« Mobile Payments for E-commerce and P2P Lending -- Cut out the bank | Main | Bet on your star economist to win the Nobel (Predictor) Prize »

Explosive technology growth is critical to the future of the U.S. economy

What if the singularity does not happen?

Peter Thiel -- co-founder of PayPal, early investor in Facebook, and current venture capitalist -- posed this question this weekend to attendees of the Singularity Summit, a conference that brought together some of the most forward-thinking technologists, futurists, and venture capitalists to explore the impact of technology on society.

The singularity can be interpreted as many things, but using the definition of Ray Kurzweil, it is a rapid and profound technological change that is irreversibly transformative. Kurzweil is known for his identification of exponential growth in technology, dating well before Moore's law, as in the diagram below, when Moore's law is seen as the fifth manifestation of this phenomenon. Source: kurwzeilai.net.

Continuing on this exponential path means that we should reach the singularity in this lifetime.

So what is Peter's conclusion if this doesn't happen?

Our expectations for constant growth that enable our credit-based economy to work will need to be seriously re-adjusted. This leaves us with two options: start saving a lot more (~40%) or work to ensure that we develop the technologies that will enable us to continue to grow. We'll probably need to do both.

In this interpretation, advancing technology IS the key to the economy. While on a panel with famous NYC-based VCs Mark Gorenberg and David Rose, Peter raised the question of whether maybe it is time to scale back on VC, given that most VC firms have not made money in the last 11 years. Maybe the 5% of his portfolio that Mark currently allocates to VC should be more like 2, 3, or 4%. The consensus of the panel, however, was that in the long run, if that 5% fails, then the 95% left is hopeless as well. It's the 5% investment in cutting edge technologies that will bring us to the next level and if we don't get there, then all growth will slump.

So who is most likely to power this growth? Peter was clear that it's not the so-called "technology companies" of Microsoft, IBM, and HP (he was far more positive about Intel). These firms are actually more like banks in that they are betting on no innovation in technology and would instead best succeed under the status quo. Peter is the primary donor to the Singularity Institute, who researches transformative technologies and ther impacts, and he also prefers to invest in companies that won't make money "for a long, long time." When you're the co-founder of PayPal, you can afford to do that.

Technology thus does not only further open and free markets, as Transcapitalist advocates, rather it is the critical input to the market's success.

PrintView Printer Friendly Version

EmailEmail Article to Friend

References (39)

References allow you to track sources for this article, as well as articles that were written in response to this article.

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.
Member Account Required
You must have a member account on this website in order to post comments. Log in to your account to enable posting.