The Third Industrial Revolution

A Farewell to Daddy Warbucks in The Post-America World...

A Farewell to Daddy Warbucks

(SASKATCHEWAN) - Somebody has said - perhaps it was S. J Perelman - that history is too good to be true. It's the next best thing to the future and more fun than the present. It should be nurtured, refined and constantly re-written. What better place to start than right here? - The Editor

My friend Tom sent me one of those email chain letters the other day, the kind that most of us exchange from time to time. This one was full of current economic and social truisms with which we're all familiar. And also like most of us, it ended in total frustration, almost anger that we can't seem to get back to those good old days we all lived through in the 20th Century. Listen:

“ Before long we'll face a world without the post office. Email, Fed Ex, and UPS have just about absorbed the minimum revenue needed to keep the post office alive.

“The younger generation simply doesn't read the newspaper. It will go the way of the milkman and the laundry man. The rise in mobile Internet devices and e-readers has forced all the newspaper and magazine publishers to develop an online model for paid subscription services.

“Unless you have a large family and make a lot of local calls, you don't need a land line telephone any more. The music industry is dying a slow death. Not just because of illegal downloading. The record labels and the radio conglomerates are simply self-destructing. People are watching TV and movies streamed from their computers.

“The United States is rapidly becoming the first "post-industrial" nation on the globe. We are witnessing the deindustrialization of America .. Tens of thousands of factories have left in the past decade alone. If the de-industrialization continues at this current pace, what possible kind of a future are we going to be leaving to our children?

“If anyone can explain how a de-industrialized America has any kind of viable economic future, please do so.”

Everything in this sad litany is true except for the final conclusion. We can't, like Thomas Wolfe, go home again to the world of 1975, the world of Daddy Warbucks, the great era that climaxed with BP's trashing the Gulf of Mexico and then – unbelievably - sponsoring a “Vacation Paradise” ad campaign for the five adjoining states. We can't go back, much as Tom's friend pines for the good old days.

But the Post-America world ahead of us is a misnomer. What's past is the Second Industrial Revolution. What's prologue is the beginning of the Third Industrial Revolution.

Economist and energy visionary Jeremy Rifkin is senior lecturer at the Wharton School’s Executive Education Program at the University of Pennsylvania, he's President of the Foundation on Economic Trends in Washington, D.C., he's the author of 19 books, and – most important – he's an adviser to the European Union and to heads of state around the world. In his recent book, “The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World,” Rifkin describes how the current Industrial Revolution is ending, not with a bang but a whimper, and why and how - instead of mourning the passing - we should work to shape the next one.

The great economic revolutions occur, according to Rifkin, when two things happen. (1) When we change energy sources globally, and more complex economic relations develop. But (2) communication revolutions must also occur to manage them.

In the 19th century, coal and steam power increased the speed, efficiency and availability of print material, creating a print literate workforce to organize the First Industrial Revolution. We did it again in the 20th century with the convergence of communication and energy. Centralized electricity became the communication vehicle to manage a Second Industrial Revolution, organized around the oil-powered internal combustion engine.

The combination of energy and communication work together in the determination of each successive historical development we call industrial revolutions. The Third is no exception. It's based on a new convergence of communication and energy.

The Internet has been a very powerful communication tool in the last 20 years. We are in the early stages of a convergence of Internet communication technology with a new form of energy that is distributed (available everywhere in the world) and we’re making a great transition to distributed renewable energy sources. The old fossil energy sources are sunsetting as we enter the long endgame of the Second Industrial Revolution.

Distributed energies, on the other hand, are found in every corner, every inch of the world around us: the sun, the wind, the geothermal heat under the ground, small hydro, ocean tides and waves.

The 27 member nations of the European Union have already committed themselves to establish an infrastructure for a Third Industrial Revolution based on this new convergence of internet communication and universal energy. Rifkin developed the plan that was formally endorsed by the European Parliament in 2007. Briefly, that ambitious plan includes a goal of 20 percent renewable energy by 2020, the collection and distribution of renewable energy through concentrated solar parks and high-voltage lines, large wind farms and hydro dams and the conversion of the entire building stock of Europe. This massive conversion will generate millions of jobs and create new opportunities for thousands of small and medium-sized enterprises stretching over a 40-year plan.

Finally, energy is transmitted and shared globally by transforming the power grid and electricity transmission lines into an energy Internet. When these elements are connected, we create a seamless new infrastructure for a new economic system, the Third Industrial Revolution in the 21st century.

In the business community a real generational shift has already begun but we don't realize it. Older men and women still think in terms of organizing economic activity in a centralized, top-down fashion. Those who are 40 years old and younger gravitate toward an organizational style that is more distributed, collaborative and lateral.

The real legacy of Steve Jobs and his generation of innovators is the organization of the communication part of the Third Industrial Revolution. But it is the coming together of the Internet and renewable energy - the democratization of information and power in one matrix – that will change the entire frame of reference for everything done in society.

There is no going back to the Daddy Warbucks Second Industrial Revolution, powered by fossil fuels. Rifkin points out that when oil hit $147 a barrel in 2008, the costs of all the goods and services ballooned, purchasing power evaporated, and the entire global economy ground to a halt. That was the great economic earthquake that signaled the beginning of the endgame for an Industrial Revolution based on fossil fuels. The financial collapse 60 days later was the aftershock.

We've reached peak globalization with our economy based on elite fossil fuels. Every time we try to re-grow the economy at the same growth rate experienced before 2008, oil prices will rise and the prices of all other goods and services will climb as well. Each time we try to restart the engine by replenishing inventories, oil prices will escalate again, all the other prices for goods and services will spike, and at around $150 a barrel, purchasing power will plunge and the economy will stall.

“We already have hundreds of thousands of people making their own green energy,” says Rifkin. “Pretty soon it’s going to be tens of millions and then hundreds of millions of people generating their own energy.”

The cost curve of the collection technology - solar panels, small and large wind turbines, geothermal heat pumps, small hydro, tidal and wave technology, biomass converters - is following the same cost curve as when we went from centralized mainframe computers to desktop computers and from centralized telephone communication to distributed cell phone networks. Twenty years from now the technology for collecting and distributing energy is going to be virtually free, just like information.

That 's the Third Industrial Revolution, according to Rifkin. We can't stop it, because there's no practical alternative. Face it. We might as well say goodbye to the Daddy Warbucks Century: Big Daddy, all about big bucks, usually leading to war.

We can't go home again.

Bill Annett grew up a writing brat; his father, Ross Annett, at a time when Scott Fitzgerald and P.G. Wodehouse were regular contributors, wrote the longest series of short stories in the Saturday Evening Post's history, with the sole exception of the unsinkable Tugboat Annie.

At 18, Bill's first short story was included in the anthology “Canadian Short Stories.” Alarmed, his father enrolled Bill in law school in Manitoba to ensure his going straight. For a time, it worked, although Bill did an arabesque into an English major, followed, logically, by corporation finance, investment banking and business administration at NYU and the Wharton School. He added G.I. education in the Army's CID at Fort Dix, New Jersey during the Korean altercation.

He also contributed to The American Banker and Venture in New York, INC. in Boston, the International Mining Journal in London, Hong Kong Business, Financial Times and Financial Post in Toronto.

Bill has written six books, including a page-turner on mutual funds, a send-up on the securities industry, three corporate histories and a novel, the latter no doubt inspired by his current occupation in Daytona Beach as a law-abiding beach comber.

You can write to Bill Annett at this address: bilko23@gmail.com