I still remember the first time I walked through an abandoned factory in the Midwest. The place had made railroad equipment for nearly a century. Massive lathes stood silent, coated in dust, yet you could still feel the weight of real work that once happened there. Tools built tools. Men saved wages to buy homes. A single income raised a family. That world is almost gone now, and most people barely noticed when it vanished.
What replaced it looks shinier on television. Stock tickers never stop climbing. Politicians boast about GDP. Private-equity barons grace magazine covers. But something feels deeply wrong, doesn’t it? We’re told we’ve never been richer, yet ordinary families struggle harder than their parents did. Maybe the numbers went up while the substance slipped away.
When Did Progress Change Its Meaning?
For most of history, progress was something you could touch.
A better plow. A steam engine that didn’t explode. Clean water coming out of a tap instead of a contaminated river. These weren’t abstractions—they changed daily life in ways anyone could see and feel. My grandfather used to say you could measure a country’s health by walking through its towns at night: the more lights burning in workshops and homes, the better things were going.
Between 1800 and 1950 that old definition still held. Life expectancy doubled. Real wages tripled in many countries. A factory worker in 1930 owned things his artisan ancestor couldn’t dream of: electricity, a radio, maybe even a used Model T. Progress meant mastering necessity, not mastering PowerPoint slides about “shareholder value.”
The Old Contract Between Work and Reward
Here’s something we’ve almost forgotten: real capital once came from saving. If a nation wanted railways, citizens had to spend less than they earned so the surplus could be turned into steel and timber. Credit was a bridge between past production and future production—not a magical fountain.
When money was tied to something scarce (gold, silver, whatever), people naturally thought longer-term. You couldn’t fake prosperity forever because the bill always came due in hard coin. That constraint was annoying, sure, but it kept society honest.
The ultimate mainspring of progress is not the energy from coal or oil, but energy released from human imagination when it is disciplined by liberty and responsibility.
– adapted from classic economic thought
Then Finance Broke Free From Reality
Sometime after World War II the tether snapped. Central banks discovered they could create money without limit. Corporations discovered they could grow earnings without growing factories. The stock exchange stopped being a place where savers met builders and became a voting machine for expectations.
Suddenly you could make enormous money without adding anything useful to the world. Private equity became the perfect symbol: buy a company with borrowed money, load it with more debt, cut costs to the bone, dress up the numbers, sell it higher. Nothing actually improved for customers or workers—sometimes things got worse—but the spreadsheet looked heroic.
I’ve watched it happen to brands I loved as a kid. Solid companies that made real things—tools, appliances, clothing—get bought, hollowed out, and flipped. The factory closes, the jobs disappear to another continent, the brand name lives on as a zombie pasted onto cheaper junk. Yet the financial press calls it “unlocking value.” Value for whom, exactly?
The GDP Mirage – Counting Motion as Achievement
If you want one number that proves we’ve lost the plot, look at gross domestic product. Politicians treat it like the score of civilization. But GDP literally adds up everything that gets paid for, whether it creates or destroys.
- A new hospital wing? Great, adds to GDP.
- A car crash that totals three vehicles and sends six people to the ER? Also adds to GDP.
- Divorce lawyers, security systems, bottled water because the tap water is toxic—all pure growth.
In other words, we can spend ourselves into apparent wealth while the real capital stock quietly rots. Infrastructure crumbles, soil depletes, skills atrophy, families fracture—none of that shows up as a subtraction unless someone gets paid to clean up the mess later.
Worse, financial engineering itself has become a massive GDP component. When banks create derivatives worth trillions that do nothing except shuffle risk around trading floors, it counts. When companies borrow billions to buy back their own shares, pushing the stock price higher, it counts. Motion masquerading as progress.
Time Preference – The Hidden Engine Nobody Talks About
Economists have this quiet little concept called time preference. It’s basically how much you care about the future versus the present. Low time preference built cathedrals that took centuries and railroads that paid off decades later. High time preference builds apps that disappear in two years and McMansions flipped before the paint dries.
Easy money raises time preference across society. When borrowing is cheap and saving earns nothing, why wait? Why maintain? Why build something meant to last a hundred years when you can extract cash today and let the next owner deal with the collapse?
I see it in everything now. Software updates that break more than they fix because shipping something—anything—gooses the stock today. Buildings with 30-year mortgages on materials designed to last 15 years. Even relationships suffer the same logic: why invest in depth when swiping right offers instant novelty?
The Private-Equity Playbook – A Case Study in Extraction
Let me walk you through a typical deal I’ve seen repeated hundreds of times.
- Firm borrows 70-80% of the purchase price at low rates.
- Buys a boring, profitable company that’s been family-run for decades.
- Immediately slashes maintenance, R&D, and employee benefits to “streamline.”
- Pays itself massive “monitoring fees” and special dividends funded by new debt on the company.
- Sells the stripped carcass five years later at a higher multiple because interest rates fell again.
The investors make 25%+ annual returns. The company often limps into bankruptcy a few years later. Pension funds that invested in the deal pat themselves on the back while retirees wonder why their benefits got cut. Everyone in finance calls it genius.
And the craziest part? This model only works in a world of endless credit expansion. The moment interest rates normalize or credit tightens, the whole house of cards shudders.
What Real Progress Would Actually Look Like
Sometimes I try to imagine what society would feel like if we returned to honest measures of advancement.
Families would need only one income again because housing wouldn’t be a speculative asset class. Young people could save for a home in five years instead of fifty. Companies would compete on making better products, not on accounting tricks. A politician bragging about GDP would be laughed off stage the way we’d laugh at someone bragging about their weight while standing on the scale with bags of flour in their arms.
Most of all, work would have dignity again. Building something durable—whether it’s software that lasts a decade or a factory that employs generations—would be respected more than flipping it for a quick gain.
True wealth is not about having more; it’s about needing less while preserving what matters across time.
I’m not nostalgic for poverty or horse-drawn carts. Technology and medicine have given us miracles. But we’ve confused the tools of abundance with abundance itself. We measure pixels per inch while losing inches of topsoil. We celebrate billionaires while bridges rust.
The scary thing is how normal it all feels now. We’ve grown up inside the illusion, so the air tastes normal to us. But step back—just for a moment—and you can smell the rot beneath the perfume.
Real progress isn’t dead. It’s just waiting for us to remember what the word actually means: not bigger numbers, but better lives. Not higher valuations, but deeper roots. Not the endless pursuit of more, but the patient stewardship of enough.
Until we relearn that distinction, all the record highs in the market are just the sound of deck chairs being rearranged on a very expensive ship that’s taking on water faster than most people realize.
