by K.R. McKenzie

In Tyler Cowen’s new book, Average is Over, of which a new review is written about every three minutes it seems, he predicts a near future where technology continues to enrich lives, both poor and wealthy. He also predicts a nasty side effect: workforce training won’t be able to keep up with technological progress, which will lead to a hollowing out of the middle class.

He may be right on all counts, but I think another major technological shift is changing the world in a way that makes the future, including the job prospects of the middle class, difficult to predict.

Yes, there will be robots that will build things better than factory workers. Artificial intelligence will replace our doctors, a private space race will bring asteroid minerals back to Earth, and so much more. But technology is also allowing us to decentralize things like never before. The same hollowing out of the middle class may occur, but not simply because machines and computers can replace our jobs. A stronger force is in play — decentralization will fundamentally change how we organize society.

Let’s look at a few examples.

During the past 100 years, the American electrical grid has been on a solid trend of becoming more nationalized. And it has made sense. Distributing the electrical load over a larger number of providers and consumers allowed both economies of scale, but has also afforded ways to do much more sophisticated load balancing.

It’s like mortgage-backed securities in a way. The more mortgages you put into a group, the more statistically accurate you can predict the probability of default of the pool. The same is true in insurance, and now in electricity. Is Ohio having a really hot summer? Well, on a more nationalized grid, Ohio can pull electricity from producers in areas of the country that are having a cold spell.

However, we now see this trend reversing. With an advent of much more efficient renewable energy sources — mainly solar power, and the ability to store that power — we’re seeing a surge of microgrids. Microgrids are electricity grids built for very small geographic areas — think an army installation, a neighborhood in a remote area, or hell, even a neighborhood in a city with very environmentally concious citizens. Microgrids can often provide enough power for all of these areas’ needs, and sometimes even sell excess power back to the national grid.

Right now, the marginal cost of implementing a microgrid is still a bit higher than simply hooking up to your local utility, but as renewable local energy rates fall, microgrids will become even more prevalent.

In another example, the future of the internet is moving in a decentralized direction. Both the progress of technology and the desire of people to avoid government (or corporate?) snooping will drive this change. This was recently illustrated in a piece by Clive Thompson in Wired magazine. He highlights a project called Hyperboria, which is “an encrypted network made up of people connecting to one another in a peer-to-peer fashion.” Yes, this is built upon the internet as we know it, but it’s a small private network that only lets in members who have invited other members that they know.

However, as my co-contributor Eli Dourado wrote recently in the New York Times, there will be new internet switch technology developed that will make it much more difficult for the NSA to intercept data. This same technology could make it simpler to create many smaller closed-off internets. I have little doubt that countries not so pleased with America’s spying ability are pursuing this technology feverishly. And other technologies such as Google’s balloon-based wi-fi would make it much easier to create peer-to-peer networking technologies. Of course, there are many positives and some serious negatives to this approach, but technological progress will make it easier to accomplish.

And there are many other examples of technology, like 3D printing, or the printing of drugs at home, that will decentralize production altogether.

The 20th century was mostly defined as the world becoming more and more connected. The 21st century will see some of this scaled back, hopefully in socially beneficial ways. Some of this decentralization would do wonders to alleviate the major problems of living in a hyper-connected world — mainly, that this type of system is so complex that it becomes, a la Nassim Taleb, hyper fragile. These complex systems have so many connections and competing forces, many often hidden, that predicting outcomes becomes futile. As an example, the collapse of the national power grid would seriously damage millions of Americans. But if more people relied on hyper-local micro grids, then damage to one of those systems would not cascade to other users.

The challenge will be to determine which things will benefit from tech-driven decentralization, and which will benefit from keeping a global focus.