Does it seem like things are speeding up? There is a reason for that: they are.
Technology is racing ahead, creating a pace never seen before. This is the nature of how things work, especially in the digital age. Our computer networks and communication systems only increase in speed. As we move forward, the time required to complete the same task is shortened. No longer do we operate in seconds but, rather, milliseconds.
It is only going to keep going.
For this reason, the term "exponential" is tossed around a great deal. This is a valid approach since we see exponential growth curves all over the place. Hence, when it comes to output, we see things moving ahead at an amazing pace.
That said, there are issues with our present system. The solution seems to be technology there also. A lot of what ails us is lessened when barriers are broken down. This is what technology tends to do. In fact, obliteration might be a more accurate word since that is exactly what occurs.
Speeding Up Of Economic Activity
One of the major benefits of technology should be that it speeds up economic activity. Not only can transactions occur at a much increased pace but we also see the opportunities to excel rise dramatically.
There are a lot of "Laws" that apply in the technology realm. We see things such as Moore's and Metcalfe's Laws which detail the progress of things. One deal with speed while other the valuation. In the digital realm, this is all put on steroids.
We all can understand how bits are faster and easier to deal with bits than atoms. Take a simple letter: Email versus snail mail? There is no contest.
Consider what Amazon did to the retail industry. Have you visited a shopping mall lately? How often do you frequent that compared to shopping online? Again, no contest.
With the acceleration of technology, we see the same impact across the economic realm. It too is on the increase.
Removing The Barriers
If all of this is true, why are our economic circumstances lagging? How come growth rates put up below the long term trends established going into the Great Financial Crisis?
The answer to this is the fact that much of what we deal with is still mired in the old way of doing things. In short, there are still a lot of barriers required to bust through.
Sadly, much of this stems from government. They are so outdated (and overmatched) it is not funny. It is still an entity that moves at a snail's pace. Also, favortism, cronyism, and outright corruption are ever present factors that still need to be overcome.
Of course, competitive businesses are not going to just sit back and be crushed. They pull out all the stops to try and fend off decline. Unfortunately, they rarely have better answers technologically so they turn to other methods. Usually this involved politicians and archaic laws that they wrap themselves in.
We see this situation with Tesla (and other newer EV makers). Laws written decades ago preventing manufacturers from selling direct in states, long before the Internet, are still being applied. In the 21st century, this is absurd. We can buy a house online but a car is illegal?
This is how the existing system tends to stall things.
Breaking Of The Dam Floods Things
The reality is that technology does not get stopped. Yes things can be delayed for a period of time. However, that only serves like the damming of a river. At some point, the pressure builds to the point that, when it bursts throughs, everything gets flooded.
Again, we have recent evidence of this. The remote work situation is rather new. Since the lockdowns due to COVID, we have a massive shift in the employment situation. However, the technology to do this was around for nearly a decade. Why wasn't it adopted? Human resistance is the reason.
That said, notice how the disruption came like a flood. All of a "sudden" there are worker issues. Companies cannot find what they need as employees are telling them to go stuff it. No longer do people need to limit their searches to local areas. Instead, they can work for anyone, regardless of where the company is located. This is the value of remote work.
As we discussed in other articles, consider how this affects real estate. Will we see the reversal of the trend toward urbanization? This took place as a result of the monopolization on quality jobs by the urban areas. What resulted was a real estate bubble that is likely to pop in a painful way. Again, when technology gets dammed up, when it does break through, watch out.
Just like shopping malls are dying, much in the commercial and residential real estate realm is going to feel it. Some areas will see a massive migration out.
Ultimately, while there is destruction, there is also opportunity. We see online shopping growing like mad. Once all the auto makers are selling cars online, think of how quickly transactions will be taking place. No longer will people have to spend hours going through a dealership, something that most state is a horrible experience according to surveys.
Cryptocurrency is an area that we also see a great deal of potential. This was developed in the digital age, so the pace that it can move is beyond what the present financial system can offer. Take DeFi as an example. The development in this area will quickly surpass the existing financial structure by the end of this decade. There is no way the present system can stand up to the present level of innovation.
Technology offers the potential to accelerate economic activity. At present, we are still mired in the old ways of doing things which puts a drag on the potential. Give it another 5-10 years, and many of the barriers will be removed.
And then things will really get interesting.
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