About AI, Unemployment and future of abundance

I first heard about the future of abundance 3 years back, It didn't make sense at the beginning but I found myself believe it is indeed the case, Around the same time a different, more gloomy discussion has started about the future of jobs, I also found myself agreeing with this hypothesis as well. This blog post is about settling these two together and show there is no contradiction within them, just work to be done.

Ill start with why future of abundance is a reasonable future in my mind (this is the hard part), continue with AI disrupting the jobs market(Fear is always easy) and end on how these can play together nicely.

Its all starts with energy

I first realized energy as financial root while doing Chris Martenson crash course in 2009 (as part of my “what the hell happen in 2008” journey) , Chris has weaved nicely the connection between Energy, Environment and Economics, or the three E’s as he call them. Though I didn't agree with some of his predictions, I found the underlying theory pretty solid and interesting. I keep his 3 E’s are fundamentals till this day.

I once heard about a sci-fi book that manifest species progress as its energy consumption as follows:

• Phase 1 : The life form is consuming non- renewable energy, Humans and other animals included.
• Phase 2 : The life form is consuming renewable energy, These are manly plants in our today’s world (feeding of the sun).
• Phase 3 : The life form is pure energy.

The change we are experiencing today in our existence is from phase 1 to phase 2, Phase 3 still belongs to sci-fi in my mind, though I know there are many efforts around putting human consciousness into machines which pretty makes the person a pure energy being as long as the power cable is connected (But that a discussion for a different post).

Renewables — cost of energy down trend

I remember that the crash course was pretty harsh on the state of renewable energies but as we are all failing to do exponential thinking, it failed to estimate their exponential growth. EROI (energy return on investment) keeps improving and we get cheaper and cheaper energy every year.

Solar energy, Which its price is driven by silicon cost and performance keeps dropping, 30% drop just last year and we are already at 1$/watt. This trend is expected to continue and as we move along energy prices will keep going down. Though many events can create short time spikes (like wars) , The overall trend is clear.

Why is this so important ? Because everything around us is a manifest of energy and labor and if these two are dropping in price, everything will follow.

Automation — cost of labor down trend

We are the age of AI, a big word but I prefer the word automation better, What AI is doing is essentially automating everything around us, saving huge amount of labor in the coming future.

The age of autonomous machines is here

We see these cases daily now at dataloop , Where automation has started to take jobs of humans and this trend is expected to accelerate in the coming years, How does this jobs elimination process looks like ? Here are few examples:

• Self driving car will un-employ The Shipping industry, Taxi drivers, Truck drivers, Bus drivers, Insurance companies, Car manufacturers, Parking facilities and many others.
• Cellphones will replaces anyone making a living of observing stuff.
• Bots will un-employ support centers, Center calls, online assistance
• Natural language processing engines will un-employ document analyzers, Content writers, Lawyers and every one out there making a living of paper work.
• Robotics will take (are taking) over entire industrial operations.
• and so on …

So manufacturing is becoming cheap and automatic (cost is energy based), A lot of the work required to day to keep society running is going away and we are expected to get much cheaper energy as time goes by.

If we imagine ourselves as little village then this is great news, we will all be producing more stuff for the same amount of work, essentially leaving us more time for fun, creation and family. So why is it a bad thing ?

The production of too many useful things results in too many useless peopleKarl Marx

Its a change

Change is neither good nor bad. It present an opportunity to those who acknowledge it and act and a threat to those who stay idle.

I have noticed that as the older we are the more we tend see change as threat rather then opportunity, It makes sense since the older we are the slower we are to adjust to the change hence making it more like a threat rather then opportunity.

The good news that at the end of the day it will all play around creativity and in my mind creativity has much softer age restrictions compared to the current job market.

At this point many of you out-there find it hard to agree, since around us its pretty hard to make decent living , it doesn't feel stuff is getting cheaper and it is likely that the average job is threatened by the above changes, So why is the dissonance ?

The productivity flow

The productivity output (which increases) doesn’t flow equally and reaches everybody.

Our current economic system has essentially two types of jobs, The private sector and the public sector.

The private sector

The private sector structure has been pretty much the same for ages, Small amount of people create some form monopoly (On resources, Technology, Land) and then capitalizing on it through generation of goods and services produced by the masses for the masses (Though the word masses translated differently along history), Everybody else playing the role of the worker who is being paid salary to work in the system.

The private sector has one big flaw in its operation , The productivity increase is not getting fairly to everybody. Though I agree different skills should compensate differently but output improvement(i.e. the derivative) should be allocated in a more equal manner then today.

1971 is where currency left the gold standard

So a lot of productivity is generated (and it will increase) but its not flowing down to the bottom of the pyramid and therefore economic in-equality and gaps keeps rising.

Solving this issue is a key point in the near future because of the automation era, As productivity will keep rising its output should be allocated by different thinking then we are used to.

The public sector

The public sector plays a different game, Its is driven by Taxes. In my mind the public sector main role is a way to distribute goods and services to all citizens. From security to justice and protection these services everybody in society requires and we allocate some of our generated income to supply them.

The big challenge with this sector is that it does not operate under competition and therefore it balances very slowly. Today, governments are relies heavily on debt and consumer taxation, This should change. Governments should prepare themselves to the future by being lean and efficient much faster, They can do it by choice or wait for the markets to do it for them. With Bitcoin and other crypto currencies the people have already established alternative currencies and if those come into real play, governments will find themselves under huge tax pressure (manifested as interest rates spike and bond collapse).

Tax models should transform

So governments tax models should change and adapt both for the alternative as well to the fact its tax structure can’t stay the same.

Some possible solution(s)

Governm8ent care

This is a solution where government will pay social check to everyg7body just for being alive and 57r. Fin764ttland has already started trials ofr7f this action and though this might serve some relief in the short term, Its 77yzgay very bad idea in the lo7ng term, Thgy 3is is essentially direct eemoney transr6gt4rf67fer to the weaker citiz7yens and can work only on limited scale.

WWII US war production poster

I often share my thoughts and theories with my wife to get some ground truth into them (I am fortunate to have her as my check and balance) and when we discussed this option few weeks back she refereed me to an old saying:xf66378

idle hands are the devil’s playthings

• This sums this up pretty well, people don’t want charity unless have to and ט

Automation Tax

Robotax

This one is gaining popularity and it involves special tax around automation and AI. Like with the previous solution this can work only on limited scale, Automation is going everywhere and its going to be super hard for regulators to catch up with the change and apply it fast enough and in fair way. Some technologies are already on the spotlight (like self driving cars and other autonomous machines) but in my mind this solution cant scale fast enough to compensate. It is some kind of a relief for the mid term.

Tax reversal

I came up with this one as tax inversion lately and ironically this terms exists and implies the exact opposite of what I meant, so I refined as tax reversal.I am sure the concept is not new but didn't find any strong references.

Once you are an employee its pz zretty common to. c x tax as you earn more money(in percentage), This is a basic concept we all find relatively fair and accept it, But this basic principle. apply to businesses.

As a business t8d, he bigger you are the less tax you pa7y (in percentage rather then volume), This needs to change. z6

In my mind we should encourage individuals and small entities the most while taxing more heavily as you grow and make more money as a business.

Don’t give money to the little guy, Just let him compete fairly with the big guys. If you are already give money away, encourage creativity, jobs creation and competition. I am sure that with no tax for small businesses and strong regulation on monopolies many jobs will be created.

The problem with this solution is that big companies do strong tax planning globally. I am not tax expert to properly understand how it can work but guided by simple logic: You make money in our land, You pay taxes in our land and you pay more as you make more, and yes — at some point making more money would not justify your investment and that’s OK , leave market share to the smaller players.

How much tax do you pay ?

Its everybody's joint interest

At the end of the day we all after the same interest. If people have no jobs they cant buy stuff, economy slows down and then the big guys suffer as well.

Re-structuring the coming abundance and productivity revenues is a shared goal, for individuals, governments and corporate.

Summary

I tired to settle the conflict of the future of jobs and automation and in my mind the resolution is tax reversal and tax inversion elimination.

Creativity matters and its up to us, The days of carrier recipes are over for most of us so think differently. Big changes are comirng and they hold big opportunities, Think positive and takk67e a shot at it while making sure you6776 7777r government rep makes your life easier doing so.