What’s Our Economic Endgame?

Talk to a parent about their worries and you’ll probably hear, “will my son or daughter have the same kind of opportunities I had? Will they be able to find a job, raise a family?” Ask them about their hopes, and you’ll probably learn that they want their children to have a better future than they had.

It’s cliche, but the want for a better future, seems to be nearly universal. This ideal of a better future, usually comes in terms of economics. These economic concerns, however, come with such vagueness and no real attempt to understand current trends or to make speculations of where they will go.

This post is an attempt to look our world, how it is developing and where that will lead. Discussion on this topic is made all the more salient and vital, with the Occupy movements around the world echoing their displeasure. People aren’t happy, they feel mistreated, and simply feel the economic system has let them down. While there are political and economic reasons, being cited as the causative problem, no-one has bothered looking at the technological trends that have led to this point.

Economics is a science of scarcity. For the first time ever, many first world countries , don’t have that problem – but instead have a problem with distribution. For example, there is more food than we can eat, but yet still some people have to go without eating. Technology has increased our productivity so that in certain areas, we are able to produce more than we need, cheaper, faster and with less people. GDP is at all-time record high. It may have stagnated the past few years, but the world is producing much more than it did 10 years ago (58 Trillion (2009) vs. 33 Trillion (2002). This increase is seen in virtually every country, even Spain and Greece (See here). The question then is if every country is producing more than they did 10 years ago, why do so many people have less?

Well one answer is that companies can’t sell more than people want to consume. And if people are already consuming as much as they can or want; then there are is no need to hire more people to produce more. That coupled with technological advances, it takes fewer people to make more, compounds the problem. The world is becoming more and more automated. Now travel agents are much rarer if not virtually extinct, news industries are endangered, big businesses are going bankrupt and the United States Postal Service is suffering. As computer algorithms become more elaborate and engineering becomes more precise, what will happen? Simply stated Production will continue to increase as employment continues to decreases. Despite the accepted fact that technology makes production more efficient, people generally fail to consider the obvious logical conclusion.

Consider the following thought experiment: I call it the robot paradox

Regardless of whether you believe in an eventual true AI or not, it is not unreasonable to think that our technology will progress to a point where technology can do virtually anything a human can faster, better, and cheaper. We already have a computer that can beat the best Jeopardy players (with goals of ‘helping’ out doctors), and a program that can write sports articles, with plans of expanding it’s subject area (“those clowns in congress did it again, what a bunch of clowns). Humans will be outperformed by technology, in virtually every domain. Herein lies the paradox – what are humans to do, when technology can outperform them in everyway? No matter how well educated or skilled you are, there likely won’t be a job for you to do.

And as we move toward that point, it is not difficult to see a world in the near future, where many jobs are replaced by computers and robotic devices. Grocers are already being replaced by efficient scanning machines. It won’t be long where you can just put your food on the belt and the machine will scan it and slide it into a bag for you, or perhaps a scan as you go device that scans things as you put them into your cart; which already exists; Or how about fast food moving from ‘automated’ burgers or coffee to truly automated burgers and cashiers. Other jobs are already semi-obsolete, but are ‘just waiting’ for the culture to change. For example, bank tellers are rarely necessary and typically serve older individuals not comfortable with a machine handling their money. However, we will undoubtedly see cuts to those jobs as individuals become more comfortable with technology.

But the question is: is this a bad thing? Not if we prepare for it. This could be a future where people pursue tasks that give their life meaning, while computers and robots take care of those ‘little things’ (like food, shelter, manufacturing etc.). That sounds like my utopia.

Given our current economic policy, however, this future is daunting. A future where either you own a business, have one of those few select jobs that robots can’t do or you are unemployed; unemployed being the strong majority. What needs to be realised is that we must begin moving from our current system which says that says everyone can work, the best just get paid more; to a system that says there just aren’t enough jobs in the world for everyone and more importantly there never will be. It is a difficult transition, but it needs to be done.

The developed world is faced with staggering unemployment rates that are causing problems for many families and individuals. Although we live in a time where we produce more than we ever have, there are still many who don’t have enough. Don’t get me wrong, I don’t think that we are at the point yet where we have to have too few jobs to go around. If done right, there are jobs currently to be created, but unfortunately, we haven’t prepared for this properly. For example, there is much needed in terms of R+D, infrastructure like roads, railways, and bridges, and the movement to a more sustainable electric grid of solar and wind.

The world needs to come to understand that we will continue to produce more with less and less people. At some point we will have more than we need and even more than we want, but fewer people to actually obtain it. Economics is a tricky system and I have simplified many of the concepts here. I don’t have the answer, but I am trying to pose the question. If you are worried about whether “your son or daughter will have the same kind of opportunities you had, will they be able to find a job, raise a family or whether you will be able to get a job or even keep it” then these question raised in the Robot Paradox should be your concerns too.

For the time, it seems we are content with our imaginary surplus of burning oil, tearing down/ building up infrastructure, and a minority of us unemployed and on welfare. We blame an economic recession, but while that may play a part, we are failing to see the bigger picture and more important trend. Every day we will produce more than we need and with fewer people to do it, and this, by definition results in more unemployment. Let’s face it, we’ve reached our current system’s economic endgame, it’s time to re-write the rules and play some thing else.