CAN INNOVATION OUTPACE GREED, WAR AND CORRUPTION?

Yes, the prognosis continues to look bleaker.

The modern story of monetary manipulation by the government via the Fed, marked by spending increasingly unmoored from GDP, is known to TJ readers.

The problem has fomented successive bubbles, from dot.com, to real estate, to derivatives.

At the moment, the dollar itself is the bubble, as world currencies and economies teeter on the edge of an abyss.

Is there still a chance that the worst can be avoided?  World war, and a cataclysm ushering in a dystopian reset of some kind or other?

Will world leaders step back from madness and wholesale destruction, having set it up so relentlessly with poor, profligate and corrupt policies?

And what role might crypto technologies, AI, synthetic biology, genomic tech, and other innovative areas play in brightening a bleak economic picture?

Can the pace of and nature of innovation create new efficiencies and value fast enough to substantially mitigate poor policies and endemic corruption? 

The First Part of the 21st Century Belonged to the Internet

Of course, there was real value in the Internet, real estate, and derivatives. But easy money enabled rampant speculation in boom and bust cycles. Kind of like what happened with cryptos in 2021.

The internet has represented the most consequential tech innovation in the latter 20th century and first part of the 21st.  It had incredible potential and a good deal of established value by 2000, and the sector not only recovered, but grew to power economies to a startling degree by 2021.

By 2011, the internet accounted for 3.4 percent of GDP in large and developed economies, according to a McKinsey report.

That was larger than either the utilities or agricultural sector, as a graphic from their report showed:

Ten years later, a 2021 study commissioned from a Harvard Business School researcher by the Interactive Advertising Bureau (IAB) found that the internet economy composed 12 percent of the overall U.S. GDP, and that the internet economy was outpacing the rest of the economy by a factor of seven.

From 2008 to 2021, IAB tracking showed that the contribution of the internet to GDP has increased from $300 billion to $2.45 trillion.

Without question, the maturation of the internet resulted in massive wealth creation.

That didn’t stop the U.S. and other governments from wildly outspending their GDPs.

But at least until the disastrous COVID shutdowns, innovation and productivity enabled by the internet had allowed literally millions of entrepreneurs worldwide to carve out livings and leverage tech in new ways.

As the IAB study noted, “More internet jobs, 38 percent, were created by small firms and self-employed individuals than by the largest internet companies, which generated 34 percent.”

Can Cryptos Tackle The Elephant Of Financial Inefficiency And Corruption?

Some believe crypto technology may eclipse even the internet in eventual importance, due to the innovations it can bring to the financial sector, which is the largest portion of GDP by percentage.

Cryptos can become the 12th economic sector, introducing a liquidity revolution, cross border payment efficiencies, new investment and ownership paradigms via NFTs and DAOs, and more. (See, for example, “COULD STABLECOINS SAVE THE DOLLAR?” 9 Aug 2022.)

Some even hold out hope that if only honest leaders saw the light, cryptos might hold the key to restoring integrity to money itself.

Writing in a May 2022 Bitcoin Magazine article picked up by NASDAQ.com, Mike Hobart argued that the values of society and its economic and monetary systems are intertwined, and integrity in one is needed for integrity of the other:

“I argue that modern society has progressed to where we are today due to the very simple aspect that because our currency lacks any semblance of integrity — as it requires no effort to produce — by this relation has produced a gravity well of attracting members of society that are most skilled, just not in producing genuine utility and benefit to society, but in manipulation. With the aim of manipulating their way through authoritative hierarchies to progress ever closer to the spigot of the money printer. This is a concept that much of the Bitcoin community is accustomed to hearing at this point.

“Bitcoin is poised to provide a possible solution to this ever-so-potent of societal issues, as the issue of integrity goes deep to the core of the soul of the society itself. By bringing the basic, yet complex, operations of economics back to a source of integrity by utilizing an asset that requires effort to produce – perhaps it is not too late for ourselves to correct this colossal ship before it is scuttled by way of our own foolish actions. Very much as Dr. Ponesse states; ‘a true Greek tragedy.’”

Barring catastrophic world war—which is by no means a given, considering the current travesty in Europe—a case might be made that the nature and pace of innovations happening since 2020 might make a crucial difference in avoiding the worst economic scenarios.

But it will take not only wise leaders to make the most of emerging opportunities, but wiser citizenries capable of understanding what’s at stake, and holding leaders to account.

For related articles, see:

• “AUTOMATING OUT OF WORLD CRISIS?” (12 Jul 2022)
• “CRYPTOS 2022: THE BEST CASE SCENARIO” (3 May 2022) 
• “SYNBIO AND BIO PHARMA: YES, THERE’S HUGE UPSIDE” 15 Mar 2022)
• “THE CRYPTO ‘AGE OF UTILITY’ HAS JUST BEGUN” (12 Oct 2021)
• “THE GEOPOLITICS OF BITCOIN” (27 Jul 2021)