Rich Karlgaard, Forbes Staff
I celebrate innovation and growth.
Question: Why has the quantum realm of computers, the Internet and biotechnology evolved so fast during the last 30 years, while progress in the big physical world of farms, buildings, ships, cars, trucks and airplanes has slowed compared with that made in the first half of the 20th century?
Let me suggest three reasons.
Would Americans tolerate 7,000 deaths a year from commercial air travel? On a prorated per-mile basis thats how many people would die in 2012 if air travel today matched 1929s safety record. Travelers in 1929 may have wished for safer airplanes, but they stoically accepted that progress meant risk. Large-scale construction projects similarly meant deaths: Six people gave their lives for the Empire State Building, 11 for the Golden Gate Bridge and 96 for the Hoover Dam. Mining accidents often killed thousands of miners a year in the early 20th century–3,242 people died in 1907 alone.
All of that risk-laden industrial progress in the early 20th century led to unprecedented affluence for those not killed, maimed or sickened. By the 1960s America was so rich it had the luxury to think about risk. In retrospect its not surprising that our national risk tolerance began to fade. When the Three Mile Island nuclear accident occurred in 1979, it was enough to shut down construction of new nuclear plants. How many people actually died at Three Mile Island? You might be surprised–none. How many people might have died prematurely because of radiation release? As a young technical editor at the Electric Power Research Institute, I saw the study. Answer: 0.7.
Western culture faced a mortal threat three times during the 20th century. Even if you disagree with that statement, you must still agree that the dangers posed by two world wars and the Cold War had the effect of accelerating the development of military technology around the world, especially in the U.S. World War II began with the Polish army defending itself with horses and cavalry; it ended with an American atomic bomb. The Cold War produced supersonic jets, interstate highways, a manned lunar landing and the Internet.
Threats today dont seem so existential. Unless, of course, you are Israel. This is why Israel leads the world in deeper computing and communications technologies, while the similarly populated San Francisco Bay Area can afford to devote its IQ to more lighthearted endeavors, such as smartphones, social networks and life-enhancing medical technologies. This is also why, absent mortal threats, the U.S. governments spending on technology takes on the form of politically motivated boondoggles, e.g., corn ethanol and Solyndra.
The American boom in venture capital that began in the 1980s has both incubated and accelerated the commercial development of countless quantum industries: personal computers, Web software and social networks, to name three. Whats been largely bypassed are the resource-heavy industries: automobiles and airplanes; utility-scale energy; and housing and commercial buildings. The reasons for this are several and easy to see. Venture capital partnerships are built to pay out investors in five, seven or ten years. This rapid rate of return–made possible by high valuations at time of exit–is hard to come by in more mature or heavily regulated industries. Thus VC firms avoid them. They like to invest in quantum-scale enterprises they can exit at ten times revenue.
Here, then–though oversimplified for the sake of an 800-word column–is the trend of the last 30 years: Progress in big physical things has slowed down. Weve gone from revolution to evolution. Meanwhile, progress in quantum products has evolved at astonishing rates.
Thats been the trend. What about the future? Im convinced that were on the cusp of an era in which progress in big physical things will once again speed up. The quantum world is starting to jump its orbit and pull the physical world with it. The intersection between the quantum and physical worlds is where big money will be made in the next generation.
More about this in an upcoming column.