when three sextillion isn’t enough

When the author of this article (Michael Baxter from Defaqto) was a little boy he once asked his father what number came after a trillion. Don’t be silly, came the reply, you will never need to know that. Well, it seems Dad was wrong. We have become used to big numbers these days, the scale of banking losses, the size of banking bail outs, the scale of the pension deficit, but here is a number to dwarf even those. It is three sextillion, 892 quintillion, 179 quadrillion, 868 trillion, 480 billion, 350 million. Or you can also list it like this: 3,892,179,868,480,350,000,000. And what is that number? It is the number of bits added to the digital universe in 2008, or so analysts at IDC have calculated And here is another number, this time seemingly modest: Five. But it is not so modest if you multiply the first number above by five. And if you do that, you get the number of bits it is estimated will be added to the digital universe in 2012. You won’t read about this in economics. Some may ask: “What has this got to do with the economy?” Well, the answer is, just about everything. If you were to print out all these bits onto paper, you would be able to wrap the earth in it eight times (enough to make a kind of pass the parcel game for gods). The paper would also stretch from here to Pluto and back ten times –(at least it would from where this is being written, not sure where you are reading this). As for the rate of growth, it seems that this paper chain from here to Pluto is growing at a rate which is 20 times faster than the fastest rocket ever made. At the current growth rate it would take just three weeks to reach Pluto. There’s a catch, of course. This growing universe needs money spent on it. In all, around $12 trillion – that’s the total annual cost of storage, computers, networks, IT, telecommunications etcetera. And don’t forget the electricity it uses up. But in this credit crunch era we find ourselves in, expenditure on IT is falling. This huge volume of data generates a vast amount of heat, and requires electricity for it to cool down. Moving forward, the IT world’s equivalent of rocket scientists need to find more efficient ways of storing data, compressing it for example. There there’s the issue of policing it and of protecting the universe from viruses. All those digital photos and videos eat up data. We are moving to a situation in which word processors and spreadsheets will be stored online, and more and more of us will take up the mantle of so-called ‘cloud computing’– where all the processing is done on another computer (as it were, in a digital galaxy far, far away). But think of the potential. IDC reckons that by 2012, 850 million people will be buying and selling things on the Internet. It also estimates that by the same year, Internet commerce will be worth £13 trillion. It often seems that people underestimate the importance of the Internet as a means of promoting wealth. Here are two reasons why this medium represents what is quite possibly the most important means since the printing press for advancing the cause of mankind. Economists have understood that specialisation is the key to maximizing the creation of goods and services. The more we specialise in what we are good at, the more the world sees economic wealth expand. This is why globalisation is such an engine for wealth creation. By promoting trade, the Internet has suddenly made it much easier to find the people and companies that are best able to provide specific goods and services. If £13 trillion will be spent on commerce over the Net in 2012, then you can be sure the result of this will be more effective specialisation. Secondly, the Internet will, and is promoting innovation. Innovation builds on ideas, and the more ideas that flow from people and companies, the more we innovate. Take this example. They say Darwin was a prolific letter writer, corresponding with over 2,000 people. He wrote literally thousands of letters, often around eight a day. This was the means by which he drew in ideas from around the world and was able to advance his own theories. Think how much faster this process would have been if he had rattled off emails instead, and got responses within hours. The digital universe is expanding at this incredible rate. It seems unlikely that wealth creationthanks to innovation or greater specialisation will match this rate of acceleration. But even so,it will accelerate, andit will accelerate fast. Article author: Michael Baxter from Defaqto, to see more articles by the author go to: http://defaqtoblog.com/iabn/