Investor and Netscape co-founder Marc Andreessen took a journey into wonkdom on Monday in a Twitter screed on what's wrong with the U.S. economy.
In a thesis posted to his account in 17 tweets, Andreessen threw darts at typically conservative bugbears, such as the over regulation of business. But he also questioned whether today's economic issues boil down to too much investment money chasing too few options.
Here's an example:
2/It seems a core dynamic of our times is too much capital relative to the number of productive investible economic opportunities. #stag-; Marc Andreessen (@pmarca) December 29, 2014
Andreessen's tract is, in part, a response to a speech made by former Treasury Secretary Larry Summers at an International Monetary Fund conference in 2013, which postulates a long period of stagnation will follow the Fed's mandated low interest rate environment. His Twitter rant also directly responds to much older theories about U.S. economic stagnation by the Keynesian economist Alvin Hansen, put forth in 1938, as the country was still emerging from the Great Depression.
Hansen describes three factors that promote investment and spur the rapid growth of capital, including new inventions, the discovery of new territory and new resources, and the growth of population. Andreessen notes that those ideas will all sound familiar in today's post-Great Recession hangover.
So where does this leave us? According to Andreessen, the savior in all this is, of course, new technological innovations, which are getting a flood of capital:
13/Oversupply of capital means that any investable project can get funded. We see that today in tech, and it may broaden from here. #stag-; Marc Andreessen (@pmarca) December 29, 2014
And the large population of millennials, as well as younger generations, who are now being seasoned as consumers will also help.
14/We may experience a massive global demographic tailwind, as huge # of young people worldwide are fully connected to modern economy. #stag-; Marc Andreessen (@pmarca) December 29, 2014
Economic theories, of course, are just that, theories. But there is probably some truth to what Andreessen postulates. You can see some of these ideas at work in the host of tech businesses placing their proverbial eggs in the millennial basket. In fact, some like investor and Paypal co-founder Max Levchin are building entire companies and new technologies around the way millennials consume.
And in the end, Andreessen says a globally wired population, including the developing world chasing the American middle class standard of living, may keep global economies humming in the future.
16/In this world, we can have massive advances in real standards of living even w/formally low investment, GDP, & productivity growth. #stag-; Marc Andreessen (@pmarca) December 29, 2014
Only time will tell whether Andreessen's theories seem prescient or irrelevant, just as Hansen's are debated today.