What do you think of when you hear the word "technology"? Do you think of jet planes and laboratory equipment and underwater farming? Or do you think of smartphones and machine-learning algorithms?

Venture capitalist Peter Thiel guesses it's the latter. When a grave-faced announcer on CNBC says "technology stocks are down today," we all know he means Facebook and Apple, not Boeing and Pfizer. To Thiel, this signals a deeper problem in the American economy, a shrinkage in our belief of what's possible, a pessimism about what is really likely to get better. Our definition of what technology is has narrowed, and he thinks that narrowing is no accident. It's a coping mechanism in an age of technological disappointment.

"Technology gets defined as 'that which is changing fast,'" he says. "If the other things are not defined as 'technology,' we filter them out and we don't even look at them."

Thiel isn't dismissing the importance of iPhones and laptops and social networks. He founded PayPal and Palantir, was one of the earliest investors in Facebook, and now sits atop a fortune estimated in the billions. We spoke in his sleek, floor-to-ceiling-windowed apartment overlooking Manhattan — a palace built atop the riches of the IT revolution. But it's obvious to him that we're living through an extended technological stagnation. "We were promised flying cars; we got 140 characters," he likes to say.

The numbers back him up. The closest the economics profession has to a measure of technological progress is an indicator called total factor productivity, or TFP. It's a bit of an odd concept: It measures the productivity gains left over after accounting for the growth of the workforce and capital investments.

When TFP is rising, it means the same number of people, working with the same amount of land and machinery, are able to make more than they were before. It's our best attempt to measure the hard-to-define bundle of innovations and improvements that keep living standards rising. It means we're figuring out how to, in Steve Jobs's famous formulation, work smarter. If TFP goes flat, then so do living standards.

And TFP has gone flat — or at least flatter — in recent decades. Since 1970, TFP has grown at only about a third the rate it grew from 1920 to 1970. If that sounds arid and technical, then my mistake: It means we're poorer, working longer hours, and leaving a worse world for our grandchildren than we otherwise would be. The 2015 Economic Report of the President noted that if productivity growth had continued to roar along at its 1948–1973 pace, the average household's income would be $30,000 higher today.