Topic: high leverage and faster pace of automation make it exponentially more difficult to re-train enough people for new jobs
Solution: Buy Google and gold (many more companies in my newsletter)
Length: very short (a few minutes’ read)
Executive summary: Low interest rates and technological progress accelerate the ongoing process of automation, leaving more people needing -but less time for- re-training.
Low interest rates also mean more indebted consumers and governments, and thus less money for re-training the increasing hordes whose jobs are being automated away.
Swedish: Plus en länk till en paneldebatt i Lendifys och Börspoddens regi, om nya investeringsmöjligheter
Leverage and Machines are at the heart of the issue
low interest rates make capital relatively cheaper than labour
investments in automation have picked up speed due to
- accelerating technological development (“Moore’s law”, or, rather Kurzweil’s Law Of Accelerating Returns) is pushing technology over the threshold needed to replace humans in many areas in short order, thus attracting more investments
- low interest rates make investments in technology even more attractive
Thus, automation is proceeding faster and in more industries simultaneously than ever before, leaving more people than ever (at best) between jobs.
Low interest rates have fueled the build-up of debt among governments and private individuals. Despite lip service to deleveraging since 2008, debts are much higher today than at the “peak” 8 years ago, leaving less room for debt-financed re-training for new jobs.
Leverage => more machines, more debt => less jobs, less re-training buffer
The same forces that make automation investments more attractive and all the more people lose their jobs to machines, also work to make it more difficult for people to be able to finance re-training (one, because they are already over their heads in debt*; two, it’s happening faster and in more industries at the same time than before, leaving less time to re-train)
* Earlier, people hadn’t maxed out on credit card loans, auto loans, mortgages and student loans, which meant the few who lost their jobs to machines had some leeway in time and money to re-train for new employment.
Now, more people are automated away at the same time and they have more leverage and thus no economic room for time off or investing in re-training.
Goldman Sach’s take on the subject in a recent podcast of theirs called for new ways of financing re-training, including re-purposing (expropriating?) pension money. I, however, think that ship has already sailed.
So, what to do?
My 2 cents: Make sure you own assets that benefit from the changes, since I expect it to get really ugly first, in a way money printing can’t mitigate, before it gets better and we can approach the Star Trek ideal of no money.
The Sprezza (and Star Trek) credo
The acquisition of wealth is no longer the driving force in our lives.
We work to better ourselves and the rest of humanity
You could, e.g., buy stock in automation companies of all kinds (robotics, software etc., including a few dozen companies on the list in my next subscriber letter). You could also buy assets that benefit from low or negative interest rates, increasing debt levels and a possible monetary re-set.
Google, IBM and gold spring to mind.
Please note, however, that I do think it’s a little early to start preparing for a complete collapse just yet.
Links to previous articles on technology and jobs:
how tech steals your job, one
If you speak Swedish, check out this free investing seminar, with me and Ann Grevelius, in Stockholm on October 25, 2016.
Redan efter ett dygn är hälften av platserna slut så bestäm dig snabbt. OSA 20 oktober. Här är länken till fri dryck och tilltugg samt paneldiskussion om framtidens investeringsmöjligheter.
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Please don’t be Dr. Doom. We are a long way from machine replacing humans in a large scale, and when that does happen, hopefully we will have adapted to a new way of life and a new way of doing things.
As for investments, only invest in stocks if you know what you are doing and have the stomach for it. For 99% of the population sticking to a handful of ETF’s with low fees is the better option IMO.
I’m not really being a doomsayer on a large scale here. I just want young people to realize just getting a job won’t make them safe, unless they keep preparing for the next step. Ten years ago some thought being a taxi driver was safe… ten years from now human drivers may even be outlawed in some (most?) places.
Ten years ago, nobody could contemplate a computer winning Jeopardy or beating a top Go player, not to mention diagnose cancer better than the top oncologists. Now it’s routine. Ten years down the road from now, you’ll have that power in your phone (or rather, in your eye implants or contacts). The automation process is right on the cusp of taking off. I’m not saying scores of people will become unemployed or discarded, I’m saying if you are prepared you can rise to the top more easily than your peers.
Very good. I agree with you for the most part, but what the future really holds is anyones guess. Imagine a driverless car that needs to make an ethical decision between crashing into a school bus full of children, or swerving of a cliff killing only the 2 passengers on board…
How do you prepare for the future, when you do not know what the future will look like. My best guess relates back to one of your previous posts on constant self development and it’s Japanese philosophy of Kaizen.
To be ahead and rise above your pears, you need to always be getting better. Get more educated, fitter, smarter, healthier, etc.
Agree…
But imagine this: an ordinary human that needs to make an ethical decision between crashing into a school bus full of children, or swerving of a cliff killing only the 2 passengers on board…
Here in the US at least, job security has been non-existent for decades. Automation was not required. I started my career as a banker, and quickly realized they were consolidating as fast as they could. Most jobs would go away or have downward wage pressure.
At the same time, anybody producing physical goods was locating to 3rd world countries as fast as they could. And 3rd world people were moving in as fast as they could. Very intense competition for every type of job.
Young people can find good jobs if they are technically minded, but you must constantly retrain and be the most expert. If you get lazy, you will be road kill in a few years. Like running on a treadmill. The machine never tires, and your boss constantly gooses the controls faster. I worked hard and made myself both a technical and investment expert. The idea was to save and get off that treadmill as soon as I could.
Yes, you really need to become your own boss as quickly as possible. There is no real “job security” as an employee anymore.
Väldigt intressant text! Då jag är något yngre än dig (23) så är det absolut något för mig och min generation att tänka på och planera inför. Jag jobbar vid sidan om mina studier på en av storbankerna i Sverige och det är samma tongångar där från huvudkontoret -automatiseringen och digitaliseringen är ALLT. Framtidens bankkunder kommer inte ha något kontor att besöka (kommer inte behöva heller), privatrådgivare ersätts av datorer osv. Det är då bankväsendet, som man rent spontant kan tycka borde vara relativt skyddat i jämförelse med andra yrkesgrupper, men icke..
Må vara utanför ämnet, men som du säger går det fort nu och ökar succesivt. Vem hade trott att dagens samhälle hade sett ut som det gör idag, för 10 år sen. Vem vågar då ens gissa hur samhället och yrkesvärlden ser ut när jag fyller 50 (2043).
Relaterar till många äldre idag som totalt missade att anpassa sig till hela “data-vågen” och nu lever i en annan värld, som blir mer och mer avlägsen för varje dag som går tack vare att de inte fattade galoppen och anpassade sig
Great post! Have nice day ! :) isxtf
Lite väl negativ post ändå? I slutet av 1800 talet började industrialiseringen och vi höll då mestadels på med jordbruk. Vi som har döda mor och farföräldrar kanske tom hjälpte dom att plocka potatis för hand i de stora åkrarna. Tänk bredare och fundera på hur många procentuella jobb som försvunnit med teknikutvecklingen. Idag är det ingen som slår på åkrarna, ingen som hugger ner träd med yxa osv osv. Där har tekniken nästan ersatt allt. Och sedan dess har det hållit på så här, jobb försvinner och nya tillkommer. Men just nu, idag 2017 har vi kommit till världs ände och det kommer inga nya jobb? Nu har vi maxat ut allt? Under vår livstid?
De senaste 100 åren har varit otroliga gällande teknikutvecklingen.
Under 80-90talet diskuterades det hur datorerna skulle ta alla våra jobb, viss fackföreningar var förbannade och därefter kom även Internet och då gjorde allt “värre”. Men hur ser det ut idag? Knappast tekniken vi ska vara oroliga över utan människans girighet som bidrar stort till de börskrascher som varit, där snackar vi jobbslakt!
Vi har gått från jordbrukssamhälle till industrisamhälle till tjänstesamhälle till tekniksamhälle till ??? ca 50-100% arbetslöshet om 10-20 år? För första gången i världshistorien? nja…
/Andreas
Inte 100%, inte 50% heller, men kanske 20% inom 20 år som kommer få leva på medborgarlön då de inte har tillräckligt värdefulla skill sets för att konkurrera med datorer och personer med utbildning.
Om 50 år tror jag 50% är i samma situation i västvärlden. Det behöver inte vara negativt för målet är förstås 100%.
Om du är typen som skulle jobbat som tex fordonsoperatör (Uber, flygplan, lastbil, båt), vad gör du när roboten tagit ditt jobb?
Om du är typen som jobbat med att sälja kläder, mat eller annan detaljhandel, vad gör du…
Om du är typen som jobbat med jordbruk, matproduktion, vad gör du…
Om du är typen som jobbat med bygg och anläggning av vägar, fastigheter mm, vad gör du när…
Om du är typen som bedömt krediter på bank, hanterat försäkringsärenden, vad gör du när…
Förvaltare…
Snabbmatskockar…
Yrken som finns kvar ett bra tag till är polis, massör, terapeut, advokat (men inte t.ex. paralegal), vissa vårdyrken, politiker (de lagstiftar ju om att finnas kvar). Sen tillkommer förstås massa yrken vi inte känner till idag.
Notera dock att yrken som tillkommit är av typen datorspelsutvecklare, webdesigner mm kvalificerade och kreativa tjänstemannayrken. Vad gör du med alla som inte gick en civilingenjörsutbildning, dvs 99% av befolkningen?
Mänsklighetens efterfrågan är oändlig och det kommer alltid finnas saker att göra. Där är vi säkert överrens. Det jag ifrågasätter är att de som är lata eller inkapabla kommer vara kreativa och kunniga nog att vare sig få anställning eller lyckas sälja/byta vad de nu kan tänkas producera själva när robotar springer om människan i både informationsbearbetning ocvh fingerfärdighet.