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Slow Economic Growth: Will The Economy Still Grow?

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Forge Your Wealth is meant for education and entertainment and should not be considered financial advice.

I have heard an interesting theory about whether the economy will still grow. Many believe there will only be slow economic growth in the future. Like how even the mighty redwood tree cannot grow much more. Many claim that computers were the last big thing. After all, what particular advances are not just an extension of computational power? The economic growth we have experienced recently attributed to digital technology and even accounts for a little less than 16% of global GDP in recent years. But is there a ceiling for the growth of the economy from digital technology that will make future economic growth slow?

First, let’s look at how the US economy was growing in the 80s to early 90s? Very well, apparently. What was one of the contributors to this? Computers. Personal computers made work easier and increased productivity. But can even the most advanced computers increase productivity?

Only Innovation Can Defeat Slow Economic Growth

There are many companies that claim to be the next best thing. Consider bed-in-a-box companies. There are over a hundred and they ultimately do the same thing, deliver mattresses. Many thought if bed-in-a-box companies came out, they would disrupt mattress retailers. That has not happened yet, traditional mattress firms are still doing well. The reason why is because bed-in-a-box companies are not very innovative, they just utilize an already present technology platform. These companies are essentially specialized versions of Amazon.

Do not believe these are the best innovations the world can provide. There are many ideas being throw into the ring and tested for practicality.

Even Small Innovations In Computers Could Lead To Massive Developments

One of the most interesting and practical innovations I have heard of recently for computers are 3D transistors. Computers require transistors for information transfer. Scientists and engineers call traditional transistors in microchips 2D because the information transfer can only happen in two dimensions. While scientists have been trying to make these chips smaller there is still only so many atoms you can cram into a small area.

Consider a 2 cm x 2 cm square. And I will use the metric system because I am a scientist, I can only use the metric system for real measurements. I could only fit four 1 cm diameter balls into said square. But what if I wanted to fit the balls into a 2 cm x 2 cm x 2 cm cube? I could fit eight into the cube, twice as much as a square. You can always fit more into a cube than a square, and the same works for transistors.

If you are impressed by that math, think of it this way. I was able to fit twice as many things into a 3D object versus a 2D object that has a dimensional length half the size of the container. Imagine if the dimensional length of the object was smaller. Let’s say the balls were 0.5 cm in diameter. I could fit four across the square or the cube. The 2 cm x 2 cm square can hold sixteen balls and the cube could hold sixty four balls. That is 8 times as many items the cube could hold with balls half the dimensional size.

Computation Goes 3D

A microchip is small, but Intel had 2 billion transistors on a microchip back in 2008. Keep in mind this chip is only 65 nanometers (as in a 1/1 x 109 meters, or a billionth of a meter for those of you who do not know scientific notation). That is smaller than dust. Each dimension of said chip would have over 40,000 transistors in either direction. Making that 3D would increase computational power by 40,000. And do you know what a cube that is 65 nm across would seem like to the naked eye? Still smaller than dust.

This technology could make a crumb of circuitry more powerful than the computers I used to run advanced calculations and molecular simulations that led to the papers that made my PhD. With this computation power, forget doctor visits, you could implant a device that will run multiple tests that can monitor your health. And that is just one of the many disruptive applications for such computational power.

So why do we not have Big Brother checking our cholesterol? (I never said the innovations were ethically transparent). The same silicon used as semi-conductors in microchips are not compatible with 3D transistors. The computation power demand produces excessive heat, and it is harder to transfer heat from the middle of a cube than from the middle of a sheet. We don’t have the cooling capabilities for that yet, at least not in personal devices. Scientists and engineers are developing new materials to try to solve this problem. One of these scientists was at my graduate school and presented his research into a material he was developing for 3D transistors.

How We Got To Now: Many Unsung Innovations

I recommend reading the book How We Got To Now: Six Innovations That Made The Modern World by Steven Johnson. Steven Johnson could have made a simple list of these innovations and how they changed the world. He does more than this. He mentioned that the greatest innovations were created by many people who were researching and developing overlapping concepts and knowledge. My favorite one he mentions is “cold” aka air conditioning and refrigeration. Both of these were developed because many people spent over a hundred years researching energy transfer. What do you think someone said: “hey, let’s make a reverse engine that will remove heat from a certain volume.” No. People studied heat transfer and learned about materials and developed small innovations that collaborated into a refrigerator.

Small innovations lead to large innovations. Nothing worth innovating was innovated instantly. Scientists and engineers are constantly making small innovations. We have no idea what collaboration of these innovations will surpass computers.

New Innovations Lead To Massive Changes

Refrigeration has transformed the world, not only by making more people comfortable, but saving lives at hospitals, preserving food, and installing new methods to build supply lines for meat and other heat sensitive goods.

Refrigeration solved the meat supply line problems that computers would not be able to solve. The best solution I could see computers come up with is by calculating which transport methods and routes could lead to less spoiled meat. While computers are a marvel, even the smartest computers can only observe patterns from available knowledge and improve efficiency. A computer simply does not have the capability to create something completely new from obtained knowledge…yet. Arguably, refrigeration and air conditioning did more for the world than computers and it did not come from out of no where.

Final Thoughts

The economy may have been a bit “meh” in the 2010s after the 2008 depression. But you should never translate that slow economic growth as a lack of innovations. Computers are not the end all be all of human innovation. And even if they are, computers are still being innovated and implemented in ways we cannot imagine.

I hope you do not believe that industries are becoming less innovative and unworthy of investment. Humanity is not done with innovation and people are not done with making money. As long as those two things are true there will always be an industry or a few hundred worth investing into to forge your wealth.

Author: Papa Foxtrot

Most of my life I was careful with money and learned where I should invest it. I was very lucky to have parents who taught me financial literacy when I was young. Unfortunately, I am very lucky because many people lack the financial literacy I know. The purpose of Forge Your Wealth is to teach people who are just starting out in life how to obtain their wealth or anyone who just realized they may need to learn more to handle their finances. I currently have a PhD in biochemistry, just started a job in industry (will not disclose where exactly for personal and professional reasons) and am currently married to the love of my life. I am one of the lucky few people in America who graduated with no student debts, my wife was not. Over the series of a little over 3 years we paid for our wedding with no debt and paid off her federal student loans.

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