The Futurist

The Age of Democracy

We often hear about how the US has no business spreading democracy to other nations by force, or how Islamic societies are not capable of functioning as liberal democracies.  But how well do these conclusions stand up to the historical trends in the evolution of democracy? 

First, consider that economic growth is exponential and accelerating, and the trendline of world economic growth is now close to 5% a year at Purchasing Power Parity. 

Next, consider that conflict between nations drops as freedom and economic growth increases.  No two nations that are both democracies and have per capita incomes greater than $10,000 a year have ever gone to war with each other, and the number of countries meeting these two criteria continues to rise. 

Lastly, let us measure the spread of democracy across the world in recent times.  The map below is the result of research conducted by Freedom House (source : Wikipedia).  Countries in green are free, yellow are partially free, and red are unfree.

From this, a few observations can be made :

1) The Western Hemisphere has done a much better job of establishing democracy than the Eastern Hemisphere, with 90% of Western Hemisphere residents living in green counties. 

2) India is hugely important to any discussion of increasing democracy in the world, given its size and what it is surrounded by.  The US would do well to cultivate broader ties with India as quickly as possible, and India would do well to cooperate rather than revert back to 'non-aligned' nonsense. 

The next question is, is there a rate at which the nations of the world have evolved towards democracy?  The same research from freedom house shows the growth in green countries at the expense of red countries from 1972 to today. 

 

The march towards democracy appears to be quite solid, and includes such events as the collapse of the USSR and liberation of Eastern Europe.  This chart unfortunately treats all countries equally, regardless of size, and thus does not take into account that Democracy in India is more valuable to the world than democracy in Estonia.  Nonetheless, a population-weighted chart would still show a similarly rapid migration from red to yellow to green - 1 billion people have upgraded at least one level since 1972 alone. 

The question now becomes, have the prospects for democracy saturated, where any nation that had the basic cultural foundations of democracy has already become one, and those without this foundation will take a very long time to adapt?  Or is the trend we see in the chart still alive?  To believe that the evolution of nations towards democracy will continue unabated, two things have to occur : 

1) China will have to move from the red column to the yellow column.  China is rapidly closing in on a GDP per capita greater than $10,000 per year, and this has usually corelated to greater political freedom in most nations.  I believe China will make such reforms by 2015, when they see that their robust economic growth has trouble advancing further without such freedoms.  Such a change in China would move the entire center of gravity of the world's governments significantly towards freedom. 

2) Afghanistan and Iraq will have to become genuine green countries.  There are many reasons to believe that this will be achieved in Iraq by 2008.  Anti-Americans, who are generally opposed to democracy, have attempted to sabotage these efforts, but have exhausted most of the tricks available to them.  Once these two beacons of democracy are established, the rest of the region will have an open flank exposed to the winds of freedom. 

These two events will trigger another wave of the democratic domino effect in countries throughout the continent of Asia.  Many countries like Vietnam, Thailand, Pakistan, Malaysia, and Iran all have GDP growth rates greater than 6%, and in order to continue this growth, political freedom is a necessity that they will have eventually evolve towards.  Catalysts like the two events above could be just the thing to move more reds to yellows and yellows to greens. 

Related :

The Winds of War, the Sands of Time

Economic Growth is Exponential and Accelerating

We Will Decisively Win in Iraq...in 2008

Telescope Power - Yet Another Accelerating Technology

Earlier, we had an article about how our advancing capability to observe the universe would soon enable the detection of Earth-like planets in distant star systems.  Today, I present a complementary article, in which we will examine the progression in telescopic power, why the rate of improvement is so much faster than it was just a few decades ago, and why amazing astronomical discoveries will be made much sooner than the public is prepared for. 

The first telescope used for astronomical purposes was built by Galileo Galilei in 1609, after which he discovered the 4 large moons of Jupiter.  The rings of Saturn were discovered by Christaan Huygens in 1655, with a telescope more powerful than Galileo's.  Consider that the planet Uranus was not detected until 1781, and similar-sized Neptune was not until 1846.  Pluto was not observed until 1930.  That these discoveries were decades apart indicates what the rate of progress was in the 17th, 18th, 19th, and early 20th centuries. 

The first extrasolar planet was not detected until 1995, but since then, hundreds more with varying characteristics have been found.  In fact, some of the extrasolar planets detected are even the same size as Neptune.  So while an object of Neptune's size in our own solar system (4 light-hours away) could remain undetected from Earth until 1846, we are now finding comparable bodies in star systems 100 light years away.  This wonderful, if slightly outdated chart provides details of extrasolar planet discoveries. 

The same goes for observing stars themselves.  Many would be surprised to know that humanity had never observed a star (other than the sun) as a disc rather than a mere point of light, until the Hubble Space Telescope imaged Betelgeuse in the mid 1990s.  Since then, several other stars have been resolved into discs, with details of their surfaces now apparent.

So is there a way to string these historical examples into a trend that projects the future of what telescopes will be able to observe?  The extrasolar planet chart above seems to suggest that in some cases, the next 5 years will have a 10x improvement in this particular capacity - a rate comparable to Moore's Law.  But is this just a coincidence or is there some genuine influence exerted on modern telescopes by the Impact of Computing? 

Many advanced telescopes, both orbital and ground-based, are in the works as we speak.  Among them are the Kepler Space Observatory, the James Webb Space Telescope, and the Giant Magellan Telescope, which all will greatly exceed the power of current instruments.  Slightly further in the future is the Overwhelmingly Large Telescope (OWL).  The OWL will have the ability to see celestial objects that are 1000 times as dim as what the Hubble Space Telescope (HST) can observe, and 5 trillion times as faint as what the naked eye can see.  The HST launched in 1990, and the OWL is destined for completion around 2020 (for the moment, we shall ignore the fact that the OWL actually costs less than the HST).  This improvement factor of 1000 over 30 years can be crudely annualized into a 26% compound growth rate.  This is much slower than the rate suggested in the extrasolar planet chart, however, indicating that the rate of improvement in one aspect of astronomical observation does not automatically scale to others.  Still, approximately 26% a year is hugely faster than progress was when it took 65 years after the discovery of Uranus to find Neptune, a body with half the brightness.  65 years for a doubling is a little over 1% a year improvement between 1781 and 1846.  We have gone from having one major discovery per century to having multiple new discoveries per decade - that is quite an accelerating curve. 

We can thus predict with considerable confidence that the first Earth-like planet will make headlines in 2010 or 2011, and by 2023, we will have discovered thousands of such planets.  This means that by 2025, a very important question will receive considerable fuel on at least one side of the debate...

Google Earth Adding Immersive Travel Content

On August 22, 2006, I wrote an article titled 'Terrorism, Oil, Globalization, and the Impact of Computing', in which I illustrate how four factors are converging to cause radical change in the nature of business travel and tourism.  One paragraph in particular was :

Google Earth and WikiMapia are very limited substitutes for traveling in person to a vacation locale.  However, as these technologies continue to layer more detail onto the simulated Earth, combined with millions of attached photos, movies, and blogs inserted by readers into associated locations, a whole new dimension of tourism emerges. 

Sure enough, today we learn that Google Earth is adding significantly more travelogue content into its application, which can even include individual blogs and video clips.  Users will continuously be contributing new content in a Wikipedia-like manner, as Google Earth and WikiMapia continually force mutual enhancement.  Suddenly, the extent that you can experience a remote, exotic, or dangerous location has just increased substantially.  It still does not replace being there, of course, but this is free of cost and of the hassles of going to an airport, flying, taking taxis, worrying about political correctness compromising airport security, etc.

Go on, and check out a place you are never likely to visit in person.  Then tell us how it felt and if it was more fun than you initially expected.

The Blogosphere Will Now Save Billions in Taxpayer Money

Porkbusters, a blog founded by Glenn Reynolds and N.Z. Bear to expose wasteful government spending and organize opposition against it, has scored a major victory.  The Senate has unanimously (no Senator would dare oppose this) passed the Federal Funding Accountability and Transparancy Act, allowing itemized information on all federal spending to be publicly available. 

Read the links for full details, but this is nothing short of a great coup for the American people, and for the blogosphere that empowered them.  Many egregiously wasteful projects will be quickly detected, publicized, and effectively thwarted by bloggers from here on. 

How much semi-corrupt wastage of taxpayer money is there?  From here, we can see annual estimates of :

2004 : $22.9 Billion

2005 : $27.3 Billion

2006 : $29 Billion

While all pork will not be eliminated, we can assume that for 2006, the $29 Billion could have been trimmed down to $9 Billion, with $20 Billion in savings. 

Just for fun, let's get carried away for a bit.  I have some crazy ideas on what the federal government could be doing with $20 Billion in taxpayer money per year.

1) Reduce the federal budget deficit.  While I don't think the deficit is a ruinous problem due to it being no greater a percentage of GDP than it has been for most of the last 25 years, it would still be nice to reduce it from $300 billion to $280 billion with this spending reduction, and move closer towards future tax cuts. 

2) An elite, specialized counterterror organization that effectively acts as a 'bodyguard force' for the public at potential terrorist targets.  Rather than mere security guards or police officers, each of these agents would have the combined skills of intelligence officers, investigative agents, interrogation experts, and elite fighters.  They would be trained to watch for suspicious behavior or body language to a greater degree than generic security guards, and be capable of conducting a rapid, penetrative interrogation on the spot. 

To attract the best candidates, we would have to offer attractive compensation.  If the salary, benefits, equipment, transportation, and administrative support of each agent amounted to a total of $250,000 a year, we could use $2 Billion a year to create a force of 8,000 of them.  That would be enough to monitor every airline gate at the time of boarding, every entrance to every stadium during major sporting events, every convention center, every subway station, every skyscraper, every water supply, every nuclear plant, etc. 

Critics would call this a dangerous step towards a police state, while others lament that this is what they had hoped the Department of Homeland Security would become.  I'm sure that if this proposition were put on the ballot for a vote, it would get much more than 50% support.  On a sheer financial basis, the 9/11/01 attacks cost the US economy anywhere from $200 Billion to $1 Trillion.  This counterterror force would be effectively free, funded purely by a fraction of the money saved from pork elimination.

3) We could create a national scholarship program, or enhance existing ones, that create massive incentives for children to pursue study in science, engineering, and business.  The simple approach would be the creation of a new program of $100,000 scholarships awarded to promising high school seniors, to be applied towards four years of tuition, room, and board, for all science, engineering, and business students maintaining a 3.0 GPA at accredited undergraduate degree programs.  Refining the selection critera and process is the easy part.  If 50,000 new students got this annually, it would still cost only $5 Billion.  But we can be far more creative than that. 

One of the reasons that the proportion of high-school students indicating an interest in quantitative fields has declined is the 'nerdy' stigma associated with studying these subjects.  Thus, the best return on investment would be a scholarship that induced cultural change in American teens, in addition to merely alleviating financial burdens.  Hence, the scholarship could be buttressed with a carefully constructed marketing and media campaign to create social prestige associated with the scholarship. 

The day on which scholarship awardees are revealed and notified by mail should be nationally announced to build suspense and chatter.  Television commercials during programs with large teenage audiences indicating 'who will be next leaders of American ingenuity and industry?' would be run.  The commercials would be designed to capture the imagination, such as depicting three high school friends who are awardees, and then jumping ahead to a reunion 30 years later, where one is a top executive, another is a Nobel Laureate scientist, and a third is an astronaut.  Other commercials could show an unnoticed, studious boy suddenly becoming popular upon receiving such a prestigious scholarship.  Such a marketing campaign could easily be run for under $100 million a year. 

If we assume another $100 Million in administrative overhead, this whole program would cost just $5.2 Billion a year. 

4) Federal funding for basic and applied scientific research is where the next generation of technology and industry begins.  However, it has a very uncertain return in terms of both timing and magnitude, and since it has few powerful lobbies advocating it, is often the first thing to be trimmed when belt-tightening ensues in Washington. 

Total NSF funding appears to have increased from $4.9 Billion in 1970 to $60 Billion today, but it is actually constant at about 0.5% of GDP throughout this period.   In an increasingly knowledge-based and technology driven world, keeping government research constant as a percentage of GDP is to let other nations close the scientific gap with the US.  Adding $20 Billion to NSF expenditures would increase the total budget by a third, and attract several thousand more students from abroad to pursue PhDs in the US, and stay here upon graduation.  At worst, the additional research will merely not yield large benefits. 

___________________________________________________________

Anyway, dreaming of things that can improve our society is fun, even if they won't happen.  Out of a $2.8 Trillion federal budget in 2006, each of these programs is a pittance, and certainly not contingent on pork removal for financing.  The total price of doing 2), 3), and 4) combined is just $27.2 Billion.  But they haven't happened, or at best, exist in only partial or diluted versions of what they could have been.  Even the most creative country in the world is often not creative enough. 

But it just shows how much can be done with the removal of some of the wasteful spending that was been occurring for so long.  If only....

The Imminent Revolution in Lighting, and Why it is More Important Than You Think

There are many technological revolutions of varying impact that we will see in the next decade, in fields ranging from entertainment to automobiles to longevity to nanotech to telebusiness.  One of the largest revolutions, however, with the potential to improve fuel costs, electricity bills, greenhouse gas emissions, dependence on foreign oil, workplace productivity, and consumer confidence will happen where you least expect it - in the humble light fixtures of your home and workplace. 

There are two technologies that have existed for decades, but are reaching cost and quality levels that can displace traditional incandescent lightbulbs.  Compact Fluorescent Lightbulbs (CFLs) and Light-Emitting Diodes (LEDs) are both reaching prices of under $2.50 each per unit. CFLs and LEDs not only consume only about 20% of the electricity of a traditional bulb, but can last up to 8 times as long, saving the time and hastle of 8 bulb purchases and replacements. 

Of the 2 billion bulbs sold in the US each year, CFLs have jumped from just 1% of the total in 2000 to about 5% in 2005, or 100 million units.  To accelerate adoption, Wal-Mart, often a critical catalyst for technology adoption, will start a major education and marketing campaign to sell another 100 million CFLs in the next 12 months. 

Let's run some numbers to illuminate the magnitude of this.

The 110 million US households have an average of 20 incandescent bulbs in operation, each lasting a year on average (hence the 2 billion bulbs sold a year).  If all 2.2 billion household bulbs are replaced with CFLs, the estimated 8-year average life of a CFL will ensure that replacement sales are only one-eighth of incandescent bulbs, or 250 million CFLs a year.  Since a 60 Watt/hour incandescent can be replaced with a CFL that consumes only 15 Watt/hours of electricity, we can calculate :

If the typical household's 20 bulbs average 60 watts (.06 kWh) each and are used for an average of 4 hours a day each, and electricity costs 10 cents per kilowatt/hour, the household spends (20 x .06 x 4 x 365 x $.1) = $175.2 a year.  CFLs would save 75%, or $131.4 in electricity costs for such a household each year.  Since the electricity consumption curve is not linear and demand is somewhat inelastic, this benefits lower-income households greatly. 

At the macro scale, if each of the 2.2 billion bulbs in operation in 110 million households is aggregated, they consume (110m x $175.2) = $19.3 billion in electricity a year.  CFLs would save 75% or $14.5 billion for consumers per year. 

But wait, it gets better.

In an age of fears about oil imports and atmospheric pollution, people are very wary of the amount of gasoline they consume, but usually have no idea how much oil and coal go into producing the electricity they use.  A single 60 Watt bulb used 4 hours a day for a year requires the burning of about 70 pounds of coal.  2.2 billion incandescent bulbs would require 77 million tons of coal per year, and CFLs could reduce 58 million tons out of that, or 6% of total US coal consumption.  The emissions savings alone would be the equivalent of reducing US automobile driving by 15%, or about 25 million cars. 

LEDs offer similar benefits in energy savings, and while they are not going to benefit from a push by Wal-Mart, are still a neccesary presence as a rival technology to CFLs, each mutually forcing the other to keep up the rate of innovation.  One of these two, if not both, will sweep across the world in the next 24 months. 

Beyond the lighting revolution in the home, there is also one in the offering for the office, where tubelights, rather than bulbs, are currently used.  This brings us to the third technology of this discussion.

A company called Sunlight Direct has a brilliant product that distributes sunlight indoors, no matter how far from a location is from a window.  The solar lighting system consists of a roof-mounted 40-inch light-collecting disc that moves to follow the sun during the course of a day, and plastic fiber-optic cables that distribute the light throughout the interior of the building.  After the costs of the initial installation, this will not only save businesses the cost of artificial lighting during the day, but will greatly increase the quality of life of employees who can be freed from their tubelit torture.  Large retailers stand to save over 20 cents per square foot per year in electricity through the use of this system.  Wal-Mart, for example, has about 3000 stores averaging 150,000 square feet each.  This amounts to (3000 x 150,000 x $.2) = $90 million in electricity potentially saved per year. 

The product will be commercially available by 2007, with the possibility of a residential version by 2009.  Of course, some geographies stand to benefit more than others, as we can see from this handy map of US solar energy intensity (from Wikipedia).  But taking the marketing even further, we can note that some fast-emerging economies with acute energy shortages also have abundant sunlight, much greater than even in the Southwestern US.  A product like Sunlight Direct's is very compelling in India, VietNam, Thailand, and Taiwan, where electricity costs are often much higher than in the US, but near-continuous tropical sunlight is the norm. 

All three of these new technologies, and their descendants, will combine into a gale of creative destruction that will shake up a part of daily life that has been essentially unchanged for several decades.  Unlike many other such disruptive technologies, the displacement and digestion process will be almost painless and nearly seamless.  We all will be the richer for it. 

Update (5/29/07) : A CNet article has more details on various lighting technologies.

Virtual Touch Brings VR Closer

Scientists have created a touch interface that, while smooth, can provide the user with a simulated sensation of a variety of surfaces, including that of a sharp blade or needle (from MIT Technology Review).

By controlling the direction in which pressure is applied to the skin when a user's finger is run across the smooth surface, the brain can be tricked into feeling a variety of pointed or textured objects where there are none.  Essentially, this is the touch equivalent of an optical illusion. 

While this technology is still in the earliest stages of laboratory testing, within 15 years, it will be commercially viable.  By then, it will find many uses in medicine, defense, education, entertainment, and the arts.  Examples of practical applications include training medical students in surgical techniques, or creating robots with hands that can perfectly duplicate human characteristics. 

This will be one of the critical components of creating compelling and immersive virtual reality environments, and the progress of this technology between now and 2020 will enable prediction of the specific details and capabilities of virtual reality systems for consumers.  A fully immersive VR environment available to the average household has already been predicted here, and now one more key component appears to be well on track. 

Update : More from Businessweek

Terrorism, Oil, Globalization, and the Impact of Computing

Three things have happened in the last few years, which are now converging with a fourth inexorable trend to make major changes in consumer behaviour, mostly for the better. 

1) September 11, 2001 showed the world the destruction that a small number of terrorists could cause by hijacking unsuspecting passenger planes.  The subsequent increase in security almost did not stop 10 other UK to US flights from being exploded above the Atlantic by British-born terrorists disguising liquid bomb ingredients in soft-drink containers.  The terrorists will continue to get more and more creative, and will eventually destroy an airliner in an act of terror.  This fear now hangs over all passengers.  At the same time, security at airports is increasing pre-flight periods to up to 3 hours in duration.  Multiply this by the millions of business passengers per year, and the loss of billions of dollars of productivity is apparent. 

2) Oil at $70/barrel is making air travel more expensive for cost-conscious businesses.  I happen to believe that $70/barrel is the optimal price for oil for the US, where the economic drag is not enough to cause a recession, but the price is high enough for innovation in alternative energy technologies to accelerate.  Nonetheless, economic creative destruction always has casualties that have to make way for new businesses, and airlines might bear a large share of that burden. 

3) At the same time, globalization has increased the volume and variety of business conducted between the US and Asia, as well as between other nations.  More jobs involve international interaction, and frequent overseas travel.  This demand directly clashes with the forced realities of items 1) and 2), creating a market demand for something to ease this conflicting pressure, which leads us to...

4) The Impact of Computing, which estimates that the increasing power and number of computing devices effectively leads to a combined gross impact that increases by approximately 78% a year.  One manifestation of the Impact is the development of technologies like Webex, high-definition video conferencing over flat-panel displays, Skype, Google Earth, Wikimapia, etc.  These are not only tools to empower individuals with capabilities that did not even exist a few years ago, but these capabilities are almost free.  Furthermore, they exhibit noticeable improvements every year, rapidly increasing their popularity.

While the life blood of business is the firm handshake, face-to-face meeting, and slick presentation, the quadruple inflection point above might just permanently elevate the bar that determines which meetings warrant the risks, costs, and hassle of business travel when there are technologies that can enable many of the same interactions.  While these technologies are only poor substitutes now, improved display quality, bandwidth, and software capabilities will greatly increase their utility.

The same can even apply to tourism.  Google Earth and WikiMapia are very limited substitutes for traveling in person to a vacation locale.  However, as these technologies continue to layer more detail onto the simulated Earth, combined with millions of attached photos, movies, and blogs inserted by readers into associated locations, a whole new dimension of tourism emerges. 

Imagine if you have a desire to scale Mount Everest, or travel across the Sahara on a camel.  You probably don't have the time, money, or risk tolerance to go and do something this exciting, but you can go to Google Earth or WikiMapia, and click on the numerous videos and blogs by people who actually have done these things.  Choose whichever content suits you, from whichever blogger does the best job. 

See through the eyes of someone kayaking along the coast of British Columbia, walking the length of the Great Wall of China, or spending a summer in Paris as an artist.  The possibilities are endless once blogs, video, and Google Earth/WikiMapia merge.  Will it be the same as being there yourself?  No.  Will it open up possibilities to people who could never manage to be there themselves, or behave in certain capacities if there?  Absolutely.

Related :

The Next Big Thing in Entertainment

100 Mbps Broadband for $40/month by 2010

Who Does America View Favorably?

Earlier, I had written an article titled Who Hates America?, discussing how America is perceived by various countries, and then drawing corelations between the nature of these societies themselves and their likely opinion of American society.  The chart of opinions on America constructed by the Pew Research Center is included again here for easy reference.  This article continues to receive heated opinions on both sides of the debate across the blogosphere.

Now, I present the exact reverse of that article, in assessing how America perceives other countries in the world.  A survey conducted by Angus Reid Consultants asks Americans if they feel the relationship the United States has with particular countries is favorable or not.  Many of the same countries queried in the Pew survey are also queried here, allowing for easy cross-comparison.  Anti-Americans will be irritated by the notion that Americans could even have the right to judge other countries, what with moral equivalence and all, which makes this examination even more worthwhile.

It seems that the countries that view America favorably have a strong corelation with those that Americans view favorably, and vice-versa, deepening the evidence that these opinions may be based on the same basic dimensions of innate psychological traits of cultures, and thus more deep-seated and well-informed rather than merely fashionable.  Americans consider Britain to be their strongest ally.  This is unsurprising, given Britain's near-unconditional support of US military efforts for the last century.  Beyond this, other favorably viewed countries are fellow democratic, secular members of the Anglosphere like Canada and India.  Given that India was the most pro-US country in the Pew survey, the jump in American favorable perceptions of India from 52.1% to 54.8% from just March to June 2006 indicates a warming of Indo-US ties in both directions.  This is of massive significance on political, economic, military, and ideological levels.  The large drop in how Mexico is perceived by Americans is also evidence of the Mexican government treating their practice of dumping their unwanted citizens into the US as an entitlement.  The American people are that much closer to getting fed up with Mexico's abuse of America's accomodative stance, and they should be very careful about pushing the generosity of the American public too far. 

Also unsurprising is that nations that view America unfavorably are also the ones that Americans view unfavorably.  These tend to be communist countries, dictatorships, or terror-sponsoring rogue regimes.  A core anti-American shibboleth is that 'the rest of the world hates America'.  Indeed, the undemocratic regimes that the anti-Americans tacitly support do indicate this, but democratic, liberal societies do not.  This complies with the anti-American opposition to the success of democracy in general throughout the world (siding with Hizbollah against Israel, Pakistan against India, North Vietnam against South Vietnam, etc.).

Remember, be judged by the character of those who like you, but also those who dislike you.  By this measure, America's moral standing looks quite robust. 

Broadband Speeds of 50 Mbps for $40/month by 2010

In 1999, maybe 50 million US households had dial-up Internet access at 56 kbps speeds.  In 2006, there are 50 million Broadband subscribers, with 3-10 mbps speeds.  This is roughly a 100X improvement in 7 years, causing a massive increase in the utility of the Internet over this period.  The question is, can we get an additional 10X to 30X improvement in the next 4 years, to bring us the next generation of Internet functionality?  Let's examine some new technological deployments in home Internet access.

Verizon's high-speed broadband service, known as FIOS, is currently available to about 3 million homes across the US, with downstream speeds of 5 Mbps available for $39.95/month and higher speeds available for greater prices.  How many people subscribe to this service out of the 3 million who have the option is not publicly disclosed.

However, Verizon will be upgrading to a more advanced fiber-to-the-home standard that will increase downstream speeds by 4X and upstream speeds by 8X.  Verizon predicts that this upgrade will permit it to offer broadband service at 50 or even 100 Mbps to homes on its FIOS network.  Furthermore, the number of homes with access to FIOS service will rise from the current 3 million to 6 million by the end of 2006. 

Verizon's competitors will, of course, offer similar speeds and prices shortly thereafter.

The reason this is significant is that if falls precisely within the concept of the Impact of Computing.  The speed of the Internet service increases by 4X to 8X, while the number of homes with access to it increases by 2X, for an effective 8X to 16X increase in Impact, and the associated effects on society.  High-definition video streaming, video blogging, video wikis, and advanced gaming will all emerge as rapidly adopted new applications as a result. 

We often hear about how Japan and South Korea already have 100 Mbps broadband service while the US languishes at 3-10 Mbps with little apparent progress.  True, but Africa has vast natural resources and Taiwan, Israel, and Switzerland do not.  Which countries make better use of the advantages available to them?  In the same way, South Korea and Japan may have a lot of avid online gamers, but have not made use of their amazing high-speed infrastructure to create businesses in the last 2 years like Google Adwords, Zillow, MySpace, Wikipedia, etc.  The US has spawned these powerful consumer technologies even with low broadband speeds, due to our innovation and fertile entrepreneurial climate that exceeds even that of advanced nations like Japan and South Korea.  Just imagine the innovations that will emerge with the greatly enhanced bandwidth that will soon be available to US innovators. 

Give the top 80 million American households and small businesses access to 50 Mbps Internet connections for $40/month by 2010, and they will produce trillions of dollars of new wealth, guaranteed.

Related :

The Next Big Thing in Entertainment

The Impact of Computing

Why Do The Biggest Technological Changes Take Almost Everyone By Surprise?

The End of Rabbit Ears, a Billion More Broadband Users

Ultrasound Tourniquet May Greatly Reduce Troop Deaths

There was a time when America could wage wars and sustain 50,000 or more casualties without severe domestic opposition.  Not any more, as even 2000 hostile deaths in Iraq has caused many Americans to be demoralized from the seemingly immense body count.  Our technological and economic progress has caused our society to rightly place a premium on human life, but in order to preserve our society, we still need to wage brutal wars.  Thus, market forces demand innovations that reduce US troop deaths even further. 

Accordingly, the Pentagon has provided $51 million for research towards the development of an ultrasound tourniquet that can stop the loss of blood from major wounds in as little as 30 seconds, and thus reduce troop deaths from guerilla/terrorist tactics (like those in Iraq) by over 50% by 2011 (Article : MIT Technology Review). 

When the tourniquet is wrapped around a wounded limb or torso, it emits ultrasound beams that detect ruptured blood vessels and induce rapid clotting to seal them.  This buys the wounded soldier enough time to be carried to an equipped medical facility, where previously he would often have died of blood loss before reaching the facility.  Once at the emergeny room, his chances of survival continue to be higher than before from targetted sealing of severed arteries and veins.  Thus, the damage from all but the most severe wounds can be greatly reduced.

The implications of this are immense.  In Iraq, the majority of US troop deaths are from improvised explosive devices (IEDs), where shrapnel often inflicts fatal wounds.  Additionally, for each troop killed, eight are wounded.  This device could reduce such deaths by half or more, and even help the wounded return to action in a much shorter time.  At the same time, none of our opponents would have such a technology, further widening the power gap between an elite US force and a terrorist cell.  Eventually, this could become a medical device available in hospitals for civilian use, reducing the deaths from automobile accidents and gunshot wounds significantly, provided an ambulance arrives in time. 

Such a tourniquet will not be available to the US military in an easily usable form for another 5 years, but when it is, US military effectiveness in the War on Terror will be increased dramatically, as will the willingness of the US public to engage in continued military activity.  When our troops become harder to kill from mere IEDs and gunshot wounds, non-uniformed terrorists and insurgents will be blunted even further.

VietNam or Korea, which was better in the long run?

America fought two major conflicts in the second half of the 20th century, within the greater Cold War campaign.  Both the Korean War and the VietNam War each resulted in over 50,000 US troop deaths and 2.4 million total deaths on both sides.  The conventional wisdom in America is that VietNam was a 'failure' and Korea was a stalemate or even a success.  However, both assessments may be untrue when viewing the long-term evolution of both theaters through to 2006.

To this day, the US and most of the world worries about North Korea, where a maniacal despot has attained nuclear weapons, and where human development is at African levels.  North Korea is a nuclear-armed hypermilitarized prison camp, and a resolution to the current situation may yet prove even more costly than the first Korean War.

VietNam today is a rapidly modernizing nation with a GDP growth rate consistently in the 8% range.  While it still is a communist state, it is not belligerent and it does not appear to be at risk of being headed by someone like Kim Jong Il. 

The world is extremely fortunate that VietNam, with a population of 85 million, or 4 times that of North Korea, has not become a nuclear-armed state run by a despotic madman, 30 years after the fall of Saigon. 

Think, for a moment, about how bad that would be. 

In the context of whether the US should have fought either war, it is true that after the end of the Korean War, no further hostilities took place on the Korean Peninsula, whereas after the US withdrew from VietNam, 2 million more people will killed in Cambodia and Laos over the next 5 years.  Yet, 31 years later, VietNam is relatively benign, and makes one wonder, in hindsight, whether the same would have happened anyway without US involvement.  53 years after the Korean War, the ripple effects of that are a danger to the world even today, and leads one to think, in hindsight, that the US should have pushed further, sustained more casualties, and unified the entire Korean Peninsula.

One more dimension about the Vietnam War merits consideration - the indirect role it had in turning China away from belligerency.  China invaded Vietnam in 1979, possibly lured by the belief that VietNam was greatly depleted at the time.  But the Vietnamese had learned many advanced military tactics after 13 years of fighting American forces.  China lost 30,000 soldiers in just the first month of their incursion, after which the Chinese army hastily withdrew.  Prior to 1979, China had conducted several acts of military aggression, including wars on the Korean Peninsula, the annexation of Tibet, a border war against India (1962), and against the Soviet Union (1969).  But after 1979, the PRC has been substantially less willing to conduct expansionist aggression, with no comparable wars occurring since then.  Perhaps the Sino-Vietnam War was what induced this change in the PRC's behavior. 

Hindsight, of course, is 20/20, and is particularly malleable when given decades of time to look back upon.  This is why any judgement on current US involvement in Iraq and Afghanistan will not be settled for quite some time, and those who are quick and eager to brand it a failure reveal a lack of knowledge of historical process (as well as simply fashionable anti-Americanism). 

I believe that the US will achieve a distinct victory in Iraq by 2008.  I also believe this will force many surrounding nations to change for the better.  But the US should learn from the past and not let success in Afghanistan or Iraq lead to an incomplete job at the fringes, and the creation of another North Korea even despite the short term view of success.  The plan has to be in the scope of decades, not just months or years.

Stock Market Capitalization in Developing Countries

An interesting table in The Economist compared the market capitalizations of stock markets in developing nations.  The first surprise is that the top seven stock markets are so close to each other in size.  The next observation is that stock market capitalization has less to do with the GDP of the country than one would expect.  China, which has the largest economy by far among countries on this list, has a smaller market cap than India or Russia.  That Hong Kong and Taiwan approach China in size despite vastly smaller populations makes China look even more surprising.  The large and wealthy diasporas of India and Han Chinese of Taiwan and Hong Kong are also a reason why these countries have market caps larger than their GDPs would suggest. 

In any event, these numbers are dwarfed by the United States, which has a total stock market capitalization of $20 Trillion, or 30 times greater than that of South Korea, India, or China.  One company, General Electric, if placed on this list, would be between Taiwan and Mexico to take 9th place.  And the US market cap grows at 8% a year (without assuming acceleration), which would bring it to $130 Trillion by 2030.  If China or India want to match the US market cap in size by 2030, that means they have to grow at 25% a year for the next 24 years straight. 

This tells you how far any other country is from surpassing the US as an economic superpower.  This will be worth visiting again when one of the countries above crosses $5 Trillion. 

Related :

The Stock Market is Exponential and Accelerating

Why the US Will Still be the Only Superpower in 2030

The US Job Market is Booming, For Those Who Can Admit It

The US economy continues to glide along in an optimal 'goldilocks' trajectory.  GDP growth, consumer confidence, service sector growth, and unemployment levels continue to proceed at robust, but not overheated levels. 

The June unemployment report confirmed this.  A quick glance at the historical unemployment rate from the Bureau of Labor Statistics shows that the current rate of 4.6% is lower than it has been for 32 of the last 35 years, the only period of lower unemployment being the bubble era of 1998-2000. 

This also shows something else that is interesting.  Let's examine the average unemployment rates over the last 14 years, during which there were two Presidents.  For simplicity, we shall ignore the notion of inheriting an economy, whether good or bad, from one's predecessor. 

Clinton : 5.3%

George W. Bush : 5.3%

So Clinton and GWB have had the same average unemployment rates during their terms, and only 3 of Clinton's 8 years had a lower rate than the 4.6% it is today.  Imagine that. 

People who suffer from Bush Derangement Syndrome just cannot accept that the economy could possibly be doing well.  Their memorized arguments are :

1) They will say that those who have been unemployed for a long time are no longer collecting benefits and do not get reported in the statistics.  This is untrue, as consumer confidence continues to be high.

2) They will say is that these jobs are all lower-skilled jobs that pay poorly.  This directly contradicts their claims that all the gains of US economic growth gravitate to the top of the income ladder while the rest received no benefit.  It also ignores the basic statistic that average hourly earnings are, in fact, rising.

3) Their final argument will be that 150,000 jobs a month are needed to keep up with labor force growth.  This is untrue, as the US workforce is 140 million people, growing at 1% a year, or 1.4 million new entrants a year.  Divide this by 12, and it comes to 116,600 jobs needed per month to accommodate the new entrants.  Furthermore, the US now has 1 million people who earn a living through entrepreneurial Internet activity, such as eBay trading, blogging, Google Ads, domain investing, etc.  They are not captured in the traditional employment statistics.  Ten years ago, these people would otherwise be working at traditional employers, but have voluntarily left the workforce.  Soon, even video games may provide a viable form of self-employment for some people(see item 6 here).

Behind this lies a deeper observation.  The angry Left has so much cognitive dissonance about the fact that the economy is currently strong, that they are probably inhibiting their own chances of success in this economy.  Their pessimism leads to risk aversion, negativity, and other behaviors that preclude success.  It also leads to a tortured logic that Bush supporters can be incredibly 'dumb' yet unfairly 'rich' at the same time. 

Here is an example of an extremist anti-Bush blogger, someone at least two standard deviations from the middle of political ideology, desperately trying to believe that the economy is doing poorly. 

It is true that jobs continue to be lost at the bottom of the skill ladder (like in manufacturing), while a greater number of jobs are added at the top of the skill ladder.  This is a boon for highly-educated workers, but a problem for workers with lower-level skills.  Those who can upgrade their skills will prosper, and those that cannot will see declines in their standards of living.

This pattern of workforce evolution has been the norm for centuries, ever since Ned Ludd and his 'Luddite' followers destroyed cotton looms that put handweavers out of business.  The accelerating rate of economic growth, however, now means that while a person could once spend their whole life at one skill level, they now have to continuously upgrade their skills every decade or so. 

The Demographics of Happiness

I happened to stumble across a report from the Pew Research Center on the demographics of happiness.  The report was interesting, but very little was actually surprising. 

The report finds that income corelates to happiness, as having one's basic needs met can remove some of the most common causes of misery.  However, the survey puts all making above $150,000 a year into one bucket, thereby not providing any insight into whether there is incremental probability of happiness upon making $300,000, $500,000, or $1 Million a year.  I believe that it is quite possible that there is virtually no marginal increase in happiness beyond an income of, say, $200,000 a year or so, because nearly all material needs are met at this threshold.  Additional income can bring only more power, prestige, and fame, but material consumption and the resultant gratification saturates as this point.  In other words, if someone making over $200,000 a year is still not happy, it is probably for some reason other than money. 

The next question that arises is that of relative vs. absolute wealth.  If a person earns more than 95% of the members of his society, he is rich in whatever era he lives in, but even a person of average income today has many technological luxuries that were unavailable to the wealthiest person 50 years ago.   This, combined with the rapidly growing ranks of the wealthy as a share of the total population and the tendency of prosperity to move people up the ranks of Maslow's Hierarchy of Needs, could lead to a very slow but steady migration of happiness away from increasingly accessible material consumption and towards more self-actualized forms of human fulfillment. 

Beyond wealth, one's worldview has an influence on happiness.  When happiness is categorized by political leanings, Republicans have had a stark advantage over Democrats for the last 35 years.  This is even during the Clinton years, when Democrats had the most reasons to be cheerful than at any other time, and President Clinton himself had a contagious optimism that contributed towards high consumer confidence and a strong economy.  The most obvious explanation for why 'liberals' are perpetually unhappy is that the realities of the real world continue to deliver outcomes contrary to what theoretical 'liberal' beliefs lead them to expect. 

Additionally, one particular strain of 'liberalism' departed from the genuinely liberal goal of improving society, and mutated into a religion of hatred towards those who are happier than they are.  'Tax the Rich' might really be intended to mean 'Tax the Happy, because we are jealous of them'.  There was a time when the 'left' and 'right' merely disagreed on which approach was more suitable to cause improvements in society, as opposed to today when many on the 'left' have no interest in improving society at all, but merely feign altruism while engaging in a hateful campaign to obstruct or distort the pillars of traditional society from which most non-leftists derive happiness (such as marriage, faith, children, or entrepreneurship).  This causes great conflict between their leftist religion and the natural urge of human decency still faintly present within them, and thus leaves them twisted and tortured in self-contradicting misery.  The same is probably true of suicide bombers, for that matter.

Since happiness is a natural condition, present when natural needs are met, what does it tell us about which belief systems, activities, and behaviours are more 'naturally' suitable for human life?

Oil Prices May Drop Soon, But This May Postpone Energy Innovation

There is an article from Larry Kudlow today predicting a drop in oil prices in the near future.  Kudlow's prediction is derived from economic data indicating higher oil supplies in the near future, an increase in exploration and drilling by oil companies, and new legislation favoring drilling.  Given that Kudlow is usually right about most of his near-term economic predictions and points to several factors contributing to the possible drop, rather than just one, this could very well turn out to be accurate. 

However, if prices were to return to lower levels, it is actually not very good for the United States in the long term.  I believe that $70/barrel for oil is the optimal price at which energy innovation can accelerate without tipping the US economy into recession.  Technologies such as ethanol and tar-sand refineries become cost-effective when oil is above $70, but if oil returns to lower prices, this innovation will stagnate once again.

A chart of oil prices (wikipedia) indicates that in the last 120 years, only for a 4-year period from 1977 to 1981 was the real price of oil higher than it is today.  Today's price is higher than it has been for 116 of the last 120 years.  While the 1977-81 price spike caused a painful recession, it fostered significant innovation in engine efficiency and alternative energy.  As oil prices dropped and remained low during the 1980s and 90s, innovation slowed.   Click on the chart to make it bigger. 

   

The US economy will not be able to reduce our dependence on foreign oil, and significanly reduce the pollution of oil consumption, without a multi-year period of oil above $70/barrel.  This will be painful, but is the only way to enable the free market to achieve this necessary goal. 

Related :

$70+/barrel oil, the non-crisis.

The coming jump in energy technology.

The World Wealth Report, 2005

The annual World Wealth Report from Capgemini, which is a worldwide census of millionaires, was released this week.  The report does not take inflation into account, using the threshold of $1 Million each year.  It also calculates net worth excluding primary residence, which can be misleading, as an American who withdraws $300,000 in home equity from his primary residence would be recorded as immediately seeing a $300,000 jump in net worth by merely this transferral of funds.  However, the report still has many useful data points that present interesting trends. 

Those with a net worth greater than $1 million increased 6.5% in 2005 to reach 8.7 million in number.  Among these, those with a net worth of $30 million or greater increased at an even faster rate - 10% - to reach 85,600. 

The variations in regional growth rates of millionaires match the performances of those particular economies closely.  Within the global average millionaire growth rate of 6.5%, the United States was very close to the mean at 6.7%.  Europe lagged by growing at only 4.5% and is rapidly shrinking its share of the world's millionaires, just as its share of world GDP simultaneously shrinks.  At the other end of the scale, the surge in India is remarkable.  The 19.3% growth of Indian millionaires in 2005 follows a 14% increase in 2004, for a two-year increase of 36%.  South Korea, already as prosperous many European nations, saw a 21.3% increase in millionaires. 

The aggregate wealth of millionaires reached $33.3 trillion in 2005, an 8.5% increase from 2004, which itself was an 8.1% increase over 2003.  That the trendline of annual asset growth appears to be above 8% shows us how economic growth is exponential and accelerating, as such rapid annual increases in wealth would have been unheard of just 50 years ago, let alone 200 years ago. 

Making some modest assumptions for continued acceleration of exponential growth, we can expect the world to contain 18 million millionaires by 2015 and perhaps over 40 million by 2025.  It is true that inflation should be considered as a factor, but the continuance of technology diffusion to the mass market should also be considered.  In other words, many items available to even lower income people today, such as email, cellular phones, realistic video games, Yahoo! Maps, iPods, and Wikipedia, were not available to even the wealthiest person just 30 years ago.  Similarly, even the wealthiest people today do not have many luxuries that the average person will have in 2015 and 2025. 

As millionaire status becomes something achieved by an increasingly larger share of the population, the psychology of wealth will continue to transform the culture of broader society as well.  More people moving up Maslow's hierarchy of needs will make a big difference on crime rates, the variety of recreational activities available, and even the frequency of warfare. 

There is much to look forward to.

Related :

These are the Best of Times.

World GGP Grew by 4.3% in 2005.

The Psychology of Economic Progress.

Economic Growth is Exponential and Accelerating.

Nanotechnology to Create Plentiful Clean Water by 2015

An article from the MIT Technology Review describes a development by researchers at Lawrence Livermore National Laboratory that could bring clean drinking water to 2 billion people who currently don't have access to this necessity. 

By using carbon nanotubes, membranes were created with pores so fine that only the width of seven water molecules could pass through.  This removes many impurities, including salt molecules.  These filters may reduce the cost of desalinification by up to 75%, and could come to market in the next decade.  The real secret is the price of carbon nanotubes, which is expected to decline by half every 18 months.  In 10 years, the price of nanotubes will be merely 1/100th of what it is today.  This filter could become inexpensive enough for even small villages to operate their own desalinification facilities.  This, in turn, could greatly reduce poverty, increase life expectancy, and foster economic growth. 

Water is a critical component of economic growth on every level, even more so than oil.  Numerous wars have been fought over water in the Middle East and North Africa, and this innovation could be yet another contributor towards the reduction of warfare through economic prosperity. 

Needless to say, a massive reduction in the cost of creating highly purified water also benefits the top of the economic pyramid.  Industries that use large amounts of purified water and could benefit from cost reductions are semiconductors, pharmaceuticals, healthcare, food processing, etc.

Related : The Nanotech Report 2006 - Key Findings

The Nanotech Report 2006 - Key Findings

The 2006 edition of the Nanotech Report from Lux Research was published recently.  This is something I make a point to read every year, even if only a brief summary is available for free. 

Some of the key findings that are noteworthy :

1) Nanotechnology R&D reached $9.6 billion in 2005, up 10% from 2004.  This is unremarkable when one considers that the world economy grew 7-8% in nominal terms in 2005, but upon closer examination of the subsets of R&D, corporate R&D and venture capital grew 18% in 2005 to hit $5 billion.  This means that many technologies are finally graduating from basic research laboratories and are being turned into products, and that investment in nanotechnology is now possible.  This also confirms my estimation that the inflection point of commercial nanotechnology was in 2005. 

2) Nanotechnology was incorporated in $30 billion of manufactured goods in 2005 (mostly escaping notice).  This is projected to reach $2.6 trillion of manufactured goods by 2014, or a 64% annual growth rate.  Products like inexpensive solar roof shingles, lighter yet stronger cars yielding 60 mpg, stain and crease resistant clothes, and thin high-definition displays will be common. 

But a deeper concept worth internalizing is how an extension of the Impact of Computing will manifest itself.  If the quality of nanotechnology per dollar increases at the same 58% annual rate as Moore's Law (a modest assumption), combining this qualitative improvement rate with a dollar growth of 64% a year yields an effective Impact of Nanotechnology of (1.58)*(1.64) = 160% per year.  As the base gets larger, this will become very visible.

3) Nanotech-enabled products on the market today command a price premium of 11% over traditional equivalents, even if the nanotechnology is not directly noticed. 

The next great technology boom is upon us, and it is beginning now. 

Why the US Will Still be the Only Superpower in 2030

Version 2.0 of this article is posted here. 

One of the most popular dinner party conversation topics is the possibility that the United States will be joined or even surpassed as a superpower by another nation, such as China.  China has some very smart people, a vast land area, and over four times the population of the US, so it should catch up easily, right?  Let's assess the what makes a superpower, and what it would take for China to match the US on each pillar of superpowerdom. 

A genuine superpower does not merely have military and political influence, but also must be at the top of the economic, scientific, and cultural pyramids.  Thus, the Soviet Union was only a partial superpower, and the most recent genuine superpower before the United States was the British Empire. 

To match the US by 2030, China would have to :

1)  Have an economy near the size of the US economy.  If the US grows by 3.5% a year for the next 25 years, it will be $30 trillion in 2006 dollars by then.  Note that this is a modest assumption for the US, given the accelerating nature of economic growth, but also note that world GDP only grows about 4% a year, and this might at most be 5% a year by 2030.  China, with an economy of $2.2 trillion in nominal (not PPP) terms, would have to grow at 12% a year for the next 25 years straight to achieve the same size, which is already faster than its current 9-10% rate, if even that can be sustained for so long (no country, let alone a large one, has grown at more than 8% over such a long period).  In other words, the progress that the US economy would make from 1945 to 2030 (85 years) would have to be achieved by China in just the 25 years from 2005 to 2030.  Even then, this is just the total GDP, not per capita GDP, which would still be merely a fourth of America's. 

2)  Create original consumer brands that are household names everywhere in the world (including in America), such as Coca-Cola, Nike, McDonalds, Citigroup, Xerox, Microsoft, or Google.  Europe and Japan have created a few brands in a few select industries, but China currently has none.  Observing how many American brand logos have populated billboards and sporting events in developing nations over just the last 15 years, one might argue that US dominance has even increased by this measure. 

3)  Have a military capable of waging wars anywhere in the globe (even if it does not actually wage any).  Part of the opposition that anti-Americans have to the US wars in Afghanistan and Iraq is the envy arising from the US being the only country with the means to invade multiple medium-size countries in other continents and still sustain very few casualties.  No other country currently is even near having the ability to project military power with such force and range.  Mere nuclear weapons are no substitute for this.  The inability of the rest of the world to do anything to halt genocide in Darfur is evidence of how such problems can only get addressed if and when America addresses them.

4)  Have major universities that are household names, that many of the worlds top students aspire to attend.  17 of the world's top 20 universities are in the US.  Until top students in Europe, India, and even the US are filling out an application for a Chinese university alongside those of Harvard, Stanford, MIT, or Cambridge, China is not going to match the US in the knowledge economy.  This also represents the obstacles China has to overcome to successfully conduct impactful scientific research. 

5)  Attract the best and brightest to immigrate into China, where they can expect to live a good life in Chinese society.  The US effectively receives a subsidy of $100 to $200 billion a year, as people educated at the expense of another nation immigrate here and promptly participate in the workforce.  As smart as people within China are, unless they can attract non-Chinese talent that is otherwise going to the US, and even talented Americans, they will not have the same intellectual and psychological cross-pollination, and hence miss out on those economic benefits.  The small matter of people not wanting to move into a country that is not a democracy also has to be resolved. 

6)  Become the nation that produces the new inventions and corporations that are adopted by the mass market into their daily lives.  From the telephone and airplane over a century ago, America has been the engine of almost all technological progress.  Despite the fears of innovation going overseas, the big new technologies and influential applications continue to emerge from companies headquartered in the United States.  Just in the last two years, Google emerged as the next super-lucrative company (before eBay and Yahoo slightly earlier), and the American-dominated 'blogosphere' emerged as a powerful force of information and media. 

7)  Be the leader in entertainment and culture.  China's film industry greatly lags India's, let alone America's.  We hear about piracy of American music and films in China, which tells us exactly what the world order is.  When American teenagers are actively pirating music and movies made in China, only then will the US have been surpassed in this area.  Take a moment to think how distant this scenario is from current reality. 

8)  Be the nation that engineers many of the greatest moments of human accomplishment.  The USSR was ahead of the US in the space race at first, until President Kennedy decided in 1961 to put a man on the moon by 1969.  While this mission initially seemed to be unnecessary and expensive, the optimism and pride brought to anti-Communist people worldwide was so inspirational that it accelerated many other forms of technological progress and brought economic growth to free-market countries.  This eventually led to a global exodus from socialism altogether, as the pessimism necessary for socialism to exist became harder to enforce.  People from many nations still feel pride from humanity having set foot on the Moon, something which America made possible. 

China currently has plans to put a man on the moon by 2024.  While being only the second country to achieve this would certainly be prestigious, it would still be 55 years after the United States achieved the same thing.  That is not quite the trajectory it would take to approach the superpowerdom of the US by 2030.  If China puts a man on Mars before the US, I may change my opinion on this point, but the odds of that happening are not high. 

9)  Be the nation expected to thanklessly use its own resources to solve many of the world's problems.  If the US donates $15 billion in aid to Africa, the first reaction from critics is that the US did not donate enough.  On the other hand, few even consider asking China to donate aid to Africa.  After the 2004 Indian Ocean tsunami, the fashionable question was why the US did not donate even more and sooner, rather than why China did not donate more, despite being geographically much closer.  Ask yourself this - if an asteroid were on a collision course with the Earth, which country's technology would the world depend on to detect it, and then destroy or divert it?  Until China is relied upon to an equal degree, it is not in the same league. 

10)  Adapt to the underappreciated burden of superpowerdom - the huge double standards that a benign superpower must withstand in that role.  America is still condemned for slavery that ended 140 years ago, even by nations that have done far worse things more recently than that.  Is China prepared to apologize for Tianenmen Square, the genocide in Tibet, the 30 million who perished during the Great Leap Forward, and the suppression of news about SARS,every day for the next century?  Is China remotely prepared for being blamed for inaction towards genocide in Darfur while simultaneously being condemned for non-deadly prison abuse in a time of war against opponents who follow no rules of engagement?  The amount of unfairness China would have to withstand to truly achieve political parity with America might be prohibitive given China's history over the last 60 years.  Furthermore, China being held to the superpower standard would simultaneously reduce the burden that the US currently bears alone, allowing the US to operate with less opposition than it experiences today. 

Of the ten points above, Europe and Japan have tried for decades, and have only achieved parity with the US on maybe two of these dimensions at most.  China will surpass Europe and Japan by 2030 by achieving perhaps two or possibly even three out of these ten points, but attaining all ten is something I am willing to confidently bet against.  The dream of anti-Americans who relish the prospect of any nation, even a non-democratic one, surpassing the US is still a very distant one. 

A point that many bring up is that empires have always risen and fallen throughout history.  This is partly true, but note that the Roman Empire lasted for over 1000 years after its peak.  Also note that the British Empire never actually collapsed since Britain is still one of the the top seven countries in the world today, and the English language is the most widely spoken in the world.  Britain was merely surpassed by its descendant, with whom it shares a symbiotic relationship.  The US can expect the same if it is finally surpassed, at some point much later than 2030 and probably not before the Technological Singularity, which would make the debate moot.   

That writing this article is even worthwhile is a tribute to how far China has come and how much it might achieve, but nonetheless, there is no other country that will be a superpower on par with the US by 2030.  This is one of the safest predictions The Futurist can make. 

More on the Decline of Europe

Joe Katzman at Winds of Change has an amazing article on the disastrous confluence of forces that have brought Europe to the precipice of disaster, and threaten to take the United States along the same path unless we learn from Europe's mistakes.  Of particular note is the observation that a society is decadant when futility is accepted, and the absurd seems normal. 

Related : Europe is giving up on the future. 

Next-Generation Graphics - A Good Intro

IGN has a good article on what level of sophistication can be expected in video game graphics in the next couple of years.  While their optimism about the period between now and 2008 is cautious, this reaffirms the technological trends and is consistent with my prediction that the descendants of modern video games will become the most popular form of home entertainment by 2012, mostly at the expense of television. 

As always, viewing the pictoral history of video games gives an idea of the rate of progress that one can expect in the next decade. 

Invite Illegals from Mexico to Join the US Military

Here's an idea : The Pentagon can offer a program where an aspiring young man (or woman) from Mexico or elsewhere can earn US citizenship by serving for 6 years in the US Military, provided their service is with honor.  This is essentially a new class of visa, just like an H-1B, but is open to anyone who is young enough, able bodied enough, and determined enough to make this sacrifice to earn a US passport. 

The military will have to start with a small intake for this program, and eventually build up the infrastucture and processes to take in a quota of around 200,000 a year.  The US will have to organize bi-lingual officers (of which there are many) to manage these divisions of troops at first, and also organize some classes in which to teach them basic English as part of their basic training, but this is not too difficult.  After these classes during basic training, however, these troops should be mixed among US born troops.  Those who violate the miltary code of conduct should be discharged, and deported.

This is attractive for the illegal immigrants, because :

1) Being an enlisted soldier in the US military carries a salary of around $20,000 a year, plus several benefits that continue after military service ends.  It is a more attractive package than they are currently getting by doing unskilled manual labor in the US. 

2) When they emerge as US citizens after their 6 years of service, they will know a fair amount of English, and will be able to get much better jobs in the US, than they could have gotten before their service.  They could even go to college.

3) The soldiers that do well may choose to continue their military career path, and rise up to higher officer ranks over time. 

This is very attractive for the United States, because :

1) It will be a way to separate out which illegals from Mexico truly want to become Americans and contribute positively to American society.  This will be a structure through which they can learn English and assimilate in American society with honor.  This may even lead to some of them going to college, and contributing to the US economy at a higher level. 

2) It will be a way for the US to boost troop levels, in case a major military operation is upon the US in the future. 

3) It will irritate the corrupt elite in Mexico, as the people who otherwise were a burden on the public services in the US will now be strengthening America, and may even gain the political clout to influence change in Mexico in the more distant future. 

4) It will infuriate military-hating anti-Americans who deride this as a scheme to cultivate cannon fodder, even as Mexicans who participate will have done so by choice.  The same anti-Americans who were previously advocates of unrestricted illegal immigration will now oppose this, and will alienate them from Mexicans who were previously easily manipulated by these extremists. 

This program is far from perfect, and many more details have to be worked out.  But among available options, this could be a very attractive one.  At the very least, there should be a program where people who want to risk their lives for America can earn US citizenship through a clearly defined path.  I suspect the number of people who sign up would be large. 

The Psychology of Economic Progress

The human brain may not have evolved significantly in the last 35,000 years, but the human mind has evolved greatly in just the last 200, in many parts of the world.  This is apparent once we observe the world through Maslow's Hierarchy of Needs. 

Abraham Maslow was an eminent psychologist in the 20th century who realized tthat the spectrum of human needs is more universally straightforward than it might appear, irrespective of culture.  He constructed a hierarchy of human needs based on each level of prosperity and satisfaction, and the Maslow hierarchy became a foundation of modern psychology.  He categorized each bracket of need-driven behavior as follows (sometimes, there are five levels).

1. Survival : The most basic human urge to survive is one where a person may disregard courtesy, culture, or religion in the pursuit of urgent necessities. An otherwise normal person may become unreasonable or even violent when his survival itself is uncertain. Animalistic behaviors may manifest themselves in the most desperate times.
2. Belonging : Once a human has progressed to a level where his most fundamental needs are no longer a cause of daily concern, then he seeks to be part of a community, whether it be his place of work or his social community. Harming another person to seize his possessions is no longer tempting or worthwhile.
3. Esteem : Once a person is secure in his career and community, and has progressed beyond the need to feel accepted by his friends or respected at his workplace, he strives to excel in multiple areas of his life. Building and maintaining an ego become the most important priority. Thinking of new ways to entertain himself is high on the priority list of the person at this level, and surplus money translates into materialism.
4. Self-Actualization : A person who has reached a level where his means greatly exceed his requirements of material contentment then may choose to focus his energies on activities that permit him to achieve his full potential.  He is no longer concerned with pure material gain or enhancing the quality of his recreation, nor does he feel he needs to impress others beyond the extent that he already has.  He seeks to become everything that he has the potential to become, and any time not spent pursuing this is treated as a waste. He seeks the company of other actualized people, and in such groups respect is gained from intellectual or artistic accomplishment. 

In centuries past, killing another person in order to take his belongings was common.  Today, the downside risk to one's career of even petty theft or minor fraud is enough that most people in the US today don't consider it.  As the world economy accelerated from centuries of slow growth to a period of rapid growth starting from the middle of the 20th century, we have seen a general decline in violence and disorder in developed societies, and also a decline in large-scale warfare in general.  Simply put, when more people have a stake in the stability and health of the system, they are more interested in maintaining and strengthening it, rather than disrupting it or trying to bypass it.

At the same time, a large segment of US society is stuck within the third level, esteem.  The pursuit of fancier cars, bigger homes, and more material status symbols is seen as the ultimate achievement in life, through a belief that quality of life improves in direct proportion to the degree of conspicuous consumption.  Relatively few have broken out of esteem and rise to actualizaton, the level where the great ideas that move humanity forward can emerge. 

In the US, perhaps 3% still reside in survival, 65% in belonging, 30% in esteem, and just 2% in self-actualization.  There is no country in the world with any more than a tiny minority attaining self-actualization yet, and such a nation would have to emerge in order to surpass the US in global power and influence.  Similarly, some cultures make it difficult for individuals to rise out of survival or belonging at all, ensuring that some nations have systems that cannot reduce poverty or nurture knowledge-based businesses. 

This is why globalization can benefit the world greatly.  While anti-Americans deride the spread of American culture, this also means that people in cultures that inhibit upward psychological advancement are now presented with a guide on how to rise until esteem.  The rapid growth in India and China, despite their cultures being heavily organized along belonging to a family and a community, has featured young people rising to embrace American-style esteem.  Thus, massive reductions in both monetary and intellectual poverty are underway.  At the same time, the complacent Americans stuck in esteem are forced to compete harder with India and China to prosper within globalization, which could induce more Americans to innovate their way to self-actualization. 

As we evolve into an information economy, where more and more people are occupied in knowledge-based careers, self-actualization will be attainable for millions of people. Through actualization arises the greatest examples of social innovation, entrepreneurship, and charity, and these forces will be the key to creating the wondrous new technologies and robust economic growth that we expect in the 21st century. 

This is a vast subject, on which more articles will follow. 

The US Economy grew 4.8% in Q1

US GDP grew at 4.8% in Q1, clocking the second-highest growth in any quarter in the last 5 years.  This also made up for the weak growth in Q4 2005, and has ensured that the US economy remains on a trajectory of robust growth.

    

What is noteworthy is that this high growth has continued despite high oil prices (where were in the $60s per barrel in Q1), and despite the high trade deficit.  In the late 1990s, despite inexpensive oil and a much smaller trade deficit, GDP growth rates were not much higher than what we have seen over the last 3 years.  This shows of structurally sound the US economy is at the moment, and how it is growing at a rate much, much higher than the EU.  The so-called 'oil-crisis' is a media circus, nothing more. 

Related : The World Economy Grew 4.3% in 2005.

$70+/Barrel Oil, the Non-Crisis

Humans are not rational beings.  This is evidenced by how much agony there is over having to pay $500 more per year on gasoline than initially expected, against the relatively muted criticism towards real estate agents charging $10,000 to $60,000 for their services, or income tax preparation consuming over 10 hours of time per household per year (is 10 hours worth so much less than $500)? 

I have written before about why $70/barrel oil is good for America, as it will accelerate technological progress in energy.  In fact, it already has begun to do this. 

But yet another interesting thought arises.  Expensive oil affects the price of many things, as it inherently raises the cost of moving an object from one place to another.  Corporations that need to do a lot of this, such as Wal-Mart, Federal Express, or United Airlines, see their costs rise, and have to both raise their prices and trim their staffing levels. 

This seems like bad news for the US economy, until one considers the following :

Other countries also have such industries, and are also hit by higher oil prices.  Countries that many fear will overtake the United States, such as India and China, have economies even more dependent on oil than the US.  Sectors like automobiles, steel, aluminum, airlines, and concrete are actually growth industries in India and China, where the majority of people are yet to become consumers.  If half of the people who have cars today did not have cars five years ago, then the increase in gasoline costs is a much larger percentage of their income than it is for an American.  $500 a year more for gasoline actually is a lot for those who make $10,000 a year and just bought their very first car.  Chinese and Indian consumer spending is much more sensitive to $70 oil than US consumer spending is. 

At the same time, US corporations such as Google, Yahoo, Goldman Sachs, Pixar, Citigroup, or Oracle are much less vulnerable to high oil prices.  Yet, these knowledge-based businesses are the ones that have created most of the new wealth in the US during the last 25 years, and are the industries in which America's dominance over the rest of the world is the largest. 

So in conclusion, high oil prices hurts some of our industries, but it hurts those industries in other countries to the same degree if not more, and the industries which are less affected by high oil prices are already the industries in which America is ridiculously far ahead of the rest of the world. 

So high oil prices actually increase the gap between the US economy and those that would seek to catch up to it.  If oil hits $100/barrel, US GDP growth may drop from 3.5% to 2%, but China's GDP growth may drop from 10% to 4%.

Food for thought...

Virtual Worlds - BusinessWeek Catches On

The cover story of BusinessWeek this week is devoted to virtual game worlds and the real economic opportunities that some entrepreneurs are finding in them. 

I spoke of exactly this less than a month earlier, on April 1, about how video games would evolve into an all-encompassing next generation of entertainment to displace television, and also become a huge ecosystem for entrepreneurship.  It seems that we are on the cusp of this vision becoming reality (by 2012, as per my prediction). 

Milli, Micro, Nano, Pico

What would be the best way to measure, and predict, technological progress?  One good observation has been The Impact of Computing, but why has computing occurred now, rather than a few decades earlier or later?  Why is nanotechnology being talked about now, rather than much earlier or later?

Engineering has two dimensions of progress - the ability to engineer and manufacture designs at exponentially smaller scales, and the ability to engineer projects of exponentially larger complexity.  In other words, progress occurs as we design in increasingly intricate detail, while simultaneously scaling this intricacy to larger sizes, and can mass produce these designs. 

For thousands of years, the grandest projects involved huge bricks of stone (the Pyramids, medieval castles).  The most intricate carvings by hand were on the scale of millimeters, but scaled only to the size of hand-carried artifacts.  Eventually, devices such as wristwatches were invented, that had moving parts on a millimeter scale.

At the same time, engineering on a molecular level first started with the creation of simple compounds like Hydrochloric Acid, and over time graduated to complex chemicals, organic molecules, and advanced compounds used in industry and pharmaceuticals.  We are currently able to engineer molecules that have tens of thousands of atoms within them, and this capability continues to get more advanced. 

The chart below is a rough plot of the exponentially shrinking detail of designs which we can mass-produce (the pink line), and the increasingly larger atom-by-atom constructs that we can create (the green line).  Integrated circuits became possible as the pink line got low enough in the 1970s and 80s, and life-saving new pharmaceuticals have emerged as the green line got to where it was in the 1990s and today.  The two converge right about now, which is not some magical inflection point, but rather the true context in which to view the birth of nanotechnology. 

As we move through the next decade, molecular engineering will be capable of producing compounds tens of times more complex than today, creating amazing new drugs, materials, and biotechnologies.  Increasingly finer design and manufacturing capabilities will allow computer chips to accomodate 10 billion transistors in less than one square inch, and for billions of these to be produced.  Nanotechnology will be the domain of all this and more, and while the beginnings may appear too small to notice to the untrained observer, the dual engineering trends of the past century and earlier converge to the conception of this era now.

Further into the future, molecule-sized intelligent robots will be able to gather and assemble into solid objects almost instantly, and move inside our body to monitor our health and fight pathogens without our noticing.  Such nanobots will change our perception of physical form as we know it.  Even later, picotechnology, or engineering on the scale of trillionths of a meter - that of subatomic particles - will be the frontier of mainstream consumer technology, in ways we cannot begin to imagine today.  This may coincide with a Technological Singularity around the middle of the 21st century. 

For now, though, we can sit back and watch the faint trickle of nanotechnology headlines, products, and wealth thicken and grow into a stream, then a river, and finally a massive ocean that deeply submerges our world in its influence. 

US Wages May Finally Rise, Through Biotechnology

For the last few years, despite robust GDP, productivity growth, and job creation, the average income of US workers has been rising at a very slow rate.  Some of this was attributed to 'outsourcing', but this is not the case, as job creation would also have been weak, rather than just wage growth. 

The reason for low wage growth has been healthcare costs greatly outpacing inflation during 2000-05.  This consumes money that employers would have otherwise distributed towards employee salaries.  Some of the rise in healthcare costs is due to an aging population, and some of this is due to the growing number of illegal immigrants not paying into a system they are using. 

The chart below from the Bureau of Labor Statistics shows how the increased costs of benefits (mostly health insurance) has left little remaining money for salaries to rise.  This is in sharp constrast to the late 1990s, when salaries could rise more rapidly due to subdued increases in healthcare costs. 

In fact, the perception that the economy is weaker now relative to the late 1990s, despite nearly every economic indicator being comparable between the two periods, could be entirely due to this.  People are getting weaker raises even when employers have increased spending on employees each year. 

But we may be over the hump, as the data is finally trending in a favorable direction.  Michael Mandel's blog has observed a decline in some of the technology-related components of healthcare costs.  The costs of medical labs and imaging centers stopped rising altogether in the last year.  Mandel says this may be due to competition, but I think this is due to technology.  Not only are many advanced instruments subject to The Impact of Computing, and thus improving in power and number every year, but new drugs and gene therapies provide treatment that sometimes avoids hospital stays altogether.  Exponentially improving technologies are pervasively moving into medicine to deliver faster, cheaper, more effective treatments, and this saves money even for people who are not users of them. 

If the moderation in the price of high-tech medical costs continues, US wages may rise as employers can pass more on towards salaries instead of health insurance premiums. 

Related : Are you prepared to live to be 100?

The Next Big Thing in Entertainment - Part III

Here is a follow up to the two-part article, the Next Big Thing in Entertainment, where a prediction is made that the video game industry will give rise to something much larger, that transforms many dimensions of entertainment entirely.

I feel one additional detail worth discussing is the performance of stocks that may do well from this phenomenon.  A 5-year chart of four game development companies, Electronic Arts (ERTS), Activision (ATVI), Take-Two Interactive Software (TTWO), and THQ Inc. (THQI), plus retailer Gamestop (GME) provides an interesting picture. 

   

All 5 companies appear to have greatly outperformed the S&P500 over the last 5 years, despite this being a poor period for technology stocks.  Past performance is no indication of future returns, and it is difficult to predict with competitors will prevail over others, but a basket of stocks in this sector will be very interesting to watch for the next 6 years. 

The Housing Bubble - 20-Year Gains May Never be Repeated

There are many reasons to believe that housing is in a bubble in many countries, and that in the US, residential real-estate in certain markets peaked in late 2005, and is now on the brink of a multi-year decline.  This is a vast subject, but to summarize the main reasons to think this is a bubble are :

1)  Interest Rates were at 46-year lows in 2002-04, which reduces mortgage payments for a given house, but inflates home values.  This causes the ratio of home prices to salaries and home prices to rent to rise far above the trendline.  At the same time, when interest rates rise (as they have since early 2005), home prices fall a couple years later as payments for a given home price rise and buyers are forced to adjust downwards. 

2)  Speculation is rampant, because the low interest rates from 2002-04 caused price increases of 15% a year to occur, and lead people to believe this is the normal trajectory of the trendline.  This has tempted people to buy additional homes for investment, and happily accept the fact that rent income is much less than the mortgage payment, under the expectation that equity gains will offset the negative monthly cash flow. 

Now, the bubble of the last 3-4 years was due to low interest rates at the front of the yield curve, which is something that the Federal Reserve controls, and which has given rise to new types of adjustable-rate mortgages that are advantageous only when short-term rates are very low.  The rise of the Fed Funds Rate back to moderate levels guarantees a correction of the recent bubble, and is easily predictable. 

However, there is another unrepeatable phenomenon residing beneath the first bubble, at the other end of the yield curve - the decline in long-term rates over the last 25 years.

    

The yield of the 10-year bond, which somewhat corelates to 30-year mortgage rates, peaked in the early 1980s and bottomed out in 2003.  This long downward drift in mortgage rates generated upward movement on housing, and permitted housing to rise at a rate greater than nominal per capita GDP over this period.  Even if someone purchased a house in the early 1990s, their mortgage rate was 10%, vs. just 6% in 2001 (before the recent bubble).  This is the reason why the old rule of thumb of prospective homeowners being wise not the purchase a house priced more than 2.5 times their annual income was applicable in the 1970s and 1980s, but somehow gave way to home prices of 5-7 times income being considered normal.  The hypothetical example below may help illustrate this phenomenon.

Now, the 10-year note yields (and mortgage rates) have begun to rise.  While the rise has merely been by 1% so far, and even if rates never get that much higher than they are is now, it is impossible for the drop in yield from 1981 to 2001 to be repeated.  When the 10-year yield is 5% and mortage rates are 6.5%, there is no room for them to drop another 3%.  Theoretical 3% mortgage rates would result in homes being priced at 10 times average salaries nationwide, and even then have no further room for appreciation from that point.  The floor has been hit, and there is nowhere else to go for further rate declines. 

Thus, while the bubble created by low short-term rates from 2002-04 may dissipate in the next two years, after that, the next 20 years will additionally no longer have a tailwind of declining long-term rates behind housing, and the trendline of housing prices will be forced to converge towards mere increases in inflation and per-capita real GDP, or about 5% a year in the US.  This is after the short-term bubble corrects. 

While I do believe that economic growth rates are exponential and accelerating, housing, being a product without a knowledge-based component, is less likely to participate in this accelerating curve.  Increasingly greater returns will be seen in the stock market, and stocks, particularly those of knowledge-based businesses, will continue to draw capital away from real-estate, over the next 20 years. 

Europe is Giving Up on the Future

Two events on April 10, 2006 pushed continental Europe closer to the irreversible extinction of their civilization. 

In France, a very modest law to let employers terminate underperforming employees before the age of 26 was scrapped after socialists rioted in protest.  This could have been the first step in halting France's slide down the economic and demographic slippery slope they are on, but rioting socialists proved they can intimidate the government.  No business started in France in the last 40 years is among France's 25 largest corporations.  A culture of low birth rates, aspirations of mediocrity, and segregation of angry Islamic immigrants spells disaster for France before 2020. 

In Italy, one of the last staunchly pro-US leaders in Europe, Silvio Berlusconi, may lose his bid for re-election.  Italy, like France, also has a sluggish economy and birth rates far below replacement levels.  His opponent, Romano Prodi, is bound to continue and even increase socialist practices such as 4-day workweeks.

The leftward shifts follow in the footsteps of Spain, which, in reaction to the March 11, 2004 Madrid Train Bombings, chose appeasement over counterattack, and voted out a pro-American government in favor of an anti-American socialist government.  Predictably, Spain also has a sluggish economy, anti-business labor laws, and a severe shortage of new children being produced.

There are still small pockets of hope in Europe.  Germany voted out anti-American Gerhard Schroeder and voted in pro-American reformist Angela Merkel.  Denmark stood firm in the cartoon controversy.  But these events, unless they cascade into much larger movements, are not enough to shift the center of gravity of European culture away from the path to demise.  The hope some had for Europe to fight for their future fell into the abyss on April 10, 2006. 

Remarkably, for the high opinions that many Europeans have of their culture, they have little interest in continuing that culture through producing new Europeans.  When many Europeans are asked about this, they don't even want to think about it.  Try a small experiment the next time you get a chance to ask this of anyone from continental Western Europe.

"In Europe, far fewer children are being produced to replace the existing population of Europeans, even while immigrant Muslims have many children.  How can European civilization continue, under these circumstances?"

Try it, and see what happens.  Notice how their answer will avoid the question posed and somehow deviate into a criticism of America.  Anti-Americanism is not merely their fashion, but now a drug that they use to distract them from their self-inflicted troubles.  The European Union, formed to be an economic couterweight to the US, still produces just half of the new wealth that the US produces, and has a growth rate much lower than the world average.  By 2020, the EU will not even be a counterweight to China or India, let alone the US.   

It is sad when a civilization with a rich history and culture stops making an effort to build a future.  Perhaps, in a Darwinian sense, we are seeing evolution and extinction at work, where societies than can't adapt to new realities are unable to take action to continue their survival. 

Cox and Forkum puts a thousand words in a picture.

The Next Big Thing in Entertainment - Part II

Continuing from Part I, where a case is made that the successor to video games, virtual reality, will draw half of all time currently spent on television viewership by 2012. 

The film industry, on the other hand, has far less of a captive audience than television, and thus evolved to be much closer to a meritocracy.  Independent films with low budgets can occasionally do as well as major studio productions, and substantial entrepreneurship is conducted towards such goals. 

This is also a business model that continually absorbs new technology, and even has a category of films generated entirely through computer animation.  A business such as Pixar could not have existed in the early 1990s, but from Toy Story (1995) onwards, Pixar has produced seven consecutive hits, and continues to generate visible increases in graphical sophistication with each film.  At the same time, the tools that were once accessible only to Pixar-sized budgets are now starting to become available to small indie filmmakers. 

Even while the factors in Part I will draw viewers away from mediocre films, video game development software itself can be modified and dubbed to make short films.  Off-the-shelf software is already being used for this purpose, in an artform known as machinima.  While most machinima films today appear amateurish and choppy, in just a few short years the technology will enable the creation of Toy Story calibre indie films. 

By democratizing filmmaking, machina may effectively do to the film industry what blogs did to the mainstream media.  In other words, a full-length feature film created by just 3 developers, at a cost of under $30,000, could be quickly distributed over the Internet and gain popularity in direct proportion to its merit.  Essentially, almost anyone with the patience, skill, and creativity can aspire to become a filmmaker, with very little financing required at all.  This too, just like the blogosphere before it, will become a viable form of entrepreneurship, and create a new category of self-accomplished celebrities. 

At the same time, machinima will find a complementary role to play among the big filmmakers as well, just as blogs are used for a similar purpose by news organizations today.  Peter Jackson or Steven Spielberg could use machinima technology to slash special-effects costs from millions to mere thousands of dollars.  Furthermore, since top films have corresponding games developed alongside them, machinima fits nicely in between as an opportunity for the fan community to create 'open source' scenes or side stories of the film.  This helps the promotion and branding of the original film, and thus would be encouraged by the producer and studio. 

Thousands of people will partake in the creation of machinima films by 2010, and by 2012 one of these films will be in the top 10 of all films created that year, in terms of the number of Google search links it generates.  These machinima films will have the same effect on the film industry that the blogosphere has had on the mainstream media. 

There you have it, the two big changes that will fundamentally overturn entertainment as we know it, while making it substantially more fun and participatory, in just 6 short years. 

The Next Big Thing in Entertainment - Part I

Previously, I had written about why the biggest technological changes take almost everyone by surprise.  Not many people recognize the exponential, accelerating nature of technological change, and fewer still have the vision to foresee how two seemingly unrelated trends could converge to create massive new industries and reconstruct popular culture.

Today, we will attempt to make just such a prediction.

Computer graphics and video games have improved in realism in direct accordance with Moore's Law.  Check out the images of video game progression to absorb the magnitude of this trend.  One can appreciate this further by merely comparing Pixar's Toy Story (1995) to their latest film, Cars (2006).  But to merely project this one trend to predict that video games will have graphics that look as good as the real thing is an unimaginative plateau.  Instead, let's take it further and predict :

Video Gaming (which will no longer be called this) will become a form of entertainment so widely and deeply enjoyed that it will reduce the time spent on watching network television to half of what it is today, by 2012.

Impossible, you say?  How can this massive change happen in just 6 years?  First, think of it in terms of 'Virtual Reality' (VR), rather than 'games'.  Then, consider that :

1) Flat hi-def television sets that can bring out the full beauty of advanced graphics will become much cheaper and thinner, so hundreds of millions of people will have wall-mounted sets of 50 inches or greater for under $1000 by 2012.

2) The handheld controllers that adults find inconvenient will be replaced by speech and motion recognition technology.  The user experience will involve speaking to characters in the game, and sports simulations will involve playing baseball or tennis by physically moving one's hand.  Eventually, entire bodysuits and goggles will be available for a fully immersive experience. 

3) Creative talent is already migrating out the television industry and into video games, as is evident by the increase in story quality in games and the decline in the quality of television programs.  This trend will continue, and result in games available for every genre of film.  Network television has already been reduced to depending on a large proportion of low-budget 'reality shows' to sustain their cost-burdened business models. 

4) Adult-themed entertainment has driven the market demand and development of many technologies, like the television, VCR, DVD player, and Internet.  Gaming has been a notable exception, because the graphics have not been realistic enough to attract this audience, except for a few unusual games.  However, as realism increases through points 1) and 2), this vast new market opens up, which in turn pushes development.  For the first time, there are entire conferences devoted to this application of VR technology.  The catalyst that other technologies received is yet to stimulate gaming.

5) Older people are averse to games, as they did not have this form of entertainment when they were young.  However, people born after 1970 have grown up with games, and thus still occasionally play them as adults.  As the pre-game generation is replaced by those familiar with games, more VR tailored for older people will develop.  While this demographic shift will not make a huge change by 2012, it is irreversibly pushing the market in this direction every year. 

6) Online multiplayer role-playing games are highly addictive, but already involve people buying and selling game items for real money, to the tune of a $1.1 billion per year market.  Highly skilled players already earn thousands of dollars per year this way, and with more participants joining through more advanced VR experiences described above, this will attract a sizable group of people who are able to earn a full-time living through these VR worlds.  This will become a viable form of entrepreneurship, just like eBay and Google Ads support entrepreneurial ecosystems today.

There you have it, a convergence of multiple trends bringing a massive shift in how people spend their entertainment time by 2012, with television only watched for sports, documentaries, talk shows, and a few top programs. 

The progress in gaming also affects the film industry, but in a very different way.  The film industry will actually become greatly enhanced and democratized over the same period.  For this, stay tuned for Part II tomorrow. 

Protesting for More Work, Protesting for Less Work

A strange world we live in.  In the US, there were massive protests of illegal immigrants in many major US cities, including a march of 500,000 participants in Los Angeles.  It is unheard of that so many people who are in a country illegally could assemble in a major city and wave the flags of another country while making demands for more rights from their host nation.  American flags were even taken down in one or two instances, even though these people are strongly opposed to returning to Mexico. 

As absurd as this outrage is, it could be far, far worse.  What if the Los Angeles protests were not peaceful? 

In France, economic stagnation and unemployment rates of 22% for young people (and up to 50% for immigrant Muslims) have brought French society to a nightmare worse than most Americans could even imagine.  In an attempt to make just a small dent in this problem, Prime Minister Dominique de Villepin suggested that employers should have to power to terminate underperforming employees under the age of 26.  The job security of underperforming employees over the age of 26 are not even being discussed yet.  This would enable businesses to feel less cautious about hiring a new employee, knowing that they could discharge the employee for poor performance.  In turn, this would permit more young people, particularly underpriveleged Muslim youths, to earn a living.  But the culture of entitlement and rationalization of sloth in France is so great that even this minor dose of capitalism provoked upper-class French youths into riots, with cars being torched and riot police having to use teargas.  It is telling that so many of these upper-crust people want guaranteed job security even at the cost of creating a fertile climate for small businesses and decreasing the unemployment of Muslim youths.  What about being entrepreneurs themselves?  What about egalite and fraternite?

A few months earlier, Islamic youths rioted in France for a host of reasons including their 50% unemployment rate.  In essense, they are fed up with bearing the brunt of the government-supported laziness of the upper-class students mentioned above.  Over 4000 cars were torched over the 16-day uprising. These two groups are on a collision course for an explosive confrontation in the near future. 

The anti-business entitlement mentality has doomed French society, and that of continental Europe as a whole.  Crushing taxation and stagnant wages have made it prohibitively expensive to have children.  Socialized medicine has made doctors apathetic, which led to the deaths of 15,000 people in France and 20,000 in Italy from a heat wave.  Economic growth is shameful, with the entire EU producing only half as much new wealth as the US, despite a larger population.  US unemployment has not been above 10% in the last 25 years, even as Europe has experienced this for most of the last decade. 

It is almost too late for Europe to reverse its population decline and its invasion by hostile, unassimilable foreigners.  Sure, if Europe slashed its tax rates by a third, overhauled labor laws to be more pro-business, and incentivized young couples with a reward for having three children, they could save themselves.  But if even a tiny reform like Villepin's provokes riots, then the psychology of young Europeans is not ready to begin the process of self-criticism and sacrifice.

Europe is on the precipice of doom.  America, by contrast, has people who came here illegally to work, and still has an unemployment rate that Europe can only dream of.  The biggest obstacle for the American people is internalizing what the difference between legal and illegal immigration is; hardly as insurmountable of a challenge as changing a society's entire attitude towards work, competition, entrepreneurship, and reproduction. 

Finding Earth-like Planets Will Soon be Possible

First, the Earth (whether flat or spherical) was considered to be the center of the universe.  Then, the Sun was considered to be center of the universe.  Eventually, mankind came to realize that the Sun is just one of 200 to 400 billion stars within the Milky Way galaxy, which itself is just one among hundreds of billions of galaxies in the known universe, and there may even be other universes.

Astronomers have long believed that many stars would have planets around them, including some Earth-like planets.  Carl Sagan wrote and spoke extensively about this in the 1970s and 80s, but we did not have the technology to detect such planets at the time, so the discussions remained theoretical.  There were no datapoints by which to estimate what percentage of stars had what number of planets, of which what fraction were Earth-like. 

The first confirmed extrasolar planet was discovered in 1995.  Since then, continually improving technology has yielded discovery of more than one per month, for a grand total of about 176 to date.  So far, most known extrasolar planets have been Jupiter-sized or larger, with the detection of Earth-sized planets beyond our current technology. 

But the Impact of Computing is finding its way here as well, and new instruments will continue to deliver an exponentially growing ability to detect smaller and more distant planets.  Mere projection of the rate of discovery since 1995 predicts that thousands of planets, some of them Earth-sized, will be discovered by 2015.  To comfortably expect this, we just need to examine whether advances in astronomical observation are keeping up with this trend.  Let's take a detailed look at the chart below from a Jet Propulsion Laboratory publication, which has a lot of information.

The bottom horizontal axis is the distance from the star, and the top horizontal axis is the orbital period (the top and bottom can contradict each other for stars of different mass, but let's put that aside for now).  The right vertical axis is the mass as a multiple of the Earth's mass.  The left vertical axis is the same thing, merely in Jupiter masses (318 times that of the Earth). 

Current detection capability represents the area above the purple and first two blue lines, and the blue, red, and yellow dots represent known extrasolar planets.  Planets less massive than Saturn have been detected only when they are very close to their stars.  The green band represents the zone on the chart where an Earth-like planet, with similar mass and distance from its star as our Earth, would reside.  Such a planet would be a candidate for life. 

The Kepler Space Observatory will launch in mid-2008, and by 2010-11 will be able to detect planets in the green zone around stars as far as 1000 light years away.  It is set to examine 100,000 different stars, so it would be very surprising if the KSO didn't find dozens of planets in the green-zone. 

After 2015, instruments up to 1000 times more advanced than those today, such as the Overwhelmingly Large Telescope and others, will enable us to conduct more detailed observations of the hundreds of green-zone planets that will be identified by then.  We will begin to get an idea of their color (and thus the presence of oceans) and atmospheric composition.  From there, we will have a distinct list of candidate planets that could support Earth-like life. 

This will be a fun one to watch over the next decade.  Wait for the first headline of 'Earth-like planet discovered' in 2010 or 2011.

The Winds of War, The Sands of Time - Part II

Refer to Part I for the reasons behind the rapidly declining proportion of warfare being conducted in the world as time progresses.  As more nations achieve prosperity and democracy, the costs of war outweigh the benefits.

To predict the future risk of major wars, we can begin by assessing the state of some of the largest and/or riskiest countries in the world.  Success at achieving democracy and a per-capita GDP greater that $10,000/yr are highlighted in green.  We can also throw in the UN Human Development Index, which is a composite of these two factors, and track the rate of progress of the HDI over the last 30 years.  In general, countries with scores greater than 0.850 have met the aforementioned requirements of prosperity and democracy.  There are many more countries with a score greater than 0.850 today than there were in 1975.

Let's see how some select countries stack up.

China : The per-capita income is rapidly closing in on the $10,000/yr threshold, but democracy is a distant dream.  I have stated that China will see a sharp economic slowdown in the next 10 years unless they permit more personal freedoms, and thus nurture entrepreneurship.  Technological forces will continue to pressure the Chinese Communist Party, and if this transition is moderately painless, the ripple effects will be seen in many other communist or autocratic states that China supports, and will move the world strongly towards greater peace and freedom.  The single biggest question for the world is whether China's transition happens without major shocks or bloodshed.  I am optimistic, as I believe the CCP is more interested in economic gain than clinging to an ideology and one-party rule, which is a sharp contrast from the Mao era where 40 million people died over ideology-driven economic schemes.  Cautiously optimistic. 

India : A secular democracy has existed for a long time, but economic growth lagged far behind.  Now, India is catching up, and will soon be a bulwark for democracy and stability for the whole world.  India is only now realizing how much the world will depend on it.  Very optimistic.

Russia : A lack of progress in the HDI is worrisome.  It could yet undo the peaceful transition from the Soviet system that the world benefit from.  Hopefully, energy and technology industries can help Russia increase its population growth rate, and up its HDI.  Cautiously optimistic.

Indonesia : With more Muslims than the entire Middle East put together, Indonesia took a large step towards democracy in 1999 (improving its HDI score), and is doing moderately well economically.  Economic growth needs to accelerate in order to cross $10,000/yr by 2020.  Cautiously optimistic.

Pakistan : The divergence between the paths of India and Pakistan has been recognized by the US, and Pakistan, with over 50 nuclear warheads, is also where Osama bin Laden and thousands of other terrorists are currently hiding.  Any major terrorist attack will inevitably be traced to individuals operating in Pakistan, which has regressed from democracy to dictatorship, and is teetering on the edge of religious fundamentalism.  The economy is growing quickly, however, and this is the only hope of averting a disaster.  Pessimistic.

Iraq : Although Iraq is not a large country, its importance to the world is disproportionately significant.  Bordering so many other non-democratic nations, if Iraq can succeed, the pressure on its neighbors to adapt will be immense.  The destiny of the US is also interwined with Iraq, as the outcome of the current War in Iraq will determine the ability of America to take any other action, against any other nation, in the future.  Cautiously optimistic, but depends on America's resolve.

Iran : Many would be surprised to learn that Iran is actually not all that poor, and the Iranian people have enough to lose that they are not keen on a large war against a powerful coalition.  However, the autocratic regime that keeps the Iranian people suppressed has brutally quashed democratic movements.  The secret to turning Iran into a democracy is its neighbor, Iraq.  If Iraq can succeed, the pressure on Iran exerted by Internet access and globalization next door will be immense.  This will continue to nibble at the edges of Iranian society, and the regime will collapse before 2015 even without a US invasion.  If Iran's leadership insists on a confrontation over their nuclear program, the regime will collapse even sooner.  Cautiously optimistic, pending Iraq. 

So Iraq really is a keystone state, and the struggle to prevail over the forces that would derail democracy has major repurcussions for many nations.  The US, and the world, cannot afford for Iraq to fail.  If we succeed, the world of 2015 will have stamped out belligerence from yet another formerly notorious region.  At this point, all remaining roads to disastrous tragedy lead to Pakistan.

As long as Pervez Musharaff runs Pakistan, he may manage to keep it from flying apart into fanatical fragments.  But the fact that the father of Pakistan's nuclear program was selling nuclear secrets, and that the likes of Osama bin Laden have found sanctuary in Pakistan, makes for a very worrisome combination.  The ultimate 'day of infamy' could be upon us long before Pakistan has any chance of attempting to restore democracy or achieving economic prosperity.

But smaller-scale terrorism is nothing new.  It just was not taken as seriously back when nations were fighting each other in much larger conflicts.  The 1983 Beirut bombing that killed 241 Americans did not dominate the news for more than two weeks, as it was during the far more serious Cold War.  Today, the absence of wars between nations brings terrorism into the spotlight that it could not have previously secured. 

Wars against terrorism are a paradigm shift, because where a war like World War II involved symmetrical warfare between declared armies, the War on Terror involves asymmetrical warfare in both directions.  Neither party has yet gained a full understanding of the power it has over the other. 

A few terrorists with a small budget can kill thousands of innocents without confronting a military force. Guerilla warfare can tie down the mighty US military for years until the public grows weary of the stalemate, even while the US cannot permit itself to use more than a tiny fraction of its power in retaliation.  Developed nations spend vastly more money on political and media activites centered around the mere discussion of terrorism than the terrorists themselves need to finance a major attack on these nations. 

At the same time, pervasively spreading Internet access, satellite television, and consumer brands continue to disseminate globalization and lure the attention of young people in terrorist states.  This unrelentingly and irreversibly erodes the fabric of pre-modern fanaticism at almost no cost to the US and other free nations.  The efforts by fascist regimes to obstruct the mists of the information ethersphere from entering their societies is so futile as to be comical.  Bidirectional asymmetry is the new nature of war, and the side that learns how to harness the asymmetrical advantage it has over the other is the side that will win.

It is the wage of prosperous, happy societies to be envied, hated, and forced to withstand threats that they cannot reciprocate back onto the enemy.  The US has overcome foes as formidable as the Axis Powers and the Soviet Union, yet we appear to be at a stalemate against a pre-modern, unprofessional band of deviants that does not even have the resources of a small nation and has not invented a single technology.  The new war is thus ultimately not with the terrorists, but with ourselves - our complacency, short attention spans, and propensity for fashionable ignorance over the lessons of history.  Whether we awaken to the advantages we do have over our enemies before or after the terrorists get a bit too lucky and kill a million of us in a day remains to be seen. 

The Winds of War, The Sands of Time - Part I

Given the massive media coverage of the Iraq War, and the pop-culture fashion of being opposed to it, one could be led to think that this is one of the most major wars ever fought.  Therein lies the proof that we are actually living in the most peaceful time ever in human history. 

Just a few decades ago, wars and genocides killing upwards of a million people were commonplace, with more than one often underway at once.  Remember these?

Second Congo War (1998-2002) : 3.6 million deaths

Iran-Iraq War (1980-88) : 1.5 million deaths

Soviet Invasion of Afghanistan (1979-89) : 1 million deaths

Khmer Rouge (1975-79) : 1.7 million deaths from genocide

Bangladesh Liberation War (1971) : 1.5 million deaths from genocide

Vietnam War (1957-75) : 2.4 million deaths

Korean War (1950-53) : 3 million deaths

This list is my no means complete, as wars killing fewer than one million people are not even listed.  At least 30 other wars killed over 20,000 people each, between 1945 and 1989.

If we go further back to the period from 1900-1945, we can see that multiple wars were being simultaneously fought across the world.  Going further back still, the 19th century had virtually no period without at least two major wars being fought.

We can thus conclude that by historical standards, the current Iraq War is tiny, and can barely be found on the list of historical death tolls.  That it gets so much attention merely indicates how little warfare is going on in the world. 

Why have so many countries quitely adapted to peaceful coexistence?  Why is a war between Britain and France, or Russia and Germany, or the US and Japan, nearly impossible today? 

We can start with the observation that never have two democratic countries, with per-capita GDPs greater than $10,000/year, gone to war with each other.  The decline in warfare in Europe and Asia corelates closely with multiple countries meeting these two conditions over the last few decades, and this can continue as more countries graduate to this standard of freedom and wealth.  The chain of logic is as follows :

1) Nations with elected governments and free-market systems tend to be the overwhelming majority of countries that achieve per-capita incomes greater than $10,000/year.  Only a few oil-rich monarchies are the exception to this rule. 

2) A nation with high per-capita income tends to conduct extensive trade with other nations of high prosperity, resulting in the ever-deepening integration of these economies with each other.  A war would disrupt the economies of both participants as well as those of neutral trading partners.   Since the citizens of these nations would suffer financially from such a war, it is not considered by elected officials. 

3) As more of the world's people gain a vested interest in the stability and health of the interlocking global economic system, fewer and fewer countries will consider international warfare as anything other than a lose-lose proposition.

4) More nations can experience their citizenry moving up Maslow's Hierarchy of Needs, allowing knowledge-based industries thrive, and thus making international trade continuously easier and more extensive. 

5) Since economic growth is continuously accelerating, many countries crossed the $10,000/yr barrier in just the last 20 years, and so the reduction in warfare after 1991 years has been drastic, even if there was little apparent reduction over the 1900-1991 period. 

This explains the dramatic decline in war deaths across Europe, East Asia, and even Latin America over the last few decades.  Thomas Friedman has a similar theory, called the Dell Theory of Conflict Prevention, wherein no two countries linked by a major supply chain/trade network (such as that of Dell Computer), have ever gone to war with each other, as the cost of war is prohibitive to both parties.  But what can we expect in the future?  Stay tuned for Part II tomorrow. 

World GGP Grew by 4.3% in 2005

The World GGP (Gross Global Product) grew by a strong 4.3% in 2005.  While this rate would merely be considered robust today, it is a rate unheard of before the mid-20th century.  In fact, prior to the 16th century, 4.3% growth was what the world economy might have seen in an entire century, rather than just a single year. 

Refer to how Economic Growth is Exponential and Accelerating for a detailed study.

However, this growth, which added $1.8 trillion to the now $44 trillion world economy, was not evenly distributed at all.  In fact, more than one third of the $1.8 trillion was generated in just the US and China.  A breakdown of the wealth creation, by country (in direct currency conversion, not purchase power parity (PPP)) :

United States : 25.0%

EU (a collection of 24 separate countries) : 12.6%

China : 9.5%

Japan : 5.8%

India : 3.0%

Russia : 2.5%

Rest of World : 41.6%

A large economy with a slow growth rate, like that of the EU, produces a similar portion of the pie as a small economy with a high growth rate, like that of China.  This also means that India and China will soon be contributing a much larger percentage of the pie, as their currencies appreciate through increased exports.

In viewing historical World GDP Growth from The Economist, we can not only see that there has not been a year without growth since 1980, but that the difference between nominal and PPP growth rates have been diverging due to India and China. Continued growth will result in currency appreciation for both (China is already forcibly keeping its currency undervalued), and will bring the light-blue nominal line up to the level of the darker PPP line.  The awakening of India and China to supercharge the global economy is effectively the single biggest event of the last 15 years. 

This could push the world GGP growth trendline over 5% by 2020, and would be consistent with the expected continued acceleration of the world's economy in the 21st century. 

Who Hates America?

An interesting survey by the PewResearchCenter, cited in The Economist, asks the citizens of several countries for their opinion of the United States.  Comparing this to the socioeconomic history and current characteristics of each of these nations allows some corelations to present themselves.

In the US itself, 17% view their country negatively.  I have claimed earlier that 8-10% of the US population comprises of active or semi-active fifth-columnists, who seek to undermine American strength and security, yet cannot bring themselves to openly admit this deeply held belief, nor move to another country.  This survey appears to offer further evidence of this fifth column. 

Next comes the big surprise.  Most Americans are entirely unaware that the most pro-US foreign country in the world is India.  It is also one of the only countries where George W. Bush is more highly regarded than in the US.  The reason for this is that during the period of Indian socialism and economic isolation (1947-91), Indians were fed a constant diet of anti-American, anti-capitalism propaganda. The utter failure of India's socialist policies, combined with the emergence of the Indian-American community as the wealthiest ethnic group in the US, led to a deep appreciation for a socioeconomic system proven to empower Indians.  As a democracy, Indians could understand America more readily than the Chinese or Arabs could.  All this has led to a nation with 3 times the population of Europe trending towards becoming one of America's closest economic, political, ideological, and military allies. 

Other pro-America nations such as Poland and Russia have also made the assumption that anti-American, socialist practices failed to deliver economic benefits for decades, so the opposite approach must be more beneficial. 

Anti-Americanism does dominate among many non-English-speaking European countries.  Americans may be saddened by this, considering how American sacrifices in troops and resources have saved Europe twice in the last 65 years.  Most of these countries have declining populations and a shortage of children being produced.  It is ironic that people such as the French and Germans, who consider their societies to be so great, have little desire to continue it through producing another generation of French and German people.  Their crushing entitlement programs and demographic time bomb have doomed their societies, and the unwillingness of America to follow them down this path has caused great envy towards America among 55-70% of the population in some European countries.  Read this article from Germany's Der Spiegel, authored by a rare European with a sense of historical context. 

Lastly, the most staunch anti-Americanism is present among undemocratic Islamic societies.  This is not a surprise.  However, not included in this survey are Afghanistan and Iraq, where pro-American sentiments are slightly dominant. 

The next time a fashion-parroting ignoramus or fifth-columnist informs you of how 'the rest of the world hates America', forward them this article, and remind them that India has more people than Europe and the Middle East put together.  The delusions of fifth-columnists represent merely their fanatical hatred of a society that celebrates meritocracy, strong families, a powerful and proud military, and a great thirst for achievement. 

Also refer them to this superb article by Victor Davis Hanson on how America can judge itself on the character of societies that exhibit anti-Americanism, and how most of their rhetoric masks a deep shame at being dependent on America.  He states :

When Europe orders all American troops out; when Japan claims our textbooks whitewash the Japanese forced internment or Hiroshima; when China cites unfair trade with the United States; when South Korea says get the hell off our DMZ; when India complains that we are dumping outsourced jobs on them; when Egypt, Jordan, and the Palestinians refuse cash aid; when Canada complains that we are not carrying our weight in collective North American defense; when the United Nations moves to Damascus; when the Arab Street seethes that we are pushing theocrats and autocrats down its throat; when Mexico builds a fence to keep us out; when Latin America proclaims a boycott of the culturally imperialistic Major Leagues; and when the world ignores American books, films, and popular culture, then perhaps we should be worried. But something tells me none of that is going to happen in this lifetime.

Nicely put.  Also read why America will still be the only superpower by 2030. 

Update : Some anti-Americans have exhibited racism towards Indians in the comments section, frustrated that a group of dark-skinned people can be economically successful and pro-American.  They have also said that the survey has been rigged to falsely show that some countries are pro-US, but simultaneously claim that the same survey has not been rigged in countries that turned out to be anti-US.  These anti-Americans, as usual, cannot answer simple questions posed to them.  Read all about it in the comments section. 

These Are the Best of Times

When we read stories or watch films set in a historical context, it is seductive to romanticize about being an Egyptian Pharoah, an English Knight, an Arab Sultan, or an 18th century French Aristocrat.  But how desirable were their daily lives compared to ours today?

First, refer back to the articles on Historical Life Expectancy, and Exponential and Accelerating Economic Growth.  Both show that the improvements in human life over the 20th century dwarf the improvements made in all of human history before then. 

But surely the people at the very top of society, at any time in history, had enviable lives, did they not?  To put this perspective, we need not go back any further than a century. 

Consider John D. Rockefeller, a name nearly synonymous with wealth.  At one point he had a net worth as high as 1/65th of US GDP at that time, a figure that would be the equivalent of $190 Billion today - four times what Bill Gates currently has.  He owned land, employed people, and had political clout that would seem extraordinary at any time in history.  But, having died in 1937 at the age of 98, Rockefeller never had photographs of his childhood, never watched a color film, never flew in a jet engine airplane, and never saw a photograph of the Earth taken from space.  If Rockefeller wished to travel from New York to Chicago, it took him and his entourage more than a day.  If his servant cut him during a morning shave (or even if he did it himself), a cloth bandage was the only kind available. His underwear did not have elastic, and since no cohort of servants could have realistically alleviated that problem for him, he probably spent every day accustomed to irritating hassles that would be unacceptable to even the poorest Americans today.  He couldn’t have even obtained a tube of mint-gel toothpaste or a can of chilled Coca-Cola from a soda machine. 

The same applied to Cornelius Vanderbilt, Andrew Carnegie, and JP Morgan. While they had immense political, purchasing, and hiring power, the diversity of what they could do was limited by our standards, and we might actually have found some portions of their lifestyles to be inconvenient and monotonous.  They, in turn, had electricity, phonographs, railroads, and slow automobiles that may have made them think that the world of Benjamin Franklin and George Washington was deprived, and so on. 

Even as the ability to purchase land and hire the services of others has become increasingly expensive with time (but still at a rate consistent with GDP growth), the cost and diversity of goods available to the average person continues to improve remarkably, and, of course, this trend will continue to accelerate. 

While it took electricity, automobiles, and air travel decades to evolve from invention to commoditization in the United States, the process of diffusion is now shortening to years.  One merely needs to internalize The Impact of Computing to grasp this surging pace.  Needless to say, if we can chuckle at the limitations of John D. Rockefeller’s world a century later, by 2030 we may be able to poke fun at out own world of 2006 to the same extent.  A world where there were no hypersonic passenger aircraft, no intelligent robots, no self-driving cars, no virtual reality entertainment, and no easy cure for cancer may seem brutal and boring by then.

Thus, the advance and democratization of technology transcends perceptions about wealth and poverty over the course of time, and it is debatable whether it was better to be a super-wealthy American in 1920, a moderately wealthy American in 1960, or an average American in 2006.  Which would you choose? 

Are You Prepared to Live to 100? - Part II

Refer back to Part I here, where we discuss that despite the many stunning advances in medicine, there is still something within us that doubts that our present lives could be extended to 100 years.

The exponentially progressing advances in genomic and proteomic science will cure many genetic predispositions that an individual may have to certain diseases, again, with medical knowledge currently doubling every 8 years.  Programmable nanobots that can keep us healthy from inside, by detecting cancerous cells or biochemical changes very early, are also a near-certainty by the 2020s.  Furthermore, if just half of the world's 8 million millionaires were each willing to pay $500,000 to add 20 healthy, active years to their lives, the market opportunity would be (4 million X $500,000) = $2 trillion.  The technological trend and market incentive is definitely in place for revolutions in this field. 

But that is still not quite enough to assure that the internal mechanisms that make cells expire by a certain time, or the continuous damage done by cosmic rays perpetually going through our bodies, can be fully negated. 

Ray Kurzweil, in his essay "The Law of Accelerating Returns", seems confident that additions to human lifespan will grow exponentially.  While I agree with most of his conclusions in other areas, over here, I am not convinced that this growth is accelerating at the moment.  I feel that the new advances will be increasingly more complex, and only the most high-informed and disciplined individuals will be able to capitalize on the technologies available to them to extend their lifespan.  This will benefit a few people, but not enough to lift the broader average by much. 

However, where I do agree with Kurzweil and other Futurists is the concept of a Technological Singularity and Post-Human existence.  The advances in biotechnology and nanotechnology will become so advanced that humans will be able to reverse-engineer their brains re-engineer their entire bodies down to the molecular level.  In fact, you could effectively transfer your 'software' (your mind) into upgraded hardware.  This is not as crazy as it sounds, as even today, many devices are used within or near the body in order to prolong or augment human life, and many of these are fully part of The Impact of Computing; so both their sophistication and number could rise rapidly. 

This potentially will afford immortality to the human mind for those fortunate enough to be around in 2050 or so.  Of course, as the years progress, we will have a better idea of how realistic this possibility actually is.

So that is my conclusion.  Average human life expectancy will make moderate but unspectacular gains for the next 50 years, with only those who maintain healthy lifestyles and are deeply aware of the technologies available to them living past the age of 100.  This will be true until the Technological Singularity, where humans *may* be able to separate their minds from their bodies, and reside in different, artificially engineered bodies.  This is a vast subject which I will describe in more detail in future posts.  For some reading, go here. 

Also read about The Longevity Dividend.

Are You Prepared to Live to 100? - Part I

There is a lot of speculation about whether new medical science will allow not just newborn babies to live until 100, but even people who are up to 40 years old today.  But how much of it is realistic?

At first glance, human life expectancy appears to have risen greatly from ancient times :

Neolithic Era : 22

Roman Era : 28

Medieval Europe : 33

England, 1800 : 38

USA, 1900 : 48

USA, 2005 : 78

But upon further examination, the low life expectancies in earlier times (and poorer countries today) are weighed down by a high infant mortality rate.  If we take a comparison only of people who have reached adulthood, life expectancy may have risen from 45 to 80 in the last 2000 years.  This does not appear to be as impressive of a gain rate.

But, if you index life expectancy against Per Capita GDP, then the slow progress appears differently.  Life expectancy began to make rapid progress as wealth rose and funded more research and better healthcare, and since Economic Growth is Accelerating, an argument can be made that if lifespans jumped from 50 to 80 in the 20th century, they might jump to 100 by the 2020s.

But that still seems to be too much to expect.

We hear that if cancer and cardiovascular disease were cured, average lifespans in America would rise into the 90s.  We acknowledge that medical knowledge is doubling every 8 years or so.  We see in the news that a gene that switches off aging has been found in mice.  We even know that the market demand for such biotechnology would be so great - most people would gladly pay half of their net worth to get 20 more healthy, active years of life - that it will attract the best and brightest minds. 

Yet something within us is doubtful.....

(stay tuned tomorrow for Part II)

Advances in Automobile Technology : Safety

Earlier articles have discussed the murmur of activity building up in the field of energy technology, and how the sum total of many different fields of innovation will add up to big cumulative advancements.  I even go so far as to predict that there will be average-priced family sedans in 2015 that deliver 60 MPG even with 240 hp engines.  But that is not the only field of exciting advances that the automobile will see over the same period. 

Today, about 42,000 Americans die each year in road accidents.  Most of these are young people, including thousands of children.  On top of the tragic loss of life, this is very costly to the economy.  From police, ambulance, emergency room, insurance, legal, and funeral resources to the productivity lost, each casualty may cost an average of $2 million.  This totals to $84 billion in cost to the US economy each year.  However, one detail has gone nearly unnoticed about this grim statistic : the number has not risen in over a decade, despite population and automobile growth. 

Here is a table with details on the last 10 years of traffic fatalities.  The deaths per mile traveled, and in proportion to the population, has been dropping by 1-2% per year.  Recent additions, such as side airbags and stronger body frames, have been percolating through the system. 

The rate of fatality reduction will begin to slightly accelerate with a raft of new innovations about to make their way into cars.  Nanotechnology is bringing new materials science to car parts, with strong carbon fiber components weighing a fraction of their steel predecessors.  With lighter vehicle weights and stronger bumpers fewer accidents will be fatal, with continual improvement through each successive advance in nanomanterials. 

As guaranteed by The Impact of Computing, more electronic intelligence will percolate into cars in the form of revolutonary safety systems.  Night Vision, Lane Departure Warnings, and Collision Avoiding Cruise Control are already available in luxury cars, and will rapidly improve while becoming standard, inexpensive features in all cars.  The Impact of Computing necessitates that even if such systems cost $5000 today, a system 5 times better may cost under $100 in ten years. 

The nanomaterials and electronic systems may at first generate false complacence and carelessness among drivers, who assume that the safety systems can negotiate any situation.  Once this belief dissipates, we will see accelerating declines in annual traffic deaths each year.  This will spare the lives of thousands of children who might not have otherwise had a chance to become adults.  Economically, this will translate into lower auto, medical, and life insurance premiums, fewer traffic jams, and less wastage of police resources. 

Prediction : By 2020, average US traffic deaths will have dropped to only 25,000 per year, despite the greater US population by then.  This is against 43,000 in 2004 and 42,000 in 1995. 

Nuclear Deal Signed with India, American Diplomat Killed in Pakistan

President Bush's critical visits to India and Pakistan were bound to be anything but dull, and two events have occured in the last 12 hours that signify not only the diverging brand images of both India and Pakistan, but also how many issues of global importance converge on this region. 

India and the US have signed a nuclear energy agreement.  This not only helps world oil prices by easing India's demand for oil, it is essentially a stamp of approval for India as a responsible, democratic chaperone of nuclear weapons. 

This cartoon from Cox and Forkum says it all. 

Things are not so rosy over in Pakistan.  A US diplomat was killed by an Al-Qaeda suicide bomber, an attack strategically planned to complicate Bush's visit there later this week.  Additionally, a major terrorist commander was captured in Bangladesh, a country that used to be part of Pakistan until 1971.  The mainstream media barely mentions this. 

As India's brand image evolves to one of a globally influential democracy with rapidly growing, knowledge-based industries, the brand image of Pakistan continues to degenerate into that of a state full of Al-Qaeda terrorists and those sympathetic towards them.  This cannot be attributed to Islam alone, as India still has about the same aggregate number of Muslims as Pakistan, yet Indian Muslims rarely have been the cause of such suicide-bombings. 

This is also apparent in this Pew survey, indicating that India has a higher opinion of the US than almost any other country, whereas Pakistan is at the other end of the scale, mostly viewing the US negatively. 

We are witnessing a divergence in the fortunes of India and Pakistan (and Bangladesh), which were all one country until 1947.  Can Pakistan change from a dangerous path to join Indian on a productive one?  For the future of the world, it must.

India, Indo-US ties, India nuclear deal, Indian economy, India outsourcing

Futuristic Construction Materials

Here is a fun slideshow in BusinessWeek today, in the upper-left corner of the article.  Materials such as translucent concrete that lets 10% of natural daylight through the walls, and a composite wood that actually conducts electricity are now a reality. 

While these materials are expensive, their costs are dropping rapidly, as the advanced molecular science behind them is, after all, an information technology.  The translucent concrete cost will, over many years, converge with that of ordinary concrete.  Plus, the money saved from consuming less electricity on indoor lighting, and thus fewer maintenence people needed to replace indoor tubelights, would also enter the cost equation.

An inflection point may occur with a major new skyscraper in Asia choosing to use some of these materials in some superluxury hotel on the upper floors, or someone like Donald Trump or Steve Wynn adding this as a feature to a new, highly publicized building.  The massive exposure will bring more competition, accelerating improvements and driving down prices.

This will be a very fun one to watch over the next several years. 

Keywords : Futuristic materials, Donald Trump new building, transparent concrete.

The Coming Jump in Energy Technology - More Updates

I have two prior posts on what I believe is a new climate ripe for major advances in energy technology.  Refer to :

Why $70/barrel oil is good for America.

The Coming Jump in Energy Technology Advancement

My prediction is that the burden of high energy prices and reliance on unsavory regimes that we currently face will have some serious scares in the next few years, but will abate and no longer be a major crisis by 2015, due to rapid advances in many new areas of technology. 

I claim that there will be no single technology that saves us, but rather many fields of innovation that slay the monster with a thousand small cuts.

Some more examples of promising advances :

A new method of converting previously unusable husks and stalks to ethanol.   

A business renting out biodiesel cars in Los Angeles sets up shop.

A battery breakthrough.

GE has created a machine that cuts the cost of producing hydrogen fuel by more than half. 

Solar energy costs are dropping quickly.  The reason this is happening now instead of at any time over the last 30 years is because solar cells are made of the same materials that computational chips are made of, and thus inevitably converge into The Impact of Computing. 

A startup attempting to make a 330 MPG hybrid.  Another attempting to reach 250 MPG.  While this may be unrealistic, if they make even moderate progress, their IP would be sold and used elsewhere.

None of these will singlehandedly change the world.  However, each bit of innovation makes the economics of the whole ecosystem a tiny bit better, which cumulatively adds up to a lot.

I have no hesitations in predicting that the average-priced 2015 model family sedan, with a 240 hp engine, will deliver 60 MPG.  On top of this, the fuel itself may have a large ethanol component, and will contain much less gasoline per gallon than today. 

Keywords : Ethanol, oil price, energy innovation, solar power, wind power, energy technology, tar sands, oil shale, hybrid car, hydrogen car

The Impact of Computing : 78% More Each Year

Anyone who follows technology is familiar with Moore's Law and its many variations, and has come to expect the price of computing power to halve every 18 months.  But many people don't see the true long-term impact of this beyond the need to upgrade their computer every three or four years.  To not internalize this more deeply is to miss investment opportunities, grossly mispredict the future, and be utterly unprepared for massive, sweeping changes to human society.

Today, we will introduce another layer to the concept of Moore's Law-type exponential improvement.  Consider that on top of the 18-month doubling times of both computational power and storage capacity (an annual improvement rate of 59%), both of these industries have grown by an average of approximately 15% a year for the last fifty years.  Individual years have ranged between +30% and -12%, but let's say these industries have grown large enough that their growth rate slows down to an average of 12% a year for the next couple of decades.

So, we can crudely conclude that a dollar gets 59% more power each year, and 12% more dollars are absorbed by such exponentially growing technology each year.  If we combine the two growth rates to estimate the rate of technology diffusion simultaneously with exponential improvement, we get (1.59)(1.12) = 1.78. 

The Impact of Computing grows at a screaming rate of 78% a year.

Sure, this is a very imperfect method of measuring technology diffusion, but many visible examples of this surging wave present themselves.  Consider the most popular television shows of the 1970s, such as The Brady Bunch or The Jeffersons, where the characters had virtually all the household furnishings and electrical appliances that are common today, except for anything with computational capacity.  Yet, economic growth has averaged 3.5% a year since that time, nearly doubling the standard of living in the United States since 1970.  It is obvious what has changed during this period, to induce the economic gains. 

In the 1970s, there was virtually no household product with a semiconductor component.  Even digital calculators were not affordable to the average household until very late in the decade. 

In the 1980s, many people bought basic game consoles like the Atari 2600, had digital calculators, and purchased their first VCR, but only a fraction of the VCR's internals, maybe 20%, comprised of exponentially deflating semiconductors, so VCR prices did not drop that much per year.

In the early 1990s, many people began to have home PCs.  For the first time, a major, essential home device was pegged to the curve of 18-month halvings in cost per unit of power.

In the late 1990s, the PC was joined by the Internet connection and the DVD player, bringing the number of household devices on the Moore's Law-type curve to three. 

Today, many homes also have a wireless router, a cellular phone, an iPod, a flat-panel TV, a digital camera, and a couple more PCs.  In 2006, a typical home may have as many as 8 or 9 devices which are expected to have descendants that are twice as powerful for the same price, in just the next 12 to 24 months. 

To summarize, the number of devices in an average home that are on this curve, by decade :

1960s and earlier : 0

1970s : 0

1980s : 1-2

1990s : 3-4

2000s : 6-12

If this doesn't persuade people of the exponentially accelerating penetration of information technology, then nothing can.

One extraordinary product provides a useful example, the iPod :

First Generation iPod, released October 2001, 5 GB capacity for $399

Fifth Generation iPod, released October 2005, 60 GB capacity for $399, or 12X more capacity in four years, for the same price. 

Total iPods sold in 2002 : 381,000

Total iPods sold in 2005 : 22,497,000, or 59 times more than 2002.

12X the capacity, yet 59X the units, so (12 x 59) = 708 times the impact in just three years.  The rate of iPod sales growth will moderate, of course, but another product will simply take up the baton, and have a similar growth in impact. 

Now, we have a trend to project into the near future.  It is a safe prediction that by 2015, the average home will contain 25-30 such computationally advanced devices, including sophisiticated safety and navigation systems in cars, multiple thin HDTVs greater than 60 inches wide diagonally, networked storage that can house over 1000 HD movies in a tiny volume, virtual-reality ready goggles and gloves for advanced gaming, microchips and sensors embedded into several articles of clothing, and a few robots to perform simple household chores. 

Not only does Moore's Law ensure that these devices are over 100 times more advanced than their predecessors today, but there are many more of them in number.  This is the true vision of the Impact of Computing, and the shocking, accelerating pace at which our world is being reshaped. 

I will expand on this topic greatly in the near future.  In the meantime, some food for thought :

Visualizing Moore's Law is easy when viewing the history of video games.

The Law of Accelerating Returns is the most important thing a person could read.

How semiconductors are becoming a larger share of the total economy.

Economic Growth is Exponential and Accelerating, primarily due to information technology becoming all-encompassing. 

What is the Real Reason the Government Refuses to Seal the Southern Border?

Arguably, the one issue on which the US public and elected officials are most disconnected from one another is the porous US-Mexico border, and the 11 million illegal immigrants who have migrated to the US through it. 

At least 70% of the US population wants the border to be sealed, and immigrants to, at the very least, come here through legal means.  Any politician who takes strong action on this matter is bound to gain tremendous popularity, from voters of both parties.  So why does nothing happen?  None of the popular explanations hold up, as there are just as many politicians, lobbies, or corporate interests that would oppose each as would support them.

1) The border is open because businesses want cheap labor. This cannot be, because illegals use hospital emergency rooms and trauma centers for free, without having paid taxes into the system.  This causes the cost of healthcare to rise, and premiums that corporations have to pay for their employee medical insurance rises.  These costs are huge, and more than offset any savings from being able to hire these illegals at low cost.  Corporations that don't employ many low-skilled workers, such as software companies or investment banks, would thus oppose this.

2) The border is open because 'of the Hispanic vote'.  This is obviously not the case, as in the 2004 election, Hispanics voted 39% for Bush and 61% for Kerry.  That would give the GOP, which controls both houses of Congress, a strong incentive to seal the border, if anything.  But they are making only minor efforts. 

Furthermore, the suggestion itself is derogatory to law-abiding, legal Hispanics, who certainly don't want illegal immigrants coming here any more than non-Hispanics do.  Do whites want illegals from Canada?  Do blacks want illegals from West Africa?  Then why would Cuban-Americans or Puerto-Rican Americans want illegal Mexicans to come here, just because of a common language (not even a common race, in many cases)?

3) The border is open because to seal it would be racism.  Vicente Fox has said as much, even though every single person of power in the Mexican government is white.  Fox has also said that Mexicans in the US do work that 'even blacks will not do'.  Mexican postal stamps show caricatures of blacks that would be a national scandal in the US. 

There are a number of extremist groups that want to push a radical agenda of creating Mexican states-within-a-state, where US laws and language do not apply, and eventually return the US Southwest to Mexico's possession.  The number of American's that would oppose this is far larger than the few fifth-column proponents of it.  Plus, non-white politicians could push the agenda.  Plus, law-abiding Hispanics don't want this to happen either. 

Bogus accusations of racism from fringe groups have not stopped our War on Terror.  Why is it stopping this? 

4) The border is open because sealing it would ruin our relationship with Mexico.  Mexico is a nation where drug trade and corruption have created a wealth distribution that is among the most skewed in the world.  The poor underclass has no employment options, and Mexico wants them to go to America not only to get rid of them, but also because they remit $50 billion a year back to their families in Mexico.  Mexico's entire economy is dependent on this flow of money.

There is no other country in the world which has the luxury of dumping the poorest 10-15% of its population into another country, and get $50 billion per year injected into its economy in return.  Despite this, the US acts as if it has no leverage over Mexico.  It is a colossal failure of the US State Department that despite the huge dependency that Mexico has on the US, the US is not even a position to ask Mexico for basic favors in America's hour of need, such as a contribution of 5000 troops to our coalition in Iraq.  They can't even do that much for us?

Angry yet?

So why does America do nothing to seal the border?

I thought and thought about it, and finally an explanation dawned on me.

After the birth of the baby boom generation concluded in 1964, the number of babies born in the US dropped.  Furthermore, Roe v. Wade passed in 1971, and since then, 43 million Americans who may have been born, were not.  This resulted in a demographic pit, where the number of babies born was suddenly and permanently lower than in prior decades.  Whether abortion should be allowed or not is a separate issue, but what is indisputable is that there are millions of fewer people as a result of it. 

Many things that support the US economy, from rising real-estate prices to social security, depend on the US population growing 1% per year, and the ratio of young people to old people remaining fairly stable.  European countries are already on the brink of catastrophie due to the shortage of young people in their societies. 

US politicians of both parties might have made a sacred agreement to keep the border open so that young Mexicans, born after 1971, can come here and fill the demographic gap that exists in the US.  US politicians don't reveal this to the public, because it is too difficult to explain and would result in pressure to overturn Roe v. Wade, lower taxes, provide incentives to families with children, and other political minefields.

That is why they let this continue.  This is the best explanation I can think of.  Why else would both parties choose to do nothing, despite so much public pressure, yet not explain why?

This is also the worst possible way to solve the demographic shortfall problem, as the current practice :

1) Encourages people to break the law.  If they broke one law to get here, why not break more after coming here?  In California, one third of the prison inmates, each costing the taxpayer $50,000 per year, are illegal immigrants.

2) Has ensured that much more than 50% of the 11 million illegals are male.  Women are less inclined to go to the lengths of crossing miles of parched desert, hide in car trunks, or be smuggled in by drug dealers.  The gender imbalance only leads to more crime and social problems within these communities.

3) Has ensured that these illegals are concentrated in border states rather than spread throughout the nation, thus making it harder for them to assimilate into American society.  Legal immigrants do go to all major cities and college towns, and thus assimilate, but these illegals instead become a majority in towns near the border, changing them into being more like Mexico and less like America.

4) Has ensured that the majority of immigrants are from one language and culture.  If this goal was pursued through a policy of legal immigration, then we would have gotten Chinese, Indians, Russians, Brazilians, etc., who would have to interact with each other and the only language they could do it in would be English.  Assimilation would be automatic. 

The US may have avoided a massive demographic collapse like what Europe is tumbling into, but the same could have been achieved in so many better ways.  This policy of achieving a demographic goal through condoning massive illegal immigration of mostly men from one country will cost American society for decades to come. 

What will ultimately result in the border being sealed?  One of two simple things :

1) If the US government decides that enough young people to fill the demographic gap have arrived, and no additional illegals are needed, then the border will be quietly sealed under the guise of some other reason.

2) If a large terrorist attack occurs in the US, and it is found that the terrorists arrived through the porous border with Mexico, then it will be sealed almost immediately, through popular demand by a furious public.

Hopefully, reason 1) occurs before reason 2).

Elevators into Space - Yes, Really.

Most popular science fiction is still not all that ambitious in what it expects the audience to accept.  The basics, such as assumptions that space will be explored by large spaceships, and that faster-than-light travel will be achieved before human near-immortality, are given.  Yet, neither is a probable outcome within current trends of technological progress, and thus represent an unwillingness to challenge many basic assumptions about our technology and existence. 

Reality can be far more exotic than the science fiction of earlier generations, because not only are the wrong trends extrapolated in science fiction, but linear, rather than exponential, thinking is applied. 

People are working to build a functioning space elevator by 2018 - just 12 years from now.  It would consist of a carbon nanotube ribbon that extends into space to carry 100 tons up at a time, to a height of at least 65 miles or higher.  NASA has a long-term goal of extending an elevator all the way up to 62,000 miles in height, or one-fourth of the distance to the Moon. 

Beyond absurd, you say?

Material strength, at least, is not going to be a problem.  Carbon Nanotubes can form superstrong materials that can be strong enough and light enough to handle this.  Nanotubes were priced at $230,000 per pound in 2000, but the price is dropping exponentially, and even a 65-mile ribbon would not be tremendously expensive by 2018.

My opinion on whether this goal is possible?  It is difficult, and 2018 might be a decade too soon, even if it does succeed.  But a voyage to the Moon would have appeared difficult to Thomas Jefferson, and the accelerating rate of progress continues to shorten the interval between major innovations.  They already advanced from 300m to 1600m in just a few months.  What if they got to, say, 10 miles by 2016?  Would people take notice?

This will be a fun one to watch over the next few years.  Stay tuned for updates.

The Stock Market is Exponentially Accelerating too

Many still have significant doubts about my article on how economic growth is growing at an accelerating pace.  To this, I offer the basic evidence that the world economy comfortably grows at more than 4% per year, and this rate was unheard of in any part of human history prior to the second half of the 20th century, because if such growth existed from, say, the Roman Era, then the compounding over 2000 years would make everyone alive today a billionaire.

Another place in which to judge the rate of exponential growth is the stock market.  Below is a chart of the S&P500 index from 1950 to today.  I have added the red trendline to show how the market is moving in quite a predictable, exponential trajectory.  The economic malaise of the 1970s, the bubble of the late 1990s, and the bust of 2001-02 all negated each other to invariably move back to the trendline.

If we see the same image on a logarithmic scale, the exponential trend (which now is a straight line) is clear, and timing the long-term future milestones of the market are semi-predictable.

This also shows that current levels are certainly not overvalued, and are in fact almost exactly where the trendline would expect them to be.

And for those who insist that the Nasdaq should be shown instead, I would point out that a) the Nasdaq has been around for a shorter time, and b) the Nasdaq is less a representation of the broader market than the S&P500, as it is technology-heavy.  Nonetheless, a logarithmic Nasdaq chart also shows a similar trendline, and the late 1990s boom and bust revert back to the trendline.

Part of the reason we don't see an increase in the rate of increase in this logarithmic chart (which would make even this line curve upwards gently) is because some of the surplus growth is occuring in overseas markets.  A composite chart of the full world's stock markets over the last 55 years would be interesting.  If I find a good one, I will add it.