In my last story, I contrasted the fourth industrial revolution (4IR) and an alternative that I call the age of sustainability. Regardless of the names we use, each approach tries to predict future economic need in an effort to prepare for global demand.
The 4IR school of thinking focuses on the tech sector and logical extensions of today’s technologies. For example, the 4IR school expects analytics, cyber-operated machines, and advanced materials to dominate the economy.
There are good reasons to believe these technologies will be out front by mid-century, but it’s not clear they will be the economic drivers for which we need to prepare. They represent a great deal of automation, which, while expected to create jobs that don't exist today, may not create the conditions needed to boost economic performance.
Also, they spring from established niches that have no trouble attracting traditional sources of funding such as stock markets. It’s hard to see how the coming changes are disruptive and not simply extensions or sustaining.
The free market has a way of focusing attention on disruptive innovations that seem peripheral at first but become mainstream quickly as latent demand emerges. History is replete with examples. Steam engines found new applications once they were perfected and made mobile. Railroads and steamships were classic applications but so was electricity generation later on. When James Watt perfected the steam engine in the late 18th century, it’s doubtful he envisioned steam-generated electricity a century later, but there it is.
So the free market has a great deal to do with driving a disruptive innovation to market and that’s the heart of the long economic cycle or K-wave.
A story in the New York Times last week provides an interesting insight into what could easily become the free market driver of the 21st century. In Warming, Water Crisis, Then Unrest: How Iran Fits an Alarming Pattern, Somini Sengupta writes of a disturbing pattern involving climate that can have a devastating affect on the world community. It begins,
UNITED NATIONS — Nigeria. Syria. Somalia. And now Iran.
In each country, in different ways, a water crisis has triggered some combination of civil unrest, mass migration, insurgency or even full-scale war.
And it traces how declining water resources turn farms to wasteland incapable of producing crops to feed domestic populations. Syria is possibly the best example and it is certainly the most prominent. Sengupta writes of Syria,
Its drought, stretching from 2006 to 2009, prompted a mass migration from country to city and then unemployment among the young. Frustrations built up. And in 2011, street protests broke out, only to be crushed by the government of Bashar al-Assad. It piled on to long-simmering frustrations of Syrians under Mr. Assad’s authoritarian rule. A civil war erupted, reshaping the Middle East.
The scenario in Syria is not an isolated incident. Proliferation to other nations, including a potentially nuclear tipped Iran has the international community’s attention. That’s why sustainability is such an important future economic driver.
Sustainability can mean many things but for our purposes, it means three things: Using emerging technologies to supplement ecosystem services such as fresh water production enabling large populations to support themselves keeping them from becoming climate refugees. It also means removing carbon from the environment to curb the worst effects of climate change. Finally, it also focuses on provisioning energy sources that don’t add to the carbon problem. The Times article provides succinct answers to why this is important,
The World Resources Institute warned this month [January 2018] of the rise of water stress globally, “with 33 countries projected to face extremely high stress in 2040."
A panel of retired United States military officials warned in December  that water stress, which they defined as a shortage of fresh water, would emerge as “a growing factor in the world’s hot spots and conflict areas.”
Millions of people left Syria at the height of the civil war for Europe where they quickly stressed host countries’ ability to support their needs. Imagine large parts of the populations from 33 countries on the move in the next 20 years.
We haven’t discussed carbon pollution or energy scarcity as contributing factors but if you consider them as well, a very different picture emerges from that proposed by 4IR boosters.
That’s why sustainability in all of its forms is not just likely to be the driving force in the global economy in the years ahead but is an urgent necessity.
You might ask why allow situations get this difficult before taking action. But the means to “do something” have only come about in the last decade or so. Solar panels and wind generators have only recently become sufficiently economically attractive to compete with fossil fuels. We should expect to see a fast ramp up.
Climate isn’t a hard problem any more than establishing continental rail, electric, or cable networks were. But they take time and investment. In turn, investment as we currently understand it requires credible plans to repay loans or reward risk takers through profits or from public offerings.
The educational demands for the age of sustainability are, in most cases, secondary education. According to the Bureau of Labor Statistics (BLS), one of the highest paying new jobs in the US for high school educated people is wind turbine technician.
Today we’re looking at numerous startup situations around the world where abundant renewable electricity could be applied to many uses like producing fresh water.
Paradoxically, the worse things look from a human crisis perspective, the better they tend to look as investment opportunities. The situation on the ground in parched corners of the earth combined with our recently acquired ability to do something about the situation provides a perfect free market storm. That’s why the age of sustainability will outmaneuver the 4IR.