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Douglas_Knight comments on A speculation on Near and Far Modes - Less Wrong
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Compare investment in railroads in the 19th century to investment patterns today. As Eliezer once said, that sounds like the sort of problem a financial system would solve. Too bad our society doesn't have a financial system.
The civilized world wasn't ever rational enough to develop AGI safely. It just used to be rational enough to plug holes in the Gulf of Mexico, to build Levees that worked, and to avoid rapid successions of speculative bubbles.
The ultimate test, IMHO, is GDP growth rate, but then again, I don't believe the official numbers for that, so...
Many people say that railroads are quite comparable to the internet bubble. The investors did badly. Maybe Victorians were better at deploying capital to useful endeavors, but that's not the same as being good at investing. Also, one example doesn't demonstrate it. You've complained about the slow spread of farm tech [McCormick?].
I agree, the 19th Century railroad surge was most likely bubble driven. Some bubbles drive investment in capital goods (these tend to have some positive spillovers for non-investors) and some don't. In recent times the tech bubble was a capital good bubble and the housing bubble was pretty much a consumption bubble. In the 19th Century the railroad bubble was a capital bubble and the tulip bubble was consumption good based.
FWIW, the tulip bubble was in the 17th century. The South Seas bubble was in the 18th.
That's what happens when I try to comment from memory. I think the basic point stands though. Bubbles of different kinds have existed since financial exchanges have existed and I don't think there's a pattern toward particularly destructive ones.
The Victorians had a MUCH higher rate of return on capital than we do, in inflation adjusted dollars. Fair point about slow farm tech.