Is the Future Cancelled or Just Postponed?
At the Singularity 2008 conference, a small group of smart people had Verner Vinge surrounded and were pressing him to metaphorically roll them bones and read our civilization’s horoscope. Vinge (interviewed in this issue), a retired professor of mathematics from San Diego State University and leading hard science fiction writer, had coined the term the Singularity, referring to a time when technological change would become so rapid because of the creation of greater-than-human artificial intelligence that predicting what would occur post-Singularity would become nearly impossible. The concept of the Singularity was embraced by other writers, ultimately spawning a culture of people who live, in part, to read the signs and portents of this astonishing event. In some formulations, the Singularity is the biggest change that humanity will ever create or experience.
Ray Kurzweil, already a major figure as the result of a number of books including The Age of Spiritual Machines, has reached a sort-of pinnacle of public notice after publishing The Singularity is Near in 2005 and viewing the world through a Singularitarian (yes, a real word) lens. In the book, Kurzweil gives his evidence that US GDP growth is exponential and contiguous. Or rather, he posits that due to the exponential nature of past US economic growth, the future will also see continuous exponential economic growth.
But will this growth be impacted as we experience an economic slowdown and global financial crisis? Will we still have all the good stuff that futurists and hard science fiction writers promise, including biotech that increases longevity, nanotechnology that revolutionizes manufacturing, information technology that improves productivity? And what about the Singularity? Speaking to the Singularity only, Vinge opined that nothing on the economic horizon was going to slow it down, because it only takes a few companies to keep up with Moore’s Law and thus to make the breakthroughs that will bring this strong AI to fruition. From Vinge’s perspective, the Singularity is still near.
But others look at the past and present and see indications that the future (a view of a world utterly transformed by technological change) has been cancelled. In a recent article for Investor’s Business Daily entitled, "Venture Capital Theme of the Day: Death", Brian Deagon stated that only six venture capital backed companies had gone public in 2008, the fewest in over thirty years, and that the value of venture-based acquisitions fell 42% from the same 2007 period to $11.2 billion. Deagon quotes National Venture Capital Association President Mark Heesen saying, "(I)f this goes on for another year or two, it means we won’t have a fresh crop of new companies."
Since venture funds typically exist for eight years, and raise their money from a small fraction of total investments made by college endowments and other funds with a long term investment horizon — and because many funds have lost half their value since September — and because the US and world economy is likely to get much worse before it gets better, it is almost certain that we won’t have a pipeline filled with well-funded start-ups ready to go public over the next seven years. And this could have a chilling effect on both the business and academic roles in creating the future that both communities have performed so superbly over the last three decades.
A bit of history may be in order. Once upon a time there was an artificial intelligence/expert system software industry, with companies focused exclusively on commercializing AI software and hardware. An AI software company called IntelliCorp (which started as IntelliGenetics) went public, and its rivals were also expected to follow suit. Then came the "AI Winter." Funding dried up. The bloom was off the rose, and though a number of the programming and interface conventions of that day have found their way into other software, those of us who were there at the time (I was in charge of the Southwest U.S. for IntelliCorp) know that the future we imagined didn’t come to pass. In fact, it’s safe to say that expectations were lowered by about 99%. No one, in 1986, could have imagined that applications that were well established by then — Microsoft OS, Oracle’s SQL database software — would still be the basis for the biggest revenues in software in 2008. Could what happened to strangle a single visionary technology industry in childhood happen to many diverse industries key to creating the future? Sadly, yes.
Corporations are considered living persons under US law. An unusual way to look at the financial crisis and the halving of equity values is that price-to-earnings ratios have also halved, and P/E ratios are an actuarial table (like those used by life insurance companies to predict when people with measurable characteristics will die). This is because the market capitalization of a company is (the market’s expectation of) the net present value of all its future profits. Thus, a PE ratio of 14 could be looked at by the market as a company expected to produce, on average, the same profits for 14 years (not counting inflation), and then to cease to exist. Over the last 100 years, the average P/E ratio has been 14-16 (depending, in part, on how you calculate the number), and every time the ratio has gone above 20, it’s dropped below 10 a few years later. In 2000, the S&P index went above 40, but when it dropped, it hit above 20, making a drop of over 50% predictable and obvious to those reporting on it in 2004 (Do a Google search of "average PE ratio" and check the third link to Generational Dynamics for evidence).
If companies are living people, the drop in life expectancy for companies is comparable only to the fastest dying country in the world that is not at war — Zimbabwe — where life expectancy has fallen from 60 in 1990 to 34 today. Due to a combination of daily doubling of prices, starvation, and cholera, it’s possible that life expectancy will halve again. It’s possible that the value of companies will also halve again if a few things happen; for instance, if the US Treasury credit rating is downgraded, bankruptcies soar, or large banks continue to fail.
as we experience a global financial crisis, will we still have all the good stuff that futurists promise, including biotech that increases longevity, and nanotechnology that revolutionizes manufacturing?
So. Is the recession of 2008 just a delay for the golden techno-future or something much worse? Current conditions are being compared to the years at the beginning of the Great Depression in the early 1930s, but then we came out of that in the late 1940s. Since the Great Depression, the average age of Americans has more than doubled, retirement has come sooner, and government benefits for the elderly retired including medical and transfer payments have increased by one to two orders of magnitude. The 2000s were supposed to be the Roaring 2000s, the last golden age boom time before the financial disaster starting in 2011, caused by 3 million baby boomers reaching retirement age. If the current crisis is a result of America’s problems at the proverbial best of times, when the baby boomers are in peak earning years, how can US economics be better when current peak earners stop generating surpluses and start being net consumers? And what happens when interest on the federal debt exceeds the amount collected in individual taxes?
There is a possibility that federal fiscal collapse meets Baby Boom retirement, and all the money that would have gone into new technology goes into appeasing elderly voters. In that scenario, the Singularity might not happen in an expected timeframe and there would be no available life extension, or conditions on earth would be so unappealing that the average person wouldn’t want to live longer, and thus, for most people, the future would be cancelled.
The moral of the story is that, for those of us in our forties and up, we need to redouble our efforts at birthing problem solving technologies, and we need to make the future happen now or never (at least within the lifetimes of adults in 2008). Or we better hope that Vernor Vinge is right and that the Singularity doesn’t require anything close to a healthy economy, in which case those smarter-than-us bots can take charge and knock off all of our problems like ducks in a row.