Issue link: http://cp.revolio.com/i/356
33 WWW.hPLUSMAgAzIne.CoM know that the future we imagined didn't come to pass. In fact, it's safe to say that expectations were lowered by about 99%. no one, in 1986, could have imagined that applications that were well-established by then — Microsoft oS, oracle's SQL database software — would still be the basis for the biggest revenues in software in 2008. Could what happened to strangle a single visionary technology industry in childhood happen to many diverse industries key to creating the future? Sadly, yes. Corporations are considered living persons under US law. An unusual way to look at the fi nancial crisis and the halving of equity values is that price-to-earnings ratios have also halved, and P/e ratios are an actuarial table (like those used by life insurance companies to predict when people with measurable characteristics will die). This is because the market capitalization of a company is (the market's expectation of) the net present value of all its future profi ts. Thus, a P/e ratio of 14 could be looked at by the market as a company expected to produce, on average, the same profi ts for 14 years (not counting infl ation), and then to cease to exist. over the last 100 years, the average P/e ratio has been 14-16 (depending, in part, on how you calculate the number), and every time the ratio has gone above 20, it's dropped below 10 a few years later. In 2000, the S&P Index went above 40, but when it dropped, it hit above 20, making a drop of over 50% predictable and obvious to those reporting on it in 2004 (do a google search of "average P/e ratio" and check the third link to generational Dynamics for evidence). If companies are living people, the drop in life expectancy for companies is comparable only to the fastest dying country in the world that is not at war — zimbabwe, where life expectancy has fallen from 60 in 1990 to 34 today. Due to a combination of daily doubling of prices, starvation, and cholera, it's possible that life expectancy will halve again. It's possible that the value of companies will also halve again if a few things happen; for instance, if the US Treasury credit rating is downgraded, bankruptcies soar, or large banks continue to fail. So. Is the recession of 2008 just a delay for the golden techno-future or something much worse? Current conditions are being compared to the years at the beginning of the great Depression in the early 1930s, but then we came out of that in the late 1940s. Since the great Depression, the average age of Americans has more than doubled, retirement has come sooner, and government benefi ts for the elderly retired, including medical and transfer payments, have increased by one to two orders of magnitude. The 2000s were supposed to be the Roaring 2000s, the last golden-age boom time before the fi nancial disaster starting in 2011 caused by three million baby boomers reaching retirement age. If the current crisis is a result of America's problems at the proverbial best of times, when the baby boomers are in peak earning years, how can US economics be better when current peak earners stop generating surpluses and start being net consumers? And what happens when interest on the federal debt exceeds the amount collected in individual taxes? There is a possibility that federal fi scal collapse meets baby boom retirement, and all the money that would have gone into new technology goes into appeasing elderly voters. In that scenario, the Singularity might not happen in an expected timeframe and there would be no available life extension, or conditions on earth would be so unappealing that the average person wouldn't want to live longer, and thus, for most people, the future would be cancelled. The moral of the story is that, for those of us in our forties and up, we need to redouble our efforts at birthing problem- solving technologies, and we need to make the future happen now or never (at least within the lifetimes of adults in 2008). or we better hope that Vernor Vinge is right and that the Singularity doesn't require anything close to a healthy economy, in which case those smarter- than-us bots can take charge and knock off all of our problems like ducks in a row. as we experience a global financial crisis@, will we still have all the good stuff that futurists promise, including biotech that increases longevity, and nanotechnology that revolutionizes manufacturing@? net present value of all its future profi ts. Thus, a P/e ratio of 14 could be looked at by the market as a company expected to produce, on average, the as we experience a global financial crisis@, will we still have all the good stuff that futurists promise, including biotech that increases longevity, and nanotechnology that revolutionizes manufacturing@?