The Next Boom Has Begun

Think of this as Volume 16, Number 51 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

I have just one prediction for 2013,
but it's an important one.

Good times.

The economy is going to grow, and
faster than we expect, for two main reasons:

1. A thumb down on energy prices.

2. The automation of just about
   everything.

The first is something no one seriously
expects. The universal belief is that energy prices have nowhere to
go but up, that the developing countries of the global south –
Latin America and Africa – as well as India and China, with their
expanding middle classes, are just going to demand more and more and
more energy, so that oil kept in the ground is always going up in
value, meaning the world's assets are gradually going to keep
drifting toward those with a lot of it.

But the events of 2012 show this isn't
true. U.S. oil production is now expected to exceed that of Saudi
Arabia in 2020.
 The U.S. boom in solar energy is not slowing down, it's accelerating.  A new study indicates the world's electric grids could be entirely on
renewables by 2030.

Just as important, people aren't taking
this opportunity to get wasteful, either. The CAFE standards imposed
by the Administration last year
are going to put a permanent brake on transportation fuel demand, not
just here but everywhere. When you double mileage, as we will, you
either double the miles driven or you see a reduction in demand.

What happens when a permanent reduction
in demand hits a rising tide of supply? It won't be obvious next
year, but it is getting harder every month for energy producers to
keep prices high. They're heading downward. More of our supply is
going to be renewable. We've turned a corner, and faster than even I
expected.

The automation of practically
everything is also important. Here I'm talking about a number of
separate technology trends:

1. 3D printing, which will make it
   cheaper to produce custom parts than mass production costs.

2. The Internet of Things, placing
   networked intelligence inside all kinds of objects, from your heart
   monitor to your car.

3. The Laboratory Economy, in which
   value comes from discovery, not from the manipulation of virtual
   goods but the transformation of real things.

There are advantages here for any
society with a large creative class, one that's highly educated. Our
kids have spent this recession getting educated. They're the most
educated cohort we've had ever. America's free capital and
intellectual environments continue to attract the best-and-brightest
from around the world, even from China and India and Brazil, the
countries that are supposed to be beating us.

The movement of our economy's center
from the office tower to the campus also has very important
implications for growth. It means we're going to have higher density
in our cities, spreading out from campuses, and lower density at the
edge, where the commuters sleep in between office visits. This will
create capital that can be used for construction and infrastructure,
because a campus lifestyle is not something you can limit to
nine-to-five. Discovery happens best within tight groups. It's not
something you turn off at night.

Fortunately we have an army of young
workers ready for the challenge. We have the capital to create these
new companies. We have a lid on energy prices. We have an
Administration willing to acknowledge the reality of global warming
and act on that understanding. It doesn't look like it, but peace is
about to break out.

This won't all happen in 2013. I'm
talking about a trend that will go through the decade, a new age of
abundance that will put today into the shade. A lot of things will
happen that appear to contradict what I've written here. That's
always the case – nothing goes in a straight line.

But the trends are set. We'll be better
off at the end of next year than we are now, and we'll have a better
understanding that things can be better still. That's an important
psychological change that can have powerful implications going
forward, that can actually become a self-fulfilling prophecy.

The challenges facing us are immense.
The globe is still warming, evolution is still running backward, and
we're all getting older. But we have the tools to deal with all of
it, and next year we'll start doing just that.