In The Dynamo and the Computer, economist Paul David explains that although electricity became widely available in the late 19th century, its major effects weren’t seen until 30 years later. More recently, Robert Gordon’s new book, The Rise and Fall of American Growth showed that by the 1940’s the transformation was essentially complete.
The truth is that innovation is never a single event, but rather the confluence of efforts undertaken by many different people and organizations. That's why electricity only became really useful when factories adapted to it and complementary innovations, like home appliances and air conditioners, took root.
Today, we’re at a similar point of convergence to what happened a century ago. Digital technology, which has been around for decades, is beginning to power new complementary technologies, such as genomics, nanotechnology and robotics. By coincidence, these forces will all converge around the year 2020 and, after that, the world will be profoundly different.
The End Of Moore’s Law
Most people familiar with technology have heard of Moore’s Law, the continuous doubling of transistors on a microchip that has been going on since the 1960’s. That’s what has allowed us to shrink computers, which once took up entire rooms, to be able to fit in the palm of our hand. Today’s smartphones are far more powerful than yesterday’s supercomputers.
Unfortunately, there are only so many transistors you can cram onto a wafer of silicon before atomic-scale quantum effects start getting in the way. We’re now nearing that point and Moore’s Law will end sometime around 2020. After that, we’ll have to find new ways to increase the power of technology.
Not to worry though. That process is already well under way. One strategy, called 3D stacking, will increase speed by integrating chips for processing, memory and communication into a single unit. There are also completely new architectures, such as neuromorphic chips, which mimic the human brain and quantum computing, which operates on the sub-atomic level.
The upshot is that the focus of technology will shift from chip performance to how the system functions as a whole, including not only the capabilities embedded in our devices, but also resources in the cloud. Intelligent software will help us to navigate between these capabilities instantly and seamlessly to optimize our devices for any given task.
Grid Parity For Solar Energy and Energy Storage
In 1979, President Carter first installed solar panels on the White House. At the time, they were merely a curiosity and President Reagan ordered them taken down seven years later. The problem was that at $40/watt, solar panels were far too inefficient to do any good.
Since then costs for solar power have dropped an incredible 99% and continue to fall about 20% for every doubling of production. As these trends continue, experts are predicting global grid parity by around 2020. After that, solar power will actually be cheaper than fossil fuels for energy production.
Still, the sun doesn’t always shine and that’s a big problem, because energy storage is still fairly expensive—about twice the cost that it needs to be to be competitive. Yet here too costs are falling fast and a new report by Lazard shows that some battery technologies will be competitive within 5 years. This is an active area of investment, so things might move even faster than that.
If these trends continue, energy costs have the potential to drop by half in ten years and by 80% in 20 years. Considering that energy makes up about 8% of GDP, that will represent a major improvement in overall productivity.
The Transformation of Transportation
The recent launch of the Tesla Model 3 was an enormous success, with 325,000 preorders within the first week and there are already a half dozen viable electric cars already on sale for roughly the same $35,000 price range. These are still relatively expensive, but Bloomberg predicts that electric cars will be cheaper than gasoline cars by 2022.
At the same time, the practice of driving itself is changing. Google’s self driving cars have already driven more than a million miles on open roads. Ford now has an autonomous car that can drive in complete darkness. While the idea of a car that drive itself still seems like science fiction, experts predict that there will be 10 million of them on the road by 2020.
Consider that roughly 90% of car accidents involve human error and it becomes obvious that fatalities can be greatly reduced by autonomous cars. It has also been estimated that 30% of city traffic is made up of people who are looking for a parking space, so this new technology also has great potential to reduce gridlock. The potential impact of self driving cars is simply enormous.
Clearly, after 2020 transportation will hit a tipping point and transform rapidly. We’ll be increasingly plugging in, rather than gassing up and riding instead of driving. The morning commute will be a time to be quietly productive, instead of the frustrating experience it often is today.
The World After 2020
Look back ten years, and it’s hard to believe the transformation that’s taken place. In 2006, very few of us had smartphones and the mobile web hardly existed. Fuel prices were rising and seemingly had no end. Many were predicting that we were about to hit peak oil and some thought oil prices would exceed $200 per barrel.
Today, not only are smartphones ubiquitous, but mobile video has become old hat. Oil prices remain under $50 per barrel and we are in the midst of an energy revolution driven by shale gas. We can search by voice, rather than using a keyboard and routinely use a navigation service to get to where we’re going.
Ten years from now, the transformation will be, if anything, greater than what we’ve seen in the past ten years. Citibank predicts that the current boom in natural gas will merely serve as a bridge fuel, before renewable sources become far cheaper and more plentiful than fossil fuels. Nascent technologies such as genomics, nanotechnology and robotics will usher in a new industrial revolution.
While the past ten years have given us unprecedented control over virtual assets, connecting mobile devices to big data and intelligent software in the cloud, the next decade will bring us unprecedented power over the physical world. It will give us the ability to manipulate matter at the subatomic level,bringing us a new era of productivity and convenience.
A century ago, no one could have predicted that the 1920’s would kick off a half century of unprecedented productivity. I would not go as far as to say that history will surely repeat itself, but the potential is undeniably there.