The future is here.
In the last year or so the US economy has seen some big but subtle changes in the techno-industrial complex that holds the imagination of the business and investment communities.
Facebook has cemented itself as the premier information and media platform. Outside of television itself, Facebook is the next TV.
Google is the unmatched leader in online search and advertising. And while Google is now Alphabet, this corporate reshuffling which allows the company to pursue new areas of innovation more importantly enables the core Google search and ad product the space and protection it ultimately needs to continue succeeding, however unsexy that success might be.
Apple still sells lots of iPhones. But it mostly just sells iPhones.
Tesla is still pretty niche.
Uber is still fighting regulation, but “uber” is a verb: the service isn’t going anywhere.
But aside from Facebook completing its entrenchment inside the media industry and Uber’s continuing saturation of the world’s major urban markets, most all of this was true a year or even two years ago. This, then, is the change: we already had everything we were going to get this cycle.
And so this is the future, our primary harvest from a post tech-bubble boom in Silicon Valley that really did change our lives and in many cases change them for the better. But for everyone waiting for the “next big thing,” I think that for at least for the next economic cycle, this is it.
Enjoy your amazing cell phones that can hail a cab in minutes while you look up literally any piece of information you want to know or keep tabs on all of your extended family.
Conor Sen, a portfolio manager at New River Investments, published a great post on Monday that brought together these disparate lines of thought which make clear, at least for me, that the tech future we were promised is actually happening right now.
Conor argues that the post-recession world — a world of organic food, on-demand services, electric cars, fintech disrupting banks — is simply a world of great but niche products. Outside of Facebook and Uber, Conor argues that this world simply does not and will not scale.
We have done the innovation, we have spawned the parody accounts praising this innovation, and now we are left to witness the economic cycles that grow from periods of rapid growth and development.
I once told Conor that history would remember Apple as a phone company, Facebook as the phone book, and Google as ad agency. I’d say we’re most of the way there.
In Conor’s view, we’re going to see the cost of labour rise sharply, capital investment will need to be far more intense than it’s been during the last six or seven years, labour will move to cheaper metros as they get priced out of the megacities that have been centres for foreign capital flight and inflated tech- and finance-backed salaries.
I’d agree on all these points. This is the stuff of real economic sea changes.
On the tech side, the next leg of innovation is apparently chatbots and virtual reality, but closing off humans from other humans will never turn out to be a mainstream success. Many will argue technologies like Facebook, Twitter, and Skype give us few reasons to leave the house, but in fact these services make us more social than ever before.
And this, really, is all people want: contact with other people.
As for what happens to the economy from here, many economists would argue that housing is the economic cycle. As the housing market ebbs and flows so too does the marginal dollar spent. The consumer leads the economy both directions. Consumer spending in recent years has remained solid and labour market is still in good shape. Calls for recession seem ill-placed.
But the housing market, in my view, is facing a significant affordability issue. Homeownership is increasingly out of reach for a young generation of professionals that is just beginning to see the disadvantages of entering the workforce during a depression dissipate.
The overhauling of our economy into one that is about information and specialised knowledge instead of one that is about goods production and specialised skill has been completed. This is, however, a slow process and along the way we’ve managed to nominate Donald Trump for president.
It’s been a bumpy transition and will continue to be. Creating a new middle class out of radically re-focused centres of economic vitality is hard.
The ways technology changes our lives, however, has almost surely made its biggest transitions for as far as my limited eye can see. My grandparents use iPads and send texts while teenagers use those same devices to send disappearing video messages to each other.
These experiences might seem worlds apart, but the space between an 80-something reading the newspaper on an iPad and a pre-teen sending Snapchats on an iPhone is, when compared to the digitization of our world from just 20 years ago, vanishingly small. Technology, by now, is only superficially generational.
Peter Thiel once wrote that we wanted flying cars and all we got was 140 characters.
Well, the characters are pretty great. I’ll wait for the cars.
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