Some Trends That Are Coming

Ran into this on Observer.


The Most Promising, Disruptive Innovations for the Decade 2011-2020

The title is off as the post is discussing trend rather than Innovations.  The fact is that trends are actually more important to look at than any individual  innovation or invention.

I’m going to discuss these in order.

Trend #1: Deflation

Most people are scared to death of inflation.

If most people are scared of something (like Ebola), it probably means it was a media or marketing-manufactured fear that will never come true.

The reality is, we live in a deflationary world.

Warren Buffett has said that deflation is much more scary than inflation. It’s scary to him because he sells stuff. It’s great for everyone else because we buy things. However, to be fair, it’s a mixed bag.

When prices go down, people wait to buy, because prices might be cheaper later. This is why some of the scariest points in our economic history were in the 1930s and in 2009 when there was deflation.

How did the government solve the problem? By printing money and going to war. That’s how scary it was. To solve the problem, we gave 18-year-old kids guns, sent them to another country, and told them to shoot other 18-year-olds.

People have all sorts of statistics about the government debt and the dollar decreasing 97% in value since 1913, etc.

I don’t care about all of that. I want to make money no matter what.

Here’s what I see: my computers are cheaper. Housing prices haven’t gone up in 10 years. And people are finally starting to realize that paying for higher education isn’t worth as much as it used to be (too much student loan debt and not enough jobs).

All electricity is cheaper. All books are cheaper. And I don’t have to go to the movies to watch a movie. All my music is basically free if I watch it on YouTube.

Don’t get me wrong: inflation exists because the government and the corporations that run it are preventing deflation. But the natural order of things is to deflate. Eventually something bad will happen, and the carpet will be pulled out from under everyone. Perhaps if we have an inflationary bubble. Then deflation will hit hard, and you have to be prepared.

In a deflationary world, ideas are more valuable than products. If you have ideas that can help people improve their businesses, then you will make a lot of money. For instance, I know one person who was sleeping on his sister’s couch until he started showing people how to give webinars to improve their businesses. Now he makes seven figures a year.

This “webinar trick” won’t always work. But then he’ll have ideas for the next way to help people.

Ideas are the currency of the 21st century, and their value is inflating, not deflating.

The big problem is that while ideas are perhaps the currency of the 21st Century, the powers that be are still living in the 20th Century, if not the 19th Century or the middle ages.  I think that ideas scare the hell out of the power that be that haven’t hesitated to devalue the money that provide the fertile investment basis for ideas to flourish.

1972 Chevy Vega vs. 2015 Toyota Corolla: How do they compare?

Today’s young Americans: the luckiest generation in history

Still the powers that be can’t keep the lid on forever and the tools for change are getting cheaper by the day. There’s no realistic way to stop what’s coming.

Trend #2: Chemistry

The last 50 years was the “IT half-century,” starting with the invention of the computer, the widespread use of home computers, and then the domination of the Internet and mobile phones.

Okay. Done.

It’s not like innovation will stop in that area. It won’t. Every year computers will get better, more apps will be useful, etc. But the greatest innovations are over for now (DNA computing will happen, but not until after what I’m about to say does).

As an example: the next versions of my laptop and my cellphone have already come out. But, for the first time ever, I have no real need to get them. And I’m an upgrade addict. But the upgrades just weren’t big enough. I don’t even think I understand the differences between the next generation of cellphones and last year’s generation (tiny changes in battery and pixel numbers, but only tiny).

Here’s what’s going to change: chemistry. The number of grad students in chemistry is at an all-time low versus the number of grad students in computer science or information technology.

And yet, we’re at a point where almost everything we do requires advances in chemistry rather than IT.

For instance, Elon Musk is creating a billion-dollar factory to make batteries. Well, for Elon’s sake, wouldn’t it be better if we had a more efficient way to use lithium so that batteries can last longer?

DNA computing, while it would create a great advance in computer technology, is almost 100% dependent on advances in biochemistry.

Many people call the US the “Saudi Arabia of Natural Gas.” But what good does it do us if we can’t convert the gas into liquids that fill up our car? Right now every country uses Fischer-Tropsch technology—a chemical process that is 90 years old—to turn gas into liquids. And it’s expensive to use it. Wouldn’t it be better if someone could develop a groundbreaking change here?

I can list 50 problems that chemistry can solve that would make the world better. But it’s not sexy, so people have stopped studying it. This will change. Not because it’s a futurist trend, but because for 3,000 years, changes in society were largely due to chemistry advances (e.g., harvesting wheat) rather than computer advances. I’m just taking an old trend and saying, “Hey, don’t forget about it. We still need it.”

A simple example: DuPont and Dow Chemical, the two largest chemical companies, have had 50% and 38% year-over-year earnings growth respectively compared with Apple (12%). But nobody cares.

One thing that’s coming is labs in a garage doing stuff in ways that people wouldn’t even believe even ten years ago.  Chemistry is moving to a low energy small scale set of method that tailors the process to what’s needed for the next steps in what’s desired and assembles product as needed rather than in bulk. Between computer controlled processed and labs in a box nothing is going to be the same.

Of course the job in a garage is going to change more than chemistry, it’s going to change how work gets done.  The time was, back in the 19th Century that many people were essentially free agents, in one way or another, able to leave work and move on to another job, doing something else.  People would start doing something as an apprentice at age 13 or so move up to journeyman and all too frequently start doing something completely different.  Just read almost any autobiography and see just how nonlinear people’s working lives were.

Of course the 20th Century changed all that.  Unions, work rules and corporate stratification created an environment where living the kind of free agent life was almost impossible.  In just about every industry the inside contractor model with people independently running the work was replaced by Taylorized professional management and a workforce that tended to get stuck in one place.

Compare how Westinghouse ran the company with the modern company.

Trend #3: Employee-free Society

Before 200 years ago, we never really had employees. Then there was the rise of corporatism, which many confused with capitalism.

I’m on the board of a $1 billion in revenue employment agency. It’s gone from $200 million in revenues to $1 billion just in the past few years. Why did we move up so fast when the economy has basically been flat?

For two reasons:

The Pareto principle, which says that 80% of the work is being done by 20% of the people. So a lot of people are being fired now, since 2009 gave everyone the carte blanche excuse.

Regulations that are too difficult to follow. It’s getting pretty difficult to figure out what you need to do with an employee. Health care is a great example, but there are 1,000 other examples.

So what’s happening, for better or worse, is a rising wave of solo-preneurs and lifestyle entrepreneurs—exactly what happened for the hundreds of years that capitalism was around before stiff and rigid corporatism (teamed with unions) became the primary but fake “stable” force in our lives.

This is why companies like Uber are flourishing. You have a workforce (the drivers), logistics software in the middle, and people willing to pay for that workforce. Our GDP and our startups are going to start to drift in the Uber direction. Uber in San Francisco last month did three times as many rides as all the cab drivers in SF combined.

Corporate life was never really stable, and now we know that.

The problem is: while we were all in our cubicles (and I’ve been guilty of this for many years as well), we stopped being creative, stopped having ideas, and just took orders from the gatekeepers: bosses, colleagues, government, education, family.

And companies that have stifled creativity are slowly dieing  the death of bureaucratic inertia. I know from personal experience that when your dealing with bureaucracy and having no way to forward your ideas, after a point you set them aside.  Which costs the employer big money in lost opportunities.

It turns out that imagination and creativity aren’t something  you can just buy. The problem is that creativity resides in people, not the company and once the corporation takes over it can’t treat people as assets and basically craps on the investment it just made. When  this is how you manage your company, you shouldn’t be surprised that things go to crap.

The big problem is that the culture as a whole, especially the culture of the financial types haven’t caught up to the new realities yet. For that matter they may never catch on.  Which creates a whole different set of problems

A new way of thinking is needed.  The system that’s been the way things were since the middle 1930’s has broken down and is essentially dysfunctional.  The country has more debt and obligations that, if nothing changes cannot be paid.  If we don’t restore the drive and energy in the economy, there may not be an economy very much longer.

The future is what we make of it.  It never pays to underestimate the power of human creativity as long as it can flourish unrestrained. The alternatives are not going to be pleasant.

We have a choice.  A bright future or a dead one.  All too many civilizations, have in the past gone down the road to oblivion.  That to me is no choice at all. It’s “give me liberty or give me death.”  I choose liberty.

For more on the dysfunctional economy click Here or on the tag below.


  1. MadRocketSci · April 2, 2016

    I don’t know if this is the sort of thing you might be interested in for a let’s build post, but I’ve recently been messing around with electronics. (Mostly for fun, though there is a purpose that prompted me to start digging into all of this stuff.)

    I do what I can in my small 2 room apartment, with spare scraps of time. One of these days, I’ll have enough room for a workbench, or even a lab. And then the world will tremble at my robot ar – err, and then I’ll be able to work on this stuff in a serious capacity.


  2. MadRocketSci · April 2, 2016

    I never really got why deflation was supposed to be a bad thing. They mentioned it in banking class: something about instability in the banking system, because any investment would have to generate higher returns than the deflation (though in a deflating monetary system, you would think that would be a natural consequence of taking any value generating action just as in an inflating system.)

    The idea was that everyone would hold onto reserves, or try to stockpile commodities, and no one would spend anything because their money would be worth more in the future just holding on to stuff. That never made any sense. Consumer spending is driven by needs that have to be met now (You’re not going to not buy food and hoard money because you can buy more food in the future). Investment is driven by actions that you would like to take in the immediate future (equipment that you would rather own than not so you can finish projects and make money, etc.)

    Anyway – something that’s really pernicious and really strange are negative interest rates on savings: Why would anyone save money under those circumstances.


    • MadRocketSci · April 2, 2016

      Save money in banks, I mean.

      My great grandmother lived through the great depression. She would always give very interesting financial advice: “Never let those damn New York bankers have a cent of your money. Bury it under the floorboards. Never trust a banker!”

      When things get loony enough you have to wonder …


  3. Pingback: Boomtown, Part 2 | The Arts Mechanical

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