The Future

by Al Gore

  There are many questions yet to be answered about the treatment of intellectual property in a 3D printing era. The three-dimensional design will make up the lion’s share of the value in a 3D printing economy, but copyright and patent law were developed without the anticipation of this technology and will have to be modified to account for the new emerging reality. In general, “useful” physical objects often do not have protection against replication under copyright laws.

  Although there are skeptics who question how fast this new technology will mature, engineers and technologists in the United States, China, and Europe are working hard to exploit its potential. Its early use in printing prosthetics and other devices with medical applications is gaining momentum rapidly. Inexpensive 3D printers have already found their way into the hobbyist market at prices as low as $1,000. Carl Bass, the CEO of Autodesk, which has invested in 3D printing, said in 2012, “Some people see it as a niche market. They claim that it can’t possibly scale. But this is a trend, not a fad. Something seismic is going on.” Some advocates of more widespread gun ownership are promoting the 3D printing of guns as a way to circumvent regulations on gun sales. Opponents have expressed concern that any such guns used in crimes could be easily melted down to avoid any effort by law enforcement authorities to use the guns as evidence.

  THE WAVE OF automation that is contributing to the outsourcing and robosourcing of jobs from developed countries to emerging and developing markets will soon begin to displace many of the jobs so recently created in those same low-wage countries. 3D printing could accelerate this process, and eventually could also move manufacturing back into developed countries. Many U.S. companies have already reported that various forms of automation have enabled them to bring back at least some of the jobs they had originally outsourced to low-wage countries.

  CAPITALISM IN CRISIS

  The emergence of Earth Inc. and its disruption of all three factors of production—labor, capital, and natural resources—has contributed to what many have referred to as a crisis in capitalism. A 2012 Bloomberg Global Poll of business leaders around the world found that 70 percent believe capitalism is “in trouble.” Almost one third said it needs a “radical reworking of the rules and regulations”—though U.S. participants were less willing than their global counterparts to endorse either conclusion.

  The inherent advantages of capitalism over any other system for organizing economic activity are well understood. It is far more efficient in allocating resources and matching supply to demand; it is far more effective at creating wealth; and it is far more congruent with higher levels of freedom. Most fundamentally, capitalism unlocks a larger fraction of the human potential with ubiquitous organic incentives that reward effort and innovation. The world’s experimentation with other systems—including the disastrous experiences with communism and fascism in the twentieth century—led to a nearly unanimous consensus at the beginning of the twenty-first century that democratic capitalism was the ideology of choice throughout the world.

  And yet publics around the world have been shaken by a series of significant market dislocations over the last two decades, culminating in the Great Recession of 2008 and its lingering aftermath. In addition, the growing inequality in most large economies in the world and the growing concentration of wealth at the top of the income ladder have caused a crisis of confidence in the system of market capitalism as it is presently functioning. The persistent high levels of unemployment and underemployment in industrial countries, added to unusually high levels of public and private indebtedness, have also diminished confidence that the economic policy toolkit now being used can produce a recovery that is strong enough to restore adequate vitality.

  As Nobel Prize–winning economist Joseph Stiglitz put it in 2012:

  It is no accident that the periods in which the broadest cross sections of Americans have reported higher net incomes—when inequality has been reduced, partly as a result of progressive taxation—have been the periods in which the U.S. economy has grown the fastest. It is likewise no accident that the current recession, like the great Depression, was preceded by large increases in inequality. When too much money is concentrated at the top of society, spending by the average American is necessarily reduced—or at least it will be in the absence of an artificial prop. Moving money from the bottom to the top lowers consumption because higher-income individuals consume, as a fraction of their income, less than lower-income individuals do.

  While developing and emerging economies are seeing increases in productivity, jobs, incomes, and output, inequality within these countries is also increasing. And of course, many of them still have significant numbers of people experiencing extreme poverty and deprivation. More than one billion people in the world still live on less than $2 a day, and almost 900 million of them still live in “extreme poverty”—defined as having an income less than $1.25 per day.

  Most important of all, among the failures in the way the global market system is operating today is its almost complete refusal to include any recognition of major externalities, starting with its failure to take into account the cost and consequences of the 90 million tons of global warming pollution spewed every twenty-four hours into the planet’s atmosphere. The problem of externalities in market theory is well known but has never been so acute as now. Positive externalities are also routinely ignored, leading to chronic underinvestment in education, health care, and other public goods.

  In many countries, including the United States, the growing concentration of wealth in the hands of the top one percent has also led to distortions in the political system that now limit the ability of governments to consider policy changes that might benefit the many at the (at least short-term) expense of the few. Governments have been effectively paralyzed and incapable of taking needed action. This too has undermined public confidence in the way market capitalism is currently operating.

  With the tightly coupled and increasingly massive flows of capital through the global economy, all governments now feel that they are hostage to the perceptions within the global market for capital. There are numerous examples—Greece, Ireland, Italy, Portugal, and Spain, to name a few—of countries’ confronting policy choices that appear to be mandated by the perceptions of the global marketplace, not by the democratically expressed will of the citizens in those countries. Many have come to the conclusion that the only policies that will prove to be effective in restoring human influence over the shape of our economic future will be ones that address the new global economic reality on a global basis.

  SUSTAINABLE CAPITALISM

  Along with my partner and cofounder of Generation Investment Management, David Blood, I have advocated a set of structural remedies that would promote what we call Sustainable Capitalism. One of the best-known problems is the dominance of short-term perspectives and the obsession with short-term profits, often at the expense of the buildup of long-term value. Forty years ago, the average holding period for stocks in the United States was almost seven years. That made sense because roughly three quarters of the real value in the average business builds up over a business cycle and a half, roughly seven years. Today, however, the average holding period for stocks is less than seven months.

  There are many reasons for the increasing reliance on short-term thinking by investors. These pressures are accentuated by the larger trends in the transformed and now interconnected global economy. As one analyst noted in 2012, “our banks, hedge funds and venture capitalists are geared toward investing in financial instruments and software companies. In such endeavors, even modest investments can yield extraordinarily quick and large returns. Financing brick-and-mortar factories, by contrast, is expensive and painstaking and offers far less potential for speedy returns.”

  This short-term perspective on the part of investors puts pressure on CEOs to adopt similarly short-term perspectives. For example, a premier business research firm in the United States (BNA) conducted a survey of CEOs and CFOs a few years ago in wh
ich it asked, among other things, a hypothetical question: You have the opportunity to make an investment in your company that will make the firm more profitable and more sustainable, but if you do so, you will slightly miss your next quarterly earnings report; under these circumstances, will you make the investment? Eighty percent said no.

  A second well-known problem in the way capitalism currently operates is the widespread misalignment of incentives. The compensation of most investment managers—the people that make most of the daily decisions on the investment of capital—is calculated on a quarterly, or at most annual, basis. Similarly, many executives running companies are compensated in ways that reward short-term results. Instead, compensation should be aligned temporally with the period over which the maximum value of firms can be increased, and should be aligned with the fundamental drivers of long-term value.

  In addition, companies should be encouraged to abandon the default practice of providing quarterly earnings guidance. These short-term metrics capture so much attention that they end up heavily penalizing firms that try to build sustainable value, and fail to take into account the usefulness of investments that pay for themselves handsomely over longer periods of time.

  THE CHANGING NATURE OF WORK

  One thing is certain: the transformation of the global economy and the emergence of Earth Inc. will require an entirely new approach to policy in order to reclaim humanity’s role in shaping our own future. What we are now going through bears little relation to the problems inherent in the business cycle or the kinds of temporary market disruptions to which global business has become accustomed. The changes brought about by the emergence of Earth Inc. are truly global, truly historic, and are still accelerating.

  Although the current changes are unprecedented in speed and scale, the pattern of productive activity for the majority of human beings has of course undergone several massive changes throughout the span of human history. Most notably, the Agricultural and Industrial revolutions both led to dramatic changes in the way the majority of people in the world spent their days.

  The first known man-made tools, including spear points and axes, were associated with a hunting and gathering pattern that lasted, according to anthropologists, almost 200 millennia. The displacement of that dominant pattern by a new one based on agriculture (beginning not long after the last Ice Age receded) took less than eight millennia, while the Industrial Revolution required less than 150 years to reduce the percentage of agricultural jobs in the United States from 90 to 2 percent of the workforce. Even when societies still based on subsistence agriculture are included in the global calculation, less than half of all jobs worldwide are now on farms.

  The plow and the steam engine—along with the complex universe of tools and technologies that accompanied the Agricultural and Industrial revolutions respectively—undermined the value of skills and expertise that had long been relied upon to connect the meaning of people’s lives to the provision of subsistence and material gains for themselves, their families, and communities. Nevertheless, in both cases, the disappearance of old patterns was accompanied by the emergence of new ones that, on balance, made life easier and retained the link between productive activity and the meeting of real needs.

  To be sure, the transformation of work opportunities required large changes in social patterns, including mass internal migrations from rural areas to cities, and the geographic separation of homes and workplaces, to mention only two of the most prominent disruptions. But the net result was still consistent with the hopeful narrative of progress and was accompanied by economic growth that increased net incomes dramatically and sharply reduced the amount of work necessary to meet basic human needs: food, clothing, shelter, and the like. In both cases, formerly common pursuits became obsolete while new ones emerged that called for new skills and a reconception of what it meant to be productive.

  Both of these massive transformations occurred over long periods of time covering multiple generations. In both revolutions, new technologies opened up new opportunities for reorganizing the human enterprise into a new dominant pattern that was in each case disruptive and, for many, disorienting—but produced massive increases in productivity, large increases in the number of jobs, higher average incomes, less poverty, and historic improvements in the quality of life for most people.

  Consider again the larger pattern traced in the history of these three epochs: the first lasted 200,000 years, the next lasted 8,000 years, and the Industrial Revolution took only 150 years. Each of these historic changes in the nature of the human experience was more significant than its predecessor and occurred over a radically shorter time span. All were connected to technological innovations.

  Taken together, they trace the long gestation, infancy, and slow development of a technology revolution that eventually grew to play a central role in the advance of human civilization—then gradually but steadily gained speed and momentum in each of the last four centuries, jolted into a higher gear, and began to accelerate at an ever faster rate until it seemed to take on a life of its own. It is now carrying us with it at a speed beyond our imagining toward ever newer technologically shaped realities that often appear, in the words of Arthur C. Clarke, “indistinguishable from magic.”

  Because the change under way is one not only of degree but of kind, we are largely unprepared for what’s happening. The structure of our brains is not very different from that of our ancestors 200,000 years ago. Because of the radical changes induced by technology in the way we live our lives, however, we are forced to consider making adaptations in the design of our civilization more rapidly than seems possible or even plausible.

  We have difficulty even perceiving and thinking clearly about the pace of change with which we are now confronted. Most of us struggle with the practical meaning of exponential change—that is, change that is not only increasing but is increasing at a steadily faster pace. Consider the basic shape of all exponential curves. The pattern of change measured by such curves is slow at first, and then ascends at a gradually but ever increasing rate as the angle of ascent steepens. The steep phase of the curve drives changes at a far more rapid rate than the flat part of the curve—and it is this phase that has consequences not only of degree but of kind. As explained by Moore’s Law, the fourth-generation iPad now has more computing power than the most powerful supercomputer in the world thirty years ago, the Cray-2.

  The implications of this new period of hyper-change are not just mathematical or theoretical. They are transforming the fundamental link between how we play a productive role in life and how we meet our needs. What people do—their work, their careers, their opportunities to exchange productive activity for income to meet essential human needs and provide a sense of well-being, security, honor, dignity, and a sense of belonging as a member of the community: this basic exchange at the center of our lives is now changing on a global scale and at a speed with no precedent in human history.

  In modern societies we have long since used money and other tangible symbols of credit and debit as the principal means of measuring and keeping track of this ongoing series of exchanges. But even in older forms of society where money was not the medium of exchange, productive work also was connected to the ability to meet one’s needs, with a tacit recognition by the community of those who contributed to the needs of the group, and whose needs were then met partly by others in the group. It is that basic connection at the heart of human societies that is beginning to be radically transformed.

  Many economists comfort themselves with the idea that this is actually an old and continuing story that they know and understand well—a story that has generated unnecessary alarm since Ned Ludd, a weaver, smashed the new knitting frames invented in the late eighteenth century, which he realized were making the jobs of weavers obsolete. The “Luddite fallacy”—a phrase coined to describe the mistaken belief that new technologies will result in a net reduction of good jobs for people—was validated on a large scale when the mechaniza
tion of farming eliminated all but a tiny fraction of farm-related jobs, and yet the new jobs that emerged in factories not only outnumbered those lost on farms but produced higher incomes, even as farms became far more productive and food prices sharply declined. Until recently, the large-scale automation of industry seemed to be repeating the same pattern again: routine, repetitive, and often arduous jobs were eliminated, while better jobs with higher wages more than replaced those that were eliminated.

  Yet what we believe we learned during the early stages of this technology revolution may no longer be relevant to the new hyper-accelerated pace of change. The introduction of networked machine intelligence—and now artificial intelligence—may soon put a much higher percentage of employment opportunities at risk in ever larger sectors of the global economy. In order to adapt to this new emergent reality we may soon have to reimagine the way we as human beings exchange our productive potential for the income necessary to meet our needs.

  Many scholars who have specialized in the study of technology’s interaction with the pattern of society, including Marshall McLuhan, have described important new technologies as “extensions” of basic human capacities. The automobile, in the terms of this metaphor, is an extension of our capacity for locomotion. The telegraph, radio, and television are, in the same way, described as extensions of our ability to speak with one another over a greater distance. Both the shovel and the steam shovel are extensions of our hands and our ability to grasp physical objects. New technologies such as these made some jobs obsolete, but on balance created more new ones—often because the new technologically enhanced capacities had to be operated or used by people who could think clearly enough to be trained to use them effectively and safely.