Source: Barron's Chinese
Author: Lars Tvede
The actual development of the world is better than most people imagine.
During market downturns, investors often fall into periodic pessimism. However, believe it or not, the world is actually much better than we think. Investor Lars Tvede, in his new book The Inescapable Trend, lists trends that humanity cannot escape from, and most importantly, human progress always follows an upward spiral.
Lars Tvede is the author of the bestseller The Inescapable Business Cycle. As an investor focused on high-tech investments, he is clearly an optimist. However, looking at the eleven trends he enumerates, you may also find that his optimism is not without reason. This article is excerpted from the first chapter of the book, 'The Perceiver.'
Humanity has a long history of 350,000 years. Throughout their lives, many people may not have noticed significant changes in the society around them. Therefore, it is not surprising that for many years, so many people, including those who are highly knowledgeable, have underestimated the future. For example, the renowned Roman engineer, writer, and statesman Frontinus stated in AD 98: 'Human inventions have already reached their limits, and I see no hope for further development.' Opportunities for innovation had already been exhausted thousands of years ago — at least, this is what Frontinus believed.
We now know, of course, that this statement is incorrect. However, the idea of extreme resource scarcity in the future quickly re-emerged, especially during the 1960s and 1970s. In 1969, Nobel laureate George Wald pointed out: 'All signs indicate that the global population will double by the year 2000. An increasing number of people believe that large-scale famines will erupt in many parts of the world by then. The scale of such famines would be unprecedented. The only debate among experts is not whether the famine will occur, but when it will happen.'
Thus, experts believed that this disaster was inevitable, and their only disagreement was about the timing, not whether it would occur. Strangely, after Wald's warning, global famines rapidly decreased. Although resource skeptics correctly predicted the rapid growth of the global population, they failed to realize that human innovation and the resulting self-sufficiency would improve even more rapidly.
1. Ziman's Law: Global scientific activity doubles every 15 years. In other words, it will grow 100 times over a century.
We can regard Ziman’s Law and most subsequent laws as vectorial. Their significance lies in providing a fundamental understanding of the world's evolution and development when synthesized together.
The application of these rules makes thinking about the future very convenient. Alfred Marshall, one of the most influential economists of his time, devised a particularly interesting method of working. Whenever reading others' economic articles, Marshall would convert them into simple mathematical formulas. By doing so, he understood the underlying algorithms behind the authors’ arguments, which usually helped him assess whether the article made sense.
Ziman's Law is precisely such a principle. Under Ziman's Law, the annual growth rate is approximately equivalent to 4%. Through derivative innovations, Ziman's Law has facilitated a combination where, on one hand, products are becoming increasingly better and typically cheaper, while on the other hand, global GDP (Gross Domestic Product) experiences long-term growth. The latter exhibits an overall annual growth rate of about 3%, with per capita growth at around 2%.
So, how fast are things developing today? This question pertains not only to scientific activities but also to innovation. It is difficult to measure, but we all know that the amount of digital data storage doubles every three years; the volume of data closely related to commerce noticeably doubles every 25 months. Meanwhile, the performance of large-scale digital technologies doubles roughly every year. We will discuss this in more detail in subsequent chapters.
Consider this from an intriguing perspective. If Ziman's Law remains valid, it implies that global scientific activity in 2030 will be approximately 10 times that of 1980. It also suggests that by 2080, global scientific activity will be another 10 times that of 2030. Therefore, someone born in 1980 and passing away in 2080 could witness a hundredfold increase in scientific activity within their lifetime. What a remarkable law, well worth keeping in mind.
If Ziman's Law remains effective for the next two centuries, it means our scientific activities will grow 10,000-fold over 200 years. Isn't that fascinating? Consider this: by 2100, human knowledge will be 100 times greater than in 2000, and by 2200, it will reach a full 10,000 times. Moreover, computers are likely to take over an increasing number of scientific tasks from humans. What an incredible journey we are on!
Carlson's Curve: The development and cost reduction of DNA decoding technology are progressing at least as rapidly as Moore's Law.
Carlson's prediction was correct. Genetic technology has demonstrated efficiency far surpassing the pace of Moore's Law. Humanity has now completed the genetic mapping of 500,000 individuals, which would have sounded like science fiction in 1997. In fact, back then, it would have been considered utter madness. Yet, it has become a reality. As a result, we now possess an excellent resource at our disposal, aiding in health diagnostics and disease prevention. By the way, the scale of this resource itself is growing exponentially. Oh, sorry, it should be described as hyper-exponential growth.
The successful decoding of DNA is just one example of first-rate technological co-evolution, with numerous additional instances emerging in this field. For example, the 'DNA Internet,' a matchmaking platform jointly sponsored by multiple research institutions and enterprises, allows people to share genetic profiles, helping doctors solve genetic mysteries of various diseases. This phenomenon is also exhibiting exponential growth. If combined with artificial intelligence and big data, we may enter an entirely new world never seen before. We will discuss artificial intelligence and big data in more detail later.
As society becomes increasingly digitized, humans will encode biological cells more frequently, and these cells will serve us like self-replicating robots.
This represents part of a broader trend where extremely tiny entities will provide intelligent services. Meanwhile, computers have advanced to the stage of self-programming and programming each other. This will inevitably lead to new forms of superintelligence with unimaginable capabilities.
As mentioned earlier, in 100 years, human scientific activity will be 100 times greater than it is today. Although I won’t live to see 100 years, the evident progress witnessed in my lifetime is already astonishing. Another point to note: just 10 short years before writing this book, we did not have Uber Technologies, Snapchat, Airbnb, Spotify (a music streaming platform), Instagram, Bitcoin, selfie sticks, or iPads. Going further back to 1970, humanity had yet to develop the internet, personal computers, DNA decoding, Netflix, mobile phones, plasma displays, and countless other technologies we now take for granted. This brings me to the fourth trend:
4. Future challenges must be addressed with newer technologies.
Thank goodness! It is clear that we cannot solve most of today's problems using medieval methods. Looking ahead, we must come to terms with the fact that if the total amount of current technology accounts for 10% of the total technology in 50 years, then it will represent only about 1% of the total technology in 100 years. Doesn't this imply that the 90% or even 99% of new technologies we are yet to develop will be smarter and more intelligent?
5. Innovation is an endless process that grows exponentially, and once initiated, there are no natural constraints that can stop it, except for the laws of physics.
Some may object: 'No, many societies were once highly innovative but eventually lost their ability to innovate.' That's correct, absolutely so. However, those cases were all the result of social transformations constrained by tyranny, authoritarianism, religion, and similar factors; societies under such constraints indeed lose their innovative power. My point is, aside from the limitations imposed by physical laws, innovation knows no natural barriers.
Thus, innovation is a phenomenon that is easy to understand yet holds immense power. Therefore, after presenting the aforementioned trend, we must introduce another significant trend:
6. Fundamentally, anything that is possible and necessary might become a reality. In the future, as long as there is an objective need and it does not violate the laws of physics, any imaginable outcome could potentially be realized.
This is an excellent trend, at least in my view. Physical laws are incredibly generous. For instance, the absolute speed limit in physics is the speed of light, at which an object could circle the Earth approximately seven times in one second. Another example: deuterium and tritium, the primary fuels for nuclear fusion, contain enough energy to provide humanity with clean and safe energy for at least 30 million years. Similarly, quantum computers, for certain types of calculations, operate billions of times faster than the fastest traditional computers available today.
This is truly astonishing. Perhaps this is why we owe this law to the famous science fiction writer (and also an outstanding prophet), Arthur C. Clarke, who said: 'If an elderly scientist of high repute claims that something is possible, he is very likely wrong.' Coincidentally, a similar phenomenon exists in the field of technology, often leading us to underestimate technological progress: we sometimes overestimate the short-term effects of technological advancements (as we have already discussed) while underestimating their long-term impacts. Some individuals, such as futurist Roy Amara, have articulated this point. Thus, we refer to it as 'Amara’s Law.'
7. Amara’s Law: People tend to overestimate the short-term impact of new technologies and underestimate their long-term effects.
I believe the main reason for this phenomenon is that every great core innovation initially has no users, or very few, until its practical applications become widespread. For example, live sports events, talk shows, and soap operas were essential for the development of television broadcasting. The growth of these content forms required significant time and experimentation and could not happen overnight. This is because they are complex, and most applications built on new core technologies are not just about the technology itself; they are also tied to new business models and new types of enterprises.
Why am I so confident that innovation will continue to exhibit a super-exponential growth trend? Some reasons have already been mentioned above, such as the fact that recombination itself is a super-exponential process. In addition, there are several other reasons.
First, compared with the population at the end of the last ice age, the current population is at least 30,000 times larger. The generation and dissemination of great ideas tend to follow an exponential pattern. Therefore, if a good idea needs to expand its audience by 1,000 times, it only requires twice the amount of time. However, a population 1,000 times larger will produce at least 1,000 times more ideas. Thus, population growth has led to a rapid increase in innovation.
Meanwhile, in many societies, people no longer believe that worldly affairs are determined by deities. On the contrary, they consider events to be driven by natural forces that can be analyzed. This is the power of enlightenment and science. Furthermore, travel, the internet, and international trade have made connections between people increasingly tighter. As a result, people now have more opportunities than ever to exchange ideas, opinions, and inventions. Additionally, urbanization plays a significant role. The growth rate of innovative capacity surpasses that of city or town populations. The larger the city, the faster the pace of work and life. Even pedestrians on the streets of large cities tend to walk faster. People in cities frequently meet, collaborate, cooperate, and exchange views. The more people one interacts with, the greater the likelihood of finding individuals whose skills complement their own. Clearly, rural areas serve as resource hubs, while urban areas act as innovation hubs. The latter’s population continues to grow, explaining why humanity will not run out of resources and why we need fewer resource centers.
Another reason for the growing power of innovation is that humans are becoming increasingly intelligent, which is truly gratifying. This phenomenon was first observed in the 1980s and has since been well-documented. It also leads us to the next trend:
8. In countries with relatively normal levels of per capita economic growth, average intelligence increases at a rate of about 0.3 percentage points per year, or 3 percentage points every decade, until the economy fully reaches developed status.
This trend holds true, at least in the Western world and Southeast Asia. The mathematics behind this is quite straightforward: through standard IQ tests, the average intelligence increases by 3 percentage points every decade, or 30 percentage points every century. This is an exceptionally high level. Such growth is sufficient to transform a nation's populace from 'mentally sluggish' to 'highly intelligent.' This may be the result of multiple factors, including higher degrees of racial mixing (outbreeding), lower levels of inbreeding, better nutrition, reduced incidence of severe infectious diseases among infants, the eradication of persistent diseases like malaria, and improved cognitive stimulation, among others.
This creates a virtuous cycle. The wealthier people become, the smarter they get. The smarter they get, the wealthier they become. Nevertheless, on a global scale, this process appears to have stalled. However, humanity has made significant progress in this regard, and this virtuous cycle is still occurring in developing countries.
Moreover, an increasing number of people have access to education. For example, the number of people attending universities doubles approximately every 15 years. This is primarily due to two reasons. First, many developing countries are becoming wealthier and can invest more in education. Second, purely from an educational perspective, women are catching up with men in terms of educational attainment. In some countries, women even surpass men in higher education. In fact, in affluent nations (referring here to OECD member countries), significantly more women than men engage in lifelong learning.
The final point I would like to make is that social media makes it easier for talented individuals with good ideas to be discovered, ensuring that inspiration and talent are not wasted. Collectively, these factors lead to a result: the quantity of innovations grows exponentially alongside the rapid increase in population. This also explains why, as the total population continues to rise, the amount of resources available per person does not decrease but instead increases. While this conclusion may seem counterintuitive, it is well-supported by evidence.
Another reason for the prevalence of pessimism lies in the media’s focus on disaster reporting. In reality, disasters are exceptions to daily life, and the majority of people worldwide live middle-class lifestyles. Some 'empathizers' believe that discussing overall progress while negative events continue to occur seems callous. This also influences the discussion to some extent. Regardless, the following trend remains valid.
9. Overall, the state of the world is better than it has been in the past, and its actual development is better than what most people (including well-educated individuals and experts) perceive.
There are still many who perpetuate the notion that the world is on the brink of destruction, and even more who are captivated by such claims. This presents a striking contradiction. “The Earth is on the verge of collapse, and humanity is facing an irreversible and terrifying future,” they proclaim.
The deeper we examine this phenomenon, the more we notice striking similarities among various doomsday predictions, leaving us profoundly astonished. However, this is not their central issue. After all, there is an undeniable gap between the fear-inducing prospect of the next Ice Age and the indiscriminate media coverage of acid rain, forest decline, Listeria, mad cow disease, Belgian dioxin, Iran’s weapons of mass destruction, the Y2K bug, avian flu and swine flu, global famine, DDT pesticides, nuclear energy, mass extinction, autism allegedly caused by vaccines, genetic modification, the plastic garbage patch in the Pacific Ocean, and carcinogenic mobile phones. Indeed, these are two distinct topics, yet the process by which they incite hysteria is remarkably similar. Every time one panic subsides, another is manufactured, capturing public attention once again.
10. For industrial production, every doubling of market size leads to an average productivity increase of 5% to 10%.
Take the aviation and automotive industries as examples. Compared to 1970, both sectors have seen tremendous improvements in production efficiency today. Not to mention when compared to 1903. Nevertheless, this trend remains valid: even when markets sometimes grow exponentially, the efficiency of mechanical technology itself tends to progress linearly.
Digital technology encompasses nearly everything related to computer technology (such as microchips) and genetic manipulation. One can imagine that biological life, in essence, represents digital technology (DNA, RNA, enzymes, etc.) encapsulated within analog technology (muscles, bones, fat, water, etc.). On the whole, this combination evolves through natural selection at an exceedingly slow pace. Part of the reason lies in the randomness of incremental improvements, while another part stems from the fact that the potentially faster-evolving digital aspects must slow down to accommodate the sluggish progress of analog components (such as reproduction, birth, and death). Consequently, the evolution of this combination requires considerable time.
However, if we could bypass the slow development of the analog layer and directly intervene in and rewrite the digital layer (not randomly but purposefully), the obstacles would be minimized. In doing so, biologically defined life would immediately resemble computer technology, transforming into a dynamic and programmable platform. Meanwhile, the digitization of traditional industries is also progressing, leading to variations of Moore's Law gradually permeating these fields.
By the way, there are numerous variants of Moore’s Law, which can generally be categorized into three main types. The first relates to efficiency, the second pertains to price, and the third focuses on user-friendliness. For example, computer technology or genetic manipulation is advancing at an exponential rate while simultaneously becoming cheaper and easier to use, with price effects often emerging and persisting faster than performance effects. For instance, companies like Walmart, Amazon, IKEA, Microsoft, and Alibaba have business models largely centered around making their services more affordable while remaining profitable.
In the progression of these three variants, digitization plays a critical role. Marc Andreessen, the creator of the Netscape browser and now a prominent venture capitalist, once summarized it this way: 'Software is eating the world.' Inspired by his statement, I distilled the following trend:
11. An increasing number of industries are completing their evolutionary processes, shifting their focus from (1) manual labor to (2) mechanical production, and ultimately evolving to (3) digitization. This implies that productivity transitions from (1) stagnation to (2) linear growth, and finally to (3) exponential growth.
Editor/Rice