Starting with our earliest ancestors, Mankind has been moving forward. Learning to stand, then walk and finally to run. Crafting primitive tools, and transforming from hunter-gathers to farmers in permanent sites, raising livestock. Except for discovering fire, which was probably caused by a lightning strike, all of our advances came from within our own development. And then, we learned from observing nature and the laws of science. Our early progress, slowly but surely changed, however, in the mid-1700s.
The Industrial Revolution occurred in the second half of the Eighteenth Century, first with the development of the commercially useful steam engine around 1770, followed several decades later by the electric engine. And these were followed by electric lighting just prior to the turn of the century. I would like to thank “Cre8tive Clyde”, who drew my attention to “The Second Machine Age: Work, Progress and Prosperity in a Time of Brilliant Machines”, by Erik Brynjolfsson and Andrew McAfee, in a blog comment about the minimum wage, of all things.
The authors of this book, two scientists at the MIT Center for Digital Business, refer to today’s ever-advancing technology as the Second Machine Age, following the Industrial Revolution, which was the first. The book deals with a lot more than just technology, as it also addresses the economic and societal implications of our evolving world.
To provide a little context, when I first entered college in September of 1963, you could always spot the science and engineering majors, since they were the ones carrying slide rules. In those days, there were no PCs or smart phones, not even ordinary (“dumb”) cell phones. In fact, the first electronic general-purpose computer, ENIAC, which was developed in 1946, took up an entire room at the University of Pennsylvania, in Philadelphia. It was slower and had less capacity than today’s smart phones, and it couldn’t play music or games, call home, or even talk to you.
Unlike the First Machine Age, today’s machines are exponential, digital and combinatorial. Their speed, and capacity have been doubling–compounding actually–each year. Digital means that data can be transmitted anywhere, even into space, and all copies are exactly the same as the original. Also, they are combinatorial in that one application can build on another. At the same time, the costs have declined significantly.
“Moore’s Law”–having to do with the speed and capacity doubling annually–was suggested in an article that Gordon Moore, later a co-founder of Intel, wrote in Electronics magazine in 1965. He estimated that that progression might continue for, perhaps, a decade. But here we are, fifty years later, and that “law” is still relevant.
To grasp the exponential compounding of speed and capacity over time, assume that you place a grain of rice on the first square of a chessboard, and each day you double the amount consequentially of the number of grains you place in each successive square. At the end of the first row, there would be 128 grains in that eighth square.
By the time you complete just half of the board, you would need four billion grains of rice for the 32nd square. Now, remember that, due to the exponential compounding, the growth is increasingly much greater over time. You would undoubtedly need a considerably larger square when you come to the final 64th square, and need 18 quintillion (that’s 18 zeros) grains of rice.
There is virtually no field of endeavor or walk of life that is not impacted by the on-going advances in digital technology. In the early stages, government needs to take the lead in committing the financial resources and manpower, which is often too vast for any one corporation. Also, the benefits are not always apparent in the early stages of development.
ENIAC, by the way, was commissioned by the US Army to calculate artillery firing tables and, later on, it contributed to feasibility studies regarding the hydrogen bomb. The Army also financed MIT’s development of the Internet. The government has also been funding NASA’s space program, the Federal Highway System, a considerable amount of pure scientific research, and various infrastructure programs.
Educators need to be preparing students for jobs in tomorrow’s world, not just those of today. In a recent interview, Ellen Stofan, NASA’s Chief Scientist, stated that a manned Mission to Mars would not be feasible until around 2035. That means that much of the crew for the trip are probably in elementary or middle school today. What kind of technology will ours techno0logy look like then? We have already fallen behind half of the industrialized nations in terms of the scores on standardized math and science tests among tenth graders. In this case, advances in education are needed to maintain some sort of relevance in the ever-changing modern world.
Business and labor groups also need to join together to identify what the workplace of tomorrow will look like, and what types of training employees will need to function in that future world. They need to recognize their mutual dependence on each other in meeting the needs of their respective constituencies–the shareholders and union membership.
Investors would also benefit by being forward-looking in trying to determine what the investment landscape of the future will be. Securities firms find it easiest to merely focus the advice they give clients on what are today’s top companies, since its difficult to question such recommendation. But, there is also an investment graveyard out there of once successful companies, like Blackberry, Eastman Kodak and Xerox, that failed to keep pace in an ever-changing world. When investing, it’s better to latch onto companies, at least with a portion of your portfolio, which might be on their way up, rather than those that are on their way down.