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Technology Stocks : Discuss Year 2000 Issues

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To: Ken Salaets who wrote (4124)2/26/1999 12:47:00 PM
From: John Mansfield  Read Replies (3) of 9818
 
' ANALOGY: The Stone Bridge Across the Chasm
Comment:
Thomas Gilligan has a way with y2k analogies. This is the most technically precise one I have seen so far.

He refers to Moore's Law (1956?): the capacity of each generation of computer chips exceeds its immediate predecessor by 100%, and a new generation is introduced every two years. Moore's time frame was too pessimistic; it's now approaching 12 months.

This analogy shows what has gone on beneath the surface -- a core that is rotting away, unobserved.

How much of the core? That's the great debate. There is no agreement among the experts. But most agree: a lot of it.

The law of diminishing returns does exist in the world of computer chips. While George Gilder waxes eloquent about the microcosm -- the realm of the quantum -- wherein there is supposedly only a law of increasing returns and ever-cheaper spectrum, the millennium bug gnaws away at the dreams of billions.

* * * * * * * * * * *

I once lived in Europe and was out walking in the Swiss Alps. Our path crossed a very deep ravine (about 200 feet deep) which was only about 15 feet wide. The way across was over a rather narrow stone bridge which had been built by the engineers and foot soldiers of Napoleon as part of the development of the trade infrastructure of his empire. The bridge itself was about 30 feet long and was held together over those many years by the virtue of a beautiful arch structure of appropriately chiseled and fitted stones. The structure appeared to be as sound today as it ever was.

How was this bridge built? There must have been some type of wooden structure built across the chasm first. On top of this, a temporary wooden arch was laid to allow the stone masons to slowly add the heavy stones one by one, from the bottom up, until the last was laid in the middle. Once the stone work was finished, the wood support would be removed (burned? axed?). There would obviously be a great hurrah yelled as the soldiers saw that the bridge did not collapse in with the wood.

The shape of the bridge is the shape of the structure upon which it was built !!!

Computer scientists/programmers are modern day versions of these bridge builders. Over that last 30 years, in legions of hundreds of thousands, they have hunkered down, first over scratch paper, and later directly on terminals and have built a new structure, line by line. The great genius Moore measured the rate of this change. The great titan of business Grove carved the many intricate new pieces. In each case, new replaced old. Automated accounting replaced clerks. Word processors replaced steno pools. Digital switches replaced levers and human hands. Digital meters and scanners replaced human eyes. The new servants worked 24 hours per day. Eventually even the replacements were replaced. Client/Server replaced Mainframe. Handhelds replaced desktops. Cellular everything, all joined to GPS. All this was done in the name of "user friendly". All done so the user (and his customers) would hardly notice a change, except for the better. The decade I was born, NASA sent a man to the moon using a computer with less processing power than my desktop. The internet was born on a single T-1 line. Now even mid-sized companies lease dedicated T-1 lines. Rich Virtual Reality Buffs have home T-1 lines. Electronically filed tax returns are reviewed automatically and checks sent without human hand. Home mortgages and car loans are approved by desktop underwriting programs. Ten times the nominal worldwide GDP worth of futures contracts are created and destroyed each year, in a delicate balance of financial homeostasis. Money supply is created in the mind of machines, using digital handshakes between banks and the auditors of banks. The presses are only replacing the worn bills. From the smallest UPS package to the largest coal train, the flow of goods can be tracked. Intelligent agents can track the outcome of small changes on these complex flows. You can buy a plane ticket, and board with your electronic card. You can clear customs the same way. Zebras now take inventory.

On the outside, the bridge looks much the same to most people. We live in houses, we are served by utility companies, we call our friends, we use banks, we eat food, we have jobs. But on the inside, the engineers have built a new structure, a structure which holds together by virtue of interlocking pieces. Some of the older manual systems are left, but most have been dismantled (to the cheers of hurrah from engineers and CEOs). Technology has moved from the hands of the artisans into the realm of six-sigma manufacturing.

The bridge is now endangered by design flaws in the stone that was chosen. A certain number of pieces were made of a type of stone which loses structural integrity. How many pieces can the bridge lose before it shifts? How much shifting before it falls?

The big debate begins. How many stones? Which ones are critical? How to identify them?

The locals, who believe that it is the same bridge that has held for all their lives, walk on over each day and laugh at the absurdity of it ever falling. Yet this is a much different bridge, one which we have rebuilt in our own image, and yet beyond our own image, into a dream (or nightmare) of a Utopia of ever-expanding GDP.

The problem with the new information bridge is that we live on it and the chasm below is deep. For some people the chasm below is very, very deep. The problem is that in our lives of abundance, we have forgotten to be concerned about the existence of the bottom. Collapse is taboo. We believe in mind over matter. We believe evolution only creates positive outcomes. We are mesmerized by Moore's Law. We believe in self-fulfillment and warn of self-fulfilling prophecies. Grove has made us forget the law of diminishing returns. Cargill and Archer Daniels Midland have destroyed their competition and still helped to lower the price of a can of coke (high fructose corn syrup replacing sugar cane sugar, plus GPS on barges and trains). Aluminum used to be more expensive than gold (1900), now gold isn't even money, and we wrap our food in aluminum. In some counties in America, the only farms are the pictures on the milk cartons. Where can you drink out of a river anymore? Streams, yes, rivers, no. Most gardeners plant flowers. Home insurance costs more when you install a woodstove. Most cities will not allow you to drill a water well.

We can do anything as long as we keep a smile on our face.


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