George Friedman has no doubt that electric cars and new kinds of cellphones will abound in the years to come. What the CEO of Austin, Texas-based global intelligence company Stratfor doesn’t see on the near horizon are the kinds of breakthroughs that solve the world’s most pressing needs and drive renewed economic growth. In his new bestseller, The Next Decade, Friedman argues that capital shortages, the impending down cycle in U.S. military spending and an aging population that drains public coffers mean the arrival of the next wave of “truly transformative” technologies will be delayed.
Canadian Business: You say that in the coming years technology will lag behind needs. Why is that?
George Friedman: Technology comes in waves: science moves into technology. In the 1970s, scientific work on the semiconductor manifested itself in technologies such as the personal computer in the 1980s. That computer then evolves, and the Internet emerges, and they converge. We’re now in a period where that technology, for one example, is mature and essentially incremental. We’re not making fundamental breakthroughs in how a computer works, and we can’t, because the silicon chip has inherent limits. To develop a computing model that goes beyond binary computing requires pure scientific work. There’s a lot of research in this area right now, but it’s not yet a technology.
Across the board, [the next decade] looks very much like the 1970s. That was a period of intense scientific transformation into technology. But it was not a time when we had fundamental breakthroughs in products. That came in the ’80s and ’90s. At the end of one of these periods, you take a pause. Partly because you’ve been spending so much time extrapolating, you now have to go back to the science. And, of course, one of the issues is how much money can you spend on science and on technology, and what is your appetite for risk. It’s a business question. The transformation of science into technology into products is expensive and risky. And we’re not in a time when we’re flush with research and development money, and we don’t have a good appetite for risk.
CB: So the financial crisis will lengthen the technology cycle because it’s sapped R&D funding?
GF: Of course. As the availability of capital decreases, you tend to get a decline in risk tolerance on a whole range of issues, including R&D. When risk rises, money becomes more difficult to obtain, and [investment] goes to more prosaic things.
CB: Conventional wisdom holds that older investors are more conservative. Will an aging population with less appetite for risk affect the availability of R&D capital?
GF: That’s probably true, although the manner in which we hold capital really doesn’t reflect the age of the investor. It’s a much more complicated sociological problem. But the baby boomers pose another problem. I believe that technology follows need. Sometimes it’s military need, sometimes it’s social. We’re now facing an aging population consuming at spectacularly high rates with an insufficient labour base under it. You must replace that labour somehow. There are two obvious answers: robotics, and curing degenerative diseases. In neither case do we have the science to [apply] them. We’re still grappling with what Alzheimer’s disease is.
CB: Could massive government investment make up for the drop in private-sector investment?
GF: Well, right now we have to do science, and the problem with science is that you can pour money into it but it doesn’t necessarily solve the problem. It’s a function of time even more than capital. You require genius to solve some of these problems. And you can’t just order up three geniuses.