I have written beffore about the reduction in price of solar energy, and how each succcessive price decline would deliver a new generation of adoption.  Now, we can examine some of the specfic technologies that are driving the race to affordability, and will enable solar energy to be one of the only candidate technologies to lead an economic recovery from the present downturn. 

Popular Mechanics has a roundup of five new areas of innovation in harnessing energy from the Sun.  All five promise to make solar energy competitive with the cheapest sources of fossil-fuel energy, and many of these five technologies could work in combination with each other.  The five technologies are the following :

 

Now, many of these technologies were invented before 2008, so this roundup does not alter the fact that 2008 was a year of very low technological innovation.  However, all these innovations bode very well for a tremendous boom in solar power starting around 2010.  Each technology has one or more startup companies mentioned in each section.  The industry consensus is that solar power becomes competitive with conventional sources of power generation by around 2011, varying by the local cost of electricity and the solar intensity of a particular region (i.e Arizona becomes cost-competitive for solar before British Columbia does).

The greatest benefits, however, will accrue to emerging markets.  Many poorer countries not only have electricity rates that are much more expensive than in the US, but these countries, being in more southern latitudes, receive greater solar intensity to begin with.  Breakeven in these markets arrives even sooner than it does for the wealthy countries at more northern latitudes.  Many villages in India, VietNam, Iraq, Egypt, and Indonesia will go from having no electricity to having photovoltaic electricity. 

Related :

Solar Energy Cost Curve

The Solar Revolution is Near

A Future Timeline for Energy

(crossposted on TechSector)

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

                                - Robert Heinlein

The secret sauce of Silicon Valley is the tradition of leaving established companies to start or join new ones, secure funding from venture capitalists, build the company to a suitable size, and then either float or sell the company for a windfall to the founders and early employees.  The incentive to continue this practice is the engine that keeps the fire of human technological innovation alive. 

Silicon Valley's unique ecosystem has so far been nearly impossible to eclipse.  The combination of research universities, the best and brightest immigrants from India and China, a culture of entrepreneurship, and a nearly perfect climate has kept the competitors to Silicon Valley at bay.  In the 1990s, the prevalent belief was that the high cost of living in Silicon Valley would enable Austin, Dallas, Seattle, and Phoenix to attract technology workers and cultivate their own tech sectors.  This did not happen, as the Silicon Valley ecosystem just had too strong of a gravitational pull. 

This, however, should not be an excuse for complacency, or a belief that Silicon Valley is a bottomless supply of tax revenue.  There are four steps that would make Silicon Valley prohibitively inhospitable to the formation of new ventures. Any one of these by itself would not be enough to dent the might of the Silicon Valley engine, but all four combined would exceed the breaking point.  The first two of these four steps have already happened, and the final two are set to happen, barring direct intervention. 

The four steps are :

1) Sarbanes-Oxley : This attempt to reduce the risk of another Enron-style fraud has inflicted a cost on the US economy greater than 100 Enron collapses.  In Silicon Valley, the crushing costs of Sarbanes-Oxley compliance (up to $3M a year) have dried up IPOs to a trickle, as the prospect of spending money of compliance that could otherwise be spent on R&D is unappealing.  IPOs are less frequent than they were even in the early 1990s, before the bubble, and start-ups can only hope to be acquired by a larger company.  In the last 8 years, only two IPOs were large enough to be considered 'blockbuster' : Google and VMWare.  This crushes the incentive to leave stable jobs to go work at a new venture. 

2) Tortuous Immigration Process : Any list of the most successful people in the history of Silicon Valley will quickly reveal that at least one third of them were born outside of the US.  In response, America has chosen to make it much harder for more such people to come here, even as the quality of life in their home countries is rising. 

While politicians pander to illegal immigrants with minimal education, they somehow refuse to make immigration easier for legal, highly-skilled immigrants who start new ventures in America.  This is significant given the fact that about half of Silicon Valley's skilled workforce is Indian or Chinese.  Many are choosing to return to their home countries when it becomes too hard to stay, and are advising their younger relatives that the US immigration process is so tedious that it is better to pursue their careers at home, working for Indian or Chinese branches of HP or Microsoft. 

Under current procedures, an engineer from India or China has to be on an H1-B visa for 6 years before he can get a greencard.  If he changes employers during that period, he has to start the clock again.  The immigrant's spouse cannot work during this period.  Even after the greencard, it takes 5 more years to become a US citizen.  More and more of the best and brightest are deciding that this 11-year limbo is not worth it, and return to their home countries (eventually starting companies there rather than in Silicon Valley).  In the 1990s, Americans had not even heard of Bangalore or Suzhou. 

I have written up a detailed solution to this problem over here. 

___________________________________________________________________________

If these two factors weren't bad enough, two more negatives are about to be piled on. 

3) California State Income Taxes are Set to Rise : The budget shortfalls and underfunded pensions in California are a ticking time bomb.  CalPERS, which invests in many of the top venture capital funds that nurture the growth of start-ups in Silicon Valley, is in a shambolic state, and has to add $80 billion in assets just to meet present obligations.  The top income bracket in California is already taxed at 9.3%, and this is set to rise.  Sales taxes are also set to rise.  Due to this horrendous mismanagement worthy of a banana republic, California will soon reach a tipping point where taxes are so high as to destroy California's private sector, which until now has been the envy of the world.  It would, of course, be better to reduce CA state expenditures, but government officials have made it clear that raising taxes is their preferred course of action. 

Victor Davis Hanson explains California's black hole in more detail. 

4) Federal Income Taxes are Set to Rise : If the Bush tax cuts are allowed to expire, then from 2011 onwards, the top income bracket will be taxed at 39.6% rather than the current 35%.  Here, too, the concept of reducing expenditures is not palatable to Washington decision-makers.  While this does affect the entire US equally, when this is combined with the increase in California Sate tax, the combined marginal tax rate in California rises several percentage points, and possibly rises well above 50%.

The danger here is that each of these factors by themselves are not life-threatening.  But all four of them in cumulative combination are deadly.  So on top of the difficulty of conducting an IPO, and the brain drain out of Silicon Valley back to Asia, if the financial windfall that a worker receives after his startup makes a successful exit is taxed at a grand total of 50-55%, fewer and fewer people will bother to toil away for years in a startup.  As a result, fewer startups will form in Silicon Valley, and instead will form in Bangalore, Shanghai, and Taipei. 

Furthermore, after these forces have been in effect for a few years a simple reversal of the higher tax rates, dysfunctional immigration policy, and Sarbanes Oxley will not simply restore Silicon Valley to its prior grandeur.  The technology centers in Asia will have achieved critical mass by then, and Silicon Valley will have permanently lost its exclusivity.  It would never recover the dominance it once had. 

Silicon Valley will be reduced to a location that still hosts the headquarters of HP, Intel, Cisco, and Google, but 90% of the employees of these corporations will be overseas, and startups will be rare.  Silicon Valley will effectively become like Cleveland or Pittsburgh, which even today host the headquarters of more than 20 Fortune 500 corporations each, but still have a lower population than they each had in 1960, and cannot attract new young people to come and live there.  Cleveland and Pittsburgh are still functioning societies, of course, but their economic vibrancy is irretrievably dead. 

This bleak outlook can certainly be reversed if prompt action is taken now.  Sadly, the current path is one that is set to have a smothering effect on Silicon Valley. 

(crossposted on Techsector)

On November 11, 2007, I created an investment portfolio to be frozen at that time, and evaluated on December 31, 2008, against the S&P500 over the same period.  The portfolio incorporated principles, economic trends, and technologies discussed in other articles here on The Futurist.  Dividends were reinvested, and so the price paid reflects dividend-adjusted cost-basis.  Yahoo and Google Finance do tend to miss recording some dividends, so one must go to a more reliable site like Morningstar to account for the exact dividends. 

So how did the portfolio do?  Well, the portfolio declined by 37.1% while the S&P500 declined by 36.0%.  So we lagged the benchmark by 1.1%.  Of course, this was a year when keeping money in cash would have been superior to almost any long equity portfolio. 

As always, weightage matters just as much as selection, and the largest component, IWN, outperformed the S&P500.  However, this was dragged down by IIF and GOOG.  Had I simply followed my advice on shorting energy stocks, I would have done better, but that was not a trade in this portfolio. 

At least the 2007 Futurist portfolio outperformed the S&P500 by a greater margin than the 2008 portfolio lagged by, so we are still ahead on aggregate.  Let us see what 2009 holds. 

 

Related :

A History of Stock Market Bottoms

Each year, I post a roundup of technology breakthroughs for that year from the MIT Technology Review, and I now present the 2008 edition. 

2008 was a year of unusually low technological innovation.  This is not merely the byproduct of the economic recession, as some forms of innovation actually quicken during a recession.  Furthermore, the innovations from 2006 and 2007 (linked below) showed very little additional progress in 2008, except in the field of energy.  This also confirms my observation from February 2008 that technology diffusion appears to be in a lull. 

The innovations in 2008 are categorized below : 

The Year in Computing

The Year in Robotics

The Year in Biomedicine

The Year in Materials

What is conspicuously absent is any article titled 'The Year in Nanotechnology'.  Both 2006 and 2007 had such articles, but the absence of a 2008 version speaks volumes about how little innovation took place in 2008.  The entire field on nanotechnology was lukewarm. 

Most of the innovations in the articles above are in the laboratory phase, which means that about half will never progress enough to make it to market, and those that do will take 5 to 15 years to directly affect the lives of average people (remember that the laboratory-to-market transition period itself continues to shorten in most fields). 

Furthermore, The Wall Street Journal has its own innovation awards for 2008, but this merely confirms that 2008 was a poor year for innovation.  For example, the Tata Nano is chosen in the WSJ article, yet it is not available to consumers until mid-2009.  Let's hope 2009 has more genuine innovations. 

Into the future we continue, where 2009 awaits....

Related :

2007 Technology Breakthrough Roundup

2006 Technology Breakthrough Roundup

One of the boldest predictions ever made on The Futurist was back in May 2006, when I made a detailed case for why victory in Iraq would arrive precisely in 2008, not sooner or later.  There was also a half-time update in September 2007 to the initial May 2006 prediction over here.  This was an unusually bold prediction to make, given the state of Iraq in May 2006, which was before the Surge was even discussed. 

So now, in 2008, I am happy to declare that the United States has WON in Iraq, and has made Iraq a reasonably peaceful, functioning democracy with a strongly growing economy. 

The following five points support the declaration of victory, as per objectives detailed in the original May 2006 prediction :

1) US troop deaths are very low : US troop casualties to hostile attacks are now less than 10 per month, a dramatic improvement from as much as 100 deaths per month in the past.  The death rate is so low that the media avoids mentioning it.  Indeed, non-hostile deaths often surpass hostile deaths in certain months.  When more deaths occur due to road accidents, drowning, and training mishaps than at the hands of terrorists, the terrorists are quite ineffective.  If a country of 25 million people were against the presence of US troops, why are only 8-10 US troops being killed per month?  Many troops report not having had to fire their guns even once in the last 90 days. 

2) Iraqi deaths are low : It is very easy for terrorists to bomb schools, markets, and hotels indefinitely.  Yet even this has dropped to a level so low that the chance of being murdered in Iraq is actually lower than it is in Baltimore, Detroit, or the South Side of Chicago.  Less than 300 Iraqi civilians are being killed per month, which is remarkable in a country of 26 million people.  The Iraqi people have taken responsiblity for removing radicals from their midst, which was the most fundamental objective for installing democracy in Iraq in the first place.  Iraqi refugees, some who left as far back as during the 1980-88 Iraq-Iran War, are returning to Iraq for the first time in years.  Neither Iran nor Al-Qaeda are capable of causing major violence in Iraq anymore. 

Furthermore, many foreign terrorists have gone to Iraq in order to disrupt the nascent progress there, only to meet their deaths at the hands of the US and Iraqi militaries.  There has been a distinct drop in Al-Qaeda terrorist attacks worldwide since the start of 2007, and it is because the 'best and brightest' have all gone to Iraq and perished.  The 'flypaper' strategy has worked. 

3) The political process is stable : Iraqi elections have high voter turnout and minimal violence, with women voting in full force.  The Iraqi parliament and judiciary are functioning moderately well.  There is little to no threat of a coup.  If you consider how many cultural, regional, and sectarian forces were fighting against this outcome, the magnitude of this miracle becomes clear.  What took Germany and Japan 25 years after their defeat in WWII, Iraq has achieved in under 6 years.  Iraqi politicians are corrupt, but so are American politicians.  If Iraqi corruption is no higher than that of India (a fully functioning democracy), that is to be considered a success. 

There was scarcely a country more unlikely to function as a democracy, yet this miracle has happened.  We should be proud to have had the privilege to witness it.  This will, eventually, lead to a domino effect of greater freedom in Iran, Syria, and Jordan. 

4) The Iraqi economy is booming : This was the crux of my 2006 case for what it would take for Iraq to become a functioning nation.  History has proven repeatedly that once a certain level of prosperity is reached, a society becomes more interested in economic activity than destabilizing violence, and the general public will unite to combat elements that are bad for business.  Iraq is not at this level yet, but is on track to approach it rapidly. 

Iraq's real GDP continues to grow at about 7% a year.  Iraq's exports of oil are increasing, and the revenue amounts to thousands of dollars per year per Iraqi.  Beyond oil, industries like financial services, telecom, and solar energy are taking root in Iraq for the first time.  Internet use is surging.  Most Iraqis now have cellular phones, which is very complementary to the democratic process.  The Iraqi stock market is functional, and investor participation is increasing. 

5) US public opinion has turned around : For the first time in years, more Americans view the Iraq War as a positive endeavor than those who have the opposite view.  This psychological transition is almost as important as the actual data, as it prevents politicians from seeking to appease the public with promises of a 'cut and run' withdrawal.  Despite complete Democrratic control of the White House and Congress, they will quietly let the progress in Iraq continue.  It also paves the way for greater support of the next US military conflict, and helps bury the ghosts of Vietnam (which itself is not a conflict that the US technically lost, but that has been discussed here). 

These five dimensions of victory are comprehensive, and at this point, irreversible.  This sends anti-American fifth-columnists (8-10% of the US population) and Euro-leftists into apoplectic, writhing agony. 

It is one thing to oppose the war due to cost, or regret that we went in.  These are reasonable positions that should be respected.  It is quite another to hope for failure, to emphasize only bad news while ignoring good news, to excuse or even defend terrorists, and to condemn anyone who wants a positive outcome.  This is anti-Americanism, period. 

The anti-American fifth column previously loved to trumpet the running total of US troop deaths, as well as the monthly rate.  In order to oppose the Surge, they were quick to mention that 2007 had higher US troop deaths than 2006.  For example, see Matt Taibbi, an entertainment reporter, at 0:50 in this video.  But now that 2008 will have less than one third the US troop deaths as the previous year, these critics are silent.  Where is Matt Taibbi's admission that casualties are now low?  Anyone with any intellectual honesty would admit that the death rate is sharply lower than it was when they used that as their main argument, but a pre-requistie for being a fifth-columnist is dishonesty, so no further explanation is needed.   

Now that the most vocal opponents to the Iraq War have been trying to change the subject to hide their embarassment, their weak position is the perfect time to call them out and hold them accountable.  Do not show restraint towards those who themselves showed no restraint between 2003 and 2007.  Just as a strong offense towards Al-Qaeda hastened their collapse in Iraq, a strong offense against the fifth column will send them to the same fate as their Al-Qaeda allies.  We owe it to our troops to expose and shame those who hoped for their failure and even their deaths. 

Please submit this article to Digg, Reddit, and StumbleUpon, link to it in your own blogs, and send it to other bloggers.  Advertising the success of our mission in Iraq is a necessary ingredient of strengthening that very success.  We don't have to settle for merely having anti-Americans desist, but we have the opportunity to make this victory the graveyard of fifth-column fashionability.  By this, I mean that the Iraq victory should be proudly touted as an example of American exceptionalism prevailing against seemingly impossible odds.  After decades of hearing anti-Americans gleefully interject 'Vietnam' into every opportunity to put America down, it is our turn to do the opposite and turn 'Iraq' into a synonym for success. 

Here is a YouTube video on how to ferret out accurate information on the progress in Iraq. 

Related :

We Will Decisively Win in Iraq...in 2008, Part I, and Part II, along with the 2007 half-time update

The Way to Debate Iraq

The Winds of War, The Sands of Time

The Age of Democracy

Why the US Will Still be the Only Superpower in 2030

The Nation Bureau of Economic Research (NBER) said that the US has been in recession since December 2007.  Of course, that is precisely the time I had given here on The Futurist, except that my declaration was back in February 2008.  So I arrived at the same timing estimation, just 10 months before the Federal Government, back when knowing this would actually have been useful. 

The longest post-war recession in the US lasted 16 months, so if this recession lasts beyond April of 2009 (which it very well may), it would be the longest post-war recession the US has had.  Of course, this recession was shallow for the first 10 months, and only turned sharply lower in October of 2008, so 'duration' is not the whole story. 

At present, the consensus is that all of 2009 will effectively be recessionary, putting the recession at 24 months in total duration.  Whether this occurs or that pessimism itself is over-shooting remains to be seen. 

Congratulations are in order to Barack Obama for becoming the 44th President of the United States.  When he first emerged at the 2004 Democratic Convention, no one thought he could topple Hillary Clinton, and go on to win the general election, just 4 years later.

And while I did not vote for him, his success proves once again that America is truly the land of opportunity, far more so than any other nation on Earth. 

Now, there are a few electoral statistics that reveal where the Democrats made the biggest gains relative to their losing effort 2004 (all data from CNN.com). 

First, in income :

What is remarkable is the the highest income bracket, earning $200,000 or more, has swung 17 points towards the Democrats.  Given that Obama wants to tax this group, this swing is remarkable.  By contrast, those earning between $100,000 and $200,000 have swung just 7 points towards Democrats.

Now, onto race :

Black turnout rose enough for them to become 13% of the vote, vs. just 11% before.  The 7-point swing in favor of Obama relative to what Kerry got is unsurprising.  But where the GOP took the biggest damage is in the Latino vote.  A 13-point loss is huge, and resulted in states like Nevada, New Mexico, and Colorado shifting from the red column in 2004 to the blue column in 2008.

Lastly, we move onto ideology :

The GOP lost 6 points of the conservative vote.  That is appalling, and if McCain was able to maintain the same 84% of conservative votes that Bush captured in 2004, the whole 2008 election would have been much closer.  This also shows that Sarah Palin, as much as we may like her, did not enable  McCain to net Bush's 2004 share of the conservative vote.  Some may contend that Palin is the reason McCain got even 78% of the conservative vote, but this is impossible to prove or disprove. 

Conclusion :

For the Republican Party to return from the wilderness in a future election (whether 2012 or 2016), they must achieve at least three of the following four objectives.

1) Win at least 55% of the votes of those earning over $100,000 a year, including at least 60% of those earning over $200,000 a year. 

2) Win at least 15% of the black vote.  Blacks are the most loyal Democratic vote bank, but this also means Democrats are so dependent on the black vote that they cannot afford to let the GOP have even 15% of it.

3) Win at least 45% of the Latino vote.  This group is growing quickly, and without it, the GOP has no future.

4) Always win at least 85% of conservatives.  A party that cannot win 85% of its own base is in trouble.  Now that Obama has won 20% of the conservative vote, he has to do their bidding as well, which is a topic I have discussed here, and is bad news for leftists. 

So, of these four, pick any three.  These four points do overlap with each other, particularly points 1 and 4, so courting multiple groups can be done simultaneously.  But until at least three of these four are accomplished, the GOP will not win again.

Recent market turmoil has many wondering when the freefall will cease, and whether we are on the brink of a new Great Depression, which is supposed to happen every 70-80 years according to Kondratieff Wave theory.  I don't believe we are on the brink of a depression, even though the present recession is already in its 10th month.  But it would be instructive to compare the current situation with prior market corrections, and judge the present situation in a historical context. 

We can first start with a chart of the S&P500, from 1950 to today.  We can see that the deepest deviations from the trendline appear to be in 1950, 1970, 1974, 1982, 1987, 1990, and 2002.  We shall term these instances as historical 'bottoms' for the stock market.  All but the 1987 bottom were in the midst of economic recessions. 

  

From this chart, we can see that the time period between bottoms can be irregular, with over a decade passing between them, in some cases.  1974 and 1982 appear to be the deepest corrections.  These bottoms coincide with recessions, but interestingly do not coincide with other major crises.  The Cuban Missile Crisis, Kennedy assassination, and 9/11/01 did not induce major market crashes beyond the first few days.  Now, we can take the datapoints of each of these bottoms, and chart the exponential trendline that connects them.  This is purely a chart of index valuation, with dividends not included. 

 

From this chart. we can see that the equivalent value of the S&P500 in 2008, as designated by the red circle, would be around the 1000 level.  As of October 10, 2008, the S&P500 is at 899, or 10% below the level of the bottoms trendline.  However, we can see that both the 1974 and 1982 bottoms are substantially below the trendline. 

The S&P500, since 1950, has delivered an 11.4% average return, with 7.7% of that in the form of a rise in the index itself, and 3.7% of the return being in the form of dividends.  If the long-term underlying growth rate of the index is 7.7%, we can chart a 7.7% compounded projection trend from each of these bottoms as another method to compare them to an approximate 2008 equivalent.  We shall start this chart from 1970. 

It is apparent that 4 of the 6 bottoms cluster around a 2009 projection of 1100-1200, but the two deepest bottoms of 1974 and 1982 project to a 2009 equivalent of only 700-750.  These should be considered the two 'mega-bottoms' that happen a couple times per half-century, with the other 4 being only smaller bottoms that happen every 7-10 years, whenever there is a recession. 

Since we are presently at 900 for the S&P500, we are about half-way between a smaller bottom and a mega-bottom.  Therefore, do not be surprised if the S&P500 does, in fact, dip into the low 700s in 2009, merely to match this correction to 1974/1982 levels.  This would be a further 20% correction from the 900 close of October 10, 2008.  It may not happen, but it certainly could in terms of historical precedent.  This also means that the Dow Jones Industrial Average would simultaneously decline to as low as 6500.  Indeed, there is no guarantee that it could not go even lower, but that would he historically unprecedented.  Even the 1932 bottom in the Great Depression was not deeper than the 1974 and 1982 bottoms, by these measures.       

The Good News :

If the thought of a further 20% decline in the S&P500 or DJIA is depressing, also consider the following :

1) After both the 1974 and 1982 mega-bottoms, the stock market promptly returned at least 60% in the next 9 months.  This also happened after the 1932 bottom within the Great Depression. 

2) Never forget about dividend reinvestment.  Dividend yields are highest when the stock market is at the depths of a bottom, and reinvestment ensures that new shares are purchased at the lower prices.  This enables the investor to enhance his returns when the recovery finally commences.  Even in the 1970s, the major indices were stuck within a flat range for a decade, but dividend yields as high as 5% enabled total returns that were substantially better. 

Considering points 1) and 2), make sure that you are in a position to capture the recovery, and are not forced to sell at the unfavorable prices of the bottom.  This means that you must a) never hold any substantial margin debt, b) be positioned across a diversifed set of securities, preferably ETFs ahead of individual stocks, and c) watch as little financial news as possible, thereby reducing your chances of panic that could lead you to take ill-considered actions.   

Tremendous profits will be made by those who can steel themselves through this purging of the weak, and are subsequently prepared for the post-bottom recovery.  Put daily volatility aside, and enjoy the historical times that we are experiencing first-hand. 

Related :

Economic Growth is Exponential and Accelerating

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

(crossposted on TechSector)

The accelerating rate of change in many fields of technology all manifest themselves in terms of human development, some of which can be accurately tracked within economic data.  Contrary to what the media may peddle and despite periodic setbacks, average human prosperity is rising at a rate faster than any other time in human history.  I have described this in great detail in prior articles, and I continue to be amazed at how little attention is devoted to the important subject of accelerating economic growth, even by other futurists.

The time has thus come for making specific predictions about the details of future economic advancement.  I hereby present a speculative future timeline of economic events and milestones, which is a sibling article to Economic Growth is Exponential and Accelerating, v2.0. 

2008-09 : A severe US recession and global slowdown still results in global PPP economic growth staying positive in calendar 2008 and 2009.  Negative growth for world GDP, which has not happened since 1973, is not a serious possibility, even though the US and Europe experience GDP contraction in this period.  The world GDP growth rate trendline resides at growth of 4.5% a year.

2010 : World GDP growth rebounds strongly to 5% a year.  More than 3 billion people now live in emerging economies growing at over 6% a year.  More than 80 countries, including China, have achieved a Human Development Index of 0.800 or higher, classifying them as developed countries. 

2011 : Over 2 billion people have access to unlimited broadband Internet service at speeds greater than 1 mbps, a majority of them receiving it through their wireless phone/handheld device. 

2013 : Many single-family homes in the US, particularly in California, are still priced below the levels they reached at the peak in 2006, as predicted in early 2006 on The Futurist.  If one adjusts for cost of capital over this period, many California homes have corrected their valuations by as much as 50%. 

2014 : The positive deflationary economic forces introduced by the Impact of Computing are now large and pervasive enough to generate mainstream attention.  The semiconductor and storage industries combined exceed $800 Billion in size, up from $450 Billion in 2008.  The typical US household is now spending $2500 a year on semiconductors, storage, and other items with rapidly deflating prices per fixed performance.  Of course, the items puchased for $2500 in 2014 can be purchased for $1600 in 2015, $1000 in 2016, $600 in 2017, etc. 

2015 : As predicted in early 2006 on The Futurist, a 4-door sedan with a 240 hp engine, yet costing only 5 cents/mile to operate (the equivalent of 60 mpg of gasoline), is widely available for $35,000 (which is within the middle-class price band by 2015). This is the result of combined advances in energy, lighter nanomaterials, and computerized systems.

2016 : Medical Tourism introduces $200B/year of net deflationary benefit to healthcare costs in the US economy.  Healthcare inflation is halted, except for the most advanced technologies for life extension. 

2018 : Among new cars sold, gasoline-only vehicles are now a minority.  Millions of vehicles are electrically charged through solar panels on a daily basis, relieving those consumers of a fuel expenditure that was as high as $3000 a year in 2008.  Some electrical vehicles cost as little as 1 cent/mile to operate. 

2019 : The Dow Jones Industrial Average surpasses 25,000.  The Nasdaq exceeds 5000, finally surpassing the record set 19 years prior in early 2000. 

2020 : World GDP per capita surpasses $15,000 in 2008 dollars (up from $8000 in 2008).  Over 100 of the world's nations have achieved a Human Development Index of 0.800 or higher, with the only major concentrations of poverty being in Africa and South Asia.  The basic necessities of food, clothing, literacy, electricity, and shelter are available to over 90% of the human race. 

Trade between India and the US touches $400 Billion a year, up from only $32 Billion in 2006. 

2022 : Several millon people worldwide are each earning over $50,000 a year through web-based activities.  These activities include blogging, barter trading, video production, web-based retail ventures, and economic activites within virtual worlds.  Some of these people are under the age of 16.  Headlines will be made when a child known to be perpetually glued to his video game one day surprises his parents by disclosing that he has accumulated a legitimate fortune of more than $1 million. 

2024 : The typical US household is now spending over $5000 a year on products and services that are affected by the Impact of Computing, where value received per dollar spent rises dramatically each year.  These include electronic, biotechnology, software, and nanotechnology products.  Even cars are sometimes 'upgraded' in a PC-like manner in order to receive better technology, long before they experience mechanical failure.  Of course, the products and services purchased for this $5000 in 2024 can be obtained for $3200 in 2025, $2000 in 2026, $1300 in 2027, etc. 

2025 : The printing of solid objects through 3-D printers is inexpensive enough for such printers to be common in upper-middle-class homes.  This disrupts the economics of manufacturing, and revamps most manufacturing business models. 

2027 : 90% of humans are now living in nations with a UN Human Development Index greater than 0.800 (the 2008 definition of a 'developed country', approximately that of the US in 1960).  Many Asian nations have achieved per capita income parity with Europe.  Only Africa contains a major concentration of poverty. 

2030 : The United States still has the largest nominal GDP among the world's nations, in excess of $50 Trillion in 2030 dollars.  China's economy is a close second to the US in size.  No other country surpasses even half the size of either of the two twin giants. 

The world GDP growth rate trendline has now surpassed 5% a year.  As the per capita gap has reduced from what it was in 2000, the US now grows at 4% a year, while China grows at 6% a year. 

10,000 billionaires now exist worldwide, causing the term to lose some exclusivity. 

2032 : At least 2 TeraWatts of photovoltaic capacity is in operation worldwide, generating 8% of all energy consumed by society.  Vast solar farms covering several square miles are in operation in North Africa, the Middle East, India, and Australia.  These farms are visible from space. 

2034 : The typical US household is now spending over $10,000 a year on products and services that are affected by the Impact of Computing.  These include electronic, biotech, software, and nanotechnology products.  Of course, the products and services purchased for this $10,000 in 2034 can be obtained for $6400 in 2035, $4000 in 2036, $2500 in 2037, etc. 

2040 : Rapidly accelerating GDP growth is creating astonishing abundance that was unimaginable at the start of the 21st century.  Inequality continues to be high, but this is balanced by the fact that many individual fortunes are created in extremely short times.  The basic tools to produce wealth are available to at least 80% of all humans. 

Greatly increased lifespans are distorting economics, mostly for the better, as active careers last well past the age of 80. 

Tourism into space is affordable for upper middle class people, and is widely undertaken. 

________________________________________________________

I believe that this timeline represents a median forecast for economic growth from many major sources, and will be perceived as too optimistic or too pessimistic by an equal number of readers.  Let's see how closely reality tracks this timeline.

Today, September 15, 2008, represented just about a perfect day for buying new equity positons.  I am going to present my 2009 portfolio, that will be tracked over the next 15.5 months between now and the end of 2009, in relation to the S&P500 index.  My 2008 portfolio is still current, and will be evaluated at the end of 2008, so the start of this 2009 portfolio will overlap with the end of the 2008 portfolio.  To assess my track record, my 2007 portfolio delivered a superb 13.3% return, relative to just 4.3% for the S&P500 over the same period. 

For 2009, the portfolio is quite simple.  I believe that small-cap value and financial stocks are at historically compelling valuations, and have no choice but to rise.  A few major technology stocks are also at attractive valuations. 

So the portfolio will be :

  

This captures the following trends from previous articles on The Futurist :

The Next Big Thing in Entertainment, Part I and Part 2

The Impact of Computing

The Stock Market is Exponentially Accelerating too

I hereby sign and seal this portfolio, bought that the closing prices on September 15, 2008, to be evaluated on the last trading day before December 31, 2009.     

(crossposted on TechSector)

I am of the belief that we will experience a Technological Singularity around 2050 or shortly thereafter. Many top futurists all arrive at prediction dates between 2045 and 2075. The bulk of Singularity debate revolves not so much around 'if' or even 'when', but rather 'what' the Singularity will appear like, and whether it will be positive or negative for humanity.

To be clear, some singularities have already happened.  To non-human creatures, a technological singularity that overhauls their ecosystem already happened over the course of the 20th century.  Domestic dogs and cats are immersed in a singularity where most of their surroundings surpass their comprehension.  Even many humans have experienced a singularity - elderly people in poorer nations make no use of any of the major technologies of the last 20 years, except possibly the cellular phone.  However, the Singularity that I am talking about has to be one that affects all humans, and the entire global economy, rather that just humans that are marginal participants in the economy.  By definition, the real Technological Singularity has to be a 'disruption in the fabric of humanity'. 

In the period between 2008 and 2050, there are several milestones one can watch for in order to see if the path to a possibile Singularity is still being followed.  Each of these signifies a previously scarce resource becoming almost infinitely abundant (much like paper today, which was a rare and precious treasure centuries ago), or a dramatic expansion in human experience (such as the telephone, airplane, and Internet have been) to the extent that it can even be called a transhuman experience.  The following are a random selection of milestones with their anticipated dates. 

Technological :

Hours spent in videoconferencing surpass hours spent in air travel/airports : 2015

Video games with interactive, human-level AI : 2018

Semi-realistic fully immersive virtual reality : 2020

Over 5 billion people connected to the Internet (mostly wirelessly) at speeds greater than 10 Mbps : 2022

Over 30 network-connected devices in the average household worldwide : 2025

1 TeraFLOPS of computing power costs $1 : 2026

1 TeraWatt of worldwide photovoltaic power capacity : 2027

1 Petabyte of storage costs $1 : 2028

1 Terabyte of RAM costs $1 : 2031

An artificial intelligence can pass the Turing Test : 2040

Biological :

Complete personal genome sequencing costs $1000 : 2020

Cancer is no longer one of the top 5 causes of death : 2025

Complete personal genome sequencing costs $10 : 2030

Human life expectancy achieves Actuarial Escape Velocity for wealthy individuals : 50% chance by 2040

Economic :

Average US household net worth crosses $2 million in nominal dollars : 2024

90% of humans living in nations with a UN Human Development Index greater than 0.800 (the 2008 definition of a 'developed country', approximately that of the US in 1960) : 2025

10,000 billionaires worldwide (nominal dollars) : 2030

World GDP per Capita crosses $50,000 in 2008 dollars : 2045

_________________________________________________________________

Each of these milestones, while not causing a Singularity by themselves, increase the probability of a true Technological Singularity, with the event horizon pulled in closer to that date.  Or, the path taken to each of these milestones may give rise to new questions and metrics altogether.  We must watch for each of these events, and update our predictions for the 'when' and 'what' of the Singularity accordingly. 

Related : The Top 10 Transhumanist Technologies

I have discussed the possibility of 3-D printing of solid objects before, in this article where company #5, Desktop Factory, is detailed.  However, the Desktop Factory product can only produce objects that have a maximum size of 5 X 5 X 5 inches, and it can only use one type of material. 

On the Next Big Future blog, the author quite frequently profiles a future product capable of 'printing' entire buildings.  This technology, known as 'Contour Crafting', can supposedly construct buildings at greater than 10 times the speed, yet at just one-fifth the cost of traditional construction processes.  It is claimed that the first commercial machines will be available in 2008 itself. 

Despite my general optimism, this particular machine does not pass my 'too good to be true' test, at least before 2020.  A machine that could construct homes and commercial buildings at such a speed and cost would cause an unprecedented economic disruption across the world.  There would be a steep but brief depression, as existing real estate loses 90% or more of its value, followed by a huge boom as home ownership becomes affordable to several times as many people as today.  I don't think that we are on the brink of such a revolution.

For me to be convinced, I would have to see :

1) Articles on this device in mainstream publications like The Economist, BusinessWeek, MIT Technology Review, or Popular Mechanics.

2) The ability to at least print simple constructs like concrete perimeter walls or sidewalks at a rate and cost several times superior to current methods.  Only then can more complex structures be on the horizon. 

I will revisit this technology if either of these two conditions is solidly met. 

(crossposted on TechSector). 

I feel compelled to dispel ten myths that I see as pervasively present in American society. These are beliefs that are repeated so often, and with so little opposition, that they are taken as fact. However, they fail to stand up to mathematical analysis, logical reasoning, or both.  These combined myths have cost the US economy trillions of dollars in direct and indirect losses.  In no particular order, let me evoke John Stossel and proceed to puncture these oft-unchallenged myths.

1) School Teachers are Underpaid in America : In any free-market setting, no major profession will be perpetually underpaid, relative to output produced, or the profession simply will not attract any new entrants.  Another clue is that private school teachers actually earn less than public school teachers.  As a private school is a business that has to pay market wages to teachers, something is seriously amiss with public school teacher salaries.

An average public school teacher earns about $54,000 a year, but this is for 9 months of work.  Thus, they earn about $6000 per month.  Most teachers have a BA degree in education, and some have an MA degree.  A wage of $6000/month compares favorably to what people with similar education will earn in a corporate job.  Furthermore, a public school teacher is shielded from economic conditions, and thus has higher job security than, say, engineers have during recessions.

So no, teachers are not underpaid, on a monthly or hourly basis, relative to professions that require a similar level of education.  To compare teacher salaries to the wages of doctors and lawyers is false, as the educational qualifications, hours worked, and stress levels are entirely different. 

2) Women Earn Less than Men in America : It is true that women, on average, earn less per year than men do.  It is also true that 22-year-olds earn less, on average, than 40-year-olds.  Why is the latter not an example of age discrimination, while the former is seized upon as an example of gender discrimination?  Because men are too afraid to challenge the false statement. 

If women truly did earn 20% less for doing exactly the same job as a man, any non-sexist CEO could thrash his competition by hiring only women, thus saving 20% on employee salaries relative to his competitors.  Are we to believe that every major CEO and Board of Directors is so sexist as to forego billions of dollars of profit?  Women entrepreneurs could hire other women and out-compete any male-dominated business, but we don't see this happening.  Individual cases of discrimination may exist, but it cannot possibly be a universal norm in a profit-driven economy.  Market forces would correct such mispricings, if they actually existed. 

This myth is closely tied to Myth #1, with the same people propagating both.  It is sad that the feminists reciting this myth are devaluing one of the most important roles in any society, that of a mother with the responsibility of cultivating the next generation of citizens, who chooses to work part-time.  The backlash of this will punish feminists greatly, as immigrants from countries quite unsympathetic to feminist notions move to the US and reproduce prolifically. 

3) Whites Prevent 'Minorities' from Achieving Economic Parity : Many of the points from Myth # 2 also can apply here.  But let me also add that the leftists who spread this myth go to great lengths to avoid revealing that Asians actually earn more than Whites in America today.  This inconvenient reality will become harder to conceal as Asians grow in number and visibility.

Furthermore, if Whites are the reason that Blacks still earn less than Whites in 2008, is it not fair to point out that Whites created a system where immigrants from poor countries like India, China, and VietNam can come to America and do so well that they surpass their White hosts, economically?  Fair is fair.  If Black poverty is due to Whites, then Asian success is also due to Whites.  If this is not acceptable, then the only other explanation is that each group's outcome is primarily due to their own actions, rather than the invisible hand of the white majority. 

Lastly, people have always migrated away from places where they are discriminated against, and into places that are relatively better for them.  We see Mexicans coming to the US by the millions, even at great personal risk.  Blacks from the West Indies, Africa, etc. also immigrate into the US in large numbers.  At the same time, we never see African Americans voting with their feet by going to some country where they might be able to earn more.  Where is the evidence of an African American exodus to Canada, Sweden, Britain, Jamaica, South Africa, etc.?  In fact, Liberia was a country created specifically for this purpose, but Liberia clearly is not able to entice any African Americans to relocate or even vacation there. 

Reverend Jeremiah Wright has become wealthy by pretending to be a man from a race he does not belong to, who is oppressed by people from the race he does belong to.  Amazing.  I am both infuriated and envious at the same time. 

4) Healthy Foods are Expensive, and Unhealthy Foods are Cheap : While I think America is the best country in the world in most ways, in dietary terms, America is sadly one of the worst.  What North Korea and Zimbabwe are to economics, America is to dietary health.  Most Americans are so alien to the concept of regularly consuming fresh fruits and vegetables, that I wonder if they even know what people ate before the 20th century.  That the 'poor' people in America have much greater rates of obesity than higher-income people is shocking to most of the world, and also leads Americans to assume that fast food is the cheapest available choice. 

On the contrary, if one goes to any no-frills grocery store, several bags of fruits and vegetables can be purchased for under $20.  Tomatoes, potatoes, bananas, carrots, cauliflower, onions, cabbage, green beans, apples, broccoli, zucchini, garlic, celery, beets, kidney beans, lentils, and dozens of other plant foods all cost less than $2/pound, and sometimes under $1/pound.  If all one eats are fruits, vegetables, and whole grains (which in fact is normal in many cultures), one can easily eat their fill for under $4/person/day.  Compare that to $15/day for someone who eats all three meals at McDonald's.  The tens of thousands of dollars of lifetime healthcare costs that a person can save with a fruit/vegetable diet are additional. 

The best kept secret in America is that the cheapest food is actually the healthiest food.  The barrier to eating healthy meals is not cost, but rather knowledge, habit, and culinary skills.  Do you dispute the $4/person/day figure?  Then you haven't actually seen how many pounds of tomatoes, bananas, carrots, apples, cabbage, etc. can be bought with $4 from a modest store.  Try this for 30 days, and the rate at which you fatten your bank account will be surpassed only by the rate at which you shed bodily tonnage.     

5) America's Foreign Policy is the Reason for the 9/11 Attacks : This clearly does not explain why the same group conducted attacks in Bali (twice), London, Madrid, Bombay, Jordan, Turkey, Morocco, and dozens of attacks in Iraq and Israel.  They also have massacred schoolchildren in Russia, Indonesia, and Thailand.  How are each of these attacks against unrelated victims due to America, rather than the logical conclusion that this group seems to have a problem with anyone who does not subscribe to their ideology?  Whatever America's flaws, America does not make a terrorist behead his hostages.  It is odd when an anti-American worldview itself is tainted by the US-Centric thought that anti-Americans love to condemn. 

6) Leftists are 'Liberal' and 'Progressive' :  You will notice that on The Futurist, I never refer to leftists as 'liberals'.  Those who were truly liberal at one time became the 'neoconservatives' of today, while the fascists of yesteryear became the leftists of today.  They are illiberal, intolerant, opposed to free speech, and incapable of defending their claimed beliefs in the face of incisive questions.  In the modern era, the Left can best be described as a vehicle through which people can fancy themselves as intelligent without having to put in the effort previously required to become intelligent, simply by believing a set of agreed-upon dogma.  The cost-benefit analysis of this approach is attractive, but this strategy falls apart spectacularly when a leftist is confronted by an informed non-leftist in a debate, hence the efforts to silence informed non-leftists through extremely illiberal means.  Ace of Spades has a superb article about what attracts people to Leftism. 

7) Republicans are Less Intelligent than Democrats :  This is the natural extension of Myth # 5, reinforced by George W. Bush's subpar oratory skills.  I simply have to point you to the voting trends by income bracket as reported by the CNN website.  Let me repost the table here :

Income certainly does not corelate exactly to intelligence, work ethic, and determination, as someone in college may have all of these things but still not yet be earning a high income.  But to believe the 'leftist' view that Bush supporters are stupid is to believe that intelligence is inversely corelated to an ability to earn a high income.  This is vastly more difficult to logically accept. 

This, more than anything else, explains why the Democrats have failed to get 50% of the vote in the last seven Presidential elections since 1976, while the GOP has achieved this feat 4 times (1980, 84, 88, 2004).  The median-income voter does not like being told that he/she is stupid. 

8) Democrats Have a Better Record on Racism than Republicans : It is an utter failure of the GOP's branding efforts that this myth has gained traction, despite :

• Abraham Lincoln being a Republican

• FDR's interning of Japanese Americans

• George Wallace running for President as a Democrat as recently as 1976

• Robert Byrd, a former leader in the KKK, still acting as the seniormost Democrat in the Senate, even to this day.

• Strom Thurmond running for President on a segregationist platform as a Democrat, becoming a Republican only 16 years later. 

• The first two black Secretaries of State being appointed by George W. Bush

Clearly, a foreign visitor with no prior exposure would not possibly conclude that the Republican Party is somehow more racist than the Democrats.  That the GOP has gotten stuck with this label despite the facts above, is remarkable.  The GOP also has some unfortunate racial incidents in the recent past, but they certainly have not done more than Democrats have.  I guess that Democrats say this partly because the GOP lets them. 

9) Houses Always Rise in Value : Here on The Futurist, we identified the Real Estate bubble back in April of 2006, when it was heresy to suggest that home prices could not detach from incomes.  Real estate is an investment class, just like stocks, bonds, art, wine, gold, and Internet domains are.  Yet, you never see people nagging you about how you 'must own stocks', or 'must invest in art'.  Residential real estate is the only investment category where emotion dominates quantitative analysis.  Remarkably, such a belief does not exist for commercial property, but somehow the existence of a kitchen and shower bestows a structure with magical immunity to price declines.  Emotions about residential real estate reveal the following two major errors that many proponents consistently make :

a) The failure to distinguish between high prices and rising prices :  A good school district or California weather can certainly justify high prices, but as these factors are the same from one year to the next, there is no reason for them to result in home prices rising faster than the salaries of workers in that area.  Is the school getting dramatically better each year?  Is California weather improving each year?

b) The failure to account for cost of capital when calculating a home price gain :  Otherwise intelligent people who fully grasp the concept of inflation still manage to think that if their home price is flat for 5 years, that they 'at least didn't lose money'.  If one's cost of capital (a mortgage rate can suffice) is 6%, then 5 years of flat prices are effectively (1.06)^5, or a 34% real loss.  On a $1 million home, 5 years of flat valuation is a $340,000 effective loss to one's net worth. 

It will take a decade for home owners to fully accept that homes are not guaranteed to rise in price any more than stocks, art, wine, or antiques are. 

10) High Oil Prices Will Create Permanent Long-Term Poverty : This belief is thoroughly debunked here.  One must have very little faith in market-driven technological change or human adaptability to believe that the world of 2020, 2030, or 2040 will be so poor that car ownership will be rare. 

Notice a common theme in these 10 myths.  Myths 1, 2, 3, 9, and 10 betray an ignorance of free-market economics or even an active attempt to suppress evidence of it.  Myths 1, 2, 3, 4, 5, 6, 7, 8 are propagated by the same ideology, indicating a total inability of that ideology to actually generate compelling ideas.  Myths 1, 2, 3, and 9 are derived from a sense of entitlement and unwillingness to accept personal responsibility.  Believing myths 2, 3, 4, and 5 require having never ventured outside of the hotel in any non-Western country.   

Clearly, a couple of unsavory philosophies have managed to disguise themselves and dupe a majority of mainstream Americans (and the foreigners who watch our television news) into believing things that are simply illogical.  As citizens, we must fight to overturn these myths, lest they give rise to even more absurdities that cost trillions of additional dollars. 

On 3/21/08, I wrote an article about the economic and technological implications of medical tourism.  True to our long tradition here at The Futurist, this article made predictions months before a major publication arrived at the same expectations.  The Economist has an article this week that predicts everything that by original article does, from a rapid increase in Americans going abroad, to the loss in revenue to the US healthcare system triggering overdue reforms.  I particularly like the following sentences from the article :

"Jagdish Bhagwati, an economist at Columbia University, thinks that the offshoring of, for instance, customer service and claims-processing could save America alone $70 billion-75 billion a year."

"By Deloitte’s reckoning, medical travel will represent $162 billion in lost spending on health care in America by 2012. "

"A bit of rivalry from top foreign facilities may introduce transparency and price competition into an inefficient system riddled with oligopolies and perverse incentives. "

If some people thought the outsourcing of technical support and software development was significant, then medical tourism promises to be several times larger by the middle of the next decade.  The Economist article provides a chart projecting the number of US patients expected to partake in medical tourism.  The number is expected to grow from under 1 million today to over 15 million by 2017.  By then, this could carve $250 Billion/year out of US healthcare spending, and pump $50 Billion/year into the destination countries, introducing $200 Billion/year of net deflationary benefit into the US economy.  Everyone will know someone who went abroad for a medical procedure, with many customers comparing their experiences in India vs. Thailand vs. Jamaica.   

To repeat the sequence of predicted events from the first article, they are :

1) Americans with no insurance are forced to make a life or death decision to get their surguries abroad, where the service meets or exceeds their expections.   

2) More insurance companies offer medical tourism with liability guarantees and cash/vacation incentives to American patients.  Only a small fraction of patients are adventurous enough to do this, but all insurance companies are compelled to offer these options.

3) Major centers for medical tourism, after a track record of about a decade, develop solid brands that can attract American patients. 

4) When we finally get to the point that 10% of Americans are traveling abroad for a wide array of procedures, the US will be forced to begin to take measures to reduce costs throughout the healthcare system.  Losing 10% of the market is all that it will take to force some positive changes.  This could begin to happen by 2020. 

This confluence of market forces, globalization, and biotechnology is about to bring overdue reform to one of the biggest and worst sectors of the US and global economies.  There are tremendous investment opportunities here, which I will write about in the near future. 

 

Computing, once seamlessly synonymous with technological progress, has not grabbed headlines in recent memory. We have not had a 'killer ap' in computing in the last few years.  Maybe you can count Wi-fi access to laptops in 2002-03 as the most recent one, but if that is not a sufficiently important innovation, we then have to go all the way back to the graphical World Wide Web browser in 1995.  Before that, the killer ap was Microsoft Office for Windows in 1990.  Clearly, such shifts appear to occur at intervals of 5-8 years. 

I can, without hesitation, nominate surface computing as the next great generational augmentation in the computing experience.  This is because surface computing entirely transforms the human-computer interaction in a matter that is more suitable for the human body than the mouse/keyboard model is. In accordance with the Impact of Computing, rapid drops in the costs of both high-definition displays and tactile sensors are set to bring this experience to consumers by the end of this decade.

BusinessWeek has a slideshow featuring several different products for surface computing. Over ten major electronics companies have surface computing products available. The most visible is the Microsoft Surface, which sells for about $10,000, but will probably drop to $3000 or less within 3-4 years, enabling household adoption.

As far as early applications of surface computing, a fertile imagination can yield many prospects. For example, a restaurant table may feature a surface that displays the menu, enabling patrons to order simply by touching the picture of the item they choose.  The information is sent to the kitchen, and this saves time and reduces the number of waiters needed by the restaurant (as waiters would only be needed to deliver the completed orders).  Applications for classroom and video game settings also readily present themselves. 

Watch for demonstrations of various surface computers at your local electronics store, and keep an eye on the price drops.  After seeing a demonstration, do share at what pricepoint you might purchase one.  The next generation of computing beckons. 

Related :

The Impact of Computing

(Crossposted on TechSector)

This is a supplement to my article from Demember 2006 titled The Culture of Success.  In that article, I make a detailed case on how certain cultures are far more likely to produce economic prosperity than others.  A recent chart from The Economist, however, adds another dimension to this thesis.  Economic prosperity is not always a guarantee of happiness.  So which cultures generate greater happiness?

It appears that happiness corelates moderately, but not exactly, with economic prosperity, as Japan and South Korea are less happy than Brazil.  However, happiness certainly does corelate with Western values.  The oldest Democracies, such as the US, Britain, Denmark, etc. are also the happiest countries. 

India warrants special mention.  While India is a genuine democracy, human development indicators reveal India to be one of the least successful societies in terms of wealth creation, even as it was once the world's wealthiest society for over two thousand years.  However, we additionally see from the above chart that India is one of the unhappiest societies in the world.  Suffice it to say that Indian culture, with thousands of years of accumulated baggage calcifying into a rocklike rigidity, has mutated into the most efficient machine imaginable for stripping away human happiness.  One could scarcely invent a more sophisticated infrastructure for extinguishing the basic joys of life if they tried.  The typical American, Australian, or Dane cannot even begin to imagine the sheer variety of obstacles to the pursuit of happiness that can be constructed around the human soul. 

Much more will be written on this subject in the future.

Related :

The Culture of Success

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.  Let us assess the what makes a superpower, and what it would take for China to match the US on each pillar of superpowerdom.  Two years ago, in May 2006, I wrote the first version of this article, and it became the most heavily viewed article ever written on The Futurist.  The comments section brought a wide spectrum of critiques of various points in the article, which led me to do further research, which in turn strengthened the case in some areas while weakening it others.  Thus, it is time for a tune-up on the article. 

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.  Many Europeans like to point out that the EU has a larger economy than the US, but the EU is a collection of 27 countries that does not share a common leader, a common military, a uniform foreign policy, or even a common currency.  The EU simply is not a country, any more than the US + Canada comprise a single country. 

The only realistic candidate for joining the US in superpower status by 2030 is China.  China has a population over 4 times the size of the US, has the fastest growing economy of any large country, and is mastering sophisticated technologies.  But to match the US by 2030, China would have to : 

1) Have an economy that matches the US economy in size.  If the US grows by 3% a year for the next 22 years, it will be $30 trillion in 2008 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 presently grows at a trend of 4.5% a year, and this might at most be 6% a year by 2030.  China, with an economy of $3.2 trillion in nominal (not PPP) terms, would have to grow at 11% a year for the next 22 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 22 years from 2008 to 2030.  Even then, this is just the total GDP, not per capita GDP, which would still be merely a fourth of America's. 

The subject of PPP GDP arises in such discussions, where China's economy is measured to a larger number.  However, this metric is inaccurate, as international trade is conducted in nominal, not PPP terms.  PPP is useful for measuring per capita prosperity, where bag of rice in China costs less than in the US.  But it tells us nothing of the size of the total economy, which could be more accurately measured in commodities like oil or gold.  Nonetheless, in per capita GDP, the US surpasses any other country that has more than 10 million people (and is thus too large to rely solely on being a tax haven or tourist destination for GDP generation).  From the GDP per capita chart, we can see that many countries catch up to the US, but none really can equal, let alone surpass, the US.  An EU study recently estimated that the EU is 22 years behind the US in economic development.  The European Chamber of Commerce estimated that the gap between the EU and US was widening further, and that it would take 75 years for the EU to catch up to the US.  Again, these are official EU studies, and are thus not 'rigged by America'.         

The weak dollar leads some who suddenly fancy themselves as currency experts to believe/hope that the US will lose economic dominance.  However, we see from this chart that the US dollar comprises a dominant 65% of global currency reserves (an even greater share than it commanded in 1995), while the second highest share is that of the Euro (itself the combined currency of 21 separate countries) at just 25%.  Furthermore, the Euro is not rising as a percentage of total reserves, despite the EU and Eurozone adding many new member nations after 2001.  Which currency has any chance of overtaking the US, particularly a currency that is associated with a single sovereign nation?  The Chinese Yuan represents under 2% of world reserves, and China itself stockpiles US dollars.  Clearly, US dominance in this metric is enormous, and is not dwindling in the forseeable future. 

2) 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-sized 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, despite military spending being only 3% of US GDP - a lower proportion than many other countries.  Mere nuclear weapons are no substitute for this.  The inability of the rest of the world to do anything to halt genocide in Darfur or other atrocities in Burma or Zimbabwe is evidence of how such problems can only get addressed if and when America addresses them.

3) 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 almost 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 cultural and economic dominance has even increased by this measure.

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) Become the center of gravity for all types of scientific research.  The US conducted 32% of all research expenditures in 2007, which was twice as much as China, and more than the 27 combined countries of the EU.  But it is not just in the laboratory where the US is dominant, but in the process to deliver innovations from the laboratory to the global marketplace.  To displace the US, China would have to 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 four 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.  Even after Google, a new batch of technology companies, this time in alternative energy, have rapidly accumulated tens of billions of dollars in market value.  It is this dominance across the whole process of university excellence to scientific research to creating new companies to bring technologies to market that makes the US innovation engine virtually impossible for any country to surpass. 

6) 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 'education import' estimated to be above $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 migrating 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.  The true measure of a country is the net difference between how many people seek to enter, and how many people seek to leave.  The US has a net inflow of immigrants (constrained by quotas and thus a small fraction of the unconstrained number of people who would like to enter), while China has a net outflow of native-born Chinese.  Click on the map to enlarge it, and see the immigration rate to America from the world (which itself is constrained by quotas in the US and forcible restrictions on fleeing the country in places like Cuba and North Korea). 

7) Be the leader in entertainment and culture, which is the true driver of societal psychology.  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.  Which country can claim the title of #2 in entertainment and cultural influence?  That such a question cannot easily be answered itself shows how total US dominance in this dimension really is. 

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 or has permanent Moon bases 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.  It is certainly not a requirement for a superpower to be benevolent, but it does make the path to superpower ascension easier, as a malevolent superpower will receive even more opposition from the world than a benevolent one, which itself is already substantial.  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 and the 2008 cyclone in Burma, 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 and money would the world depend on to detect it, and then destroy or divert it?  Until China is relied upon to an equal degree in such situations, China 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.  America's success in bringing democracy to Afghanistan and Iraq, and defending local populations from terrorists, is condemned more than the UN's inaction in preventing genocide and slavery.  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 upcoming 2008 Olympics will be an event where political demonstrations are going to grab headlines perhaps to a greater degree than the sports themselves, and the Chinese leadership will be tested on how they deal with simmering domestic discontent under the scrutiny of the world media.  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. 

Economically, is China prepared to withstand the pressures that the US presently bears?  How long before the environmental movement (at least the fraction of it that is actually concerned about the environment) recognizes that China is a bigger polluter of the atmosphere than the US is, and that the road to pollution reduction leads straight to China?  How long before China is pressured to donate aid to Africa in the manner that the US does?  What happens when poorer nations benefit from Chinese R&D expenditures, particularly if those are neighboring countries that China is not friendly with? 

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 and more equitable treatment than it experiences today.  Is China prepared to take on the heat?  Arguably, there is evidence that the Chinese public has not even begun to think that far. 

Of the ten points above, Britain, France, Germany, 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 European countries 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 most successful 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 sort of very long tail if it is finally surpassed, at some point much later than 2030 and probably not before the Technological Singularity, estimated for around 2050, 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.  I would not bother to write such an article about, say, India or Germany (the largest of the 27 EU countries).  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 American Exceptionalism by Tunku Varadarajan at Forbes. 

Related :

The Winds of War, the Sands of Time

Who Hates America?

Who Does America View Favorably?

The Age of Democracy

The Culture of Success

I have long been optimistic about Solar Energy (whether photovoltaic or thermal) becoming our largest energy source within a few decades.  Earlier articles on the subject include :

A Future Timeline for Energy

Solar Energy Cost Curve

Several recent events and developments have led me to reinforce this view.  First of all, consider this article from Scientific American, detailing a Solar timeline to 2050. The article is not even Singularity-aware, yet details many steps that will enable Solar energy to expand by orders of magnitude above the level that it is today.  Secondly, two of the most uniquely brilliant people alive today, Ray Kurzweil and Elon Musk (who I recently chatted with), have both provided compelling cases on why Solar will be our largest energy source by 2030.  Both Kurzweil and Musk reside in significantly different spheres, yet have arrived at the same prediction.

However, the third point is the one that I find to be the most compelling. There are a number of publicly traded companies selling solar energy products, many of which had IPOs in just the last three years.  Some of these companies, and their market capitalizations, are :

Now consider that the companies on this list alone amount to about $50 Billion in capitalization.  There are, additionally, many smaller companies not included on this list, many companies like Applied Materials (AMAT) and Cypress Semiconductor (CY) for which solar products comprise only a portion of their business, and large private companies like NanoSolar (which I have heavily profiled here) and SolFocus that may have valuations in the billions.  Thus, the market cap of the 'solar sector' is already between $60B and $100B, depending on what you include within the total.  This immense valuation has accumulated at a pace that has taken many casual observers by surprise.  A 2-year chart of some of the stocks listed above tells the story. 

While FirstSolar (FSLR) has been the brightest star, all the others have trounced the S&P500 to a degree that would put even Google or Apple to shame over this period.  Clearly, a dramatic ramp in Solar energy is about to make mainstream headlines very soon, even if the present valuations are too high. 

Is this a dot-com-like bubble?  Yes, in the near-term, it is.  However, after a sharp correction, the long term growth will resume for the companies that emerge as leaders.  I won't recommend a specific stock among this cluster just yet, as there are a wave of private companies with new technologies that could render any of these incumbents obsolete.  Specific company profiles will follow soon, but in the meantime, for more detail on the long-term trends in favor of Solar, refer to these additional articles of mine :

Why I Want Oil to Hit $120 per Barrel

Terrorism, Oil, Globalization, and the Impact of Computing

(crossposted on TechSector)

I first wrote on October 14, 2006 about a liquid that quickly self-assembles into a solid gel upon contact with blood, sealing the wound quickly.  At that time, it appeared that military use of this type of substance was 8-10 years away from 2006.  However, it appears that progress has accelerated, and we are much closer to market availability than it initially appeared.  An update on the progress is posted this week in MIT Technology Review.

The material consists of naturally occurring amino acids that have been engineered to form peptides that spontaneously cluster together to create long fibers when exposed to salty, aqueous environments, such as those found in the body. The fibers form a mesh that serves as a physical barrier to blood and other fluids.

Needless to say, this could save many lives on the battlefield, in car crashes, and during surgery.  If it becomes inexpensive enough, it could even be part of home first-aid kits.  Arch Theraputics is the company that is licensing the technology from MIT, and clinical trials are set to begin soon.

Let's hope the next hurdles are quickly cleared. 

Popular Mechanics has assembled one of those captivating lists of new technologies that will improve our lives, this time on healthcare technologies (via Instapundit).? Just a few years ago, these would have appeared to be works of science fiction.? Go to the article to read about the ten technologies shown below.?

Most of these will be available to average consumers within the next 7-10 years, and will extend lifespans while dramatically lowering healthcare costs (mostly through enhanced capabilities of early detection and prevention, as well as shorter recovery times for patients).? This is consistent with my expectation that bionanotechnology is quietly moving along established trendlines despite escaping the notice of most people.? These technologies will also move us closer to Actuarial Escape Velocity, where the rate of lifespan increases exceed that of real time.?

Another angle that these technologies effect is the globalization of healthcare.? We have previously noted the success of 'medical tourism' in US and European patients seeking massive discounts on expensive procedures.? These technologies, given their potential to lower costs and recovery times, are even more suitable for medical offshoring than their predecessors, and thus could further enhance the competitive position of the countries that are quicker to adopt them.? If the US is at the forefront of using the 'bloodstream bot' to unclog arteries, the US thus once again becomes more attractive than getting a traditional procedure done in India or Thailand.? But if the lower cost destinations also adopt these technologies faster than the heavily regulated US, then even more revenue migrates overseas and the US healthcare sector would suffer further deserved blows, and be under even greater pressure to conform to market forces.? As technology once again acts as the great leveler, another spark of hope for reforming the dysfunctional US healthcare sector has emerged.?

These technologies are near enough to availability that you may even consider showing this article to your doctor, or writing a letter to your HMO.? Plant the seed into their minds...

Related :

Actuarial Escape Velocity

How Far Can 'Medical Tourism' Go?

Milli, Micro, Nano, Pico