Tech Sector Forecast: Good News, Bad News

Tech Sector Forecast: Good News, Bad News

By Maneula Reyna, Alston Chapman and Carolyn Gray Anderson

In 1991, a gigabyte of data cost $10,000. Today it’s free. Back then, one million transistors crowded onto a single chip, now one chip holds seven billion transistors. In 10 years we can probably expect chips to hold 100 billion transistors. If we think of these transistors like neurons, the 86 billion “logical switches” in our brains (where space opens up only as memories fade), then it’s fair to say we easily own more transistors than exist in the most complicated locations of the human body.

Scott McGregor, keynote speaker at the UCLA Anderson Forecast’s quarterly economic report, is president and CEO of Broadcom, which was founded in 1991. The company, just acquired by Avago Technologies in a cash and stock transaction that values the combined company at $77 billion in enterprise value, gave us the first digital modem and the first digital set-top box — connecting consumers to information in what were then new and expansive ways.

In keeping with the technology theme of the June Forecast, McGregor addressed the age of “smart machines” and the staggering rate at which they are getting smarter. He called it the microelectronics revolution, and it distinguishes itself from the industrial and electrical revolutions of the past in its exponential advancement. We will never again have a whole century to acclimate to change, he observed: when certain jobs go, they all go at once and don’t come back. There’s no gradual tapering off as automation and robotics take over.

McGregor, the Forecast economists and a panel of invited guests moderated by Senior Associate Dean Al Osborne, Jr., all contributed to the conversation concerning which jobs will next be lost to robots. As we harness the power and processing capabilities of computers to perform skilled white-collar jobs that previously required a living, breathing human being to execute, experts agree that it’s not a question of if, but when, computers and artificial intelligence permanently replace working people.

But it’s fair to say technology has a democratizing effect, too. Three billion Internet users globally enjoy equal access to information that formerly might have been for the exclusive consumption of the first world. As panelist Naveen Jain pointed out, “Village girls will become the world’s doctors,” thanks to this kind of access. Jain, a space travel advocate and founder of Moon Express, INome and World Innovation Institute, comes down squarely in favor of the exponential changes brought by advances in technology. “The human body is the software,” he said, “and it hasn’t been updated for thousands of years!” Jain believes we can correct the obsolete nature of the human body and looks to 3-D printing and other technologies that will rival or surpass the power of the human brain.

Economist William Yu, who compiled the special report, said that in Los Angeles tech has contributed to California’s economic growth in ways other states have not benefited. Even without counting the entertainment industry, Los Angeles County still has the largest high-tech sector workforce in the state, ahead of Santa Clara, Orange, San Diego, San Mateo and San Francisco counties. But since that growth spurt, incentives have diminished. And this has certainly been true for big industry, as Forecast Senior Economist Jerry Nickelsburg pointed out: coastal California is a singularly expensive place in which to support traditional manufacturing. Panelist Robert Griffin, deputy under secretary at the U.S. Department of Homeland Security, corroborated by saying Los Angeles is quickly following suit with cities like Singapore, Antwerp and Sydney in establishing a consolidated “super port” or “megaport.” Rotterdam’s port, he said, is already completely mechanized, with no reason to support traditional labor.

Lori Kozlowski, editorial director at the entertainment and artist management company Atom Factory, feels encouraged by the growth of the startup economy in Silicon Beach since 2011, but she worries that “income inequality is the issue of our time,” suggesting the tech sector might not be the great equalizer. Whereas the good news is that it’s never been easier to launch a company than now because technology is so cheap and accessible, Kozlowski said that entrepreneurship is still largely the domain of those with means. Meanwhile, her fellow panelist Jeff Cruttenden founded Acorns, an investing app that leverages mobile technology specifically to appeal to Millennials, creating greater access to an arena traditionally reserved for the wealthy through brick-and-mortar firms and high-paid executives. “Acorns is mobile first and mobile only,” Cruttenden said. “Not everybody likes that, but it’s the direction the world is moving. We’re betting on people trusting technology more.” Having attracted nearly 400,000 investors in just eight months, Acorns creates an experience that’s immediately attainable, with small amounts of money — literally “spare change,” as Cruttenden said.

Osborne asked Professor Jon Lindsay, who specializes in digital media and global affairs at the University of Toronto Munk School of Global Affairs, to comment on “life after Sony,” referring to the North Korean cyber attack on the company that released the filmThe Interview. It was the first use of cyber tools for coercion rather than just a co-opting of intellectual property, Lindsay said, and the first time a U.S. president has pointed to a specific nation for cyber terrorism. Lindsay conceded that the bad news is if you’re in the information business and you have intellectual property circulating, you are a target. But the good news, he said, is that while the expanding information economy becomes more complex, it will also afford greater transparency.

Forecast director Ed Leamer offered a succinct analysis of jobs that technology is unseating by asking whether a PC is more like a forklift or a microphone: Either way, the tool affords greater productivity because it essentially lifts a heavier load. But the forklift is the largest amount of equipment for the least skilled workforce, whereas the diminutive microphone demands greater “talent” of the user. Of course, the user needs to stay a step ahead of the tool rather than become interchangeable with it. And lest we think our hard-earned degrees are obsolete, Leamer and the other speakers hold out great hope for education in helping people to keep pace with technology. “Thinking creatively is going to make the difference,” said Griffin. Hard traditional skills are still needed, agreed Kozlowski. Good managers have skills they’ve learned from experience and young companies need them.

Kozlowski also called for greater reinvestment by the “juggernauts” in smaller startups to fuel the local economy, which was echoed by Jain, who urged anyone who sees a problem to start a company that solves it. McGregor declared, “Technology is a lifeline to jobs and markets. Technology will enable people in existing places to improve their lives.” He closed his keynote by urging everyone to figure out what we can do to help the world understand and become “literate” with technology changes so that total access is ensured and no one gets excluded. “We need to do a little work to make sure everybody can participate.”

“We must change from a mindset of scarcity to one of abundance,” said the optimistic Jain. “The best way to predict the future is to create it yourself.”