The mean time of innovation is faster than the mean time of social and regulatory evolution.

From US Capital is Depreciating Faster by Timothy Taylor.  

I routinely refer to the steepening of the innovation S-curve in the US and the world.  100 years ago, the introduction of a new technology such as refrigerators or telephones, might take 40 or 50 years before the innovation became ubiquitous and the market saturated.  50 years allows plenty of time for social norms to adapt to the new technology, for cultural standards, for regulatory clarity etc.  

There was a long ago debate about proper salutations when picking up a phone, not knowing whom was addressing.  The phone's inventor, Alexander Graham Bell suggested "Ahoy!" but Thomas Edison's much more pedestrian "Hello!" won out.

But especially as the digital revolution began taking over innovation from the 1960s onwards, with its corresponding Moore's Law, the innovation S-curve has becomes very steep.  The introduction of the trinity of browsers, the internet and smartphones circa 2000 has seen the s-curve steepen to perhaps at most ten years.  

Ten years is no time at all to accommodate the social, cultural or regulatory issues arising from the new technology.  The mean time of innovation is faster than the mean time of social and regulatory evolution.  

Taylor offers another example of this steepening of S-Curves.

But in the last decade or so, gross investment has been about 20% of GDP, and net investment has fallen to about 5% of GDP. In other words, gross investment as a share of GDP has fallen a bit, but not too much. The real change is that about three-quarters of investment is now going to replace capital that has worn out, so net investment is much lower.

What’s going on here, as I understand it, is that the life expectancy of capital investment has been declining. If a firm bought a large piece of physical equipment for a factory back in the 1960s or 1970s, it was probably hoping to get at least 10 or 20 years of use from that investment. But if a modern firm makes a major investment in new computers, databanks, and software, that investment will depreciate over a much shorter time period.

In short, it’s not just how much an economy invests in capital equipment, but also how long that equipment can reasonably be expected to last. The data shows that the typical US capital investment, with its greater emphasis on rapidly evolving information technology, is depreciating faster than it used to.

All sorts of implications flow from this, both philosophical as well as financial, political and productivity.

I have argued often that one of the luxuries to American arising from our astonishing productivity is the capacity to greater policy risks.  Basically, individually and collectively, the richer we are, the more capable we are of testing ideas and policies which will be significant failures.  We can indulge naive utopian hopes.  

When we do so, it results in a massive malinvestment in scarce capital.  Los Angeles invests a billion dollars over a decade in building Housing First stock to warehouse the homeless, discover the cost is exorbitant and the policy is a failure with no improvement in individual welfare but a dramatic increase in the homeless population.  

This almost goes beyond malinvestment into malevolent investment.  

But if capital depreciation in the productive part of the economy is accelerating, might we begin to see a crowding out of mainvestments and bad policies?  Possibly.