Monday, June 24, 2013

The future is exciting and scary

"I have seen the future, and it's a place about 70 miles east of here, where it's lighter."

McKinsey and Company, the renowned business consultants, have just published a fascinating, comprehensive look at the likely impact of technology on society between now and 2025. Disruptive Technologies: Advances that will Transform Life, Business and the Global Economy is available as a free .pdf, or you can download it for e-reader.

The report's tone is somewhere between positive and giddy, and well it might be. When you think about all the cool stuff that's been brought to our doorsteps in the last, say, 20 years, it's exciting to think about what the next big thing might be. Some of these, like mobile Internet, are already pretty widespread, but will become even moreso; others, like driverless cars, are now largely in the prototype stage. Given the likelihood of interaction effects between the burgeoning technologies, it just gets cooler.

Without further ado, their list of the 12 emerging technologies that are likely to have the biggest impact in the next 12 years. Each gets its own chapter, which discusses opportunities for its use as well as barriers and risks:
  1. mobile Internet ($3.7-10 trillion impact): there will be more ways to be wired on-the-go, and these devices will be cheaper, with users increasing from 1.1 billion to 3-4 billion
  2. automation of knowledge work ($5.2-6.7T): tasks that currently require college-educated humans could be programmed, such as research or institutional technology support (Box 6, p. 41)
  3. the Internet of Things ($2.7-6.2T): more ordinary objects, like shipping containers or hospital beds (p. 51) will have sensors that are connected to the Internet, and could even have actuators that take certain actions when indicated
  4. Cloud technology ($1.7-6.2T): delivery of computer services over a network or the Internet through a shared pool of resources (p. 62), increasing convenience for users and accessibility for small businesses
  5. advanced robotics ($1.7-4.5T): not just for assembly lines anymore, robots could take on tasks currently done by college-educated humans, such as assisting with surgery (Box 7, p. 69)
  6. autonomous and near-autonomous vehicles ($200B-1.9T): cars that run on their own... discussed in "Freakonomics" podcast #128
  7. next-generation genomics ($700B-1.6T): genetic analysis becomes easier and cheaper, and design becomes possible and maybe even mainstream
  8. energy storage ($100-600B) for future use, like super-batteries
  9. 3D printing ($200-600B): not just for gun-making anymore, printers will be able to do a lot of low-cost manufacturing
  10. advanced materials ($200-500B) with special functions or unusual strength
  11. advanced oil and gas exploration and recovery ($100-500B): economical ways of finding and getting at fossil fuel supplies that are currently too expensive to extract [n.b. opinions vary as to how affordable this is going to get, in terms of both direct costs and pollution externalities]
  12. renewable energy ($200-300B) like wind and solar become more widespread as they become more viable
As business consultants, their first concern is with the commercial impacts. Firms that are well-placed to take advantage of these waves stand to benefit big-time. And, for that matter, who needs a firm? Quoth McKinsey: "A new wave of unprecedented innovation and entrepreneurship could be in the offing as a result of falling costs and rapid dissemination of technologies" (p. 16). They elaborate with a combination of encouragement and warning (p. 21):

Business leaders need to be on the winning side of these changes. They can do that by being the early adopters or innovators or by turning a disruptive threat into an opportunity.... Top leaders need to know what technologies can do and how to bend it to their strategic goals. Leaders cannot wait until technologies are fully baked to think about how they will work for—or against—them. And sometimes companies will need to disrupt their own business models before a rival or a new competitor does it for them.

While entrepreneurs and business owners (leaders?) face the choice of whether to be on this train or underneath it, and consumers revel in piles of ever-newer, ever-cooler stuff accumulated throughout ever-longer lives (p. 15), there remain some rather sticky social questions. The report does not overlook these, though the prospective costs don't nearly get the attention that the benefits do. The rest of this post consists of my observations, concocted from selective reading of Disruptive Technologies.

(1) There will be a significant role for government in managing the impact of the "disruptive technologies." To hear some tell it, America already suffers from too much government. Perhaps it would be more accurate to say there's too much in some areas and not enough in others? In any case, McKinsey's report does not neglect to mention that the brighter day of 2025 will not arrive unless government effectively manages some aspects of the evolution:
  • providing new, high-level technical skills to the workforce, as existing jobs become obsolete at a faster pace than ever (p. 15)
  • addressing how to deal with increasing inequality between individuals and nation-states (p. 16)
  • balancing the benefits of new technologies and the necessary freedom to innovate with risks to individual and national security from hacking, leaks &c. (p. 19 and #2 below)
  • providing the regulatory framework, for example, for driverless cars
  • funding research 
  • developing better ways of measuring the value of technological innovation that go beyond GDP and employment/unemployment (p. 22)

(2) The more wired we are, and the more connected we are, the more our security is at risk in ways it is difficult for the individual to comprehend. In 2006, when I attended a conference on Internet security at Principia College, the main concern was individual hackers. They're still a concern, as companies like (lately) Facebook deal with security breaches, and Internet commerce remains vulnerable to the capture of encrypted personal data. To which add violent criminals: this weekend I heard a radio report about child molesters using location data on Facebook pictures to target their victims. (Did I know that the pictures I upload have their location tagged?)

Beyond rogue individuals, as we've seen recently with reports of leaks of national security information by contractor Edward Snowdon (on the lam, reportedly in Russia, as of today), both governments and businesses have mounds of our personal data at their fingertips. They promise not to misuse it, but, shoot, if the government can't keep their own secrets out of the Washington Post, why should we trust them with ours? Given the leaps forward coming in electronic connectivity, chances are we ain't seen nothin' yet. And Snowdon may be a hero to some (not me, by the way), but surely we should be given pause that an uncontrolled individual had the opportunity to do even greater damage with the data to which he had access.

Most people seem to me rather sanguine about all the piles of their data in various places, because, I think, they perceive that the costs of opting out of the digital world are greater than the present danger to themselves from others having access to their personal data. Will that continue to be the case?

(3) Most importantly for this blog's concern with 'how we are going to live together,' economic opportunity for many--most?--people is going to be even more up in the air than it is now. The global economy is ever more competitive and productive, at least from a labor perspective. (By 'productive' is meant that more stuff can be produced by fewer workers, thanks to improvements in technology.) In a winner-take-all world, a few successful firms can drive the rest out of business, as we've seen with, for instance, airlines, book and record stores, credit cards and discount stores. That means fewer places for people to work, and, thanks to those improvements in technology, less need for even successful firms to hire. Note that, not only has the unemployment rate been persistently high since the worst of the last recession, which has a depressive effect on most people's incomes, but wages were slipping even during extended economic growth between 2001 and 2007.

These are the people who are going to be most disrupted by Disrupting Technologies. That "millions of people will require new skills" (p. 15) is a refrain we've been hearing for decades. The industrial policy advocates of the early 1990s, like Robert Reich, saw retraining and education as the solutions to displaced blue collar workers. We continue to hear this in President Obama's call to make post-secondary education available to everyone. The assumption is there's a place for everyone in the new economy if only they have the right skills. I don't buy it. I certainly don't sense in the poorer areas of my town that people feel any sense of economic opportunity at all. And even if there were, not everyone is able to take advantage of post-secondary education to become a well-compensated knowledge worker.

But now, McKinsey predicts, software and robotics are going to be taking the jobs even of knowledge workers. Now we're not talking about people who couldn't or didn't get college degrees, we're talking about people who did. Of course, the premise of liberal arts colleges like the one where I teach is that college is not vocational education, that you learn and develop skills that you can take to a succession of careers. But, along the way, how much retooling is it reasonable to expect? As Paul Krugman writes in The New York Times:

The woolworkers of 18th-century Leeds addressed this issue back in 1786: “Who will maintain our families, whilst we undertake the arduous task” of learning a new trade? Also, they asked, what will happen if the new trade, in turn, gets devalued by further technological advance? And the modern counterparts of those woolworkers might well ask further, what will happen to us if, like so many students, we go deep into debt to acquire the skills we’re told we need, only to learn that the economy no longer wants those skills? Education, then, is no longer the answer to rising inequality, if it ever was (which I doubt).

Krugman's answer is to cushion the periods of retraining between jobs with a substantial safety net, including a minimum income and health care. I doubt that a health care system based on employer-provided insurance can be viable in an era when employment is uncertain. I doubt that a retirement system based on employee contributions can be viable when people are going to be tapping those savings to get through periods of unemployment. Will unemployed 60-year-old knowledge workers stand any chance of getting rehired? And how much inequality can society tolerate?

My earlier posts envisioning a reconnected Cedar Rapids with a core stretching from Mound View and Wellington Heights through to the Taylor Area Neighborhood are questionable if the residents of Mound View, &c. are going to be marginalized. In a global economy with accelerating technological change, neither ordinary individuals (atomized, insecure, replaceable, lacking political or economic power, with varying skill levels) nor governments (starved for resources, publicly mistrusted, vulnerable to business decisions, paralyzed by partisan deadlock) are well-positioned to effect the changes necessary for Americans to live well together. I'm not as pessimistic as James Howard Kunstler:

Young people, harken: prepare for careers in agriculture and activities that support it. Consider moving to small towns in parts of the country where farming is possible and get ready to rebuild a very different economy.  Also, consider repudiating your college debt en masse, since the fantasy of repayment is but another mental shackle holding you back from your future.

But I am anything but sanguine about living well together in the future.

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