Discounting the fact that he’s wrong though about the reason for the failure of the music industry, some really interesting points.
Moore’s Law, an Economy of Abundance, and Disruptive Technology
via ShrinkWrapped by ShrinkWrapped on 12/18/08
[This is a highly speculative post in which I discuss some relatively inchoate thoughts about a potential economic singularity. I welcome comments offered in the same vein.]
The four most dangerous words for our economy are “this time is different.” Anyone who has lived through and paid attention to, the last few bubble iterations (dot.com, housing, financial) knows that when the good times are rolling, the Cassandras who warn of impending doom are typically silenced with words to the effect that “this time is different.” It raises the question of what conditions would need to exist for the economy to actually reach a point where the ruleswould change; in other words, what conditions could enable an economic singularity?
The triumph of liberal capitalism (though in the present context of the early days of a frightening recession it may not seem particularly triumphant) has been the creation of wealth. By leveraging individual genius we were able to create a self-perpetuating technology that has raised the standard of living of even the poorest Westerner to levels that Kings could only dream about in the past. At the same time, our great wealth has enabled us to facilitate our brightest minds to answer questions about the nature of the world that have led to amazing increases in life expectancy and the ability to manipulate and exponentially increase knowledge.
Ray Kurzweil’s insight in The Singularity is Near was to notice that any field of intellectual pursuit, once its tools (technology) had matured, inevitably would follow Moore’s Law. Certainly human activity could short circuit the application of Moore’s Law in any particular field. A totalitarian regime could restrict the open availability of information in ways which would inhibit further developments in a particular field. A government that had fallen under the sway of nonsensical ideology, aka religious or quasi-religious beliefs, could impede the growth of the economy in such a way as to impair information acquisition.
(As examples, some might accuse the Bush administrationof stunting the development of bio-tech by the refusal to fund embryonic stem cell research; others express concern that by increasing taxes in service of a belief in anthropogenic global warming, the Obama administration will impair our ability to support more speculative science.)
However, the underlying premise of Moore’s Law, that information increases exponentially, and Ray Kurzweil’s corollary, that any field that evolves to the point where it is primarily about manipulating information will inevitably follow Moore’s Law, has so far held up fairly well.
What does this mean about the possibility of coming to a time when we discover that “this time really is different”?
I have loved listening to music since getting my first turntable and 45. (For anyone under the age of ~50, that was a meaningless statement.) The 45 cost about one dollar and albums were in the $10 range (if memory serves.) My 35th birthdaypresent was a complete set of the Beatles albums on cds, each of which cost a significant premium over the original albums. It took almost four years to finally acquire the entire set since they released them a few at a time. I am fairly sure I have spent well over $2000 on my cd collection over the years. Themoney I spent on cds went to the middlemen(record companies) and some to the artists who created the music; I still pay for music, including when I down load mp3s. However, those of us who actually payfor mp3s are an anomaly. Most young peoplehave iPods filled with thousands of songs, many of which they have never heard, and almost none for which they have paid. Music stores have been closing for some time (Does anyone still remember Sam Goody’s, or Tower records?) because music has essentially become free. The music business collapsed because they were not been able to compete with free, or negligibly cheap, music. This is a model that many businesses may well follow.
The proponents of nanotechnology suggest that there are two inevitable outcomes of mature nanotechnology, the cost of material goods will trend toward zero and we will have functional immortality. (Once we can predictably control manufacturing at the molecular level, we could, in theory, build anything out of a pile of dirt or organic waste. Immortality is a little trickier but would essentially involve, in one conception, creating a one-to-one copy of a human organism with designed hardware [true intelligentdesign] which would exist in parallel and slowly replace the originalorganic, kludgey original; other approaches suggest building nanoscale robots to enter our systems and debug, troubleshoot, etc. None of the approaches are precluded by any of the laws of science.)
When prices drop too low for the producers and traders of the products to make more than their expenses, the industry dies. This is independent of companies that go out of business because they fail to remain competitive.
Economic systems have always been arranged to manage scarcity. We have too little experience managing abundance but if the current economic dislocations are any indication, we do not yet have a framework for understanding the effects of abundance on our economy and managing the sever dislocations that will accompany abundance. The most likely outcomeswould involve brand new industries coming into existence (consider the economic impact of computers, cell phones, iPods) and the economy that best develops such industries will gain an exponentially increasing advantage over those that are less effective innovators.
The key, more than ever, is finding ways to enhance and leverage our brain power.
For perspective, consider two items today:
How to build a supercomputer from Playstation 3s
Two UMass Dartmouth sceientists have created a step-by-step guide to building a home-brew supercomputer from Sony Playstation 3s for $4,000–the cost of 5,000 hours at $1 per hour on the National Science Foundation’s TeraGrid computing infrastructure.
Cognitive computing: Building a machine that can learn from experience
Scientists are studying complex wiring of the brain to build the computer of the future, one that combines the brain’s abilities for sensation, perception, action, interaction and cognition and its low power consumption and compact size. Understanding the process behind these seemingly effortless feats of the human brain and creating a computational theory based on it remains one of the biggest challenges for computer scientists.
And to balance such intriguing stores, here are two reminders of the power of the blind to impede and impair our future:
Americans have always lived at the new frontier, at least in their imaginations. It’s taken the death of the likes of the wonderful Pan Am to keep them contemplating the horizon rather than their navels. The risk of saving the moribund is the demise of the vital — and the long-term cost of that is incalculable.
Hope, Change & Illiterate Kids
Only 17% of 8th Graders Overseen by Obama Education Secretary-Designee Can Read at Grade Level
U R kidn me, rite?
Our country has always been ambivalent about maximizing our brain power. TAG programs (talented and gifted) receive much less money than programs for disabled children (even as the definition of disability stretches by the day.) We can surmount such short sighted thinking and have done a decent job of creating an environment where a Steve Jobs or Bill Gates can express the full flowering of his intellectual abilities, but the tendency to protect the status quo in the guise of fairness or other chimerical desires, will stunt our growth in ways that, to quote Roger Cohen, are “incalculable.”
Those of us who support the creative destruction of capitalism often use the example of the buggy whip manufacturers put out of business by the invention of the automobile to illustrate the benefits of capitalism but there are two extremely important distinctions which must be kept in mind. The transition fromthe buggy whip to the automobile was a slow process taking place over decades and involves a relatively modest percentage of the American economy. In contrast, as manufacturing falls increasingly under the sway of Moore’s Law, the dislocations are likely to be dramatic and extremely rapid, allowing very little time for adjustment. A buggy whip manufacturers son could get a job on an assembly line with little preparation and time. A worker on a GM assembly line cannot hope to re-educate himself to be employable in an information economy in anything less than years. His son, sliding by with B’s through high school in which he never has to grapple with Physics or Calculus will have very little chance of working near the leading edge of the economy.
Secondly, and perhaps more important, the potential changes in the economy form new industries can and will dwarf the effect of losing the buggy whip manufacturers. The loss of the music business was large; the loss of an entire industry could be exponentially more significant. Consider the possibility, almost certain to occur at some point, of High Definition TVs made of plastic, costing pennies per square foot, easily manufactures in your home by an ink jet printer. Such an advance to be wonderful a and welcome to almost everyone but billions and billions of dollars have been invested in building TVs and the entire industry could be wiped out in a matter of weeks to months should these developments come to fruition. Suddenly going frm fabrication plants costing billions to make and staffed by highly paid and trained professionals to nearly free plastic TVs would wipe out fortunes and leave many people suddenly unemployed and trained for highly skilled positions that no longer exist.
On balance I’m an optimist but I wonder if our economists, with all their theoretical models that have worked so well to minimize risk in the last 20 years, have begun to think about the dangers inherent in an economy of abundance.
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