Trends to Watch, Updated
1. Productivity growth has tailed off in recent quarters. It varies so much on a year-to-year basis that it takes quite a while to discern a long-term trend (a point I can recall Alan Blinder making years ago).
2. I have said to keep an eye on cognitive neuroscience. IBM’s Kevin Brown writes,
progress has been made in understanding and reading electrical brain activity were we can use computers to see how the brain responds to facial expressions, excitement and concentration levels, and the thoughts of a person without them physically taking any actions.
So the idea is to use these electrical synapses to also do everyday activities such as placing a phone call, turning on the lights or even in the healthcare space for rehabilitation.
3. On solar power, I view 2011 as a setback year. Part of the reason that Solyndra and First Solar cratered is that the price of solar panels has come down quite a bit. That would be great news, except that it appears to me to be due to aggressive subsidies, as opposed to technological progress per se. I will believe that solar is ready for prime time when it can compete without subsidies.
4. On cancer therapy, I continue to believe that we are seeing progress. But a cure is not yet in sight.
5. On the meltdown of mainstream media, I believe that it is proceeding on schedule.
Last year, I added sovereign debt as an issue to watch. That was a correct call, if an easy one. The governments that were in trouble a year ago have basically wasted the last year, while the problems generally got worse.
This year, let me add a trend that probably should have been there before: factor-price equalization. That is, I see incomes of median-IQ workers in different countries tending to converge. That means higher incomes in underdeveloped countries while there is downward pressure on median incomes in developed countries.
Related to that, let me add a trend toward the Diamond Age scenario, in which people with Victorian values (marriage, thrift) accumulate wealth, while people who lack those values can address their basic material needs but otherwise fall behind. I discussed this scenario in What if middle-class jobs disappear? and also in my dancing presentation at the Kauffman bloggers conference. The issue of the causes and consequences of inequality came up a lot this year, from the Occupy movement to the e-books by Tyler Cowen and Erik Brynjolfsson.
By the way, I now can break my self-imposed silence on the OWS movement. I think that enough time has passed to see where it is headed.
If you think of income redistribution as civil rights, on a scale of 1 to 10, how does OWS compare with the Montgomery Bus Boycott? A 10 would mean that history will view the two as equivalent sparks that ultimately produced major change. I will put OWS as a -1 (that is, minus one) on that scale. I think that the income inequality issue would have gotten more traction this year had it not been linked to the anarchist-romantic OWSers. America has seen many anarchist-romantic movements over the years, and they have never done well. I think that OWS movement will fade into oblivion having achieved nothing; the inequality issue will come back, but it will no longer be linked to OWS.