Is growth over?

Global growth from the current industrial revolution (computers, the web, mobile phones) is slowing — especially in advanced-technology economies, and long-term economic growth may grind to a halt, Robert J. Gordon, Stanley G. Harris Professor in the Social Sciences and Professor of Economics at Northwestern University, has argued.

Growth in real GDP per capita, with actual (from .2 to 2.5 percent per year) and hypothetical paths (credit: Robert J. Gordon)

Growth in real GDP per capita, with actual (from .2 to 2.5 percent per year) and hypothetical paths (credit: Robert J. Gordon)

Now economist Paul Krugman counters in The New York Times that we are moving toward a world in which:

Big Data — the use of huge databases of things like spoken conversations — apparently makes it possible for machines to perform tasks that even a few years ago were really only possible for people. Speech recognition is still imperfect, but vastly better than it was and improving rapidly, not because we’ve managed to emulate human understanding but because we’ve found data-intensive ways of interpreting speech in a very non-human way.

However, he warns, while smart machines may make higher GDP possible,

they also reduce the demand for people — including smart people. So we could be looking at a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots.

What about taking into account the effects of future exponential growth of hardware and software computation and technological singularity?

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Signals and Frequencies

From the Internet of Things (IoT), where we are today, we are just beginning to enter a new realm: the Internet of Everything (IoE), where things will gain context awareness, increased processing power, and greater sensing abilities. Add people and information into the mix and you get a network of networks where billions or even trillions of connections create unprecedented opportunities and give things that were silent a voice.

Cisco defines IoE as bringing together people, process, data, and things to make networked connections more relevant and valuable than ever before—turning information into actions that create new capabilities, richer experiences, and unprecedented economic opportunity for businesses, individuals, and countries. (On Cisco POV, see also the video at the end of this post).

As more things, people, and data become connected, the power of the Internet (essentially a network of networks) grows exponentially. (See Metcalfe’s Law and Network effect).

A full realization of IoE will require some key enabling factors. In my opinion, the most crucial ones will be IPv6 implementation and, above all, a brand new software engineering approach. The manner in which software is developed hasn’t fundamentally changed since the 1960s. The orchestration of a paradigm shift is essential if the software industry is to ever become at least as innovative and productive as the hardware industry, which is following Moore’s Law. A new software science approach needs to be established to meet the requirements for the emerging IoE of unattended devices.

More on this subject:
What is the ‘Internet of everything’? – Answered by Peter H. Diamandis
Gartner Symposium: CIOs, Get ready for the IoE

On Accelerating Change

Albert Einstein once said that

Technological progress is like an axe in the hands of a pathological criminal.

Or not? The U.S. Air Force has released an impressive video on accelerating change, “Welcome to 2035…the Age of Surprise” (see below).

Produced by the U.S. Air Force Center for Strategy and Technology at The Air University, the video was based on Blue Horizons, a multi-year future study being conducted for the Air Force Chief of Staff, a “meta-strategy for the age of surprise”…

We can predict broad outlines, but we don’t know the ramifications. Information travels everywhere; anyone can access everything — the collective intelligence of humanity drives innovation in every direction while enabling new threats from super-empowered individuals with new domains, interconnecting faster than ever before. Unlimited combinations create unforeseen consequences.

Maybe it is just PR and nothing more, or another article about predicting history today, but the video is definitely cool. Turn up your sound, and go HD full-screen!

Toilet 2.0

No joke: Bill Gates wants to reinvent the toilet.

Gates is focusing on the need for a new type of toilet as an important part of his foundation‘s push to improve health in the developing world. Open defecation leads to sanitation problems that cause 1.5 million children under 5 to die each year, Gates said, and Western-syle toilets are not the answer as they demand a complex sewer infrastructure and use too much water. As a matter of fact, toilet technology has not fundamentally changed since the invention of the flush toilet in 1775.

One year ago, the foundation issued a challenge to universities to design toilets that can capture and process human waste without piped water, sewer or electrical connections, and transform human waste into useful resources, such as energy and water, at an affordable price. California Institute of Technology in the United States received the $100,000 first prize for designing a solar-powered toilet that generates hydrogen and electricity.

In addition to health issues and equal opportunities, this represents a huge potential market for business. As reported in an interesting article on the Harvard Business Review by Alfredo Behrens:

The largest markets will be seen around the axis of India and China, because both countries have huge populations, with a significant share still living in rural areas. India, for instance, expects to see some 350-400 million people becoming urban residents in the next three decades. That could mean demand for as many as 150 million new toilets.

Beherns estimates that in 2010, the two world’s largest toilet suppliers have shipped about 6 million units to emerging markets where, altogether, there are about 2.8 billion people without access to sanitarily acceptable toilet systems.

It looks pretty clear that demand and supply gap is daunting. Moreover, additional demand for new toilets, and derived demand for raw materials and energy, is only the tip of the housing demand iceberg coming from emerging markets. This will far outstrip the current demand coming from the advanced economies.

Globalization, anyone?

HFT - Robot Wars

Robot Wars

This animated GIF created by the Nanex pictures the rise of high-frequency trading (or HFT) volumes across all US stock exchanges between 2007 and 2012. The initial murmur, the brewing storm, the final detonation: not just unsettling, it’s terrifying.

HFT trading volumes across all U.S. stock exchanges between 2007 and 2012
credit: Nanex Research, hosted by imgur.com

This is what high frequency trading looks like, when specially programmed computers make massive bets at lightning speed.

We don’t know is what the long term consequences are of all this hyper-volume as depicted by the Nanex GIF and the kind of systemic risks created from the market’s ongoing evolution from human traders to rapidfire AI. Sometimes things go wrong, a software glitch, an algorithm gone rogue and the music stops, like a couple weeks ago when Knight Capital lost $10 million a minute when it’s trading platform went haywire or during the infamous Flash Crash when the Dow dropped 1000 points in mere minutes.

Read the excellent full Mother Board article here.

The new mayor? A Computer.

Your Next Mayor? A Computer.

Our planet is becoming smarter, and this isn’t just a metaphor.

Three years ago, 100 Parisians volunteered to wear a wristband with a sensor in it. The sensors measured air and noise pollution as the wearers made their way around the city, transmitting that data back to an online platform that created a virtual map of the city’s pollution levels, which anyone with an Internet connection could take a look at.

This was a peek at an urban future when “smart cities” will collect data of all kinds (in all kinds of ways) and use it to make themselves better places to live. With the market projected to be worth $16 billion by the end of the decade, big companies like IBM and Cisco have much grander — and more profitable — ambitions: they’re going all-in on smart cities, with designs that supposedly do everything from end traffic jams to prevent disease outbreaks to eliminate litter.

As IBM Chairman Samuel J. Palmisano said at the 2010 SmarterCities forum in Shanghai:

Computational power is being put into things we wouldn’t recognize as computers. Indeed, almost anything—any person, any object, any process or any service, for any organization, large or small—can become digitally aware and networked.

Think about the prospect of a trillion connected and instrumented things—cars, appliances, cameras, roadways, pipelines… even pharmaceuticals and livestock.

And then think about the amount of information produced by the interaction of all those things. It will be unprecedented.