical expertise to investors. He learns the technical basics of
something, which is enough to fire some of the obvious fools. He's also
known to people with money as someone with at least some
technical expertise. That combination is the bottleneck, but not because
Elon Musk is a unique kind of person. No, that's the bottleneck because
America has no system to create people who fill that role. It used to use
universities for that, but that responsibility has been abdicated.
I'll say it again: the state of
US universities is bad enough that a smart and motivated but fairly ordinary
person can do better than relying on university credentials by learning
about a new technical field from scratch.
That's bad, but the
situation is only going to get worse. The
president of Stanford faked data.
A bunch of Alzheimer's research was
based on fake data.
There's a lot more fake science out there, but people in labs are afraid
to bring attention to it when they notice. Such people are now
the leaders in place, in charge of choosing the next generation. Newer
professors at US universities are more focused on metrics over substantive
research than older ones. Graduate school has largely
driven out
people driven by curiosity and replaced them with people driven more by desire for
credentials.
US universities are in decline, but the institutions that rely on them,
like investment firms doing technical due diligence, don't seem to be
adapting - beyond some of them giving up on doing what
they used universities for.