Automation has a habit of killing jobs, which has been true since the Industrial Revolution. However, it seems that we're discovering this truth all over again. We easily forget when we focus only on the job-creation aspects of automation, and that usually gets us in trouble.
Since the IR, there have been five distinct economic waves lasting between 50 and 60 years. Named after the late Russian economist Nicolai Kondratiev, those waves now are known as "K-waves," or the "Kondratiev Cycle."
With an economic cycle this long, very few people alive and working remember the last transition, so of course it feels new.
The first Industrial Revolution revolved at first around water wheels and later around steam power, iron and textiles. It gave way to an age of steel and heavy engineering. Then came petroleum, electricity, cars and mass production. Today we live in an era of information and telecommunications. I estimate this era began around 1970, so it's getting long in the tooth.
The first half of a wave is wonderful. A new technology takes hold and drives the economy, jobs are abundant even for the unskilled, inflation kicks up a notch or two, and things seem pretty good. Inevitably, though, the second half kicks in and some of the earlier gains evaporate. The focus now is on gaining efficiencies from earlier innovations and product line extensions.
In the second half, overqualified people have a hard time finding a job, wages are flat, and capital reaps significant returns on investments made much earlier in the cycle. Sound familiar? The good news is that if you know where and how to look, you can see the next wave forming just as sure as a surfer can spot the next big one.
That's the nexus in my friend Vinnie Mirchandani's new book, Silicon Collar. (Dear reader, please be aware that I am quoted extensively in the book but that I'd be writing this piece regardless.)
In Silicon Collar, Mirchandani gives us a surfer's-eye view of the next wave -- or at least the candidates for next wave. At this point, there are many pretenders competing for the mantle and often the winner is hard to predict.
Our current era, information and telecommunications, has roots in the space program and the race to the moon. If you were alive then, you would have bet anything that the next big K-wave would have had something to do with flying cars -- and many people made that prediction, but they were wrong.
IT and telco were embryonic in the 1960s and nothing like what they've become. Telco was a sleepy oligopoly, a regulated monopoly, printing money and delivering so-so service. Computers were things that required climate-controlled rooms and lots of paper to perform really trivial tasks. Few people predicted that the miniaturization required to place a guidance computer on a space ship would have such far-reaching effects, but it did.
That's my look backward, but Mirchandani tries to peer into the future. In his meticulously researched and reported book, he interviews leaders in about 50 new companies or industries, and lets them tell their tales of the future.
It's an optimistic look at a future that far too many have glanced at with fear and suspicion rather than optimism and curiosity. You can't blame them for their insecurities. We do live in interesting times. Still, our strength -- and the strength of Silicon Collar -- is its hopefulness and inquisitive nature. It's worth reading even if you think you already know what the future will look like.
It might surprise you, because you might find some backwater idea that only has a low-power proof of concept that you think couldn't possibly go anywhere.