Bill Gross, the former manager of the planet's biggest bond mutual fund (Pimco), coined the term "new normal", meaning that an era of slow growth and lower returns on stocks, bonds and other assets has already started (cnn). And Tyler Cowen, a professor for economics at George Mason University and owner of the influential blog "Marginal Revolution" (marginal), jumped on the pessimistic bandwagon with his phrase "the great stagnation" (tylercowen wikipedia). Cowen asserts that America ate already all of the low-hanging fruit of modern history.
I believe that all these techno pessimists suffer a collective blindness. Maybe they need Google glasses. Then they might see that there is so much going on now. I reckon that we are at the beginning of a new industrial revolution driven by technological innovations. And it looks like that technological progress is accelerating.
We are witnessing the mobilization of the Internet (asymco). Almost everywhere you can see people using smartphones, tablets and other devices which allow them permanent access to the world wide web. These high tech devices, which didn´t even exist in the year 2000, are rapidly getting better and cheaper. A hand-held device, the iPhone, has computing power that dwarfs the super-computers from the 1970s-era.
Smartphones, tablets & co. also are getting more attractive because new apps and other software make them more user friendly and expand their functions. Rapidly falling prices for smartphones & tablets - often below $100 - make these Internet devices affordable for billions of people in Asia, Latin America and Africa (a16z).
The mobile Internet is becoming global and accessible 24/7. People worldwide are spending much more time and money online for E-commerce and other services. Soon billions of people are using Internet and other incarnations of software to organize shopping, leisure time, traveling, dating, eating out and more.
The mobilization of the Internet also fosters the catching-up-process of the emerging markets. In Africa "mobile banking has given consumers cheaper access to their finances, reducing the need to travel to bank branches", reports a study by the management consulting firm McKinsey (mckinsey).
Access to Supercomputers
The Internet also gives everybody access to a network of supercomputers: The "cloud" (wsj.com). Amazon.com, IBM, Apple, Google and other companies offer data storage and processing either for free or for low fees. This cloud isn`t just used by consumers who store pictures, movies and other data there. Institutions like the CIA and companies like Netflix are using it. They all can process and store huge amounts of data without spending much money for own data centers.
The Internet - including the "cloud" - increases the flow of information and reduces the cost of data. New ideas can spread faster, encouraging discoveries and inventions and boost the technological progress. Falling information costs are creating more markets and are expanding existing ones. "Digitized information has some weird and wonderful properties: it can be transmitted almost instantaneously and copied at virtually zero cost, and copies are identical to the original. The idea of having goods that are free, perfect and instant obviously leads to some very unusual economics compared to traditional goods and services", write Erik Brynjolfsson, Andrew McAfee & James Manyika (huffington).
Restaurants, shops, movie theaters and a lot of other companies are gaining more customers because they can be more easily found and can advertise better for their products & services. Applications and recommendations from friends or unknown reviewers on Amazon.com, Facebook and other websites can gain interest for many products & companies which would have stayed unknown without the Internet. I believe that the falling information costs foster global economic growth because they lift the productivity of the companies. They can run their business smoother because necessary data can be gained, processed and stored faster and cheaper.
Internet based travel networks like Airbnb - a website for people to rent out lodging - give people additional income by temporarily leasing or sharing their flats. Their customers can reduce costs for vacations or business travels.
Another example is Uber, a transportation network company whose mobile apps connect passengers with drivers of vehicles for hire and ride-sharing services. Car owners and drivers can earn an additional income, their custumers reduce their travel costs.
Big data processing companies like Hopper are helping people to find cheap flights (hoppertravel). I reckon that in the coming years many other new companies will appear using the Internet to disrupt traditional industries and markets.
Command Center of a Space Ship
The number of Internet connected devises is growing, expanding into the "Internet of Things" (barrons). Earlier this year Google bought the startup company Next, a maker of smart Internet connected thermostats. Many other devices like TVs, refrigerators, household appliances are or will be soon connected to the world wide web (time). "Equipment now monitors its own status and not only notifies repair and maintenance teams when regular updates or PMs are due, it also continually checks its own performance and calls for repairs or recalibration when it notices reductions in its efficiency or throughput" reports Christina Chatfiel (manufacturing). These innovations make life for everyone easier and create markets for a lot of companies.
Doctors at a Boston hospital are wearing Google glasses when they are treating patients in the emergency medicine department (businessinsider). These devices give them immediate access to patient history and medication information which could save lifes.
Another maybe life-changing innovations are Internet connected devices which are worn on the wrist, the smart watches. Apple introduced already their smart watch, just called Apple watch. These devices could be used for 24/7 medical observation and health monitoring to prevent heart attacks and to discover other medical problems.
Financial analyst Ed Maguire points to smart clothes: "These are clothes with embedded sensors or other devices. Examples include AIQ BioMan t-shirt, Solarman vest, Cameraman jacket, Moticon wireless shoe insole. The UnderArmor E39 shirt is embedded with sensors, accelerometer and 2GB of storage. The Zepp sensor can track baseball, tennis and golf performance with 1,000 data points per second" (barrons).
These devices are just a tiny part of the growing health technology. If you are unfortunate enough to visit an emergency room in a hospital - or a similar place - you will get the impression to enter the commando center of a space ship. Sophisticated machines, which might be Internet connected, "improve the quality of healthcare delivered through earlier diagnosis, less invasive treatment options and reductions in hospital stays and rehabilitation times", writes Wikipedia (wikipedia).
MRI scanners (magnetic resonance imaging) for instance use strong magnetic fields and radiowaves to form images of the body (wikipedia). The da Vinci Surgical Systems, delivered by the high-tech company Intuitive Surgical (intuitivesurgical), are surgical robots which assist surgeons while cardiac valve repair and gynecologic surgical procedures.
Software eats the World
Advances of the Internet - and other technologies - are not possible without progress in the development of software (cio.com). Computer programs are also becoming more important outside the Internet. The software firm Autodesk, founded in 1982, creates virtual design tools used by millions of architects and designers every day (theguardian). "Machines can beat humans not only at chess and other highly structured games, but also answer unstructured queries on a wide range of topics quickly and accurately enough to beat world champions in games like Jeopardy", write Erik Brynjolfsson, Andrew McAfee & James Manyika (huffington).
Cars are getting more and more software which makes them safer, more comfortable and more fuel efficient. The rising use of software in cars leads to driverless cars, which are already developed by Google (bbc). These driverless cars cause fewer accidents (shorter response times, no human failures, no drunk driving, no txting while driving) and save energy.
And there are more technological revolutions going on in the car industry. We are witnessing the advance of the electric car. Tesla Motors, a US company which specializes in developing and maufacturing electric cars, is getting rapidly popular (wikipedia). Traditional car producers like Daimler (Mercedes-Benz), Volkswagen and BMW are also developing electric cars.
This technology might become more important when electricity becomes significantly cheaper. Today prices for electricity depend mostly on the prices for fossile energy (oil, natural gas, coal), but the costs for alternative energies (solar, wind) are falling. It seems that solar energy, which has been hyped for decades, is now approaching reasonability. Prices for solar cells that generate electricity are declining rapidly. "The price US residential consumers pay to install rooftop solar PV (photovoltaic) systems has plummeted from nearly $7 per watt peak of best-in-class system capacity in 2008 to $4 or less in 2013," reports McKinsey (mckinsey). Cheaper electricty will reduce costs for producing and transporting goods. Thus consumers will have to spend less of their budgets for heating and traveling.
The high priests of the church of stagnation also ignore the revolution in manufacturing. Companies are using more and more robots to save costs and to respond more flexible to the demands of their customers (howstuffworks theweek robohub). For instance robots are welding car parts together and are varnishing them, Amazon is using robotic systems in her gigantic fulfillment centers and more.
The advances in robotics are driven by progress in technologies like processors (chips) and sensors. FidelityVoice reports that (forbes) "sensors have evolved, allowing machines to become more aware of their environment. This enables them to handle new tasks and operate in new places. Smaller and more powerful controllers and processors—and the power of cloud computing—have helped machines become more flexible and cheaper".
Part of the new industrial revolution is the rise of 3D printing, also known as additive manufacturing. This technology is literally "printing" parts of machines and devices by using computational power, lasers and basic powdered metals and plastics.
The manufacturing expert Christina Chatfield reports (manufacturing): "No longer relegated to printing ungainly plastic components, 3-D printing has rapidly evolved to the point where it can produce items made of metals, mixed materials and even human tissue. The result is shorter lead times, improved quality because of fewer components, reduced waste and the ability to produce complex shapes without complicated machining. Additive manufacturing is causing changes in the way engineers and designers think about creating products and components, and it is changing the way we will educate and train future generations.Already emerging are printed parts for high-value applications like patient-specific implants for hip joints or teeth, or lighter and stronger aircraft parts".
According to Wikipedia the 3D printing technology is already used in architecture, construction, industrial design, automotive, aerospace, military, engineering, dental and medical industries, biotech (human tissue replacement), fashion, footwear, jewelry, eyewear, education, geographic information systems, food, and many other fields (wikipedia).
And there are more revolutions. Companies & university laboratories are advancing Nanotechnology. The term "nano" is derived from the Greek word for "dwarf" and means one billionth (wikipedia): "Already in 2008, the Project on Emerging Nanotechnologies estimated that over 800 manufacturer-identified nanotech products are publicly available, with new ones hitting the market at a pace of 3–4 per week. The project listed all of the products in a publicly accessible online database. Most applications are limited to the use of "first generation" passive nanomaterials which includes titanium dioxide in sunscreen, cosmetics, surface coatings, and some food products; silver in food packaging, clothing, disinfectants and household appliances; zinc oxide in sunscreens and cosmetics, surface coatings, paints and outdoor furniture varnishes; and cerium oxide as a fuel catalyst".
"Tiny machines have been enlisted for such diverse purposes as delivering cancer-fighting medications directly to the site of a tumor, repelling stains on clothing, and extending the life and efficacy of lubricants" writes Chatfield (manufacturing).
The stagnation callers also overlook the rising importance of genetic engineering, the direct manipulation of an organism's genome with the use of biotechnology (wikipedia). "Biotechnology is the creation of drugs and other useful products by making use of “nature’s toolkit”—that is, by adapting or exploiting processes found in living organisms", explains the Economist (economist).
Companies and universities are working together to develop new vaccines and cures.
"Dozens of exciting new drugs for the treatment of dire diseases such as cancer, AIDS, Parkinson’s and Alzheimer’s are either on the market or are very close to regulatory approval" (plunkettresearch). "In a few instances, doctors are now beginning to make treatment decisions based on a patient’s genetic makeup. New breakthroughs in genetically targeted drugs occur regularly".
Genetic engineering also is altering plants making them more resistent against pests and more tolerant of temperature changes and draughts. Genetically modified crops (GMOs) will be necessary to feed the growing world population in the coming decades (technologyreview).
Investing into the Future
A lot of these new technologies are working together and amplifying their positive impulses on the economy. 3D printers for instance are controlled via Internet by sophisticated software and use new materials. Robots, health technological systems and other new machines are benefitting from better sensors, processors & software, and they are often made with new materials and controlled via the Internet.
Companies like Google, Amazon, Apple, Baidu (China), Alibaba are spending annually billions of dollars for research & development. These investments are growing fast and are creating tons of innovations which will speed up the technological revolution. And there are thousands of universities in the US, Europe, Japan, Korea, China, India and other regions which are educating a growing number of skilled & talented students who will drive the technological progress in the future.
Summary: I think that the rapid advances in software & Internet (including cloud computing), robotics, 3D printing, nanotechnology, genetic engineering and other technologies are all lifting the productivity of the economy significantly and are creating new markets. I also believe that the technological progress is fostering globalization. Emerging countries like China and India have easier access to new technologies which is promoting their transformation into modern economies. These processes are working together and will be creating economic growth in the decades to come.