Douglas Adams pointed out how all generations respond to new things:
1. Everything that was already in the world when you were born is just normal.
2. Everything invented between then and when you turn 30 is incredibly exciting and creative.
3. Anything invented after you turn 30 is against the natural order of things and the beginning of the end of civilization as we know it until it's been around for about ten years when it gradually turns out to be alright really.
The technology ratchet
Any useful technology that's successfully adopted by a culture won't be abandoned. Ever. (Except by top-down force).
The technology might be replaced by a better alternative, but society doesn't go backwards.
After books were accepted, few went back to scrolls.
After air conditioning is installed, it's never uninstalled.
Vinyl records, straight razors and soon, drivable cars, will all be perceived as hobbies, not mainstream activities.
This one-way ratchet is accelerating and it's having a profound effect on every culture we are part of. As Kevin Kelly has pointed out, technology creates more technology, and this, combined with the ratchet, has a transformative effect.
In a corollary to this, some technologies, once adopted, create their own demand cycles. A little electricity creates a demand for more electricity. A little bandwidth creates a demand for more bandwidth.
And the roll-your-own media that has come along with the connection economy is an example of this demand cycle. Once people realize that they can make their own apps, write their own words, create their own movements, they don't happily go back to the original sources of controlled, centralized production.
The last hundred years have also seen a similar ratchet (amplified, I'd argue, by the technology of media and of the economy) in civil rights. It's unlikely (with the exception of despotic edicts) that women will ever lose the vote, that discrimination on race will return to apartheid-like levels, that marriage will return to being an exclusionary practice... once a social justice is embraced by a culture, it's rarely abandoned.
Douglas Adams pointed out how all generations respond to new things:
1. Everything that was already in the world when you were born is just normal.
2. Everything invented between then and when you turn 30 is incredibly exciting and creative.
3. Anything invented after you turn 30 is against the natural order of things and the beginning of the end of civilization as we know it until it's been around for about ten years when it gradually turns out to be alright really.
Give It Time
There is a revolution under way but we must give it time to transform lives.
Maybe it’s appropriate that the technology most likely to transform banking started out as a means to help drug dealing. Bitcoin, the anarchic digital currency, was little more than a curious irrelevance until the dark web’s Silk Road drug marketplace sprang up in 2011. Anonymity made it ideal for illegal payments and, by the time the site was shut down two years later, nearly ten million bitcoins had changed hands, worth about $1.2 billion at the time, according to the FBI. The cryptocurrency had come of age.
Today, the leading investment banks are scrambling for a piece of the action. Not so much in bitcoin itself but the blockchain technology underpinning it — a centralised public ledger through which transactions can be settled immediately. According to Gary Cohn, the chief operating officer of Goldman Sachs, transaction technology in finance has barely evolved since 1940. When a bank does a dollar-yen trade, for example, the currency risk sits on its balance sheet for 19 hours, tying up productive capital. Axel Weber, the chairman of UBS, reckons that blockchain would allow a bank to turn over its balance sheet 24 times as often. Santander says that the technology could save the industry $20 billion annually by 2022. Twentyfive global banks are working together to develop the initiative.
Blockchain is only one example of how the global economy appears to be on the cusp of an innovation revolution. This week scientists at the University of Cambridge claimed to have made an energy breakthrough that may soon make it possible to drive an electric car from London to Edinburgh on a single charge. Elon Musk, the founder of Tesla Motors, is building a big factory in the Nevada desert to mass-produce home battery packs that promise to solve the problem of storing solar power.
Meanwhile, 3D printers are recreating human tissue for transplants. Uber and BlaBlaCar are building a new world of selfemployed, part-time taxi drivers. Anyone with a home can become a hotelier through Airbnb, or turn hobbies, such as carpentry, into business propositions on Etsy in the “gig economy”. The list goes on.
Computing power has multiplied exponentially in the past 30 years. Apps that come as standard on a smartphone, from GPS to video conferencing, would have cost $900,000 in today’s money when equivalent devices were launched in the 1980s. Life’s a lot more fun as a result, but sometimes it’s hard to discern value in what has been added.
Writing in the London Review of Books this year, John Lanchester questioned whether the digital age was delivering much in the way of productivity benefits. “The lightbulb changed the world; Facebook is just a way of letting people click ‘like’ on photos of cats that resemble Colonel Gaddafi,” he wrote. “Real change would involve something like a ten or hundredfold increase in the potential of batteries.”
Perhaps his tone would be different had he written the piece six months later, after the announcements by Mr Musk and Cambridge. What may have seemed like inconsequential developments are becoming essential. Facebook is a personal verification tool for Airbnb. BlaBlaCar and Uber would not be possible without GPS apps on smartphones. Even graphene, hailed as a wonder material when it was isolated in Manchester 12 years ago, has struggled to find commercial use. Yet the Cambridge scientists would not have made their breakthrough without it.
Economic revolutions require patience. In a speech in February, Andy Haldane, the free-thinking chief economist of the Bank of England, pointed out that the last three great leaps forward hinged on general purpose technologies — innovations that had applications beyond their original design. Examples included the steam engine in the 18th century, electricity and the internal combustion engine in the 19th century, and the personal computer in the 20th century.
To begin with, the innovations were eccentric curiosities. James Watt’s 1763 steam engine did not have its full transformational effect on the economy until the rise of the railways half a century later. Ken Olsen, a US computing pioneer, said in the 1970s that the personal computer “would fall flat on its face”. Similarly, it took seven years before the brains behind graphene were recognised with a Nobel prize.
Real value becomes evident only with time. “Given past trends, it could take 30 to 40 years or longer for general purpose technologies to reach critical velocity,” Mr Haldane said. If he’s right, we should be nearing liftoff. The worldwide web was invented 25 years ago.
For Larry Page, the co-founder of Google, technology and the internet promise to cut ruthlessly through inefficiency. Just as Uber makes it easier to get around, Google Translate promises to improve communication, blockchain will deliver quicker and cheaper customer banking and Elon Musk’s home batteries should lower energy costs and cut wasteful carbon emissions. That’s what we already know, and ignores the possibilities from developments in artificial intelligence, genetics and Big Data.
It is all too easy to find reasons for pessimism today, whether it’s high unemployment, slowing global growth, the world’s $200 trillion debt pile or central banks’ apparent inability to climb off zero interest rates. But innovation has rescued us before and there is no reason to think it will not do so again.
As Mr Haldane observed, annual growth in GDP per head during the 250 years since the Industrial Revolution has averaged 1.5 per cent, meaning that “each generation has been around a third better off than its predecessor”. There have been blips but, overall, “secular innovation has dwarfed secular stagnation”.
No one predicted four years ago that a cryptocurrency favoured by drug-dealing anarchists would be the seed of the next revolution in banking. Progress creeps up unexpectedly, and it’s happening all around us right now.
Every 30 or 40 years, Americans become incredibly pessimistic. They begin to believe the nation is falling behind in competitiveness and innovation, that their children will not be as well off as they themselves have been, and that some other country will own the future. They fear that the United States will go the way of the British Empire in the 20th century.
This may be the country’s greatest advantage, because it causes it to maintain a level of humility and to constantly reinvent itself. But the fears are completely unfounded.
The United States is in fact in the middle of a dramatic revival and rejuvenation, propelled by an amazing wave of technological innovations. These breakthroughs are delivering the enormous productivity gains and dramatic cost savings needed to sustain economic growth and prosperity. And they are enabling entrepreneurs to solve the grand challenges of humanity, the problems that have always bedeviled the human race: disease, hunger, clean water, energy, education, and security.
Through advances in computing whose rate of acceleration Moore’s Law describes, faster computers are being used to design faster computers. And these faster computers, in turn, are making it possible to design new forms of energy, smaller and more powerful sensors, artificial-intelligence software that can interpret the massive amounts of information that we are gathering, and robots that can do the mundane work of humans. It is even becoming possible to redesign human cells and other organisms. Almost all fields of science are becoming digitized, enabling them to start advancing at exponential rates.
The really good news is that the world will share in the prosperity that this American reinvention is creating.
There are 1.2 billion people with no connection to a power grid, for example, and another 2.5 billion who can get power only intermittently and so use fuels such as kerosene for lamps. Kerosene is a dirty fuel that, according to The Economist, costs as much as $10 per kilowatt–hour— which is about 50 times more than Americans pay for their energy. Worse, kerosene fires are epidemic in Africa, and their toxic fumes cause respiratory ailments that kill hundreds of thousands per year. This is all about to change: within a decade and a half, we will have the ability to harness the power of the sun and wind to provide 100 percent of the planet’s energy needs. The cost of clean energy will fall to the point that it seems free. We will be able to light up every corner of the globe and allow children in Africa to be able to study when they get home, to equip all homes with heating and air conditioning, and to produce unlimited food and clean water.
Desalination plants have so far struggled to get funded, because they are power hungry. This makes water production through desalination prohibitively expensive. When power costs decline by 30 to 40 percent, desalination will become an economical option; when they approach zero, which will happen, coastal zones will become water-rich regions. We will be able to remove environmentally damaging dams and transport water everywhere.
Despite the recent El Niño, California is still suffering from an extreme drought. Farmers and city-dwellers are fighting over water rights; where I live, in Silicon Valley, some towns have dramatically increased water rates — affecting rich and poor residents alike. The doomsayers are warning that California will need to change forever and that it will need to stop growing fruits, vegetables, and almonds. With almost free energy and desalination, though, Sacramento River Delta will easily afford to grow rice, and the San Joaquin Valley can grow more almonds.
Affordable smartphones are also becoming available worldwide, connecting the human race as never before. When Silicon Valley companies succeed in perfecting their drones, balloons, and microsatellites later in this decade, they will be able to blanket the Earth with Internet access, thereby providing everyone with access to a sea of knowledge. Communities across the globe will be able to learn from each other, participate in the global economy, and uplift themselves.
With the advances in genomics and with health sensors that connect to smartphones, our entire health care system is about to be upended. We are moving into an era of data-driven, crowdsourced, participatory, genomics-based medicine. Just as our bathroom scales give us instant readings of our weight, devices we wear on our wrists or ingest into our bodies will monitor our health and warn us when we are about to get sick. Artificial intelligence–based applications will prescribe medicines or lifestyle changes holistically, on the basis of our full medical history, habits, and genetic makeup. This is a good thing, because health care is a misnomer for our medical system: it should be called sick care. Doctors, hospitals and pharmaceutical companies only make money when we are in bad health. The technology industry, which is creating these advances, is however motivated to help us prevent illness and disease and stay healthy in the first place — so we can surf the Internet more and download more apps.
Advances in robotics and 3D printing will also, over the next decade, change the way in which we manufacture products that we use every day. Our home 3D printers will produce our toothbrushes, clothing, and even our food. Robots will soon start driving our cars and stocking shelves in supermarkets, and will care for the elderly and provide companionship.
America is leading the world in technology advances, but innovation is happening everywhere. It is an unstoppable force, one that will create great opportunities and disruptions. Entire industries will be wiped out as new ones are created. Jobs such as taxi driver and machinist will be eliminated, and a few new ones will emerge. We will find solutions to the grand challenges of humanity, and everything will be more affordable, but income inequality will rise because the creators of the new technologies will be the ones most to gain financially.
As America turns 250 a decade from now, it is going to be a time to reflect on how far the country has come and what has made it what it is. But it will be past time too to foresee the effects of technology changes and to prepare for a future far different from anything we have imagined. Anything is possible, and that is why we need to change the national dialog now from one that is bogged down in pessimism to one in which we discuss how we make the most of the amazing opportunities ahead.