Peter Schwartz and Peter Leyden wired.com 1997
The Long Boom: A History of the Future, 1980-2020
We're facing 25 years of prosperity, freedom, and a better environment for the whole world.
You got a problem with that?A bad meme – a contagious idea – began spreading through the United States in the 1980s: America is in decline, the world is going to hell, and our children's lives will be worse than our own. The particulars are now familiar: Good jobs are disappearing, working people are falling into poverty, the underclass is swelling, crime is out of control. The post-Cold War world is fragmenting, and conflicts are erupting all over the planet. The environment is imploding – with global warming and ozone depletion, we'll all either die of cancer or live in Waterworld. As for our kids, the collapsing educational system is producing either gun-toting gangsters or burger-flipping dopes who can't read.
By the late 1990s, another meme began to gain ground. Borne of the surging stock market and an economy that won't die down, this one is more positive: America is finally getting its economic act together, the world is not such a dangerous place after all, and our kids just might lead tolerable lives. Yet the good times will come only to a privileged few, no more than a fortunate fifth of our society. The vast majority in the United States and the world face a dire future of increasingly desperate poverty. And the environment? It's a lost cause.
But there's a new, very different meme, a radically optimistic meme: We are watching the beginnings of a global economic boom on a scale never experienced before. We have entered a period of sustained growth that could eventually double the world's economy every dozen years and bring increasing prosperity for – quite literally – billions of people on the planet. We are riding the early waves of a 25-year run of a greatly expanding economy that will do much to solve seemingly intractable problems like poverty and to ease tensions throughout the world. And we'll do it without blowing the lid off the environment.
If this holds true, historians will look back on our era as an extraordinary moment. They will chronicle the 40-year period from 1980 to 2020 as the key years of a remarkable transformation. In the developed countries of the West, new technology will lead to big productivity increases that will cause high economic growth - actually, waves of technology will continue to roll out through the early part of the 21st century. And then the relentless process of globalization, the opening up of national economies and the integration of markets, will drive the growth through much of the rest of the world. An unprecedented alignment of an ascendent Asia, a revitalized America, and a reintegrated greater Europe – including a recovered Russia - together will create an economic juggernaut that pulls along most other regions of the planet. These two metatrends - fundamental technological change and a new ethos of openness - will transform our world into the beginnings of a global civilization, a new civilization of civilizations, that will blossom through the coming century.
Think back to the era following World War II, the 40-year span from 1940 to 1980 that immediately precedes our own. First, the US economy was flooded with an array of new technologies that had been stopped up by the war effort: mainframe computers, atomic energy, rockets, commercial aircraft, automobiles, and television. Second, a new integrated market was devised for half the world - the so-called free world - in part through the creation of institutions like the World Bank and the International Monetary Fund. With the technology and the enhanced system of international trade in place by the end of the 1940s, the US economy roared through the 1950s, and the world economy joined in through the 1960s, only to flame out in the 1970s with high inflation - partly a sign of growth that came too fast. From 1950 to 1973, the world economy grew at an average 4.9 percent - a rate not matched since, well, right about now. On the backs of that roaring economy and increasing prosperity came social, cultural, and political repercussions. It's no coincidence that the 1960s were called revolutionary. With spreading affluence came great pressure from disenfranchised races and other interest groups for social reform, even overt political revolution.
Strikingly similar - if not still more powerful - forces are in motion today. The end of the military state of readiness in the 1980s, as in the 1940s, unleashed an array of new technologies, not the least of which is the Internet. The end of the Cold War also saw the triumph of a set of ideas long championed by the United States: those of the free-market economy and, to some extent, liberal democracy. This cleared the way for the creation of a truly global economy, one integrated market. Not half the world, the free world. Not one large colonial empire. Everybody on the planet in the same economy. This is historically unprecedented, with unprecedented consequences to follow. In the 1990s, the United States is experiencing a booming economy much like it did in the 1950s. But look ahead to the next decade, our parallel to the 1960s. We may be entering a relentless economic expansion, a truly global economic boom, the long boom.
Sitting here in the late 1990s, it's possible to see how all the pieces could fall into place. It's possible to construct a scenario that could bring us to a truly better world by 2020. It's not a prediction, but a scenario, one that's both positive and plausible. Why plausible? The basic science is now in place for five great waves of technology - personal computers, telecommunications, biotechnology, nanotechnology, and alternative energy - that could rapidly grow the economy without destroying the environment. This scenario doesn't rely on a scientific breakthrough, such as cold fusion, to feed our energy needs. Also, enough unassailable trends - call them predetermined factors - are in motion to plausibly predict their outcome. The rise of Asia, for example, simply can't be stopped. This is not to say that there aren't some huge unknowns, the critical uncertainties, such as how the United States handles its key role as world leader.
Why a positive scenario? During the global standoff of the Cold War, people clung to the original ideological visions of a pure form of communism or capitalism. A positive scenario too often amounted to little more than surviving nuclear war. Today, without the old visions, it's easy enough to see how the world might unravel into chaos. It's much more difficult to see how it could all weave together into something better. But without an expansive vision of the future, people tend to get short-sighted and mean-spirited, looking out only for themselves. A positive scenario can inspire us through what will inevitably be traumatic times ahead.
So suspend your disbelief. Open up to the possibilities. Try to think like one of those future historians, marveling at the changes that took place in the 40-year period that straddled the new millennium. Sit back and read through the future history of the world.
The Boom's Big Bang
From a historical vantage point, two developments start around 1980 that will have profound consequences for the US economy, the Western economy, then the global economy at large. One is the introduction of personal computers. The other is the breakup of the Bell System. These events trigger two of the five great waves of technological change that will eventually help fuel the long boom.
The full impact can be seen in the sweep of decades. In the first 10 years, personal computers are steadily adopted by businesses. By 1990, they begin to enter the home, and the microprocessor is being embedded in many other tools and products, such as cars. By the turn of the century, with the power of computer chips still roughly doubling every 18 months, everything comes with a small, cheap silicon brain. Tasks like handwriting recognition become a breeze. Around 2010, Intel builds a chip with a billion transistors - 100 times the complexity of the most advanced integrated circuits being designed in the late 1990s. By 2015, reliable simultaneous language translation has been cracked - with immediate consequences for the multilingual world.
The trajectory for the telecommunications wave follows much the same arc. The breakup of Ma Bell, initiated in 1982, triggers a frenzy of entrepreneurial activity as nascent companies like MCI and Sprint race to build fiber-optic networks across the country. By the early 1990s, these companies shift from moving voice to moving data as a new phenomenon seems to come out of nowhere: the Internet. Computers and communications become inextricably linked, each feeding the phenomenal growth of the other. By the late 1990s, telecom goes wireless. Mobile phone systems and all-purpose personal communications services arrive first with vast antennae networks on the ground. Soon after, the big satellite projects come online. By 1998, the Iridium global phone network is complete. By 2002, Teledesic's global Internet network is operational. These projects, among others, allow seamless connection to the information infrastructure anywhere on the planet by early in the century. By about 2005, high-bandwidth connections that can easily move video have become common in developed countries, and videophones finally catch on.
The symbiotic relationship between these technology sectors leads to a major economic discontinuity right around 1995, generally attributed to the explosive growth of the Internet. It's the long boom's Big Bang - immediately fueling economic growth in the traditional sense of direct job creation but also stimulating growth in less direct ways. On the most obvious level, hardware and infrastructure companies experience exponential growth, as building the new information network becomes one of the great global business opportunities around the turn of the century.
A new media industry also explodes onto the scene to take advantage of the network's unique capabilities, such as interactivity and individual customization. Start-ups plunge into the field, and traditional media companies lumber in this direction. By the late 1990s, the titans of the media industry are in a high-stakes struggle over control of the evolving medium. Relative newcomers like Disney and Microsoft ace out the old-guard television networks in a monumental struggle over digital TV. After a few fits and starts, the Net becomes the main medium of the 21st century.
The development of online commerce quickly follows on new media's heels. First come the entrepreneurs who figure out how to encrypt messages, conduct safe financial transactions in cyberspace, and advertise one to one. Electronic cash, a key milestone, gains acceptance around 1998. Then come businesses selling everyday consumer goods. First it's high tech products such as software, then true information products like securities. Soon everything begins to be sold in cyberspace. By 2000, online sales hit US$10 billion, still small by overall retail standards. Around 2005, 20 percent of Americans teleshop for groceries.
Alongside the migration of the traditional retail world into cyberspace, completely new types of work are created. Many had speculated that computer networks would lead to disintermediation - the growing irrelevance of the middleman in commerce. Certainly the old-style go-betweens are sideswiped, but new types of intermediaries arise to connect buyers to sellers. And with the friction taken out of the distribution system, the savings can be channeled into new ventures, which create new work.