Everyone agrees: the future has never been so exciting. Lately, some of the world’s leading futurologists have been outbidding themselves in their enthusiasm, breathlessly predicting The Rise of the Robots , The Second Machine Age, The Third Wave, The Fourth Industrial Revolution.
We stand on the brink of a brave new era that will usher in unmatched technological progress and economic abundance. All we have to do is decide how best to manage the social disruption caused by this revolution and allocate the fruits of this unprecedented growth.
The trouble is that the present does not appear to have received that memo.
Global economic growth has been below the 20-year average in six of the past eight years. Productivity growth has slowed around the world amid talk of a secular stagnation. And as Mary Meeker, partner at Kleiner Perkins Caufield & Byers, emphasised last week in her latest Internet Trends report, the growth in the number of global internet users is flattening off at about 3bn and smartphone uptake is slowing too.
Is this latest wave of tech hype crashing on the rocks of reality?
One of the most persuasive arguments that we are at a “pivotal point” in history is made by Steve Case, co-founder of America Online turned tech investor, in his book The Third Wave . His argument is that the internet is becoming all-pervasive in our economies, transforming pretty much every industry and area of our lives. Just as it once became senseless to talk about electricity-enabled industries, so it is becoming meaningless to talk about anything being internet-enabled. Here comes the “internet of everything”.
According to Case, the first wave of the internet started in the mid-1980s when pioneering companies such as AOL began to connect people to this technology. The second wave arrived when the likes of Google and Facebook created search and social networking businesses and Snapchat and Instagram exploited the emerging app economy.
But Case believes the third wave, which is only just beginning, will have far more impact as the internet transforms real world sectors such as healthcare, education, transport and energy. He shows how existing technologies can be deployed far more smartly rather than assuming that we will see further heroic breakthroughs.
Take healthcare. Soon, he reckons, we could all be wearing sensors that will track health data in real time, alerting us — and our doctors — when things start going wrong. This will profoundly change how we are treated as well as the entire way health systems operate. Given that US healthcare accounts for one-sixth of the economy, that is a big deal.
One of the most intriguing aspects of Case’s argument, though, is what this means for his fellow entrepreneurs in Silicon Valley. In short: they cannot surf the third wave alone. Much as it may rankle West Coast libertarians, governments — and some existing businesses — have an essential role to play. “Partnerships in the third wave are the prerequisite for success,” he writes. “Unlike in the second wave, arrogance won’t work as a strategy.”
Case himself experienced a crash course in humility following the disastrous merger of AOL and Time Warner, which vaporised about $200bn in shareholder value. The lesson he learnt was that the “people factor” is all important. It is no good having a great plan if you cannot persuade other people to pursue the same objectives.
Whereas the biggest challenges for entrepreneurs in the first and second waves were technology and market risks respectively, he argues that policy risk will be the greatest obstacle in the third wave. All the industries at the heart of the third wave are heavily regulated. Governments can facilitate the adoption of self-driving cars, for example, or block them altogether.
If Case is right, then we have a problem with the future. As he acknowledges, there is an attitude in Silicon Valley that money equals merit and that government is the problem, not the solution. Conversely, politicians and the public appear to be growing increasingly exasperated with the tech titans. The charge sheet includes: exploiting privacy, manipulating public opinion, dodging taxes and defying the requests of law enforcement agencies.
Just as cold war tensions were reduced after the installation of a red telephone between Washington and the Kremlin, so Case argues — somewhat cheesily — for a red iPhone to operate between Washington and Silicon Valley.
However, in the present political mood, it is far from clear who would answer at either end.