The future for humanity looks a little grim from the continent…
Since I’ve landed in Greece, I’ve been taking the time to listen to what the rest of the world is saying about the global economy. I tend to sift through the same sources at home, but I’ve had some access to some fresh, more European perspectives over here.
My God it’s depressing.
They don’t see their problems as particularly European. It’s more a ‘Capitalism in the 21st century’ type thing. And when you ask people about Australia (No, Lord of the Rings was New Zealand) they just think we’re ten years behind the curve.
That is, the dynamics of global capitalism soured with the dot-com bust. Australia dodged the bullet thanks to high immigration and a China-driven mining boom, but really, we only just bought ourselves a bit of extra time.
In ten years, we’ll be exactly where Europe is – with depressing demographics, failing labour markets, and thin-pickings for investment opportunities.
And that picture isn’t pretty. We all know about the economic bloodbath that Greece has become, but youth unemployment across Europe is truly scary.
And what went wrong?
Robots.
Well, you hear this line a lot – that robots have ruined capitalism, but its really just a way to make the problem sound sexier than it actually is.
Exponential technology is to blame.
That is, technology advances at an exponential rate – faster and faster. Humans advance linearly (if at all!). We’re simply getting left behind.
The dream of technology was that it would make humans more productive. Give a primitive human a club, and he becomes a more efficient hunter. He doesn’t have to rely on his soft, hairy hands. He has hunting technology now.
And so he becomes more productive. He can either kill more things with the same amount of time and effort, or he can kill the same amount of things with less time and effort, and switch the surplus time into leisure, or mating or crafts.
The club is human-augmenting technology. It makes the human more productive.
And for most of history, technology has been human-augmenting. Clubs, wheels, iron, steam engines, word-processors.
The trouble is, we’ve kind of tapped out the human potential (with respect to economic output.) Adding more technology to the average human only makes us marginally more productive.
There’s only so much technology a human can manage and engage with.
And at some point we become overwhelmed and distracted and hang on, I just got a message.
So rather than having human-augmenting technology, we have technology-augmenting technology. Productivity gains now only happen when we marry technologies up together. Design software and 3D printers. Big data algorithms and robo-traders. Computers designing other computers.
Robots improving themselves.
There’s no place for humans in this story. Technology marries up and looks back at us and thinks, “Ugh. I can’t believe we used to go out. What was I thinking? He’s just a dense slab of meat. And what’s that whole ‘sleep’ thing about anyway. Lol. Have some coffee and a Snickers, meat brain.”
So we’ve gone from human-augmenting to human-replacing. We’re being cut out of the dance. More and more jobs are in the robot firing line – even actors have a 40% chance of being replaced by robots in the next 20 years!
(That said, you could probably already replace Matt Damon with a toaster.)
Few jobs are safe. That’s why I’m planning to minister religious sermons to athletics teams.
These things are hard to predict, so I don’t place too much weight on the above probabilities, but the trend is clear. It is getting harder and harder to justify the human’s role in economic output.
Sure, new jobs will open up, but how long until technology swallows them up as well? And that’s the thing about exponential tech. It’s just gets faster and faster. The time lag between a job opening up and being replaced by a robot will get smaller and smaller.
You’ll start a job in the morning and be working on your resume in the afternoon.
But even if we’re not talking about a massive jobs cull, what happens to wages in this story? Wage gains are tied to productivity growth. The more your workers produce, the more fat there is to share around.
And in the human-augmenting phase, you could justify wage gains because each worker was producing more for the company.
But from here on, productivity gains will come from combining technologies. Humans are just getting in the way.
From the firm’s perspective, it’s easy to justify giving the technology a pay rise (investing more in it). It’s much harder to justify paying the humans more.
Wages growth has already fallen to record lows. I just see it going lower (as it’s done in Europe.) Pretty soon, falling wages will be the new normal. Only the pace of decline will be interesting.
But once wages start falling, consumption follows suit, and the whole fabric of growth-driven economics starts to unravel (which is what we’re seeing in Europe.)
But this is where the medium term gets interesting. Until we can totally rethink the way our economies work, we’ve got a massive political problem.
And what do politicians do with political problems?
Throw money at them.
So we’ll see more money-printing and more public spending. Soon, the public sector will dominate the economy, labour market and wages.
(And we’re already seeing that with the rise of the Health sector in Australia).
And who knows what happens after that. Maybe the whole can goes up in flames. Maybe we just shuffle on for a few centuries until the robots enslave us.
But the short-term implications are clear. If the government is going to start throwing money around, we need to get in the way of some of it.
Assets in fixed supply are the natural go-to: gold, silver and of course property.
But in the long run, just think about how you can make yourself useful to the robots.
Are things as grim as the Europeans think?