How Fast is the Future?

Peter Diamandis & Steven Kotler cherry-pick evidence to paint a Panglossian picture of accelerating innovation, but fail to conceal the gloomy shadows of Secular Stagnation.

I have been reading Peter Diamandis & Steven Kotler’s new book, “The Future is Faster Than You Think”. If you are already familiar with the authors’ previous works, it will come as little surprise that the latest volume in their “Exponential Mindset Trilogy” doubles down on the same arguments made in “Abundance” (2012) & “BOLD” (2015). Basically, that a convergence of accelerating technologies such as Artificial Intelligence (AI) & Augmented Reality (AR) will lead us to a Singular Utopia — much sooner than you would expect.

The book is certainly worth reading end contains numerous enlightening insights about emergent exponential technologies. But, to get that out of the way first, the book’s biggest weakness is that it does not seriously engage with the counterarguments of the Secular Stagnationists; that the future is not so fast.

After all it has been close to a decade since the publication of “Abundance” & for most of the middle-class in most Western countries that has been a decade of stagnation in wages & wealth. For many the authors’ arguments that flying cars are right around the corner & that we will soon be enjoying an abundance of low-cost housing, healthcare & education may thus ring a bit hollow, to put it mildly. For example, what exactly does it mean that “exponential technology is dematerializing, demonetizing, & democratizing nearly every aspect of real estate”? Three funky words starting with “de-“; that will probably go down well in a TED speech. But try telling that to a Silicon Valley employee struggling to pay the rent on his ludicrously expensive San Francisco hut.

The authors do at least acknowledge Peter Thiel’s complaint that: “We wanted flying cars, instead we got 140 characters”. But they interpret Thiel too literally, without taking him seriously. Their retort that flying cars are here already is too clever by half. It is true that Uber plans to launch their aerial ridesharing scheme in 2023 – Uber Elevate – with a long­-term goal of achieving lower marginal costs per passenger mile for flying cars than for traditional cars. However, the Covid-19 pandemic has thrown renewed doubt at the feasibility of both those targets.

The book would have been more credible if Diamandis & Kotler had offered a more comprehensive macro rebuttal of the Secular Stagnation story, instead of cherry-picking individual companies & sectors with outsize productivity gains. It weakens the book that the authors are hesitant to confront the decelerating productivity growth in the American (& other Western) economies that has been extensively documented by Robert Gordon & others – most notably in his masterly “The Rise & Fall of American Growth”. The only thing this evasiveness serves is to stoke suspicion that the crowd around Singularity University is turning into a techno-utopian cult.

The human factor is a bit missing from Diamandis & Kotler’s narrative. Throughout the book one often gets the impression that people, far from having any inherent value or free will of their own, are reduced to a pathetically mortal pieces of meat, whose intelligence has been transcended by their Alexa home enter­tainment system & who can be rocketed around in Hyperloops at 760mph serving some higher Kurzweilian purpose. & if the authors get their way society will soon reach Longevity Escape Velocity – i.e. that for every year you live you will add more than one year of life expectancy. If this is what the future holds, most sane people will probably wish to die before they will have the chance to spend eternity in AI purgatory.

Despite the claims of an “exponential mindset” the authors occasionally fall prey to rather linear, & dare one say shallow thinking. Such as their very linear view of the “time saved” by googling the answer to a question instead of having to look it up in a lexicon or applying your own cognitive faculties. Even Eric Schmidt has recognized the risk that Google – & the Internet more broadly – making us stupid, by producing a tendency toward shallow thinking, at the expense of (for schoolchildren esp­ecially) developing the ability to think (& read) deeply about things. Diamandis & Kotler on the other hand, have no such qualms.

There is no question that a lot of interesting stuff is happening in Silicon Valley. But will Avatars ever match the impact of the invention of electricity or Blockchain that of running water? Gordon has demonstrated very thoroughly how hard it is to match the truly life-altering significance of the General Purpose Technologies & subsidiary inventions of the Second Industrial Revolution: the internal combustion engine, automobiles, aircraft, the telephone, radio, “modern” sewage systems, the washing machine & assembly lines. These inventions powered a century of miraculous growth from ~1870 to ~1970. Their impact was so transformative that the feat can hardly be repeated. Diamandis & Kotler wax lyrical about the notion of a Kurzweilian “Law of Accelerating Returns”. But the law of diminishing returns will not easily be turned upside down. Yes it may be true that an iPhone would have cost 110 mUSD in 1980, but how much better is really the iPhone 11 than the iPhone 10? & will the 12 be leaps & bounds better than the 11?

Even if one remains sceptical about Diamandis & Kotler’s grand thesis of accelerating change, their analyses of several industries are spot on. In the retail industry for instance, the changes are obvious to see & have been accelerated by the coronavirus pandemic. The transition from analog to digital has been sped up. Amazon is the big winner. Shopping malls will die. It will be the end of cashiers as automated checkout becomes the new norm. The transition from physical to online retail has profound consequences for the advertising industry as well, as evidenced by the fact that Google & Facebook have gobbled up a combined quarter of ALL global ad revenue – leaving Old Media as the big loser.

The Covid-19 Pandemic has been a Luther moment for the “Higher Education” racket. As lectures have moved from campus to cyber­space it seems to have finally dawned on students that they are indebting themselves for life only to pay exorbitant tuition fees for knowledge that is essentially available for free on the Internet. The authors are right that this relic from the past is no longer fit for purpose (if it ever was – note the disparaging judgments of Oxbridge from the likes of Adam Smith or Edward Gibbon as long as 250 years ago). Peter Thiel has rightly compared modern university diplomas to the indulgence letters of the medieval Catholic Church. But students’ obedient faith in orthodoxy has held up surprisingly long. With Covid – judging for example from reports suggesting that foreign students will not bother with elite educations at prestigious US or UK universities if classes will anyway be held online – the moment when students (& employers) see that the Professor is not wearing clothes may at long last have arrived.

AR, VR & Avatars are all exciting fields, but will they truly transform the lives of common people like the dishwasher did? Or perhaps more likely & more sinisterly; will these technologies provide avenues for resigned people to retreat from reality? A second chance to create in virtual worlds the life they could not have in the real world? At the very least this should bode well for the gaming industry.

Blockchain & Cryptocurrencies are perhaps the emerging tech­nologies with the biggest potential to radically change the way the economy is ordered – by challenging the incumbency-biased hegemony of central banks & fiat currencies. In theory at least. Not that I believe it will happen in practice. The “Fintech” revolution held early promise but has by now been quite effectively co-opted by the legacy banking system, rendering the chances for radical change minimal.

Legacy banks have today become probably almost as big a break on entrepreneurial activity as government regulation. If blockchain, cryptocurrencies, Digital Autonomous Organi­sations (DAOs) & seasteading perhaps could be combined in a way that would enable people to conduct (legitimate) business across borders without being reliant on legacy financial institutions then it could unlock a new dimension. But for the moment the whole cryptosphere, although it has practical utility, for all intents & purposes remains a casino.

Speaking of money, Diamandis & Kotler claims that entrepreneurs today enjoy easier access to capital than ever before. While that may be true for some tech startups, it is not the everyday reality for most small businesses. Legacy banks have largely abandoned their traditional role of providing finance to new business creation, in favour of loans to big corporates & mortgages to the salaried classes. With the exception of a few much-publicized success stories, the concept of crowdfunding was dead on arrival. At any rate, cheap capital is no magic potion for entrepreneurship. If that had been the case, the Kamikaze monetary experiments of the Federal Reserve & other central banks should have unleashed a Wirtschaftswunder like the world had never seen before. It has not happened. That is because the stagnation we see in Western economies today is due to deeper problems on the supply side, which cannot be solved by funny monetary policies. Or to take a case in point, look at SoftBank’s 100bUSD Vision Fund, which was created with the aim of throwing billions of dollars at Unicorns to accelerate the future, & the best they could find was a Ponzi office sub-letting scheme? Building the future is hard & requires more vision than an abundance of Petrodollars from hallucinating desert princes.

The authors do pay lip service to concerns for rising technological unemployment – concerns that suddenly have become much more acute in the wake of the coronavirus pandemic, as many of the job losses triggered by Covid-19 are unlikely to be reversed. For example, the cashiers that have been rendered obsolete as shopping has migrated online. What are they going to do next? Diamandis & Kotler cite a McKinsey report (congratulations) claiming that the Internet has created 2,6 new jobs for every job it has destroyed. That claim may have been supported by the low pre-pandemic unemployment levels. But, as David Graeber has documented, there has been an awful lot of bullshit jobs out there. What the pandemic has brutally revealed is that society manage to cope pretty well without many of those jobs, (a consequence that can be both encouraging & disheartening, depending on your perspective).

Another trend that the authors are very keen on that is also being challenged by Covid is urbanisation. Are ever bigger cities with ever-taller towers with ever-more people crowded together in tiny closets still the answer to the future? It does not look very appealing to me.

As a matter of formality Diamandis & Kotler go through the list of threats to their thesis – from water woes to climate change in addition to the risk of technological unemployment. But they remain optimistic on all fronts. Politics do not seem to play much of a role in their future – except that: “Governments around the world, encouraged by Estonia’s example, are going digital”. That sounds great, but where is the evidence that digitalization has increased public sector productivity – other than in governments’ tax-collecting arms & citizen surveillance capabilities? When it comes to immigration Diamandis & Kotler still cling to, the rosy-eyed view that: “Migration is an innovation accelerant”, which to a European reader sounds dangerously naive. As if their example of Jews emigrating from Hitler’s Germany holds any relevance whatsoever for the migration flows of today.

All in all, the book is absolutely worth reading, as it is representative of how Silicon Valley’s most Pangloss­ian minds envision the best of all possible futures. But while Diamandis & Kotler have their AR goggles on & are ready to hyperloop into the future, the rest of humankind will be joining them not so fast.

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