The year ahead is going to be a tumultuous one, challenging in political, economic, and financial terms. Despite this, there are opportunities for those prepared to take advantage of them, because uncertain times mean that market share is up for grabs. And no, it’s not a coincidence that there are 12 trends for 2012. I discarded a bunch more, but it’s such a catchy title I couldn’t resist.

I’m going to approach these 12 trends with three objectives: What is important? Why is it important? And what does it mean to you?

And I’m going to start with the bad news, and end with the silver linings.

1)    Declining American influence – America’s absolute and relative influence in geopolitics, economics, finance, and the military is declining for a host of reasons: the rise of competing powers like China, India, Brazil, and others; the very expensive military adventures in Iraq and Afghanistan, which have sapped America’s willingness to engage in aggressive political and/or military action; the Arab Spring, which eliminated Middle Eastern strongmen like Mubarak who followed America’s political lead, and the continued stalemate over the fate of the Palestinians, means that America’s influence over this critical and unstable region is at or near an all-time low; the Great Recession, which has sapped America’s economic and financial clout; and the dysfunctional stand-off between Republicans and Democrats that has frequently led to policy paralysis.

The implications of this are a less stable, more dangerous world. America may have gone back and forth on whether it wanted to be the world’s policeman, even though it truly was the global cop, and it’s inability to fill that role now means that the world is a more dangerous place.

This sets the stage for sticky situations to emerge, such as the twin nuclear threats from a suddenly even less-stable North Korea, and the only slightly more stable and geopolitically ambitious theocracy in Iran. It also leaves more elbow room for the ever-ambitious China to expand its power and influence, notably in south Asia and the South China Sea. It also leaves critical global issues, like what to do about climate change, without essential leadership.

The implications of this is a world where there are more likely to be more, and more serious, geopolitical, financial, and economic crises, and greater uncertainty in virtually every aspect of life. Others may not always have agreed with American policies, but they will miss America’s steadying influence as it ebbs from their lives.

2)    Ho-hum! Just another financial crisis (European edition) – The daily drumbeat of scary headlines dealing with the financial crises in Europe have gradually deadened everyone’s awareness for how dangerous the situation truly is. In particular, Angela Merkel is juggling hand-grenades, and hoping that she won’t drop any, and that none of them will go off unexpectedly. Germany is the only European country with the potential to stop the rolling crises that are affecting Europe, and then only if Merkel acts in a timely basis. To do this, she must let Greece go bankrupt instead of propping it up, shore up the banks, notably German banks, that have bought far too many dodgy EU bonds in the past, allow the European Central Bank (ECB) to become a lender of last resort, with the ability to stop a run on European bonds, and halt the bond market attacks on other European countries, starting with Portugal and Ireland, but extending to the much bigger countries like Spain, Italy, and even France. But Germany doesn’t want to do these things, and German voters are adamant that they won’t subsidize what they see as the lazy, profligate lifestyles of southern Europeans. But if Germany doesn’t act, and in a timely fashion, it may lose the ability to act at all, and come under attack from the bond markets as well. Indeed, German bonds are no longer being bought with as much enthusiasm as they were even two months ago. If Germany doesn’t act soon, it may lose the ability to do so at all.

Remember what happened in the American financial markets in 2008? If Germany doesn’t act in time, we could see the same kind of thing happen in 2012, this time starting with a run on European government bonds. From there a run could spread to those banks – American as well as European – that hold too many of these bonds. And once such a run started, the most dangerous question of all would emerge: “Who’s next?” Investors, frightened by the panic, would look to sell any and every questionable credit, and their attention might turn to the various U.S. state and local governments, like Illinois, California, and Harrisburg, Pennsylvania, among many others, that are struggling with their finances.

The U.S. Federal Reserve has become the de facto lender of last resort to the entire developed world, and would undoubtedly step in and support the banks and markets with everything they had. But this time, remembering the callous, greedy ingratitude of last rescue of the banking industry, American voters and the American Congress would likely tell the banks to drop dead. It was a hard enough last time to get Congress to bail out the banks; this time I suspect it would be impossible, even though failing banks would take the global economy down with them. Moreover, the Fed doesn’t have anywhere near as many bullets today as they did in 2008, and Fed Chairman Bernanke already has some Republicans, notably Ron Paul, baying for his blood over the quantitative easing from the last crisis.

The danger here is frighteningly real, and even greater than the risks we faced in the panic of 2008. Yet, the steady drip of crisis headlines and last-minute rescues has left many people convinced that nothing will happen. If it does, it will catch people flat-footed, not because they didn’t know there was a crisis, but because they have been hearing about it for over two years now, and have tuned it out. We could muddle through, and probably will – but the risks are far higher than most people realize. It will be important to have thought out a Plan B to deal with the unthinkable, if it happens, one that prepares you and your finances for a bigger repeat of the 2008 panic. Again, it probably won’t happen – but it’s better to have a plan and not need it, than need a plan and not have it.

3)    Yes, China’s influence will continue to rise, but…  Napoleon famously said, “China is a sleeping giant. Let it sleep.” Well, China’s very much awake now, and throwing her weight around – although cautiously. If I were (God forbid) Emperor of China, I would require my minions to tread cautiously, to smile a lot at our trading partners and neighbors, and to make our gains slowly, one salami slice at a time, never appearing too greedy or overreaching. I would practice soft diplomacy, offering aid and comfort where I could do so cheaply, loudly proclaiming our respect for other countries’ internal policies, taking leadership positions in things, like climate change, where I knew I was going to have to make changes anyway, and generally trying to look like a good global citizen. I would act, in short, as if time were on my side, and I was going to be the next Big Thing.

And generally speaking, that is precisely what China is doing – except that every once in a while the mask slips, and the avarice and aggression shows, as with the boundary disputes with other countries, especially as related to the South “China” Sea, which China (the nation) seems to be trying to interpret literally as being a Chinese lake.

But China has an Achilles’ heel – several of them, in fact – and does not have (much) time on its side. Its biggest weakness is that it is aging faster than any other significant country on Earth. Because of its One Child policy, China’s population is expected to peak, and begin declining, sometime around 2020 – within the next 10 years. And its labor force is already in decline, even as the demands for higher wages push its cost structures higher.

Meanwhile, although there is a great deal of pride in China’s new affluence among the Chinese, that affluence is not evenly spread, and there is unrest among those who remain poor. Add to this the widespread corruption of Chinese officials at all levels, which often provokes revolts, like the one in Wukan, which leads to simmering dissatisfaction among many Chinese.

This will further be exacerbated by the fact that China’s factories are automating almost as quickly as those of the developed world, which threatens to slow the rate of job creation, productivity, and affluence markedly over the next 10 years. Yet, China dare not automate; to do so would mean a loss of competitiveness, which would produce even worse results as industries would move elsewhere.
So, with that in mind, what would I, as self-appointed Emperor of China, do? Worry about a future I couldn’t control, and for which I could not see a clear path forward. The next 10 years will mark the beginning of the end of China’s ascension, and if I were Emperor, I’d think about retiring to some warm, cushy haven before the revolution came. Chinese Spring, anyone?

The implications are for China to step up its attempts to increase power and influence, and throw its weight around even more actively before that power starts to wane, but as quietly as possible. Look for China to try to make this the China Decade, especially in finance, trade, and geopolitics, as it attempts to pull in as much as it can while it can.

4)    American Spring? Meanwhile, closer to home, while those on the political right like to dismiss the Occupy movement (e.g., Occupy Wall Street), the fact that the movement happened at all is the most significant part of it. Indeed, Time magazine made protestors its “Person of the Year”, and that’s not restricted to just the Arab countries. The Occupy movement and protests against cut-backs in many developed countries had many of the earmarks of the Arab Spring: protestors saying that their governments serve an elite clique and not the people; lots of people, especially young men, who cannot find work despite months or years of trying; and a belief that the political system is neither representative nor responsive. Just because winter has fallen, and the Occupy settlements have been disbanded does not mean that the dissatisfaction has gone away. And with increasingly dysfunctional government in America, the potential is there for a much stronger protest movement against the System, however that is defined. American Spring, perhaps? It sounds unlikely, but not as unlikely now as it did before, and it won’t be restricted to America for discontent will grow in all developed countries.

This is especially true as the boomers move towards retirement, only to find that their either don’t have the resources to retire and that no one is going to donate them, or that the civil servant pensions that they were promised are unaffordable.

The protest movements have only just begun, and they are going to be acrimonious, disruptive, and at times hijack the political process.

5)    Mixed signals for both weaker – and stronger – economic growth.  Europe and its prospects are dragging the global economy down. The uncertainty in Europe, combined with the painful budget cuts in Greece, Ireland, Portugal, Italy, Spain, and the United Kingdom, mean that Europe is now in recession and a drag on the global economy.

Meanwhile, China, which had been concerned about inflation, and hence was hiking interest rates in a bid to slow it, has now reversed itself, which I can only interpret as concern that growth will slow more than they want. That’s a potential positive, as it will add stimulus to the global economy.

Canada, which has to date seemed to skate above most of the problems of the rest of the developed world, now seems to be experiencing slower growth, with an unexpected jump in the unemployment rate, while its housing market is looking pricey, frothy, dangerous, and much like America’s prior to the collapse in 2008, especially in condo development in its major cities like Toronto, Vancouver, and Calgary. Moreover, its consumer debt levels are exceeding the levels of American consumers in 2007, and no less a figure than Mark Carney, the highly respected Governor of the Bank of Canada, has warned consumers and banks alike to cut back on consumer borrowing. Canada could be arriving late for the financial meltdown of 2008 – but if its consumers don’t mend their ways, they will get there.

And yet, America, which until 2008 was seen as the world’s engine of growth, seems to be picking up for no specific reason. Actually, this was almost inevitable because of the natural dynamism and entrepreneurship of the American economy. What has prevented America from rebounding earlier, or more strongly, has been the housing market, which is still in horrendous shape – but slowly improving.

So how will this balance out through 2012? Assuming that Europe doesn’t crash and burn, and drag everyone else down with it, and that Iran doesn’t precipitate a significant war in the Middle East, then America will continue to recover, its jobless rate will continue to decline (slowly), the world will lick its (economic) wounds, and things will slowly get better.

Accordingly, while I continue to counsel my clients to have a Plan B in their back pocket if things do go bad, my primary advice is the prepare now for better times ahead. There are problems – big problems – ahead, and the American election in 2012 is not going to help, but for 2012 we are likely to see an improving environment, and opportunities re-emerging for those with the courage to grasp them, as I outline in Trend #7 below.

6)    Climate change accelerates – and the consequences will multiply. The most significant and portentous climate news of 2011 was the discovery of methane gas bubbling up in the Arctic Ocean off the north coasts of both Siberia and Alaska. Methane is a far more potent greenhouse gas than carbon dioxide, and the melting of the Arctic ice cap, combined with the rise in the temperature of the Arctic Ocean, has started to release methane from the ocean floor. As well, as temperatures rise in the northern polar regions of Siberia, Alaska, and Canada, the permafrost melts, releasing even more methane into the atmosphere. The amounts of methane that could be released by both sea floor methyl hydrates and permafrost are staggeringly huge, and could dramatically accelerate the rate of climate change. If this trend continues, not only will the debate over climate change be over, but humanity will be forced to race to keep up with the potential changes.

As it happens, the vast majority of climate scientists – something approaching 95% – now agree that climate change is happening, and that humanity is at the very least a significant contributor to it. Since I speak to lots of different kinds of audiences, I can tell you that most groups now accept that climate change is happening, even those that have been among the most vocal doubters. The doubts they now raise are more along the lines of whether humanity is to blame. But from my point of view, it no longer matters: if your house is on fire, you don’t throw gasoline on the fire, regardless of how it started. That’s roughly the position we’re in now.

In 2012, we will get more information about the release of methane, and can only pray for good news. Meanwhile, brace yourself for more strange, and increasingly extreme weather. And because climate is a chaotic system (where chaos theory is a branch of mathematics), it is literally unpredictable. This means we can’t tell whether we will get floods or drought, hurricanes or tornados, or something else unforeseen. But it won’t be business as usual, either.

7)    Innovation as Steve Jobs’ legacy.  Jobs didn’t invent innovation, but he sure popularized it! Innovation has become a corporate religion in recent years, and with good reason: innovation can allow you to disrupt the marketplace, scoop up market share, increase profits, and win friends and influence people, just as Jobs and Apple have done. Yet, innovation is hard, especially because there’s a natural resistance to change and to the real risk-taking that innovation requires.

But if there is a theme for the corporate world in 2012, it is that now is the time to get serious about innovation. As an innovation specialist who runs seminars and workshops for corporate clients, I’m seeing this on a daily basis in genetic and medical research, agriculture, the automotive industry, the insurance industry and finance generally, plus just about every other sector of the economy. And technology itself embodies innovation. Indeed, the idea of a technological company not working hard at innovation seems like recipe for extinction. The world is changing rapidly, and there are lots of new opportunities – and disasters – out there. It’s raining soup, but if you just stand there, looking up in surprise, you’ll drown!

8)    Who dares, wins. Such is the motto of Britain’s fabled SAS – one of the world’s premier commando groups. But their motto applies equally to unsettled times. During such times, it’s easy and very, very tempting to hunker down, conserving cash, and wait for lazy, easy times to return. But study after study shows that companies that continue to market aggressively, and pursue research into new ideas, new products, and better results for their customers make far more inroads with modest expenditures during bad times than spending far more during good times, when everyone else is competing hard. Moreover, loyalty is won when times are bad, both among consumers, and among employees. And best of all, you can often accomplish a great deal with careful planning and foresight rather than lavish expenditures. This is where strategic planning comes to the fore. The time to be thoughtfully aggressive is when your competitors are playing turtle.

9)    The Red Invaders. The emergence of a Chinese middle class not only means upward pressure on food and fuel prices, it also means a vast invasion of Chinese tourists bearing money. For those countries and regions able to attract such tourists, it means a new source of revenue, and a big shot in the arm. And, as with all ethnic groups, it also means serving them the way they want to be served in terms of language, food, and customs. To the winner go the mega-spoils.

10) Haggling returns to North American retailing. Smart retailers are recognizing that it’s no longer enough to post a sign saying “10% off” to attract consumers, but that consumers are more demanding now, and are moving away from the traditional “no haggle” approach to buying. Moreover, haggling offers two additional benefits to consumers: it’s become somewhat of a game where they can enjoy the thrill of the hunt; and it offers bragging rights when talking with their friends. As a result, haggling has been emerging in two different ways, one passive, and the other active.

The passive form of haggling is to wait for sales. You can witness this almost anywhere when consumers see an item they like in a store, and ask if it’s on sale. When they’re told that it’s not, they turn up their noses, and say they’ll wait until it is. This might be described as “temporal haggling”, where the consumer is saying, “I’ll wait until you lower the price before I buy it. And if you don’t lower it enough, I won’t buy it.” Smart stores are responding in creative ways. Some salespeople say, “No, that’s not on sale, but it will be starting next week,” which amounts to a counter-offer. A smart consumer will reply by saying, “Can you put it aside for me until then?”, implicitly offering to buy it if they do. Some salespeople say no, others say “Sure.” The net result is that store and consumer have haggled over the price to agree on a sale/purchase. Yet the smart retailer actually has an advantage in this exchange: they get to name the sale price in temporal haggling.

By comparison, in active, more traditional haggling the consumer takes the initiative, saying something like “What’s your best price on this widget?” If the salesperson replies with the sticker price, the haggle is over and the consumer leaves. If the salesperson names a price, the consumer responds dismissively, and says, “I wouldn’t pay a nickel over $X for that”, and the salesperson can choose to respond or not. This is, as I say, traditional marketplace haggling.

If a retailer wants to capitalize on the re-emergence of haggling into the North American marketplace, they need to anticipate it, and come up with a range of responses. One might be to say, “We can’t discount this item today, but it is going on sale next week. Would you like to put a deposit on it to hold it until then?” The retailer regains the initiative this way, and moves towards a close. Or better still, the retailer should look for a way to add value rather than cut price by making a counter-offer like, “No, I’m sorry, we can’t discount that item. But we can offer you a 50% discount on a matching accessory if you buy it.”

Regardless of approach, though, retailers should be prepared to return to marketplace haggling, and have a range of responses ready to deal with it. Consumers, as always, should decide what they want, and what their bottom line is in getting it.

11) Health care magic blossoms. Putting aside the issue of cost, which concerns everyone, the ability of health care to solve problems is beginning to move at computer speeds, in part because IT is increasingly being used by doctors, nurses, hospitals – and patients – to manage health care, and in part because research is increasingly being done using smart, powerful computer tools to perform research and execute treatments. Among the changes in the immediate future of health care are:

• The rapidly rising ability to repair failing hearts and minds (or at least brains) and other organs with stem cells. Stem cell treatments are starting to move out of the laboratory and into the operating room, and 2012 will see hundreds of people receiving this kind of therapy.
• Similarly, 3D printers, which have been in development for roughly 20 years, are now good enough that they are starting to be used to create replacement organs from a patient’s own tissue. This will gradually move into mainstream medicine, with replacement hearts, livers, and kidneys being at the top of the list.
• Quadriplegics will increasingly be able to interact with the world through prosthetics controlled by thought alone, either through electrodes that interpret brain wave patterns, or implanted chips which interpret specific thought-impulses.
• Retinal implants are starting to emerge that can help blind people discern light, shapes, and some objects. The implication is that we may be able to help aging boomers improve their failing eyesight as they age – one of the biggest complaints of old age!
• Health care is increasingly falling into the hands of the patient – literally. Smartphones, which are fundamentally wearable computers with all the capabilities of what used to be called “supercomputers”, can now work with Bluetooth-enabled sensors to monitor various aspects of health, from the vigor of your workout, to the health of your heart, to the level of your blood sugar. This will lead to a revolution in health management, with consumers sometimes way out in front of practitioner.
• Likewise, as patients become more and more comfortable with researching medical conditions and treatments online; they are demanding an increasing role in their own diagnosis and treatment; becoming active, important advocates for fund-raising and acceptance of treatments; and blunt critics of health care practitioners through social media and word of mouth. Smart practitioners are accepting this trend and rolling with it. Old school practitioners are resisting, but may wind up steamrolled by it.
• Crowdsourcing of tough diagnoses, and novel solutions to the medical and financial problems of health care promise to open yet another front in the health care revolution. This follows on with the success of crowdsourcing in helping leading-edge research scientists in astronomy (galaxyzoo.org) and protein research (Foldit game softwear).
• Sequencing your genome gets cheap. Sequencing the first genome cost billions of dollars and took decades to perform (culminating in the Human Genome Project). Today it costs about $1,000 (although analysis costs significantly more). Within 10 years, it will cost $100, and analysis will cost about $500 more, and will provide you a complete run-down of where your vulnerabilities lie, and what you can do to forestall future health problems. For 2012, we will see incremental advances towards that goal, with major diseases identified, and a short list of things you do – and don’t – want to do or eat prescribed. This is the true beginning of personalized medicine, and it will revolutionize health care.

12) Technology accelerates in 2012. It’s hard to know what to leave out: electronic mind-reading? Glasses that emit sounds and smells to allow you to enhance social media? The proliferating tablets and smartphones with ever-more wondrous abilities? Here’s a partial list of things I think demonstrate trends that will become increasingly important:

• 3D printers – As well as making replacement organs, 3D printers are coming into the price range of consumers, and may mean that you can buy your own desktop factory. Need a replacement screw for a door? Make it yourself. Need to duplicate a key? Ditto. See a nifty device on TV? Download the plans and make it yourself. Of course, who knows what the ink cartridges will cost.
• Near-eye monitors – These look like glasses, but are computer monitors. They’re the lineal descendents of jet fighter heads-up displays, and will revolutionize the way we use computers, particularly smartphones, but have been hampered by high costs. Prices are starting to approach luxury consumer levels, so applications will start to appear in things like immersive gaming, personal entertainment theaters, medical imaging, and augmented reality.
• Augmented reality through your smartphone – Augmented reality is overlaying information on top of the view from your Mark 1 eyeball, much as Google Street View overlays the names of shops on a photo. You’ll be able to hold up your smartphone’s camera and have your phone overlay directions, stores, infrastructure views, or whatever else might be useful to you. This gets better when you can view the results in your near-eye monitors.
• Cloud computing explodes – Owning a computer is so 2010. Cloud computing is rapidly placing the resources of today’s supercomputers in your hands for pennies a minute. One researcher used one of the commercial clouds to try to break his password to a social media website by brute force, just to see if he could do it. Using the cloud and standard code-breaking techniques he did it in minutes, and it cost him 39¢. As the tools to harness this power get more powerful and easier to use, the potential of the cloud will be adapted by more and more users.
• Siri & copycats + babbling to your smartphone – Siri is an application of the iPhone 4S that allows you to speak to your iPhone and get it to do things for you. This might be setting a count-down timer, converting milliliters to fluid ounces, finding an address and directions from your present location, or looking up a phone number (all of which I’ve done). Apple is offering this technology as a beta version now, but every Siri request goes through Apple’s servers. This means the potential exists to assess what people want to do, and come up with solutions, improving the results really quickly, making personal avatars (also called PDAs, butlers, or assistants) much more valuable in short order. And that means everyone will rush into the field. This will lead to lots of really bad copycat applications, but ultimately a revolution in how we use technology.
• Biometric passwords – Our world is becoming so full of passwords that need to be foolproof (meaning our tendency to forget them) that biometric passwords are almost inevitable, and they are beginning to appear. They will be expensive at first, but gradually retina, fingerprint, voiceprint, and other means of making sure you are you will become cheap and commonplace, and then you will become your own password, no memory required.
• Robots – Everyday robots are here, but they are clunky, expensive, or just plain cute. That’s changing very quickly, and 2012 will see more and more of them appearing in more and more places. Typically these will be commercial settings, but health care is one place where robots make sense and will be used. Rosie the Robot won’t be washing your dishes this year, but she’s coming – if you’re willing to pony up the equivalent of the price of a luxury car.

The Occupy movement is most significant not for what the protestors say, but rather that the movement is happening at all. It demonstrates significant unrest, and the greatest dissatisfaction with the capitalist system that we’ve witnessed since the fall of the Soviet Union. But where is it headed? That’s a much more worrisome question.

The fuel that powered the Vietnam war protests was the draft. There were many other issues – objections to the military-industrial complex, objections to American foreign policy, objections to the money misspent on the war, dislike and disagreement with McNamara and Johnson, even objections to war per se – but without the draft, the protests could not have been as sustained or as widespread as they were.

In the same way, the fuel that powers the Occupy movement is jobs – or rather, lack of jobs. In America, and most other developed countries, the official unemployment rate is high, but the true unemployment rate is obscenely so. In the U.S., for instance, the official rate is 9%. But if you include those who have stopped looking for work, and therefore are no longer counted in the official unemployment statistics, then add those who are underemployed, the true rate approaches 20%. And if you look at the rate for young men, particularly among minorities, it approaches 40%. There is immense frustration with the lack of opportunity, and the smug, self-righteous people who look at the protestors and sneer, “Get a job!” only reveal the vast depths of their ignorance.

It’s true there are many issues embraced by the Occupiers, but without the lack of jobs, the movement would never have developed into much of anything. Americans are not generally a jealous people. If people were prospering, the middle class was expanding, and young people were able to find jobs and start their careers, they wouldn’t really have cared what percentage of total wealth is held by the top 1% of income earners. What rankles is that the rich continue to get richer through a perceived manipulation of “the system”, while the vast majority of other people suffer economically. It leads to the belief that the game is fixed in favor of those who can afford to buy the politicians. Whether this is right or not may not matter – it’s the perception that’s important here. And that perception may be explosive.

But where is this movement going? What’s next?

The Future of Work

If the future holds more jobs, and greater prosperity for most workers, then the Occupy movement will collapse from lack of fuel, and be remembered as a strange fad that came and went, like pet rocks or hula hoops. That’s not the case, because the future of work is much bleaker than people, even most top economists realize.

There are two forces that are squeezing workers in all developed countries: foreign competition, and domestic automation. One is going to get much worse, and the other is going to get slightly better.

The one that will get slightly better, at least in manufacturing, is foreign competition. There have been headlines for decades about the offshoring of jobs. There was even a management cliché for it in the 1990s: “Emigrate, automate, or evaporate,” which meant move your factories offshore in order to take advantage of dramatically lower wages in developing countries; decrease the labor content of your products in order to reduce the advantage of cheap labor in developing countries, or go out of business. (As an aside, there’s actually a fourth option: innovate, but that’s another story.)

This happened because of the emergence of the global economy. A global marketplace implies a global labor pool. If workers in developing countries can do similar work, but at much lower wages, then the work will naturally gravitate to them, and away from workers in developed countries. This has been going on since the 1970s, and is a familiar tale. It makes headlines, and becomes the subject of learned papers by economists, and protests by industries and unions that want protection. And the offshoring of jobs will continue until there is a rough parity between those producing things offshore, using cheaper labor, and the cost of producing things at home, using more expensive labor.

One way this could happen is through wages falling in developed countries, and rising in developing countries. But wages tend to be sticky; not many people are willing to take a cut in pay. As a result, what has tended to happen instead is that workers here are let go, and their jobs disappear, even as the wages in places like China and India are, indeed, rising.

The mild good news here is that much of this adjustment has already happened. Indeed, there are a few reports of manufacturers moving production back to America as the cost of labor in China, for instance, has risen, and as governments, particularly in the southern American states, have reduced legal protections for workers, effectively lowering their cost. (Whether you view this as a good thing or not is a separate issue. Indeed, it’s a difficult issue: do we want good worker protection, but no jobs, or bad worker protection and some jobs?)

The other way for workers in developed countries to compete is through higher productivity, and many companies have survived and kept their production in America that way. Yet, even when they succeed, the number of jobs required goes down. Businesses survive, but only by shedding jobs, leaving a trail of unemployment in the wake.

This is the past and present. The future will be different.

Increased productivity comes most notably through increased automation, and we’ve all experienced that, as when we go to the gas pump, swipe our credit card, and pump our own gas, all without an attendant. But automation is about to become supercharged.

The rate of change in computing speed and cost-effectiveness is not only accelerating, but the rate of acceleration is increasing. Some technology forecasters believe that computers will increase in power by 1,000 times over the next 10 years. With this growth in computing power available at steadily cheaper prices, automation is going to accelerate dramatically, eating its way up the workplace food chain. Only this time, it’s not going to be primarily blue-collar jobs that disappear – that’s pretty well already happened – but white-collar jobs that are hard hit. Indeed, anyone who uses a contemporary computer can experience this for themselves.

With the Macintosh laptop that I’m using to write this blog, I could (if I had the talent) write a new piece of music, score it, perform it with dozens of (computerized) instruments, record it and release it for sale. I could take videos with my iPhone, download them to my laptop, edit them, add titles and special effects, add in the music that I had created, and then publish the end result on YouTube. In effect, with these two tools, a laptop computer and a smartphone, I can replace composers, performers, and an entire movie making team – and that’s using today’s technology. Very shortly, I could make an entire movie, using technology to create photo-realistic virtual actors and background scenes, dub the voices myself, then change the sound of my voice using technology, and produce an entire movie without anyone else. True, it would be a terrible movie as I know nothing about directing, editing, or acting, and not much about composing or playing musical instruments – but that’s not the point. The point is that the tools we use are becoming so powerful that high-end jobs that used to require skilled people can now be done by ordinary folk.

Likewise, computers will move into medicine, performing research using Genetic Programming, and assisting doctors to do complex diagnoses using smart computers like IBM’s Watson; performing clerical work in almost every conceivable industry, and displacing millions of white collars workers along the way; drive cars, trucks, and trains unassisted; and almost any other kind of routine work. Indeed, computer intelligences and everyday robots will move towards replacing workers in any and every kind of repetitive work, leaving only creative, innovative, entrepreneurial work – and leaving millions, or even tens of millions of people unemployed.

What Happens When Too Many People Are Unemployed?

If you look at the Arab Spring from earlier this year, it wasn’t so much a yearning for the freedom to read newspapers not approved by dictators, or the desire to vote that was the driving force that caused people to revolt, but unemployment, especially among young men – leading the inability to create a life, to feed your children, or even to be able to afford to get married and start a family – that drove the revolutions, and inspired young men to face bullets and tanks. If you look at the protests in Europe, it’s not just the anger that a lazy, luxurious way of life is being taken away from Greek citizens, but a very real fear that they won’t be able to live that drives citizens to the barricades.

Unemployment, the specter of want, and the inability to make a decent living, to have a decent life, is historically a very potent, very scary force in geopolitics, and it’s with us now. The Occupy movement is not just about fairness, but driven by the fear and anger that there is no opportunity unless you are one of the privileged class that has a job. As the number of jobs lost to automation rises, so too will the number of people who will respond to the goad of fear and anger about their future.

Worse, it’s not just about finding a job – it’s also about keeping one. Jobs appear and disappear faster than at any time in history, and someone who is a valued employee and a rising star one day can be redundant and valueless the next. A person in that position can try to retrain and find new work, but they find themselves among the multitudes of people desperately seeking work. Without the in-demand skill that got them a job in the first place, they are reduced to the same pavement-pounding, resuming-producing, faith-sapping odyssey that afflicts so many out of work people today.

I’ve seen this coming for some time. In 1993, I wrote a book called Facing the Future. In that book I wrote the following passage:

It’s an overall decline in the need for work that concerns me, brought about by the increasing capabilities and sophistication of computers.

I seem to be very much in the minority on this view, and I may be dead wrong. The conventional view is that as jobs disappear from manufacturing and clerical work, for instance, the steadily rising productivity of workers using increasingly sophisticated automation will create a new prosperity that will increase demand and create new jobs. This is certainly reasonable, because it is precisely what has happened throughout history. But where, I wonder, will the new jobs appear? The conventional view is that new services will spring up, and that higher living standards will allow people to spend money on things they could never afford before, and that much of this will be for personal and personalized services.

I can see logic in this. New services do appear. There were no aerobic instructors, for example, in my grandfather’s day. But how much personal service can we use? Moreover, generally speaking, service jobs pay less than manufacturing jobs. As for being able to buy things that we couldn’t afford before, since manufacturing will increasingly be automated the higher demand for manufactured goods won’t necessarily generate more jobs.

This is not a problem that will burst on the scene in the next five to ten years. Humans are still capable of offering a flexibility, initiative, and creativity that machines cannot duplicate. But at some point, whether it’s twenty years away or one hundred, I’m afraid that the time will come when there will be very few jobs that computers can’t do better, faster, cheaper, and more reliably than humans. As that day approaches, we will be confronted with several problems.

In the first place, we will need a new economic system. Much as it grieves me to say so, free market capitalism may be dying, for it only pays those who are part of the production process. If virtually no one is part of this process, all the fruits of production will belong to those who own the machines – a recipe for the peon-and-aristocracy patterns of Third World economies. But where will the machine-owners find their customers? People can’t be consumers unless they have money to spend. …[1]

In the intervening 18 years, I’ve seen nothing to change my mind. We are, indeed, heading towards a world of aristocrats and peons. Indeed, that is precisely what the Occupy forces are demonstrating against, only they use a slightly different terminology: the 1% and the 99%. Same thing.

So where is this leading us? If I’m right, then even if the economy and employment picks up, and mollifies the Occupy protestors and their spiritual kin, the concerns will return again and again as the long-term rates of unemployment, especially among the young, continue to rise. And that way lies revolution.

What Should We Do About This?

If we lived in Naples in 79 A.D., and saw steam pouring out of the top of Mount Vesuvius, we would try to warn the residents to flee. We are in an analogous situation. This volcano won’t erupt in the next month or next year – but as things are trending, we need to take action, and soon, or we risk precisely the kind of revolution we witnessed in the Arab Spring earlier this year.

It’s no good trying to stem the tide of automation. That smacks of the 19^th century luddites smashing mechanized looms that they felt were stealing their jobs. Moreover, it would be like trying to hold back the tide, and about as successful. It is possible that politicians, under voter pressure, will seek to ban automation and the productivity increases that automation produces in order to preserve jobs. (This is also called “featherbedding”.) All that means is that countries that do not ban automation will see their relative productivity increase, their cost structure decrease, so that the jobs will migrate from here to there rather than being lost to automation.

Instead, politicians, economists, and anyone else interested in our future prosperity and stability should be taking a serious look at how to create new, better jobs that people can do best. These will largely be entrepreneurial, I suspect, and will all be creative, and focus on innovation. This also implies a complete revamp of our education system, away from rote learning and memorization, and towards creativity and individually customized education, to enable each person to emphasize the things they are best at.

None of this will happen quickly or easily. It requires a very different view of “job creation” and a very different understanding of the future of work. The “magic of the markets” won’t solve this problem. Capitalism, left to itself, will emphasize greater productivity through automation, leading to greater profits for the owners of the machines – until profits collapse because there aren’t enough consumers to by the goods and services industry produces. Capitalism will lead to a dead end.

This is not the conventional view, and many will decry my message as “socialist”, although I’ve said nothing at all about redistributing wealth. Some will pillory me for being alarmist, but without attempting to refute my reasoning. And some will just hide their heads in the sand and say “it can’t happen here.”

To this last group, I would suggest that they tell that to Moammar Gadhafi and Hosni Mubarak. They were sure it couldn’t happen there, either.

Like all years, there will be good news and bad in 2011. Because of the bad planning, bad judgment, and bad behavior of previous years and decades, some of the potential bad news is very scary indeed, as I’ll get to in a moment. The odds are that 2011 will be a not bad year, but the risks are higher than normal for economies emerging from a recession. I’m going to deal with the scarier parts first, and then move on to happier things, so bear with me.

GEOPOLITICS

North Korea has worn out everyone’s patience, including China’s, but nobody knows what to do about it. As well Kim Jong Il and his anointed successor have grown up being told that they are always right, and everything they want to do is perfect, which makes them unlikely to listen to even allies (or ally) like China when they don’t like what China has to say. As a result, while the odds are against it, and some kind of negotiated stand-down is still the most likely outcome, North Korea’s narcissist leader could go too far and finally provoke a disaster, up to and including a shooting war. This is specially true now that South Koreans have turned hostile to North Korea because of it’s recent killing of South Koreans.

Iran will continue to work towards nuclear weapons, plus the missiles to deliver them, no matter what anyone says to them. Nobody in the Middle East or the West wants that. The critical question is: do China and Russia put their narrow self-interests before peace, or do they work to stop what could lead to a potential (nuclear) war in the region?

What seems like a revolution in a country that rarely makes news in the West, Tunisia, could become a massive problem for America, and complicate the entire geopolitical equation. What started as food riots in Tunisia rapidly became political protests, and led to the ouster of the former president, Zine El Abidine Ben Ali. As this gained attention elsewhere, the long-suppressed opposition to Hosni Mubarack’s American-backed dictatorship in Egypt flared up. America is now in a position of supporting a despot against what could become a popular uprising. This not only makes it look hypocritical for cheering on democratic uprisings in places like the Ukraine and Iran, but is a big risk for them going forward. If Mubarack falls, he’s likely to be replaced by a government far less amenable to Washington, and much more hostile to Israel. This could seriously complicate the Middle Eastern political situation, especially in the wake of the PLO’s embarrassment by Israel, as revealed by leaks about concessions that PLO leaders were prepared to make to get a Palestinian state. Moreover, there are now protests in the streets of Yemen. This could be the beginning of the end for the satrapies of the Middle East, redrawing the map of one of the key flashpoints of global geopolitics. And if Saudi Arabia’s monarch were to go, you could add real uncertainty to the price of oil, and the strength of the global recovery.

ECONOMY & FINANCE

Canada spent 2010 crowing about what a great country it is, how well it fared in the Great Recession, and how sound it’s public finances and banks are. We may well eat those words in 2011 as our economy slows down, the price of oil goes up, increasing tension between oil-producing and manufacturing provinces, and consumers find that they are struggling with too much debt. If we’re truly unlucky, we could have the crash that everyone else had in 2008.

As well, the unfunded liabilities of retirement benefits promised to civil servants are starting to come home to roost. Already in developed countries around the world, stories are starting to appear about the unpopularity of high salaries and retirement benefits accruing to civil servants. This will continue to grow as a story – and as a fiscal reality at federal, state/provincial, and municipal levels of government. Ultimately, these stresses will lead to pitched political battles, with civil servants rightly pointing to the fact that they have firm contracts for these benefits which can’t be rolled back after-the-fact, and critics rightly pointing out that governments can’t afford to fulfill the promises they’ve made. As this problem continues to gain prominence, as it has in the financial crises in Europe, it will raise the noise level of the debate everywhere else. We’ve already seen the final resolution in a parallel case: the unions of the American car companies gave back the store when the alternative was to bankrupt those paying for pensions and benefits. But it’s going to be a long, painful, noisy road before we get there.

America’s financial position could get even worse than it was in 2008, only this time it will be the state governments in trouble rather than banks and car companies. The list is led by Illinois, California, and New York, but more than half of all state governments are in some financial difficulty, and not all of this is related to the anemic recovery. The over-promises made by governments to their civil services, as just noted, is now threatening to overwhelm state finances. There’s a very real chance of multiple state insolvencies in 2011, leading to a run on state and municipal credits, and potentially triggering a run on the dollar and US Treasuries. What happens after that is anyone’s guess.

Meanwhile, the situation of the PIIGS of Europe isn’t getting any better. Bond investors aren’t buying the Euro bail-outs of Ireland and Greece, and it becomes a question of whether the skepticism stops there, or whether it spreads to Italy, Portugal (already under scrutiny), and, most importantly, Spain, the fourth largest economy in the Euro-zone. The real risk is that someone that the market isn’t already worried about, like Belgium, goes belly-up. If that happened, it would throw everyone’s credit into question, and could trigger a run on almost all Euro-credits (possibly exception Germany). And if there’s a run on Euro-credits, it could trigger a run on the Euro – but if that happens at the same time as a run on the dollar, where do currency traders flee? There are no other currencies capable of taking the gaffe. Gold, of course, would skyrocket, but there just isn’t enough gold to absorb the demand – but that would leave an awful lot of unhappy investors looking for alternatives, and crowding into niche currencies like Swiss francs and Canadian dollars, spreading the pain by forcing their currencies to shoot up.

If none of these disasters occur – and it’s hard to see how we can dodge all of these bullets – then the global economy will continue to improve. (Admittedly, this is a little like saying “If we don’t die, we’ll be fine.”) America’s economy will grow, but not terribly quickly. Projections range from 1.5% to 3.5%, which really indicates how uncertain the outlook is. I would estimate that, absent major shocks from the issues above, the U.S. economy will grow closer to the high end at something close to 3-3 ½ %. This will lower unemployment, but very slowly, leaving a lot of dissatisfied Americans, and threatening Obama’s re-election in 2012.

And the U.S. Congress is likely to be more than slightly fractious, with the Tea Party ideologues trying to run Congress on right-wing ideals and running smack into the real world of congressional politics. This is going to lead to widespread frustration on many fronts, and from all parties involved. It’s going to be particularly interesting to watch the Republican party try to digest the Tea Party-ites, while the Tea Party tries to take over the GOP. I suspect the GOP will win through sheer size and inertia, but will use the Tea Partiers as shock troops in the war against evil (the Democrats) and the devil (Obama).

A related question will be: Can anyone in the Republican party stop Sarah Palin? They’re scared to death she’ll win the nomination – and blow the election. What Americans should be more afraid of is if she wins the nomination, and then wins the election. Everyone I talk to about this says that it’s not possible (except for die-hard right wing-nuts who say “Please God!”), but stranger things have happened in electoral politics.

TRADE & EMPLOYMENT

Tensions between trading partners over competitive devaluations, notably between China, America, and the Euro block, will rise. If cool heads do not prevail, we could see a full-out currency war, and, if protectionists, who are in the ascendant everywhere (“American jobs for Americans!”), get their way, it could degenerate into a 1930s-style trade war with disastrous results.

There’s another aspect of the employment picture that is also worrying. What we are seeing is a massive change in the world of work. As the Rapidly Developing Countries (“RDCs”) like China, India, Brazil, Mexico, and so on, expand their economies, and take on increasingly sophisticated jobs at wage rates that are significantly below those of the developed countries, jobs have migrated, and will continue to migrate, from developed countries to RDCs. In effect, a global economy implies a global labor force. What we are now witnessing is wages in the RDCs rising, and wages in the developed world falling – an equalization of the disparities in wage rates. Since workers in developed countries won’t like this, it is going to further exacerbate the acrimony between trading partners.

TECHNOLOGY

There are a number of technological developments that will start to emerge in 2011, and continue through the decade. The first is that television broadcasters and their delivery people – being satellite and cable providers – are fighting a running (and ultimately losing) battle against online video. Smartphones already offer TV without a television, and in the home users are increasingly going to turn to devices like Apple TV and Google TV, combined with services like iTunes, YouTube, and Netflix, for their video entertainment. Given that this also opens up their living rooms to Internet shopping, it’s going to be difficult time for traditional TV suppliers. It’s also going to be an even greater reason why video production companies are going to gradually move away from TV distributors: they can start having relationships with individual video consumers instead of broadcasting through middlemen.

Another extension of something we’ve already seen is augmented reality, which is adding information to the real world. Hence you might look at a picture of an intersection on your smartphone while you’re getting driving directions, and have arrows and labels appear on the photo (or live) image of your location, identifying the stores (or addresses), and possibly listing items that are on sale you might be interested in. Location advertising is catching on, and will become bigger over time, in part because merchants (and cellphone suppliers) want it. How eager consumers are for this is going to be the real determining factor.

The real advance in augmented reality, though, as well as many other potential applications, will come if consumers adopt near-eye video monitors. Near-eye video means putting an eye-sized video screen right up in front of your eye, which means that a small image can look very big. If such monitors are clear except when there are images for display, they could look like a pair of ordinary glasses, but act as computer (or video) monitors. If that were to happen, augmented reality could become an everyday tool. The real key is whether consumers want near-eye video; the technology has been kicking around for years as the lineal descendent of jet fighter pilots’ heads-up displays. So far, though, consumers have shown little interest. On the other hand, 3D images have been around since the 1800s, but only recently have consumers found a form they were willing to accept. The same is true of ebooks (about which more in a moment), which have been kicking around for well over a decade, but didn’t make the grade until Amazon and Apple made them desirable. What technology will be capable of in the future is relatively simple to foresee. What consumers will want, especially with technologies they’ve never experienced, is much harder to project.

Perhaps the biggest technological change coming in this decade is going to be the arrival of everyday robots and computer intelligences. This marks the full emergence of the Third Industrial revolution. The first, which blossomed in the 19th century, was when humans used machines to augment their muscles. The second emerged in the 1960s when machines (computers) helped humans manipulate information and make decisions. The third will happen when seemingly intelligent computers make the decisions and act on them autonomously, while humans set objectives, but leave implementation to the computer. Functioning robots, as opposed to prototypes and toys, already exist, but they are expensive, and used only in specialized situations. As computing power continues its faster-than-exponential increase, and decision-making and self-learning software becomes more sophisticated, robots, computer intelligences, and automation will begin to appear in industrial, commercial, and health care facilities. This will lead to two major effects: First, it will lead to a significant increase in the standard of living by increasing worker productivity. And second, it will throw more and more people out of work as automation becomes financially preferable to human workers, and in a steadily widening range of jobs. This is going to cause the divide between those who are gainfully employed (the well-off, and the so-called “gold collar” workers) and everyone else to expand dramatically. This is a recipe for political and social instability.

Meanwhile, social media will continue to expand, and their influence will become more pervasive. The pressure for another means of communicating beyond keyboarding, text, and screens is building, but so far, no one has come up with a better interface between users and computers. Near-eye monitors, verbal commands, virtual keyboards, and gesture commands have been tried, but have not gained much traction. It may be that Microsoft’s Kinect™ may be the beginning of something big, if it can translate into an interface that is used in serious computing as well as gaming. Perhaps Apple will, once again, revolutionize computing with a new interface. If someone does come up with a more intuitive computer interface that is faster, slicker, and more natural than typing, then social media will explode like a gasoline fire on a hot, windy night.

And ebooks have finally arrived, after many years of false promise and false starts. As happened in music, Apple didn’t invent the ebook, and wasn’t the first mover, but has produced the most popular device for it in the iPad that will only get better in successive versions. What hasn’t happened quite yet is for ebooks to become something more than text on a screen and printed words on a page. There is a hybrid out there, waiting to be invented, that is significantly more powerful than either medium alone. We may see it emerge in 2011.

The revolution in health care is only getting started. Computer intelligences are going to start being used to identify new epidemics as they emerging, and to analyze the microbes involved to find cures in record time. A new technology, called Genetic Programming (“GP”) is about to emerge on the health care scene, and will first produce diagnostics and prognostics in the treatment of cancer, and eventually revolutionize cancer treatments and drugs themselves before moving on to other areas, such as diabetes and other diseases.

Meanwhile, the continuing struggle to find enough money to finance all the health care that consumers (and voters) want in the aging developed economies is going to heat up. Ironically, there are lots of ways of improving both the effectiveness and the efficiency in health care, but our social structures have become so calcified, and health care has become so politicized, that it’s impeding real improvements. It’s ironic that this is happening simultaneously with a technological revolution in health care that promises so much.

© Copyright, IF Research, January 2011

The next 10 years will dramatically change your life and almost everything in it. And while there are lots of things likely to change, I’d like to focus on 10 that will be of particular importance to you personally, to our society, and to the meeting planners generally.

Someone always benefits from change – and those who will benefit most will be those who prepare most successfully for what’s to come. Since I’m necessarily going to have to be brief, I would encourage you to contact me if you’d like to discuss any or all of these 10 points.

1. Everyday robots

The first thing you need to know is that we are about to experience the emergence of what might be called “everyday robots” and computer intelligences. We’ve been raised on the idea of robots, and they’ve always been just beyond the horizon, like flying cars, vacations on the moon, and the three-day workweek. We grew up with pulp fiction fantasies about what robots would be like, such as Rosie the Robot from The Jetsons, the Terminator from the governor’s mansion in California, or the classic Isaac Asimov I, Robot series of stories. But over the next 10 years, we are going to experience an increase in computing power of roughly 1000 times, and that means that that the hesitant, clumsy robots that are now appearing in laboratories will get dramatically better over the next decade, improving about as quickly as an 18 month-old toddler improves at walking. Robots will first be used with applications in the military, police, health care, and be created by hobbyists for fun. Much of the non-military development is in Japan, because they have, by many measures, the oldest population in the world, and need arms and legs to do things.

Aside from the sex trade, which seems to soak up new technologies and harness them for sexploitation, the development of robots for civilian use will start primarily in the workplace, especially in fields like health care. (I’ll deal with sex robots at a later date, because they are a real prospect.) It will take time for robots to come to households, because they will cost about as much as a car. But the business potential of another household possession in a field that may become as important as the automotive industry is going to drive development. And along with everyday robots, we will also get computer intelligences that rival human intelligence in certain, tightly defined areas. This leads to my second point.

2. Dramatic increases in productivity

Related to the rise of robots will be automation and dramatic increases in productivity, which has several implications. The first is that increased productivity will lead to cheaper goods and services, which will produce a substantial increase in your standard of living and a much higher level of wealth – if you have a job or occupation. But greater productivity also implies that companies won’t need to employ as many people, which will mean that many jobs will disappear, replaced by automation.

Traditionally, automation has led to new jobs with better wages and prospects appearing, and that will happen – but these new jobs will also require more education, more intellect, and more creativity. This means that people who don’t have appropriate skill sets will become chronically unemployed or underemployed. This could make it even harder for young people, just finishing their formal educations, to get their feet on the bottom rungs of the employment ladder.

In the meeting industry, it also means smart tools for planning your conferences and running your business. Think of having an automated assistant that can do a lot of the routine work in organizing a conference, including the routine interactions with hotels, travel agencies, printers, communicating with conferees, and so on, leaving you to do the tougher creative work, and to focus on the human, interpersonal aspects of your job

3. The ascent of women

Next is the ascent of women and different ways of doing business. The first part of this is the decline of men, as men seem to be harmed more by environmental degradation than women. Based on research that is only just starting to emerge, two to four times more boys than girls are afflicted by attention-deficit disorders and hyperactivity disorders in America. Sperm counts are dropping in many parts of the world, and testosterone levels are lower. Testicular cancer is higher in many places. And the birth rate of boys in many countries, including America and Japan, is far lower than statistical variance should allow. We don’t really know why this is happening, but researchers are theorizing that males are more vulnerable to new chemicals, such as synthetic hormones, that are making their way into the biosphere.

Meanwhile, girls have better roles models now than ever before in our society, up to, but not quite including president of the United States. More businesses are being started by women than men, and the businesses started by women are more likely to survive, so that over time, more and more businesses will be headed by women. But the clincher is that almost 60% of college and university students are women, and the ratio is even higher in most graduate fields. As a result, a steadily rising share of tomorrow’s leaders will be women, which will lead to a cultural shift. Without being too glib, I think it’s safe to say that women have a different way of thinking and acting in the world than men, and this power shift to women is going to change the way our society – and this industry – behaves.

4. The health care revolution

Point four is the health care revolution, starting with customized drugs and treatments. Herceptin is a drug used to treat breast cancer – but it is only used with patients that have two particular genetic markers. If you don’t have these two specific genetic characteristics, there’s no point in giving you Herceptin, because it won’t help you. And it’s the precursor of customized drugs. They will be dramatically more effective – and, at least initially, dramatically more expensive as well because the research costs will have to be spread over a much smaller population.

Meanwhile, decoding your personal DNA is rapidly becoming affordable. You can already get genetic tests that show whether you are susceptible to certain kinds of diseases, such as Alzheimers, ALS ( Lou Gherig’s disease), or Huntington’s. But whereas it took decades, and billions of dollars to decode the first human genome, within 10 years, having your personal genome fully decoded will cost about $1000 or less, and take a few hours, bringing it into the realm of the possible. And this cascade of data about you will, gradually, allow us not only to ascertain what diseases you need to guard against, but also which lifestyle choices, including foods, will work best for you.

And a third leg of the future of health care is the wearable computer companion to monitor your health and guard against threats. There are already smartphone applications to monitor heart rate, blood sugar, calories burned, and so on. These are going to become increasingly sophisticated, and will, over time, become dedicated to monitoring your health, heartbeat-by-heartbeat, and intervening as necessary to reduce the risks of health crises, such as heart attacks or strokes, as well as to advise you on optimal health management.

These three things, combined with electronic health records, will, over time, produce the greatest tool for health treatment and research humanity has ever had: a global system to identify health risks, and find cures or treatments for them in something approaching real time. And I fully expect that they will eventually lead to life expectancies of 120 years and more, although this development will take much more than just 10 years. Which leads me to my next point.

5. Transhumanism

Like my previous point, this is going to start over the next 10 years, but will carry on into the indefinite future as we learn more, and figure out what to do with what we know. Transhumanism is the school of thought that science and technology are going to allow us to first cope with disabilities, and then to augment and exceed our natural abilities. Some of this, such as stem cell therapies, will mean using biological mechanisms to repair our own bodies. Beyond that, transhumanism also projects that we will use artificial means to augment our abilities. It has already started with devices that help us survive. Some, like heart pacemakers, have been around for decades. Others, like brain pacemakers to prevent seizures, are relatively new. Next are prosthetics. Of course, the oldest prosthetics, like peg legs and hook hands, have been around since Disney invented pirates, but I’m talking about arms and legs controlled by thoughts and nerves. Prosthetic arms & legs will act and seem natural.

As we move towards computers that can read your intentions and interpret your thoughts, we get into interesting man-machine combinations. Eventually we will be able to choose, by an act of will, to control distant machines and mechanisms by thought. We’ll be able to use the power of computers to augment the speed with which we think, and the depth of things we can “remember.” Imagine, for instance, being able to Google something on the Internet just by thinking a query, and getting the answer either whispered into your ear, or displayed on contact lenses on your eyes that act as a computer monitor. There are already prototypes of precursors of these things, from thought-controlled wheelchairs for paraplegics, to memory glasses that can remind the forgetful who the person in front of them is. As I said, this is a brand new field, so I doubt if you’ll need to worry about the Borg just yet.

6. Critical economic uncertainties

The headlines this spring have centered on whether we’re likely to have a double-dip recession, and the financial and fiscal crises of the PIIGS of Europe (Portugal, Ireland, Italy, Greece, and Spain). These uncertainties are caused by too much debt borrowed by consumers and governments alike.

Having too much debt is like having a rowboat that’s heavily loaded – it doesn’t take much to swamp it completely, and it doesn’t have much resilience. Moreover, it takes a long time to bail out of debt, so these problems are not going to go away overnight. Accordingly, in your plans and planning, I would strongly recommend that you be prepared for repeated, periodic shocks and crises that lead to financial upheaval, and economic slowdowns or outright recessions over the next decade. Believe me, I don’t like this prospect, but I think it’s better to be prepared for shocks than to be caught by surprise by them. You need to have plans in place for dealing with such upheavals and slowdowns, or else you’ll be flattened by them.

7. Growing political and social turmoil

In addition to the potential for new crises and turmoil in the global economy and global markets, there is also the potential for increased financial and political turmoil in the developed countries. Not only is the U.S. federal government, among other nations, running up unprecedented amounts of debt, increasing its financial vulnerability, but many of America’s individual states are in a squeeze. This is happening not just because of the Great Recession, but also because they’ve been too generous with pensions and benefits to their retirees over the years. For example, by 2018, the state of Illinois will have to pay $14 billion a year for benefits for retired state employees, which is more than a third of the state’s total revenues, and could bankrupt it, much as happened to General Motors.

And in a larger sense, there are going to be growing conflicts between public sector retirees, who mostly have decent pensions, and private sector retirees, who mostly don’t yet will be paying taxes to support their civil servant neighbors. As well, there will be conflict between aging boomers, who will vote for generous Social Security payments and unlimited health care, and their children who will be paying taxes for benefits they don’t believe they will ever receive. Accordingly, the political situation in most developed countries will likely get worse – hard as that is to believe!

8. Climate change accelerates

Within 10 years, the debate on climate change will be effectively over except for those who are willfully choosing to ignore evidence. It’s already clear from changes happening in the polar regions that climate change is happening, and climatologists are astonished by how fast they are occurring. Change may come not only more rapidly than we expect, but faster than we can adapt. I suspect we’re in for a wild ride, and that will almost certainly force changes on us that we will find difficult. We will also find some changes that are helpful, such as longer growing seasons in parts of North America – particularly the northern tier of Midwestern American states and the Prairies of Canada – IF we get the right rainfall patterns, which may also change. But it’s also clear that many of the changes will be harmful to us and the way we live.

I also suspect it is going to force us to make significant changes to our lifestyles, imposing Green Economy ideals on even disbelievers. This doesn’t have to be a bad thing, because another name for “pollution” is “waste,” and by decreasing waste, we can actually increase profits. Specifically for the meeting industry, I would suggest that we need to develop a “green index” to indicate the environmental cost per participant of conferences as a means of first measuring, then pushing for improved efficiencies.

9. The energy revolution

We’ve already seen with natural gas that new technologies can revolutionize even well-established industries – but that’s not going to be enough. If you look at the long-term cost of oil over the past 150 years, you can see that, with the added demand from rapidly developing countries like China and India, coupled with the sheer volume of energy we need to add each year just to maintain our lifestyles, we will push up the price of oil at a remarkable rate – at least for the next several years, until we come up with good energy substittues.

Now, let me reassure you – we are not running out of oil, because almost ¾ of the Earth’s surface is covered in water. We haven’t discovered or exploited the vast majority of the oil under that water. But we are running out of cheap oil. The BP oil spill in the Gulf of Mexico is an example of the problems ahead. More expensive petroleum will provoke us to develop new ways of using energy more efficiently – so called “negawatts” – as well as developing new sources of energy. It’s astonishing what demand for a critical resource can do, but it’s going to take time to displace oil from the center of our energy equation.

For this industry, though, it’s also going to mean that travel is going to become more expensive. We will see more moves towards virtual meetings, more local meetings, and regional satellite meetings that combine through telecommunications into national conventions. Start thinking about, and looking for ways of stretching travel dollars, because it’s going to be a fact of life.

10. The purpose of life

When people ask the question, “What is the purpose of life?”, they are starting off in the wrong direction with an improperly formed question. This is not a question at all, but a statement: Life is purpose. Without purpose, there is no life.

But this raises a different question: What’s my purpose? And this is a question that can’t be answered by looking out there, but in here, inside yourself. I got this from a wise man, Viktor Frankl, in a book called Man’s Search for Meaning. And here’s the question he posed that you should ask yourself: “It’s not a matter of what you can expect of life, but what can life expect of you?” It may be that you think your purpose is to bring home a paycheck, and that’s certainly important. But I would urge you to stop and think about what life can expect of you, what you feel is your calling, and then be guided by this sense of purpose.

The decade ahead is going to be radically, remarkably, dangerously different than any period you’ve lived through or have experience with. And it’s going to offer opportunities that you cannot now anticipate. If you don’t have a clear sense of where you are going and why, and are not prepared for the challenges we face and the opportunities ahead, you will be devastated by what’s to come.

Someone always benefits from change. Let it be you.

Good luck, and God speed. Thank you.

There are three principal issues that will drive health care over the next quarter century: an aging population; technology; and money. They are linked, but different. Let’s start with demographics.

For the past 20 years or so we’ve lived in a period of relative demographic calm because most of the key generations have stayed within a single phase of their life cycle. This is about to change, as three of the key demographic cohorts are about to undergo major demographic transitions. The first group is mature adults (those born 1938 or before, currently in their 70s and up), who have been described as the “oldest elderly.” A steadily rising percentage of this group are now moving into the stage where they can no longer manage their lives and affairs without assistance.

There will be a dramatic increase in demand for services for this group, especially in chronic care facilities, as this group is growing faster, in percentage terms, than any other age group in the population. Moreover, the children of this group are the boomers, and we boomers are not known for our sweet reasonableness. This means boomer children will demand government help in coping with their parents. The net result is going to be a steadily increasing demand for help with the oldest elderly in our population.

Trouble ahead for boomers – and everyone else

Next are the baby boomers themselves (born 1947 to 1967, turning 43 at the low end and 63 at the high end). In 10 years’ time, they’ll be between 53 and 73. This means the leading edge boomers are now entering the transition to retirement. By my estimates, the annual cost of health care per person remains relatively level until about age 55, at which point it starts going up almost exponentially. The boomers, the largest generation in history, are now entering the high rent district of health care, and although I’ve seen reports that claim that health care costs are going up because of the increasing costs of treatment, and not because of an aging population, I flatly don’t believe it. As one example, the Government of Ontario, in a 2005 publication, projected that health care spending there will rise to more than 55% of program spending (i.e., total spending excluding debt service) by fiscal 2024-25, and I believe this underestimates the real situation as these estimates were made before the recent recession. By 2035, I expect Ontario to be devoting something in excess of 60% of its program spending to health care – and that’s typical of jurisdictions throughout the U.S. and Canada. This will create all kinds of fiscal and financial problems, as well as acrimonious debate at state and provincial governments across North America – and, indeed, throughout the developed world. These costs may even bankrupt all major governments in the developed world, because these programs are essentially pay-as-you-go, and demographic support for the biggest generation in history is simply not there. If governments are to avoid bankruptcy, then people in the developed world are not going to get the health care we want and expect.

Finally, there are the children of the baby boomers, called the “echo boomers” or “echoes”, born roughly between 1977 and 1997 (currently between 12 and 32). In 10 years time, they will range between finishing their formal schooling and approaching their 40s. The echoes are the Next Big Thing for any organization that hires and employs people, for they are not only the next generation of clients and customers, they are also the next generation of health care professionals. The problem is that there aren’t as many echoes as there are boomers, with the result that we are going to experience an increasing shortage of health care professionals for the next 10 years. It will improve slightly after that, but then get substantially worse beyond 20 years, especially in Canada, unless Canada and the U.S. import and certify substantially more foreign doctors, or unless technology provides new solutions.

So where are all the customized drugs?

Next let’s look at the very real promise, and the phony pursuit of personalized drugs. The pharmaceutical industry is talking a good game when it comes to personalized drugs, but I don’t think they mean it. If you look at the current state of such drugs, the industry tends to point to two drugs in particular: Herceptin and Gleevec.

Herceptin (from Genentech) is the exception that proves the rule. It is much talked about, but with few exceptions, its example hasn’t been much followed by pharma companies. In my opinion, the reason why Herceptin is an exception is that the screening test that accompanies it eliminates roughly 65% of potential patients, producing a much smaller potential market. Since big pharma companies are largely run by marketing people and bean counters, they hate the idea of cutting down on potential markets. They would much rather find another blockbuster, even if it means discarding a perfectly effective drug that doesn’t have a large-scale market. And yet, since the overall percentage response rate in the overall potential population for Herceptin is less than 10%, Herceptin would probably not have been approved without a genetic screen. With the screen, a failed drug was rescued, serves as a niche drug, and still produces $1 billion in revenues per year. Yet, despite Herceptin’s success, as far as I know, Genetech doesn’t seem to have made any effort to improve the focus of the diagnostic test; it’s seen as “good enough,” even though they could increase the efficacy of the drug by narrowing the focus further.

By comparison, Gleevec (from Novartis) seems like the industry’s ideal – but there’s a catch. Gleevec targets a particular protein in chronic myeloid leukemia (CML), and produces a 75-80% response rate, which is head & shoulders above competitive drugs. This is the industry’s ideal, but it was targeted on that protein because it was already known there was a relationship between that protein and CML, which is the reverse of most drug research.

Pharmaceutical companies dragging their feet

There are probably other “personalized drugs” in development, but nowhere near the number you would expect from Herceptin’s success as a $1 billion a year niche product. I believe this is because the pharma industry is dragging its feet. And I further believe this is a mistake: pharmaceutical companies should be eager to pursue this approach, as it will make them more money than ever before. The problem is that it requires a different business model with which they aren’t familiar. All they know is that the marketing model they have followed for decades is based on big blockbuster drugs that sell billions of dollars of drugs to millions of people. They don’t see how selling millions of dollars to thousands of people can replace that – yet it can, as I’ll come to in a moment.

Moreover, in both cases, Herceptin and Gleevec involve a single protein, a single test, or a single genetic marker, yet most genetic indicators will be more complex than that. Mostly there will be multiple indications, and a multivariate approach will be called for, which has been a problem in drug research so far.

According to Tufts University, in 2006 it cost $1.2 billion to develop a new drug and bring it to market. Most of that is the opportunity cost of selecting one compound for development compared to other possibilities, and investing the 15 years necessary to bring it fruition. And a hefty chunk of the cost associated with drug development comes in drugs that get as far as Phase II or III clinical trials, and then fail because they either are not effective enough, or they have unacceptable side-effects.

But if you can identify the populations for whom such drugs either have low efficacy or unacceptable side effects, you can still market such drugs profitably, albeit to much smaller segments of the target market. So, which is better? To get nothing from a drug, and flush all of the associated costs? Or to target it to a smaller population, derive lower revenues, but at higher profit margins? To date, the major pharmaceutical companies have generally decided they’d rather flush such drugs than take them to market. If your revenues are $20 billion, and Wall Street expects 20% growth, you have to come up with an additional $4 billion in revenues every year. With that as your target, a drug that might produce $100 million in annual sales is not worth pursuing. Yet, according to one research group with whom I’ve worked, “A failed drug is an expensive lost opportunity.”

Improving the beauty contest in drugs

A major pharma company may have 300 compounds it is considering at any one time, and must pick and choose which ones it will develop. This becomes a matter of internal politics, and a bit of a beauty contest. If, instead, the pharma companies developed companion diagnostics based on genetic indicators right from the start, they would have a much better way of predicting the potential market for each drug, and hence its ultimate profitability. The direct marketing industry knows this well. Broadcast advertising – TV and newspaper ads – sells on the basis of cost-per-thousand. Direct marketing, like direct mail, sells on the basis of cost-per-sale. And successful Google Adwords marketers and the like measure success on the basis of cost-per-dollar-of-profit. Companion diagnostics are a way of coming closer to being able to predict cost-per-dollar-of-profit, and that should be the yardstick pharmaceutical companies use going forward. Moreover, it’s a yardstick that would lead them to substantially bigger profits and lower costs.

Which brings me to new research tools. Although statisticians deny it vehemently and for obvious reasons), statistical analysis is no longer sufficient in a world where relevant data are growing by orders of magnitude, and multivariate analysis is required. The old tools just aren’t up to the task, yet companies cling to them because, as Abraham Maslow once remarked, “When all you have is a hammer, you tend to see all your problems as nails.” Yet, new tools are emerging in strange and unusual places, such as mathematical models of fuel combustion in jet engines, and software techniques for designing radio antennae, none of which have any credibility with pharma companies – but which can solve these kinds of massive data problems. By using such tools, and embracing rather than avoiding pharmacogenomics, I believe pharmaceutical companies can reduce drug development costs, perhaps by an order of magnitude, produce more successful drugs, albeit for smaller potential markets, and sell them for higher profit margins because of their higher efficacy. Let’s look at one potential new tool set to see if this is realistic.

Genetic programming – a new tool set

I’m going to describe one specific tool that’s already emerging into the marketplace, and about which I – accidentally – know quite a bit, called genetic programming, or “GP.” Genetic programming is a machine-learning technique where the system evolves by reinforcing success. It uses the idea of natural selection to discover solutions. The solutions that work best are combined to discover even better hybrids, much as cross-breeding horses can create offspring that are faster and more robust than their parents. GP is not an artificial intelligence system, and there is no attempt to mimic human reasoning. GP’s advantages are that it:

• Solves the problem of too much data.
• Integrates large & diverse data sets.
• Facilitates the unbiased discovery of key factors, especially where the key factors are unknown.
• Ignores factors that turn out to be irrelevant or unimportant; and
• Creates human readable models that can serve as indicators for future research.

Moreover, GP is a non-linear method, which means it can be dramatically faster than conventional analysis techniques, especially for multivariate analysis involving large amounts of data. Indeed, large amounts of data tend to produce more robust results.

I’m about to describe a company called Genetics*Squared, but in the interests of disclosure, I must also say that I know the principals, I have worked with this company, and I own shares in it. This is also how I know so much about it. However, since Genetics*Squared (or “G*2”) is privately held, there are no shares available to outsiders anyway, so the disclaimer is academic.

G*2 is a “dry” biotech company that uses GP to analyze clinical trial data in order to produce prognostics and diagnostics predicting who will respond to a given therapy or pharmaceutical. G*2 is about to seek FDA approval for a prognostic test for colorectal cancer to determine which patients, following surgery for colorectal cancer (CRC), are at risk for a relapse and should seek additional treatment. Preliminary indications are that the test they developed has 85% sensitivity, and 90% specificity. These results compare with the National Comprehensive Cancer Network (NCCN) guidelines of 73% and 38%. This means G*2’s test is very good at identifying the people who are – and are not – at risk for recurring colorectal cancer. The test does not suggest the form that treatment should take; that’s up to the patient and her doctor to explore and decide.

A logical next step from there might be to use genetic programming to run clinical trials with those patients who are at-risk for a relapse in CRC to see which ones would respond to an off-patent, generic chemotherapy drug, such as 5-FU (Fluorouracil), a chemotherapy drug that’s been around since the 1950s. For those identified at high risk for CRC recurrence, and for whom 5-FU is found to be effective, as identified by such a diagnostic, the efficacy and cost of 5-FU would have the potential to completely undermine the market for any new drug for whom there was no screening test.

For instance, suppose G*2‘s test were to eliminate 66% of a potential market for a new chemotherapy drug for CRC, and suppose further that one-third of those at risk for relapse could use generic 5-FU instead of the newly developed drug. This means that instead of a potential market of 100% of those people who have had surgery for colorectal cancer, the pharmaceutical company would have a potential market of only 22% of such patients. (Please note that I’m making these numbers up purely for illustration purposes.) Hence, using more sophisticated screening, and a low-cost, generic drug might not only be more effective, but could spoil the potential market for a new drug that does not identify the appropriate niche for its use. It is this low-cost competition that will ultimately drive the pharma industry toward pharmacogenomics, not regulation: the threat that smaller companies could destroy the market for blockbuster drugs. Moreover, how many failed drugs could be resurrected with an appropriate genetic screening? And how much would that save in R&D costs? It will ultimately be money that will make pharmacogenomics appealing.

On beyond genetics

Beyond genetics, IT will also force a reshaping of health care. Moore’s Law, coined by Gordon Moore of Intel fame, states that computers will double in speed, and halve in price every 18 months. (Actually, Moore’s Law refers to the number of transistors on a chip, but this is the effect of it.) Yet Moore’s Law, even though it represents exponential growth, is too conservative. Not only is the pace of change accelerating, but the rate of acceleration is increasing. This implies that a computer for a given price will be roughly 1000 times faster in 10 years’ time than it is today. This is going to produce changes over the next 10 years that are at least twice as dramatic as the changes of the last 10 years. And technology is going to have direct and important changes in medical practice.

Let’s start with the basic building block of the global computer network that tracks and identifies new diseases and epidemics that I described earlier. The precursor to the computer companion, which forms that basic building block, is already in widespread existence today: the smartphone, such as the BlackBerry or iPhone. For instance, I understand that there is an application for the iPhone that communicates with a heartbeat monitor to monitor your health heartbeat-by-heartbeat, much as I described it earlier. Only this isn’t science fiction; this is today’s reality. As smartphones become more powerful, more globally connected, and work with devices that monitor and analyze different aspects of your health, I expect they will gradually morph into all-purpose assistants, including health monitors.

When coupled with the intricate knowledge of our individual genomes, and the dramatic increases in our understanding of what the various markers in our genomes mean, these computer companions will become incredibly powerful and useful agents on our behalf. And analysis of individual genomes is not that far off. The first reading of a human genome was the focus of the Human Genome Project, and it cost billions of dollars. Today, the cost of reading a genome is approaching $1,000, and within five years, or ten at the outside, it will approach $100 per person. And once read, your genome will provide a continuing source of new insights into why your health is the way it is, plus why your body is the way it is, as we learn more about how to interpret the genetic markers buried in each genome.

The greatest medical tool humanity has ever had

When coupled with global analysis of lifestyle factors, food, exposure to particular viruses, bacteria, and chemicals in our personal environments, we will begin to build a broad understanding of what helps – and hurts – us, both as individuals, and as a species. This will be, I believe, the greatest medical tool humanity has ever had.

But it won’t end there. There will be lots of developments in lots of areas. These range from dramatically improved x-rays, CAT scans, and imaging of all kinds, to computer-oriented solutions to difficult problems, to the rise of robots, both for surgery and for attending to pateints.

Let’s start with an example in imaging. Dr. Otto Zhou of the University of North Carolina is working with Siemens to bring out a much clearer and more precise x-ray technology based on electron-field emission[i].

This allows for an array of receivers so that a CAT scan, for example, can be taken all at once instead of progressively, so that the images will be dramatically sharper and more detailed. It also allows for imaging at the same time as treatment, so that health care professionals can watch precise images as the same time as they zap a cancer tumor, for instance.

Up until now, robots have been seen as science fiction phantoms, good for Hollywood, and not much else. All of the robots to date are seen either as being bolted to the floor in car factories, or as cute little toys that don’t do much. But did you know that Toyota is pouring billions of yen into producing household robots, and plans to start marketing them in their home market, in Japan, this year?

Over the next 10 years, we are going to see the gradual emergence of much more flexible and powerful robots. BigDog & HRP-4C are both examples of today’s robots. They are awkward and clumsy. Rather like human toddlers, they are taking their first steps, and those first steps are ungainly and tentative. Yet, like human toddlers, they will improve rapidly, and this will be powered both by dramatically faster computers, and increasingly sophisticated tools and techniques to use them.

According to Raymond Kurzweil, an inventor and technologist, by 2016, a $1000 computer will have more computing power (not “intelligence”) than a human brain. By 2036, he projects that a $1000 computer will have more computing power than the entire human race. And increasingly sophisticated software will harness this power into seeming-intelligence that will first rival, and then exceed our own. And in health care, this rapidly accelerating intelligence will produce a rapidly increasing flow of new discoveries and treatments.

It’s not all good; trouble ahead

Finally, let me address one of the problems ahead, just to demonstrate that I’m not a pollyanna, and that I do appreciate that the road to dramatically improved healthcare will be rough. The biggest problem ahead is summarized in two words: money and politics.

We know that money spent in preventing disease is generally more effective than curing it. Hence, promoting the use of condoms for safe sex is more effective than trying to deal with an AIDS epidemic, but politics and social attitudes often get in the way. Moreover, we know that some choices make no logical sense. We know that we spend, on average, about half of all the money we will ever spend on health care in the last six months of our lives. So sensibly, we should know when to say enough is enough. But paranoia about litigation, coupled with an attitude of preserving life at any cost, seems to prevent us from even discussing such issues, particularly when it’s your mother, your wife, or your son that’s involved.

Yet, I don’t think I need to convince anyone here that our health care systems in both America and Canada are leading towards bankruptcy. The U.S. Federal Reserve and the Government Accounting Office essentially agree on the extent of the projected unfunded liabilities of the U.S. federal government. The Fed estimates it at $99.9 trillion, while the GAO estimates it at $101 trillion – and almost 2/3 of these estimates relate to health care costs.

And while the Canada Pension Plan is in much better shape than Social Security in the U.S., Canada is in no in better shape in terms of its promises on health care. The IMF published a report, which has been refashioned as a book by Peter Heller and published by the IMF, called “Who Will Pay?” In this book, Heller quotes the IMF as indicating that as of 2002, the U.S. had explicit net debt of about 45% of GDP, and Canada had explicit net debt of about the same (Canada’s has moved down since then, while America’s has shot up). However, when you add the implicit debt due to future promises, in 2002, America’s explicit plus implicit debt amounted to about 265% of GDP, and Canada’s amounted to about 415%. What is beyond dispute is that both governments – indeed, all governments of all developed countries – are going to be under enormous financial pressure because of the aging of their populations. What we don’t know – and what I would strongly suggest you should prepare for – is how governments and voters will cope with being unable to give boomers the health care they demand. To attempt to do so is to court being voted out in favor of some demagogue who promises the impossible.

And there’s another aspect to the future: the war against infectious disease has not yet been won. We are already experiencing a silent pandemic about which virtually nothing is said: the spreading of antibiotic-resistant superbugs. And even here, policy choices are clouded by what should be extraneous issues, such as creating deliberate breeding grounds for superbugs by feeding antibiotics to livestock, a practice advocated and protected by the farm lobby. As well, neither governments nor pharmaceutical companies want to finance the development of new antibiotics. Governments don’t want to do it, because it looks, to a bean counter, like an extra expense. Pharmas don’t want to do it because there’s no guarantee of a large enough market. Moreover, we have no true cures for viruses at all, except vaccination ahead of time, and there is not much money going into research in this field, either. Yet, in the war against infectious diseases, I can promise you that we have not won the war, only an opening skirmish. We have pitched battles yet to come, whether in the emergence of a viable airborne ebola virus, or some completely unknown bacteria infection.

For example, consider the H1N1 flu pandemic. It had the potential to be as bad as the Spanish flu of 1918-20, although we also have a better idea how to contain it. But now imagine the emergence of a hyperbug – a strain of bacteria resistant to all known antibiotics – emerging in the midst of the flu pandemic. This is not unlikely; overcrowded hospitals and over-tired health care workers create a likely breeding ground for just such a hyperbug. The day will come when we can analyze and respond to such threats in a matter of days, but we’re not there yet, and millions of people will die until we get there.

Two questions everyone wants answered, but no one wants to ask

At the core of the health care debate, there are two questions that no one wants to ask, but that everyone wants answered. First: How can I get someone else to pay for my health care? And second: Do we want a more effective & more expensive health care system, or a less effective & less expensive health care system? And the problem is that voters (and hence politicians) want a more effective, less expensive system, which is not one of the choices. Worse yet, we are not even discussing these issues. Instead, we are shouting at each other about useless matters that won’t solve the problem.

Change will come slowly at first. Social systems have tremendous inertia. Drug approvals are slow. Payers are slow to accept new, more expensive, more effective drugs. Doctors are so swamped that they are reluctant to take the time to learn new fields, like genetics, that impinge on their own, so that practice in the field can often take years or even decades to catch up with research in the lab. And the general public, and the politicians they lead, don’t take the time to understand the debate, with the result that they fall prey to demagogues who cloud the issues for their own reasons. In Canada, it’s a phony “public vs. private” debate. In America, it’s the misleading “socialized health care is worse than dying” debate. Both debates are largely irrelevant to the central issue of financing health care. Worse, they divert attention and vital resources from the real issue.

Changes will start slowly. But the pressure from an aging population, an Internet-informed voting public, and the startling developments from science will start to move the log jam, slowly at first, and then faster and faster. If you are not prepared when the pace picks up, you will quickly be left behind. I wish you good luck, and God speed. Thank you.

I’ve written about robots on several occasions before, but want to revisit the subject because the arrival of robots is imminent, and portends more than just science fiction characters come to life. First, let’s review where we are.

Robots have been around for decades, but mostly in very rudimentary forms, such as machines bolted to the floor of a car factory, or toys that roll over to you, carrying a tray. More recently, there have been what might be considered demonstration robots, such as Hitachi’s EMIEW, and Toyota’s Mobiro. As well, there are now commercial household robots, like Roomba and Scooba that, respectively, vacuum or scrub ceramic floors, as well as robots that pick up golf balls at driving ranges, and that mow lawns, both for individuals, and for industrial users. None of these have been terribly impressive -– but they weren’t really intended to be. Instead, they were stretching the possible, and testing out new techniques. The idea of a robot being able to look at the world, analyze its surroundings, and move on wheels, or walk on legs, evading obstacles, is actually a remarkably difficult problem. It’s one that computer scientists have been working on for decades – at least since I studied computer science in university in the early 1970s, but now have just about solved. Today’s robots walk on legs. The HRP-4C robot, built by Japan’s National Institute of Advanced Industrial Science and Technology, walks on two legs and has a human form. Big Dog, walks on four legs and looks like a headless mule. And the best way to view the development of robots – in all respects, not just in walking – is much as you would think of a human toddler: they are clumsy, and just learning how to walk, but they will develop quickly, now that they’ve taken their first steps.

Remember that the computers that direct robots will continue to follow Moore’s Law (“Computers will double in speed and halve in price every 18 months”), thereby becoming more powerful at exponential rates (or faster). Within a small number of years (somewhere between 2 and 5), we will see robots that can walk competently, and in a seemingly adult-human fashion and speed. And it’s not just the skill of walking that will develop: it’s robot’s overall abilities to perceive, analyze, consider, and respond. They will become progressively more and more life-like. Indeed, those who have seen the Big Dog video on YouTube have proclaimed it “creepy,” by which I infer they meant that it acts like a living thing.

There’s more, though: not only is the raw power of computing going to increase, some say by 1,000 times over the next 10 years, but there are many kinds of software that are being developed that allow computers to learn how to solve problems, and teach themselves new skills. The website shapingtomorrow.com cites an example of a Japanese robot that can create its own lab experiments, coming up with results unknown by its human creators. The combination of dramatically more powerful computers, and increasingly sophisticated software means that we are at the cusp of the emergence of robots.

And it’s not just robots: automation will get progressively more powerful and sophisticated, and, again, at exponential rates or better. This is both an opportunity and a threat. The opportunity is that increased automation means increased productivity – companies will be able to produce more, or do more, with the same number of people, or produce the same amount with fewer people. (This is, after all, what increased productivity means.) And increasing productivity, for an economy, generally means increasing wealth and affluence.

The threat is that automation is eating its way up the employment food chain, replacing workers with machines. This has been happening for centuries, starting with the Industrial Revolution, but the pace of change is now advancing at computer speeds, and the increasing sophistication of automated devices means that it’s not just grunt work jobs that are being eliminated, ringing up gas purchases, but jobs that require more, and higher, skills. Coming back to the Japanese lab robot mentioned earlier, suppose that within several years a robot can do the work of a skilled lab technician, one that trained for, say, three years, and holds a post-secondary diploma. What kind of work would such a highly trained individual look for then? She already has an undergraduate degree, plus a post-graduate diploma, and the automation replacing her will get smarter much faster than she can. What kind of future lies in store for her?

Which points to a broader question. Automation will continue to get better and smarter as far as we can foresee into the future, whereas humans are limited by the capacity of our brains and senses. When automation can do almost everything, what will there be left for humans to do? And what share of the higher standard of living will we be entitled to when we have done no work to contribute to it? Or will we become a society of owners and peasants, with the owners of the machines vastly rich, and the peasants, who do not own them, living off the crumbs of the aristocracy?

Ned Ludd, the leader of the luddite movement, had an answer: the luddites smashed the knitting machines that were producing better cloth, and faster, than a human, thereby displacing workers. Will there be a movement to smash robots and computers? That would be dangerous, because we’ve become so dependent on them, and will become more so in future.

And if we find a way to distribute the goodies that automation delivers, even to those who do not work, what then will we do with our lives? Is there life after work, or life without work?

But how soon is this likely to happen? Is 10 years wildly optimistic, or wildly pessimistic, or somewhere in between? No one knows, because there’s a lot of art involved as well as a lot of science. It’s not just enough that computer scientists can come up with the software and hardware to make these things happen. You also need the venture capital to back it, management to create a workable business plan to deliver it to market, and an education period for people to get used to the idea of robots and smart computers and get comfortable with them. If Big Dog, for example, looks “creepy” today, how long until “creepy” becomes “commonplace,” and acceptable?

Well, one of the best ways of gauging the progress of robots will be by watching the American military. The Predator unmanned (but human controlled) flying drones are now being widely used by the military, and to great (military) effect. Big Dog was developed specifically to help soldiers carry gear in terrain where wheels won’t work, pioneering a quadruped walking robot. DARPA, the Pentagon’s research arm, sponsored a prize that led to the development of the first self-driving car, a Chevy Tahoe, in a simulated urban environment, complete with traffic signals, other vehicles, and pedestrians. And you just know that DARPA has to be working on a robot soldier, to go to places too dangerous for humans. To the extent that they succeed (and it’s publicized), that will be the leading edge of the utilization of robots.

My own sense (and this is, at best, an educated guess) is that within 10 years time we will have robots in public and private places doing menial tasks, such as cleaning, washing, and general maintenance. (We already have robots like Roomba, a computer-run vacuum cleaner, so this isn’t much of a stretch.) Within 20 years, computers, robots, and automation will be seen as a serious threat to workers in many low-, medium-, and even some fairly high level jobs, and the use of computer-driven devices (whether robots or some other form of automation) will be a hotly debated political issue.

Yet, it may be that this happens just in time. In the developed world, the aging of the population is going to mean that, within 20 years’ time, there will be a lot of retired people who need help, and nowhere near as many who can give it. There are already villages in Japan that have no inhabitants under the age of 60, which is one of the reasons why Japan leads the world in robot research. It may be that the robots be the ones to do the work the boomers need done.

In other words, the robots may arrive just in time.

© Copyright, IF Research, June 2009.