Thursday, March 20, 2008

MBA Tech: The next revolution

In an opening session entitled "The Third Industrial Revolution and its Effect on Commercial and Residential Real Estate," Jeremy Rifkin, founder and president of The Council on Economic Trends and author of The End of Work, told mortgage bankers attending the MBA's Technology in Mortgage Banking conference in Dallas earlier this week that global trends indicate that we are on the cusp of revolutionary changes that will have a marked impact on the way we live and work.

Rifkin has spent much of his career analyzing trends in economic data and trying to determine what they will mean to humans in the future. One of his conclusions is that soon we will leave the era of mass wage labor. His conclusion is based on his identification of trends in two industries, communications and energy.

Rifkin says that any time big changes in communication technology coincide with big changes in the availability of energy, you'll have an industrial revolution. The first one we experienced happened in the early 1800s, another occurred near the beginning of the last century. Soon, says Rifkin, Internet technology will converge with the business of delivering power and we'll experience a third industrial revolution.

He envisions a world where the need to combat climate change coincides with the drive to find more affordable energy than fossil fuel (he says oil will continue to become more expensive--approaching $200 per barrel in the near future). The result will be green buildings that combine solar, geothermal, ocean waves or river current, biomass and wind technologies to produce more energy than they need. Excess energy will be stored using Hydrogen-based fuel-cell technologies or sold back to the energy supplier.

For their part, suppliers will used lessons learned from the World Wide Web to create wide area power transmission networks that will essentially make power a cheap commodity. He mentioned four Southwestern energy companies that are already working on this.

Update: Here is a story about one company apparently moving in this direction.

Building out this infrastructure will be expensive and will constitute the last gasp for the wage slave economy. After that, things will change.

"Every building will become a power plant," he told the audience. "Buildings will go up where renewable energy is plentiful. We'll all be generating power like we generate information today."

He's very passionate about his message and I look forward to reading more of his ideas, but judging by the looks on the faces of some in his audience, I think many were asking themselves one important question: who will finance these buildings and where will those lenders find liquidity?

Considering the rise in investment from Sovereign Wealth Funds and the new proficiencies on the part of middle eastern countries for building new cities, if we're not careful we'll be the wage slaves swinging the hammers and someone else will end up owning the world when the dust clears from Rifkin's third industrial revolution.

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