The New Digital Order: Five Megatrends

Mary Meeker, long a mainstay at Morgan Stanley, now a partner at the venture-capital firm of Kleiner Perkins Caufield & Byers, is one of the most important Internet analysts in America today. Which is to say, she’s one of the most important social analysts, because not much is happening these days that doesn’t have a digital component.

Here are five megatrends from her latest presentation, delivered on May 28 at the Code Conference in Palos Verdes, California.

First: In the future, you will be hacked.

As life is lived online, as most of us give ourselves over to the “Internet of Things,” we will just have to deal with the fact that some of the innermost detail of our lives will be shared with others. Ninety-five percent of all the networks in the world will be hacked in some way [slide 18]. Hacked by whom? Hackers? Criminals? Our government? Other governments?

The answer to all these questions, of course, is “Yes.”

Second: People will seek to find new ways to escape the all-seeing eye.

Experimentation with Bitcoin and other kinds of encrypted virtual currencies is accelerating–up 800 percent in the last year [slide 53]. Will people use these crypto currencies to find a way to evade taxes? To beat prohibitions? To evade embargoes? And more broadly, in a world of big data and drones, will people ever be able to truly go off the grid?

It’s probably fair to say that the future of freedom, as we have understood it, hangs in the balance.

Third, innovation has a global propulsion that transcends countries and systems.

The march of Moore’s Law continues: The cost of computers has dropped from $527 per million transistors in 1990 to five cents per million transistors today [slide 70]. And storage costs have fallen from $569 per gigabyte to two cents today [slide 71].

Do pro-tech policies help speed progress? Of course. Do bad policies hurt? Obviously, yes. But global competition is so intense that countries with counter-productive policies are soon forced to get back into the tech herd. A case in point is France: The country’s experiment with high taxes and reactionary socialism lasted only a year or so; faster economic feedback loops brought the lefty vision to a screeching halt as capital flight damaged business confidence. Today, France is scrambling to get back into the competitive capitalist swing of things. France may never again be a tech leader, but it will always be a fast follower, and a good customer.

Worldwide, it remains to be seen which country will take the lead in innovation, but we know that all countries will follow–they have no choice. The United States, we might add, is no exception to these rules.  Stay tuned for a sharp pro-competitive political correction in the 2014 midterm elections.

Fourth, the vision of innovation trumps the vision of deficit reduction.

Innovation in education, for example, is going strong–but it is still just beginning.

The inexorable Rise of the Screen–smartphones and tablets, worldwide, having increased 500 percent in the last five years–is going to make the “education anywhere” dream a reality for anyone interested in learning, at any age [slide 95].

And speaking of a learning, the tech elite has also gained knowledge about what really matters in the economics of growth. In the words of The Business Insider‘s Joseph Weisenthal, Meeker’s presentation “represents a turning point in the thinking of the elites.” Downplaying the importance of straight-line static analysis, long popular in Washington, Weisenthal explains: “Stressing about the debt is tired. Talking about how we’re actually solving our big problems is hot.”

Fifth, healthcare is a matter of science, not finance.

For more than two decades, American politics has been transfixed by debates over healthcare finance.   Should we have Clintoncare–or not? Should we have Obamacare–or not? These were lively and important debates, to be sure, but they will be mooted, ultimately, by two realities: First, one way or another, everyone in the US is going to wind up getting at least some minimal level of healthcare; it might be Department of Veterans Affairs level, but it will be something. And second, what matters most in medicine is science, not finance. Do we have a cure for MERS, or not? Do we have a cure for cancer, or not? Do we have a cure for Alzheimer’s, or not? If we do, then healthcare will be cheap, at least relative to the alternatives, which are early death or costly long-term decline.

A key to medical success–most obvious, so far, in cancer treatment–is personalized medicine: that is, the development of treatments attuned to each individual’s unique genetic code. And so it’s heartening to see that the cost of sequencing the human genome is falling faster than the cost of computing. Yes, there’s something pushing down prices faster, even, than Moore’s Law [slide 89].

Indeed, the world that Meeker paints is challenging. It’s scary–and exciting–at the same time.

So the political system will have to react. If you click through Meeker’s whole presentation, you might ask yourself: Are the politicians keeping up with this level of insight and sophistication? Are they able to keep faith with basic American principles and values, even as they adapt to new possibilities and prospects? And if not, what are you, the voter, going to do about it?

Source: Breitbart Feed

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