isen.blog

Phil Neches and Tom Evslin were the only entrepreneurs in the upper echelons of AT&T management when I was there. I don't think it's a coincidence that today they're my only former-AT&T-senior-management friends.

Phil Neches (who'll be at WTF!?! A Gathering of SMART People, by the way) emailed me this commentary on Eli Noam's heavily blogged recent FT column and, later, consented when I asked if I could blog it:

"Pessimism without Paradox" reminds me of the turn of the century. Not 2000, but 1900. The typical American worker felt under pressure. Wages were dropping faster than prices. Foreigners were arriving to take jobs from "real Americans". The price of new technology components fell relentlessly, prompting waves of mergers. Cheap goods flooded the market.

Serious people feared the collapse of capitalism, either through implosion by merger or violent revolution.

Of course, we now look back on the period from roughly 1880 to 1920 as a time of extraordinary productive change. In that time, we saw the rise women's rights, public education, the middle class, national brands, and America's emergence as the world leader in just about everything. We saw a slew of seminal inventions: the automobile, the airplane, the telephone, radio, and anesthesia, just to name a few. Energy consumption turned from wood and coal to oil and gas.

Today, the sense of dislocation many of us feel is that we are living in another era of fundamental change. By 2050, the following things are highly likely:

• Oil and gas production will be declining. Either other energy sources will be increasing in importance, or civilization as we know it will have collapsed. (I vote for the former). [I think we're likely to see dramatic movements in both directions, and *way* before 2050. -- DI]
  
• The "First World" economy will encompass ~3 billion people, up from ~1 billion in 2000. This means that the United States will be ~10-15% of interesting economic activity, as opposed to today's ~40-50%. In other words, the US can still lead, but cannot dominate.
  
• Employment of application programmers will continue its 50-year decline, just as manufacturing employment will continue its 100 year decline and farm employment will continue its 150 year decline, viewed as a percent of the workforce. (Farm employment peaked between 1840 and 1870; manufacturing employment peaked in the 1950s in the US).
  

In the middle of the 1880-1920 changeover, it was easier to see what was being lost than what would be gained. In 1900, one could readily predict the loss of jobs through consolidation in the steel industry, but it was much harder to foresee the number of jobs that would be created in the auto industry. The automobile was a curiosity for the idle rich, and there were practically no roads to drive on. But by 1920, Henry Ford was selling automobiles for about the same price that the Wright brothers were selling bicycles in 1900. [Wow! -- DI]

Now we face a similar failure to imagine how big the new industries created by today's infant technologies can become. This is because we can easily imagine how a new technology can fit into our established world, but it's hard to envision how the world could be reordered to take advantage of the technology.

Just one example: Caltech researchers created a directional microwave system that is physically smaller than a postage stamp and which will cost only a buck or two. In a recent New York Times article (02/26/04, page E5), the "so what" of this breakthrough was radar "night vision" for our cars and tight-beam microwave links for real cheap. In other words, the impact of the new technology was envisioned in terms of familiar things like cars, phones, and computers. But the article did not ask what new things we might do because these new microwave devices that might re-order our world.

To return to 1900, what we today call the automobile was then called a "horseless carriage". People understood the new technology by analogy. And, of course, the early horseless carriages resembled horse-drawn ones, with narrow wheels and high ground clearance, because they worked with the roads of that day. Few could imagine a continent covered with paved roads, but it happened within only 20 years.

Eli Noam's litany of discontinuities is easy to see. But what we should be looking for are opportunities to reorder the world to take full advantage of our new technology. These are hard to see and even harder to believe in. Yet, these opportunities, not today's apparent problems, are likely to sculpt the shape of the future.

Yeah!