A short piece in the WSJ got me thinking about valuation creation. Since we broke out of the Malthusian Trap innovation has steady increased the standard of living for an increasing amount of the worlds population. Clearly in the industrial revolution and far beyond the value creation was about material things but since we created computers we have seen an increasing amount of value created through software. We can create objects that work, think the process of designing airplanes. We use software to help make decisions or analyze complex situations.
What struck me about this is that the tools to do the job are all intangible. Okay this wouldn’t be possible without the physical computers but it is the software that does the work. When you look back over the last 1000 years I think this quite amazing and shows the incredible creativity of the human mind. Imagine telling a medieval nobleman who relied on farming his large estate that in future value would created in the ether.
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