Economics, Energy, Automation & Medicine

 

Civilization's megatrends are about to change everything, for real this time.

Read Time: 18 minutes

Updated 7/26/2017

When I was a kid, "the future" meant "The Year 2000." We would refer to "The Year 2000" as THE line of demarcation bisecting what was the past and the glorious future to come. Y2K is now quite a ways in the rear view mirror. On the integer timeline I'm now farther away from "The Year 2000" than I was for most of my pre-school years when I developed a fetish for the future. Flying cars. Space colonies. Lifelike androids. It was all coming, in "The Year 2000."

Yeah so that didn't happen. The turn of the millennium came and went and the World Wide Web didn't even melt down. But with many of the Isaac Asimovian visions aside, it is something to consider the degree in which segments of technology have advanced in a short period of time. Gary Butler, a friend of mine and CEO of IoT company Camgian, gave a great TEDx talk about this a few years ago. Gary noted - humorously and accurately - that flying cars and clunky humanoid-ish robot housemaids not withstanding - most all of the "future" advancements depicted in The Jetsons had actually come to pass in our own time.

Epiphany Alert

As insanely fast as technology and societal systems have progressed over the last two decades, little fundamental disruption has actually occurred.

What???  Heresy!!! We have an entire valley of silicon making billions of dollars based on disruption!!!  Burn him!!!

Hold on there, e-mob. A TON of disruption has occurred within existing systems. And by this I mean products, services, and technologies have been developed that have radically changed the way in which we operate within our established constructs. These legacy "systems" I'll identify as communication, occupation, transportation, commerce, and medicine. Without getting into the weeds on all of these, I'll point out a few of the major disrupters that have occurred. At a foundational level, there is the development and proliferation of access to a relatively fast global network - the internet. On the back of this, communications have become near instantaneous and information has become mobile. Occupations are now less centralized with the availability of more productivity tools. Transportation and commerce systems have been a bit less disrupted. We still depend on planes, trains, and automobiles which in turn depend mostly on the century-old usage of fossil fuels. Transportation advances have revolved around increased efficiency and access, the same of which is true (in different ways) for commerce. You still negotiate a contract as "fee for services." You are better able to access and spend your earnings, but the system is still basically the same. Major advancements have been made in medicine, but these are technological and technical, not fundamental. We continue to "practice" medicine and medical research on a global scale, retrofitting subsequent advancements to prevention and treatment at the acute level.

Progress? For sure. Disruption? Yeah, in a way. But if the disruption we have created could be metaphor for evolution, we have only observed short-necked giraffes evolving into long-necked ones. We haven't yet witnessed a giraffe evolve into a new species. I contend that this evolutionary disruption is right around the proverbial corner.

IntoTheFuture

You can't get the Megatrend Genie back in the bottle

Not that we would want to. Well, there are those who benefit from the status quo who wouldn't mind the genie just chilling in his velvet-lined magic lamp. But it's a bit too late, and now it's time to adapt or die. (I wrote a piece about this recently specific to ad agencies, posted on the MWB blog.) We're staring down the barrel of real disruption in the areas of economics, energy, automation, and medicine. I'll explain why, how, and pontificate on some surprising and unexpected effects.

1) AUTOMATION

I want to tackle the automation megatrend first, because it is a, if not the, major catalyst driving disruption in economics. There's no need to go into a lengthy explanation of "automation" and it's impact on the economy here. (If you're interested in background, here's a related piece I wrote on 21st century workforce. Or just Google 'automation and jobs.').

"I do believe that by 2045 machines will be able to do if not any work that humans can do, then, at least, a very significant fraction of the work that humans can do." - Dr. Moshe Vardi

Numerous futurists, economists, and computer scientists have contributed to the commentary and analysis regarding automation. The seminal piece on this to date is probably Martin Ford's Rise of the Robots. Experts have a range of predictions about the impact of automation, from the utopian Keynesian vision that humans will have more time to pursue enrichment activities, to the more Matrix-ish fear of submitting to our new robot overlords, to a human-machine synthesis in which we become a bit like The Borg. Notably no less than Mark Zuckerberg and Elon Musk have had public disagreements on this subject.  For what it's worth, I don't foresee becoming enslaved - or a Duracell - for machines; or becoming a cyborg in the traditional sci-fi sense. I also harbor no illusions that robotic laborers means we'll end up spending our days painting and composing to freestyle urban poetry. To deal in facts and draw a conclusion from such, here is what I think we can safely say: robots, software, and artificial intelligence are going to replace many careers and a sh*t-ton of jobs. This isn't a prediction, it is an observation. It began with dumb-robots in the 1980's on manufacturing lines and accelerates into the "skilled" and "white collar" worlds as AI becomes ever more sophisticated. Yes, will still need humans to originate the code that runs the machines, but the machines themselves will be able to replicate and adjust more efficiently downstream than can fleshy developers. It has kind of become my cane-shaking mantra, but I'll say it again: If your job - regardless of pay scale, field, educational degree prerequisite, etc. - depends on strict adherence to a set of rules, then it will be automated. In some cases this means individuals jobs and in others it will likely effect entire career fields.

Dr. Moshe Vardi, Director of the Ken Kennedy Institute of Information Technology, gave a presentation at the i4J (Innovation for Jobs Ecosystem) Summit in 2013 in which he posed the question - "If machines are capable of doing almost any work humans can do, what will humans do?" Certainly a thought-provoking poke at one of our most archetypal fears: being meaningless. Again, the ramifications of this can be conjectured-upon all day long, but the fact that it is happening is indisputable.

In the American manufacturing world, there has been a pronounced trend toward "re-shoring." Factories and manufacturing facilities are coming back to physically locate within the United States. Recent rumors have Apple building three new plants in the U.S., and their Taiwan supplier Foxconn is reportedly looking to build here as well. The fact is, the value of manufactured goods is at an all time high. Yet even with these pronounced trends, employment in manufacturing is at a low and trending downward. There are still a good number of manufacturing jobs to be had in the U.S., but even as factories come back or open up, the quantity of jobs that once accompanied such activity is way down. The quantity of human jobs, should I say. A plant which a quarter century ago may have employed 2,500 people can now be operated at greater efficiency and volume with perhaps fewer than 250 air-breathers.

The most prized human jobs of the future will be those that find value in deviating from the status quo. That's why I believe that design associated jobs will be the hot commodity in the near to medium term. These types of jobs aren't just what we think of as traditional "artsy" ones. Machines can paint a picture or write a book. These types of jobs put into practice the idea by which Sir Ken Robinson defines "creativity": Something Original that Has Value.

Since the first Industrial Revolution, the human economy related workforce has largely been operated at a matter of scale. "Boutique" industries are nice but very few people became wealthy through them.  The real economic engines that drove first national then global GDP was that of mass production. In order for this mass production to occur, we needed mass population to operate it. Moving forward...not so much. This is the major disruption that automation causes: the value of human capital shifts from labor, to creativity...from hard work, to innovative origination. It will ultimately make us better as a civilization, but it will be a painful transition.

 

2) ECONOMICS

All of the disrupted topics discussed here are inter-related, but perhaps no two more than automation (workforce) and economics (makin' those dollar bills, yo). There have really been two big innovations in the financial system throughout our history, and some would argue that they are really one in the same. The first would be the development of representative currency - you can carry around coins and paper money rather than gold bars and goats. The second is the development of banking and credit systems. Other than the fact that technologies have given us more access to our money and protection over it, the underlying system of accumulating wealth hasn't changed that much since Roman times. Back then, free men were paid a wage in exchange for labor/service that they were then able to spend in turn on goods and services. Opportunistic Romans may have recognized a chance to help back some enterprise - say - a business that was involved in making purple dye. So you could work, spend, and invest in the Empire of the Caesars (assuming of course that your weren't enslaved and ended up as Fancy Feast for a Coliseum Lion). The same paradigm holds true today in all industrialized economies and among most if not all of the developing world.

Then our friend Automation enters the fray and cuts out part of the equation for a good many people. What if there just aren't enough jobs? We now bemoan so many families living paycheck-to-paycheck, but think about what happens when there are less paychecks? That takes a big bite of our the "spend" component of our current economic equation (which unfortunately drives our economy NOW) as well as makes the "invest" component (which I WISH was driving our economy) much smaller and more closely held. We need only to look to Feudalism (God bless 'em) to understand that less investment capital in the hands of fewer people means radically less innovation. This dynamic was only broken in the 14th century by the ravages of Black Plague... and I for one don't want to have to go down that road again.

So here's where the upside of economic disruption is involved: Universal Basic Income.

What???? That's some commie crap!!! Capitalistic heresy!!!! Burn him....again!!!

Yes I'll admit that my admiration of classical liberalism and free trade gave me an immediate aversion to the thought of someone getting a paycheck just for breathing. I don't like the "participation" trophies in Little League. Being compensated just for existing is coddling to the Nth degree! And I though just that until I actually started looking into suggested programs and their relative cost versus real impact. Admittedly I came to Universal Basic Income (UBI) as a feasible and perhaps even desirable disruption not by way of philosophy. My consideration came from the realization of the impact of automation. A friend of mine put it best - "We're going to have to do something." If necessity is the mother of invention, then in this instance automation is the mother of necessity.

“We shall again take for granted the availability of a system of public relief which provides a uniform minimum for all instances of proved need, so that no member of the community need be in want of food or shelter.” - Friedrich Hayek

Last week I held a Twitter chat about UBI. It was an honor to have Basic Income guru Scott Santens participate. You know Scott is legit because he has a blue check by his Twitter profile pic. Seriously, Mr. Santens is one of the staunchest advocates for UBI today and has a mountain of knowledge to support it's implementation. Here's a great interview Scott gave with Futurism on the topic, if you're interested in getting into the weeds on avenues of implementation. To the neo-McCarthyists who knee-jerk against UBI as admittedly I once did, let me point out that free market icon Milton Friedman supported the idea as a "negative income tax," and libertarian-minded Friedrich Hayek advocated for and saw "guaranteed income" as an inevitability.

The finer points of Basic Income? There are various proposals. probably the most workable would be the elimination of most entitlement programs, save Social Security and Medicare/Medicaid. Each citizen is appropriated XX% above the poverty line as a basic income. Sure there are inflationary concerns, but Mr. Santens advocates for a UBI that is net neutral, which means the entire amount of money circulating is neither decreased or increased substantially. This, therefore, cannot create system-wide inflation. Also consider that all recipients of UBI won't spend it equally. Those in economically-challenged situations will use it for necessities, while those who don't "need" it will use it for added commerce or, hopefully, as investment capital. Eventually the investment capital will multiply and further spur innovation which in turn snowballs into economic development. And hopefully this economic development will drive economic improvement (which is NOT the same thing) for society. UBI isn't a free lunch, it's a fair system and a level playing field through which treasury revenue is distributed to ALL. And UBI appears to be the most feasible off-set to the wave of automation that is inevitable. With seismic disruption coming to the workforce, we need real disruption equally as significant - if not more so - in economics and commerce.

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Image Credit: Futurism full image click here.

3) ENERGY

Energy is one of the areas of impending disruption that is also related to economics - both in terms of spending required to acquire energy and income generated from producing it. It also happens to be the area in which I believe there may be the most cohesive public sentiment. The environment movement would like to think that disruption in energy disruption is being driven by the realization to cut green house gas emissions. Pragmatics would point to geopolitical forces driving the need for a new form of energy. The truth is, the impending disruption is more about meeting future needs than either of these two aspects.

Whether or not you believe global warming is man-made, we all generally agree that if there was a more economically efficient system that didn't involve putting gook in the air, it would be preferable. And I think we all generally agree that if there was a more economically efficient system that used a fuel source that was readily available and virtually sustainable, such would be preferable as well. The problem to date has been most of our "alternative" energy solutions (with the exception of nuclear somewhat) have been expensive and unable to be evenly geographically distributed.

Before delving into the specific types of new energy production that is the disruption, let's rightfully identify the drivers of the disruption. I stated earlier that the real driver was being able to meet anticipated future needs. There was a renewed movement about a decade or so ago - when oil prices had spiked - to "conserve energy." You may remember the three days during the 2008 presidential election when "under-inflated tires" dominated the news cycle. Energy conservation is a nice thought, but the fact is you don't conserve your way into growth. The other hard fact is that energy is the component that drives growth. Kinetic, potential, electric, chemical, nuclear whatever, you need energy to power anything.

So we've been prodding along still driven largely by fossil fuels. Environmentalists will applaud that fact that coal as a fuel source (and industry) is practically gone. New technology has also allowed for more efficient extraction techniques for oil and natural gas which has resulted in near unprecedented price stability. This fact, environmentalists bemoan. It doesn't bother me as much because I understand that it is impossible for fossil fuel to produce the kind of power that we'll need in the near future, so it is inevitable that a new energy production paradigm is created. Simply put, fossil just doesn't "pack the punch" that we'll need to power the future. Here's where the real disruption enters.

And I see three real contenders in this energy race. Things like hydroelectric, wind farms, liquified natural gas, etc., are nice ideas and may be some small piece of the puzzle, but the fact is they aren't reliable enough or efficient enough to be "the answer." The three energy production mechanisms that will disrupt our current system are solar, nuclear, and CO2.

Wait...CO2??? Isn't that what everyone is railing about having too much of??? Now you are suggesting that we build an energy economy based on it?!?  Burn him yet again, this time with what's left of coal stores!!!

Ok so I'll tackle the CO2 explanation first. I'll state upfront that this is probably the least plausible long-term solution (because it means utilizing CO2 admissions, which we will eventually drastically curtail), but it may be the most viable short-term. In a moment worthy of the discovery of penicillin, scientists at Oak Ridge National Laboratory accidentally discovered a way to convert CO2 into ethanol.  And, as the title of that article rightly points out, it is cheap, efficient, and scalable. This is certainly a GAMECHANGER for the time being. However, the process also requires that there be CO2 to work with. This means that we can capture the excess CO2 that we're emitting, but when those levels fall below a certain threshold (which I believe will happen more rapidly than anyone realizes) we're faced either manufacturing more CO2 to work with, or abandoning the method. Creating more CO2 specifically to convert to fuel... allow me to interject an allegory here.

I'm from the Southeastern United States. Several decades ago we were having an issue with soil erosion in certain areas. The solution was to bring in a vine-like plant called kudzu to help keep the soil in place. And it worked. The problem was that kudzu literally grows like a week. It is all over the place here now, and has caused a host of other problems. Cutting CO2 emissions to a level that we must emit more CO2 just to create fuel seems like a  kudzu solution, to me.

So even with this amazing and useful discovery, I don't see a way in which CO2 conversion solves the energy demands long term. Let's turn to nuclear. I've been an advocate of nuclear power for some time. It's not technically sustainable, but it is damn close. It also scares the hell out of some people. With the track record taken as a whole, nuclear is actually one of the safest, most regulated industries on the planet. That being said, disasters do happen and when they occur in nuclear, they can be of nuclear proportions.

But safety concerns aside (I believe nuclear is safe), nuclear is expensive. The construction, maintenance, and operation of a nuclear facility takes a tremendous amount of capital. "New nuclear," as newly constructed nuclear plants are known, also take quite a bit of time to build. To meet future energy demands, we would have to make a great deal of time and investment in "new nuclear." While this would likely pay off in the long run, I'm not sure corporations or society has the short-term stomach for the undertaking.

But nuclear proponents take heart! Here's where a disruption within a potential disruption comes into play. Wrapped up in the semi-mystical ethos of String Theory, quantum mechanics, wormholes and the like, is the notion that one day we can uncover a single unifying equation of the universe...a Theory of Everything. Within this theory, we will be able to understand - thus manipulate - now mysterious phenomenon like magnetic reconnection. I pick magnetic reconnection not because it's especially sexy (I mean, we're taking warping the space-time continuum here), but because it is a key factor in containing nuclear fusion. Yes, nuclear fusion, that ultimate goal of near perpetual energy that, were we actually able to accomplish on a decent scale, would likely evaporate a large portion of the planet. Highly efficient. Scalable? Not so much...

We have made some strides toward reproducing nuclear fusion in a usable capacity, at least theoretically. But the problem of containment persisted, perhaps until now. Researchers at the Princeton Plasma Physics Laboratory (say that five times fast) believe they have unlocked the mystery of magnetic reconnection, which if true would put us within realistic striking distance of earth-centered nuclear fusion energy production. GAMECHANGER.

The harnessing of nuclear fusion production would be one of, if not THE, most important technological development for mankind. Available energy on that kind of scale could power the world at little cost, and power spacecraft to destinations currently far from our reach. Fewer and fewer of the earth's resources would be monopolized for energy production, freeing these for potential advancements in other areas.

Of course even with exciting breakthroughs, fusion power generation is still very much theoretical. We can celebrate our moves closer to a fusion production disruption, but we really can't bank on a set timetable for breaking the code. I will happen, but will it be sooner, or later?

Which brings us to the third potential energy disruption trend that will and is happening - extraterrestrial fusion harvesting - more recognizable by it's pedestrian moniker: solar.

The sun is a giant energy production factory operating by means of fusion. We don't have to figure out to get the facility up and going, it's been operating at peak efficiency for a couple of billion years, and has a couple billion left before being decommissioned in a super nova. The problem is we face with solar isn't one of production, but rather of being able to efficiently harvest.

It is very easy to veer off into technically feasible but still unworkable science fiction here (e.g. Dyson Spheres, Starkiller Bases, etc.). For those types of engineering feats to take place, we would have to experience quite a number of other seismic disruptions from now until their realization. (I mean, we can't enough energy to build a Dyson Sphere right now without actually having a Dyson Sphere to generate it. #Paradox #InsertIndignantNerdScoffLaugh ) For the looming disruption, we will remain in the realm of Earth-based solar collection.

The problem with solar has always been two-fold: cost, and storage. Collection systems are expensive (and inefficient) to build relative to your energy return. There also hasn't been a viable solution for energy storage. As I write this, it has been cloudy here for three days. Even in the Sunbelt solar has been used more as a release valve to take some pressure off the legacy electrical grids, rather than an independent and steady source of power generation.

Regarding cost, it was only a matter of time before technology made the investment footprint of solar smaller and smaller. Solyndra was the poster child for jumping the gun on new tech. We've come a long way since then.

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See the charts above. Or better yet, just let me sum up. The cost of both utility-scale solar installations (top) and independent residential size installations (bottom) is falling at an accelerating pace. Remember the first mainframe computer was like a bazillion dollars and the size of a house? Seems Moore's Law applies to solar capacity, too. So if scientific evolution is taking care of things on the cost side of the equation, what about that storage side? That takes innovation.

Enter the real-life Tony Stark.

Elon Musk founded a solar company - SolarCity - and recently engineered the purchase of SolarCity by another of his co-founded ventures, Tesla. I have said for sometime that Tesla isn't a car company. Tesla is an energy company that sells a product line (which happens to be automobiles) that helps fund it's battery and energy storage developments. And I'm far from the only one to reach this conclusion.  Without getting into the strategy or the science, it is supposed that the ultimate goal of the Tesla/SolarCity merger is to unify collection and battery storage technologies in a way that can efficiently and reliably store collected solar power and subsequently transfer the power to a grid without significant loss. If this is successful - and we believe that by having actual facilities in production already we are closer to this solution vis a vis fusion production - we will have achieved true sustainable energy collection at a cost comparable to or less than existing production methodologies. It is going to happen. The implications of this are far reaching and difficult to foresee. It's likely that we continue to maintain some sort of expansive "grid" structure, but also much more energy collection and processing happens at a local level (i.e. homes and blocks rather than cities and regions).

The ultimate disruptive megatrend in energy (regardless of the form it takes) is that we are moving rapidly away from a fossil-based energy regime.

4) MEDICINE

I'll begin this section by noting I am specifically addressing "medicine" rather than "healthcare" in more global sense. I believe the most socially disruptive innovations within the healthcare world are going to come soonest from the design and administration of treatments. Specifically, I believe this disruption is going to be the implementation, in earnest, of personalized medicine.

"In the past we have somewhat personalized treatment based on a general set of criteria - age, weight, etc. We have now arrived at a time in which we can delve much deeper than a demographic level. Advancements in pharmacogenomics allow us to design one specific treatment for one specific person, which will prove imminently more effective for positive outcomes versus our traditional global approach." - Dr. Jamie Mask, CreativePharmacist

 The mapping of the human genome is an under-appreciated accomplishment outside of biotech circles. Unlocking the secret of what makes us, us, on the most elemental level was the tipping point in this wave of disruption of which we are already in the midst. DNA sequencing has rapidly progressed from something only affordable by the 1%, to retail ancestry companies offering mail-order DNA analysis. The societal benefits don't stop at shockingly discovering that you're one-quarter Scotch-Irish rather than the Irish-Scotch that you thought you were all along. The real benefit, as underscored by Dr. Jamie Mask, Clinical Pharmacist with Creative Pharmacist (yes, and my wife), is that treatments can now be optimized to work specifically for you, rather than mass produced to work "as best they can for most." A small but growing number of businesses are aggressively occupying the space to partner with pharma companies to create these personalized medicines.

Another related innovation in this area is more effective, organic, and less invasive ways to deliver treatments. Biological medicinal delivery is now a reality. This will ultimately meant that we can use biological agents to precisely target and deliver treatment without major risk of reaction. Chemotherapy for cancer patients will soon seem barbaric and highly inefficient.

Biological-based 3-D printing is also makes waiting on donor lists a thing of the past. We can print a new pancreas specifically designed for a patient based on their own genomics. We can 3-D print an organic mesh that can more effectively heal broken bones. The revolution in biological 3-D printing will likely make many of the situations we now consider DEFCON 5 on the health scale much more akin to strapping on a bandage.

And it's not just about personalizing what you put in your bodies. It's about what we are able to put on, and around us. Wearables may now just track how many steps we take, but technology is already allowing them to read genomics and process other important signals at the local level. Why is this important? At a cellular level, the body can give otherwise undetectable signals that a certain health event is likely or imminent. Imagine knowing a few hours in advance that you are about to have a heart attack or a stroke. This can and will save countless lives.

The disruption in medicine will meant that we are actually making good on a promise that all healthcare providers want to fulfill - actually treating the specific person, based on that specific person.

You mentioned some surprising effects of these disruptions?

So if these are the four megatrends of fundamental disruption that are upon us, what are some of the effects and consequences? Some might predict that with medical advancements we will experience major population growth. I don't see this. Living better, longer doesn't mean that there will be more people. In fact, it just might mean the opposite. Population growth has been tied to labor expansion. People had kids to help on the farm. We needed "manpower" to operate factories and machinery. The automation megatrend throws a wrench into this equation. We will not need as much manpower, and therefore not as much "man." We are already seeing decisions by families to put off having children until later. Most of the world's developed economies are also right at or below the population maintenance rate. These kinds of things are always a bit cyclic, but I think given the other megatrends we're experiencing, the growth rate of human population will continue to slow.

The one surprising conclusion that I keep reaching is that all of these megatrends will push back into an age when populations are clustered around villages rather than densely populated urban areas. Yes, I understand that urban renewal and downtown developments are all the rage right now, but aren't these pockets within metropolitan areas really just good-sized villages within the confines of an incorporated city boundary.

Basic Income, access to rapid communications, and "off grid" or "mini-grid" energy solutions will enable more decentralized lifestyle communities to develop. Rather than the traditional drivers of urban civilization development - access to resources for the whoe and proximately to work for individuals - I believe that more social aspects will drive population shifts. We're already seeing this to some degree with population growth in Colorado and the US Pacific Northwest.

Funny to think that all this "disruptive development" might push back into "village life." They'll be really, really nice villages, though. (And hopefully have flying cars.)

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