Saturday, May 5, 2012

What does it mean? "we don’t have enough ways for people to work and prove that they deserve this stuff."

So, to conclude this discussion, according to Diamandis and Kotler, we have a new world just coming into being.

At the very beginning of this book, we argued that the true promise of abundance was one of creating a world of possibility: a world where everyone’s days are spent dreaming and doing, not scrapping and scraping. Never before has such promise really been in the offing. For most of human history, life was a constrained affair. Just finding ways to survive took most of our energy. The gap between one’s day-to-day reality and one’s true potential was vast indeed. But in these extraordinary days, that chasm is beginning to close.
Of course, technology historically does not destroy jobs in aggregate so much as free people to do higher-level jobs.

“At a high level,” says Second Life creator Philip Rosedale, “humans have consistently demonstrated an ability to find new things to do that are of greater value when jobs have been outsourced or automated. The industrial revolution, outsourced IT work, China’s low-cost labor force all ultimately created more interesting new jobs than they displaced.”

Much of that involves learning more advanced skills or dealing with more complexity. But what if the greater value option this time does not look like a traditional job?

In addition to training up, others might simply retire. SU AI expert Neil Jacobstein explains, “Exponential technologies may eventually permit people to not need jobs to have a high standard of living. People will have many choices with how they utilize their time and develop a sense of self-esteem—ranging from leisure normally associated with retirement, to art, music, or even restoring the environment. The emphasis will be less on making money and more on making contributions, or at least creating an interesting life.”

The greatest line in the book

And here is the greatest line in the book - almost at the end.

Our problem is not that we don’t have enough stuff—it’s that we don’t have enough ways for people to work and prove that they deserve this stuff.

And this is also the problem with the book, too. Technologists can point to where the problem is. But they don't have much to say about how to solve it, because the solution is not primarily a technological issue. It's an ethical, political and economic problem.

We've seen this before with other brilliant writers on technology like as W. Brian Arthur, who also stops at much the same point. if you follow the link to the older post, Arthur said:

This suggests to me that the main challenge of the economy is shifting from producing prosperity to distributing prosperity. The second economy will produce wealth no matter what we do; distributing that wealth has become the main problem. ... The system will adjust of course, though I can’t yet say exactly how.
The problem, say Diamandis and Kotler, is how you move beyond scarcity economics.

Part of the problem is that most contemporary thinking about money and markets and such has its roots in the scarcity model. In fact, one of the most commonly used definitions of economics is “the study of how people make choices under conditions of scarcity, and the results of those choices for society.” As traditional economics (which believes that markets are equilibrium systems) gets replaced by complexity economics (which both fits the data significantly better and believes that markets are complex, adaptive systems), we may begin to uncover a postscarcity framework for assessment, but there’s no guarantee that such thinking will result in either more jobs or a different resource allocation system.

So we need a different resource allocation system (not to mention a revolution in the discipline of economics). But, as I've said so often, our traditional broadly liberal approach completely lets us down when we try to think about resource allocation.

It's a problem for the left, who either stress procedural justice or varieties of equality but whose 20th century welfare state has produced unsustainable fiscal problems and stunted lives. The whole notion of "redistribution" has failed.

It's a problem for libertarians and the market-oriented right, because markets will not allocate intangible goods as effectively as the port wine or better mouse traps. The boundaries of the market could move back sharply and make market exchange a less central part of the economy, whether we like it or not.

It's a problem for economics, which is still stuck with a thin welfare economics based on revealed preference, pareto-optimality and other vestiges of Viennese positivsim. And it's a problem for traditional conservatives because technological change is shaking up communities and transforming society.

In fact, it's a problem for the whole liberal tradition as it has evolved since its birth in the enlightenment response to the carnage of the Wars of Religion. We have to think about what the purpose and ends of life are again, what flourishing means, what the good life is, rather than just adopt a neutral stance. And we have to rethink some of our fundamental institutions, such as the 19th and 20th century models of "the job." Most of our mental furniture is arranged so that we feel proud of not answering the most important questions.

When people have material abundance, what do they do next? Suppose you were told all your shelter, energy, food, healthcare and education costs were taken care of for the rest of your life. Hard to imagine, but try it. What would you do?

And how do we run an economy if that choice is open to most people?



Friday, May 4, 2012

Radical cheapness

We're tallking about the book Abundance: The Future Is Better Than You Think. One consequence of these waves of technological change is basic needs could get much cheaper. In fact, in a fascinating table they work out what the components and functions of a 2011 smartphone, including GPS and video cameras, would have cost to buy in about 1982. The answer: $902,605.

Of course, technology has fallen in price far more than other needs like housing or healthcare or education, which have in fact got more expensive. But the innovations we saw in the last post are likely to lead to significantly lower costs for most of our basic needs as well. They become abundant rather than scarce.
The typical American spending breakdown shows that 75 percent to 80 percent of the money we earn goes to meet basic needs such as water, food, clothing, shelter, health care, and education.
This also means that 75-80% of the current economy will be under hyperdeflationary pressure. It's already evident in the clothing sector, for example. The quality and cost is so much better than when I was a kid.

Of course, the usual positive story is that plunging costs for one set of purchases means demand can rotate to new goods and services. People suddenly have spare income to buy new items. But it may not be that simple if the new goods and services can themselves be produced extremely cheaply as well.

Take employment in services, for example. One other major new innovation is likely to be robots will finally become useful on a much bigger scale.

Whether it’s shelf-stocking robots maintaining inventory at Costco or burger-slinging robots serving lunch at McDonald’s, we’re less than a decade away from their arrival. Afterward, humans are going to have a hard time competing. These robots work 24/7, and they don’t get sick, make mistakes, or go on strike. They never get too drunk on Friday night to come to work Saturday morning, and—bad news for the drug-testing industry—have no interest in mind-altering substances. Certainly there will be companies that continue to employee humans out of principle or charity, but it’s hard to envision a scenario where they remain cost competitive for long. So what becomes of these millions of blue-collar workers?
Again, the economic challenges are much larger in coming years than most people - and most leaders - realize. It's more than just fixing social security or attracting manufacturing plants to Iowa or the Mezzogiorno.

It's a phase shift in how people live.

Some new trends in "Abundance"

We're discussing Abundance: The Future Is Better Than You Thinkby Peter Diamandis and Steven Kotler.

The authors talk in impressive detail about a whole series of impressive technologies. Not all of them may work out, of course, but collectively they are almost certainly transformative. And it is seldom you see so many striking trends brought together at book-length, with evidence to back it up.

One potential game-changer, for example, is algae which can photosynthezise fuel. One of leading names trying to develop the field is Craig Venter of human genome fame:

The efficiencies are considerable. “When compared to conventional biofuels,” says Venter, “corn produces 18 gallons per acre per year and palm oil about 625 gallons per acre per year. With these modified algae, our goal is to get to 10,000 gallons per acre per year, and to get it to work robustly, at the level of a two-square-mile facility.”
Of course, companies have been working on cultivating algae for energy for decades. It's not easy to do it on an industrial scale. But it is possible that we are close to major breakthroughs which could alter the oil markets and the geopolitical balance.

Energy production could also be transformed by liquid metal batteries which provide huge amounts of scalable storage, as well as new generations of nuclear technology which could produce safe "backyard nukes" - tiny powerplants which could work for decades.

And even much maligned solar energy, where so many companies like Solyndra have found themselves on the bleeding edge, is steadily falling in price. Indeed, that is why there is so much carnage in the industry.

According to Travis Bradford, chief operating officer of the Carbon War Room and president of the Prometheus Institute for Sustainable Development, solar prices are falling 5 percent to 6 percent annually, and capacity is growing at a rate of 30 percent per year. So when critics point out that solar currently accounts for 1 percent of our energy, that’s linear thinking in an exponential world. Expanding today’s 1 percent penetration at an annual growth of 30 percent puts us eighteen years away from meeting 100 percent of our energy needs with solar.
They give a well-sourced tour through other potential transformative technologies. Other examples include the "internet of things" which will create enormous new efficiencies in the physical world by embedding cheap sensors everywhere. Inventories and storage costs will plunge. And 3-D printing of manufactured goods is advancing. It is one small step, they say, towards a Star-trek type "replicator" which can download schematics and "print" physical goods in your own house.

Healthcare may be on the brink of massive change as well. For example, new cell-phone size blood-testing and diagnostic devices are being developed that can not only perform a medical check on the spot, but upload aggregate information in real time so that health trends and diseases can be monitored globallly. In fact, a combination of technologies will transform healthcare, they say.

In total, creating a world of health care abundance appears to be a very tall order—except that almost every component of medicine is now an information technology and therefore on an exponential trajectory. And this, my friends, makes it a whole new ball game.

Computing could be transformed once again:

IBM recently unveiled two new chip technologies that move us in this direction. The first integrates electrical and optical devices on the same piece of silicon. These chips communicate with light. Electrical signals require electrons, which generate heat, which limits the amount of work a chip can perform and requires a lot of power for cooling. Light has neither limitation. If IBM’s estimations are correct, over the next eight years, its new chip design will accelerate supercomputer performance a thousandfold, taking us from our current 2.6 petaflops to an exaflop (that’s 10 to the 18th, or a quintillion operations per second)—or one hundred times faster than the human brain.
New technologies could transform use of water and save vast quantities of wasted food:

Mark Modzelewski, executive director of the Water Innovations Alliance, believes a smart grid could save the United States 30 percent to 50 percent of its total water use. IBM believes that the smart grid for water will be worth over $20 billion in the next five years, and the company is determined to get in on the ground floor.

And that is before the potential for new agricultural techniques and "vertical farms" in urban areas:

Hydroponics is 70 percent more efficient than traditional agriculture. Aeroponics, meanwhile, is 70 percent more efficient than hydroponics. Thus, if we used aeroponics for agriculture, we could drop water use from 70 percent to 6 percent—quite the savings.

And economic growth increasingly does not rely on natural resources.

Furthermore, for most of the twentieth century, pulling oneself out of poverty demanded having a job that—one way or another—relied on these same natural resources, but today’s greatest commodities aren’t physical objects, they’re ideas. Economists use the terms rival goods and nonrival goods to explain the difference.

We've talked about the huge significance of the shift to nonrival goods before. It means that traditional markets don't work as well, at least without elaborately defined property rights over ideas. And intellectual property law is a mess.

The book also emphasises the massive leap in scale of the global economy which is in prospect. Three billion people will be linked into the global economy of ideas and innovation for the first time as mobile telephones and computing spread in developing countries. And those billions of new people and new needs and exepriences will likely mean a surge of innovation.

And we haven't even talked about the potential impact of artificial intelligence or potential transformations to education.

So here's the takeaway: the global economy may feel like it is stalled right now, with talk of crisis and austerity and cuts. Beneath the surface, however, change is actually speeding up. If even a few of the big transformative technologies the book talks about are realized, it will have immense consequences in the next twenty years, moving us much closer towards a world in which the problems of material provision and abundance have been solved.

What then? What then?


Wednesday, May 2, 2012

Abundance and what it means

And now it's time for a quick look at another book. Abundance: The Future Is Better Than You Thinkby Peter Diamandis and Steven Kotler. It is a startling look at the potential impact of new technologies, many of which I hadn't even heard of. We'll look at some of those in the next post.

They start, though, with a bold claim:
Humanity is now entering a period of radical transformation in which technology has the potential to significantly raise the basic standards of living for every man, woman, and child on the planet. Within a generation, we will be able to provide goods and services, once reserved for the wealthy few, to any and all who need them. Or desire them. Abundance for all is actually within our grasp.
This is a remarkable claim, if true. It means that the economic problem, as Keynes put it in the essay that served as one of the starting points of this blog, will be solved within the next few years.

How can they say this? Well, they are highly experienced technologists. One is the innovator between the X-prizes for new technology, for example, and the other is a highly connected science journalist.

And from their standpoint the world is changing even faster than most people believe. Contrary to the pessimism many people habitually like to wallow in, much of the change is positive. Consider the impact that mobile phones are having in Africa:
Right now a Masai warrior with a cell phone has better mobile phone capabilities than the president of the United States did twenty-five years ago.
And if he has rudimentary access to Google on the cellphone, he has much of the world's information and knowledge, too.

This claim that the whole world is a generation or so away from solving basic needs is much more radical than anything I've claimed in this blog. Of course, I've argued that the developed countries are approaching the point where many of our problems have to do with abundance. We have satisfied most basic needs, and higher-order needs on Maslow's hierarchy aren't as easy to convert into tradable goods or services.

But I acknowledge that many poorer countries may be far off that point, and environmental or energy constraints could create addiitonal headwinds.

Diamandis and Kotler, by contrast, think that within a generation or so, all basic needs problems will more or less be solved.Technological advances will have a transformative effect on healthcare, agriculture and services. For example, electric cookstoves could reduce ecological damage, free up time spent gathering firewood and signficantly improve mulitple health problems which arise from indoor air pollution.
For example, the two-burner electric cookstove is a simple device, but it would bring magnificent change to the 3.5 billion people who now cook food and get light and heat by burning biomass: wood, dung, and crop residue.

Luxury versus possibility

That is not to say everyone will live like the inhabitants of Bel Air or South Kensington.
Abundance is not about providing everyone on this planet with a life of luxury—rather it’s about providing all with a life of possibility. To be able to live such a life requires having the basics covered and then some.
That is a definition I can easily live with, indeed strongly support. But, as we will see, the question is what to do next. And here is where the book leaves many questions unanswered. What use should we make of possibility? Will it mean mass unemployment and drift, or genuinely freeing people to flourish and live a fulfilled life?

The same applies to another very interesting idea they adopt from Matt Ridley (whose book The Rational Optimist: How Prosperity Evolves (P.S.)I strongly recommend). Prosperity is saved time.

This process, Ridley feels, creates a further feedback loop of positive gain: “Specialization encouraged innovation, because it encouraged the investment of time in a tool-making tool. That saved time, and prosperity is simply time saved, is proportional to the division of labor. The more human beings diversified as consumers and specialized as producers, and the more they then exchanged, the better off they have been, are and will be.”

Again, the question is time is saved for what. When you solve problems of basic abundance, then questions of purpose become much more important.

The Hype Cycle

Finally, one other basic idea before we turn to a few specifics about technology. One eternal problem in discussing technological change is a feeling that much o f it is "gee-whiz" speculation, just silly dreams of flying cars and martin colonies and Star Trek warp drive. What we actually got was more prosaic. Instead of interstellar travel, we got the iPod and Angry Birds. At least so far.

We are often not good at understanding the pace of change. We expect both too much and too little of technology. Diamandis and Kotler note that the research firm Gartner have developed a graphical representation of this.
.. we fall prey to what’s become known as the “hype cycle.” We have inflated expectations when a novel technology is first introduced, followed by short-term disappointment when it doesn’t live up to the hype. But this is the important part: we also consistently fail to recognize the post-hype, massively transformative nature of exponential technologies—meaning that we literally have a blind spot for the technological possibilities underlying our vision of abundance.
A 2011 edition of the Gartner chart is here.

Added to that, many technologies are exponential in character, as we've discussed before on this blog. Exponential change starts small, and looks linear. But the curve can suddenly break out.

And it’s this kind of explosion, from meager to massive and nearly overnight, that makes exponential growth so powerful. But with our local and linear brains, it’s also why such growth can be so shocking. 
Short-term disappointment and long-term transformation often tends to be the pattern of change. But the technological developments they discuss do look like they will be genuinely transformative. We'll discuss those in the next post.

 (edited to fix formatting, 5/4)

Tuesday, May 1, 2012

Occupy May Day

So far so good. Little sign of disruption to the city or any outbreaks of violence. In fact, apart from some distant chanting it is difficult to see much impact at all.

I don't have much sympathy for the anarchist fringe who are often involved in these events. The big issue which does deserve attention is education and student debt.