May 8, 2018 Reading Time: 5 minutes

Every conference on tech these days features confident talk of the future. Everything is going to change and the results will be amazing! I’ve given a fair share of talks like this, mostly focussed on distributed ledgers and their potential to disrupt the status quo in money, contracts, and investment.

Today’s fashion for futurism probably compares to the 1893 World’s Fair that shaped popular culture. Then as now, the question is: why is the future not here yet? We have the technology. It is deployed in a limited way. It mostly seems to work. It seems intuitively obvious that it is better. Under these conditions, it seems like the future should be now.

The most obvious case in point is cryptocurrency. It works today. How long do we have to wait for it to be widely in use?

Horses and Tractors

Here is a fictional story from the past based on the real American farming experience. The year is 1910 and a family farm is in full operation. It’s been in the family for three generations. The young son comes to his father and suggests that they upgrade from horses to a new gas-powered tractor, which was becoming commercially available in a way that was affordable.

The father finds the idea ridiculous. They have so much invested in horses. A tractor is too expensive. If it breaks, no one knows how to fix it. The job is getting done now. There is no compelling reason to change.

The father sends the son away with the wave of his hand. Was he foolish? My argument is no. He knew that the time had not yet arrived.

I’ve experienced something similar in my own lifetime. The first time I heard about email, it wasn’t obvious to me that it would be better than a direct connection through the modem. How would the person know to login and get a message? There aren’t many people who have accounts so what would be the point? It’s expensive for this service whereas my phone and modem are already paid for.

Maybe someday I would find a use case but not yet. I sent away the promoter with a wave of my hand (and later learned to get humble about these things).

Which brings us to the five reasons why the future, even if it is known, is not yet now.

#1 Current technology works. Technology is not an end in itself and there is no good reason for anyone to use any of the practical arts unless there is a task to accomplish that cannot be realized through current tools. If the job is being done with some reasonable degree of efficiency, switching is more costly than continuing with the status quo. Think about this with regard to cryptocurrency. Credit cards and banks work just fine right now. Yes, the improved product offers advances (cheaper, faster, more secure) and though these are all good things, there are still plenty of problems that make existing solutions more economically rational for the vast majority of people. Of course that could change. A currency crisis, a bank holiday, or mass identity theft could shift the calculation dramatically. These could all make the future hurry up and get here sooner.

#2 Future technology is too buggy. Remember how the farmer said that there was no one to fix the technology if it should break? Exactly. Things break. Sometimes it makes sense to wait for the second, third, and fourth generation before you adopt because developers learn from mistakes. A technology recruits people unto its ranks to fix and repair. New companies come along that specialize in replacement parts (think about the screen protector on your smartphone). But all of this takes time.

When to adopt is a rational calculation and different people have different levels of hunger for new things. Installing electric indoor lighting in 1890 was possible and affordable for many but only a few were ready to pay and take the risk of seeing their house go up in flames. Oil lamps persisted for many decades. Similarly, some people bought the iPhone 1. Others waited until iPhone 4. This gradual adoption allows developers, producers, repair infrastructure, and replacement parts to come online.

#3 Talent pool for implementation too limited. I had a friend tell me last week that the perfect use case for blockchain technology is the electrical system in Puerto Rico. Maybe he is right. But I can also think of another one thousand similar use cases. There is titling, health care, food and restaurants, contracts, credit, transportation, auction houses, and more, not only in one country but in every country. It would not be economically efficient for 10% of the labor force to leave their current positions to become blockchain codeslingers. Right now, everyone I know who can code in this industry is extremely busy and very well paid. This will gradually attract more programmers into this industry. But every retooling of labor resources has an opportunity cost. It’s not always worth it.

#4 New technology must build on old. Legacy technology is currently in use. Technology must be woven into the existing fabric. It is never adopted in whole. For example, anyone today can build a website from scratch but it is much harder to take an existing website and build within it and from it to refresh its functioning. Most new technologies are designed for the perfect use case. There is no such thing. This is why there are so many “concept cars” that you never see on the road. In real life, new technology comes about gradually, feature by feature, as small problems are solved, success is realized, and the benefits of more radical restructuring become more obvious.

#5 Economics takes time. It’s not always about risk aversion, network effects, bugs, and the workability of legacy systems. There is the plain fact of economics that all resources – land, labor, and material – must be apportioned in a way that is rational and socially optimal. Only a central planner pretends to know how things should be allocated and he or she is always wrong. You need the gradual unfolding of the market process to test new ways through trial and error. How are these tests graded? Through the system of profit and loss. The best and coolest technology that produces nonstop losses is clearly not ready to be implemented. There is a time and place for all things. It’s not always now.

The interactions and feedback loops between invention, implementation, and full-on adoption is a fascinating process to watch. It can’t be gamed. It relies on something no one can control: the price system, human choice, resource tradeoffs, and case-by-case circumstances of time and place.

Thinking back on my initial doubts about email, it took nearly 20 years for email to become a universal part of life. To be sure, the digital age has speeded up the process but we all know people who continue to be seriously alarmed at the pace of digital life. They look at an app store and nearly have a meltdown.

Meanwhile, I’m meeting young people today who can’t even imagine life before cryptocurrency was an investment tool. Thus goes the unfolding of history. If you feel rushed these days, don’t be intimidated by it. Let the risk takers subsidize the risk averse. Eventually, if a technology is truly worth having around to replace the old, it will come to you, and you will love it.

Jeffrey A. Tucker

Jeffrey A. Tucker served as Editorial Director for the American Institute for Economic Research from 2017 to 2021.

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