so there’s very challenging future
problem that I think it’s always always good to address and for sure there’s a
lot of talk about this lately but I think there’s a lot of points that are
being missed when it comes to the future problem about automation and how it’s
going to affect the the workforce of the future I think there’s a couple of
points that need to be addressed and I’m going to try to address this in this
episode the first one being how automation could eliminate up to 25
percent of US jobs by 2030 but how the lower wage tiers will get hit the
hardest and how soon that’s going to happen the second point I think it’s
important is to talk about the variety of uncomfortable problems that we’ll
know that appear with even more inequality especially between lower wage
workers and highly skilled professionals and ultimately business owners the third
point is why displaced workers aren’t going to just surrender weekly and what
they’re most likely to do instead I think you know displaced workers are
being portrayed as as a victim workers that aren’t capable of adapting to
what’s coming so I think I want to touch on that and then lastly of course how
are we going to pay for all of this there’s a lot of a lot of answers that
are being thrown in the air right now especially and now that we are in a
electoral year a lot of candidates are throwing around different solutions with
Andrew Yanks UPI solution being the most famous and most talked about right now
so I think whether we like ubi or any of the other points that I just recently
brought up I think these issues related to the future of work are headed
straight at us I think we underestimate the speed of how fast this is headed
straight at us but at least over the next decade as we’re entering
2020 I think the better the answers we consider now the better we all will be
prepared so I think one one main I think if we take this episode now and we
concentrate on the on one of the biggest research papers about this issue made by
Bain & Company the they created a report back in 2018 called labour 2030 the
collision of demographics automation and inequality and I think it touches these
subjects in a very interesting way and I think talking about that specifically
for the the points that I just mentioned is could lead to a lot of a lot of facts
and a lot of arguments that might necessarily have not been heard before
but what I personally think is important to tackle I will give a whole lot of
course link to to the actual report but I will just use that in them I will use
the report to make my points and comments on the points being made in the
report now so first I think the very the most important fact that the report is
tackling is that they think Bain & Company thinks the automation will
eliminate up to 25 percent of all US jobs by 2030
with the lower wage tiers getting hit the hardest and getting hit the soonest
and of course that will be devastating and it’s not that far away right so if
you remember the last financial crisis back 2008 we’re more than a decade past
that so right now in 2019 and during 2030 we are halfway
between them and 2030 we’re right in the middle so it goes to show I mean without
saying time flies and as time flies this time it won’t be that much fun now
interestingly Bane predicts that the manpower needed to build out the
technology that will ultimately eliminate all those jobs will be enough
to keep us all working until 2030 now I personally think it might happen before
2030 but the report goes well into details by reading those those points
and their argumentation they definitely have their reasons but I think what
what’s more important is to discuss why this is happening
demographics and automation are mutually reinforcing trends one of these trends
that’s already easy to see is that employers they already turn to
automation increasingly because well the biggest reason is they can’t find
workers with the specific skills required and especially not in the
sufficient numbers that they need one reason for that is the baby boomers
slowly leaving the workforce though many of them are delaying retirement as long
as they can I remember advice had had a clip uploaded not too long ago about
people who in their 65 plus age choosing to remain in the workforce and doing all
kinds of jobs instead of retiring at hundred percent so that’s that’s one
another thing is the additional labor that came from China China’s opening I
think that has mostly run its course so his sufficient numbers of qualified
people aren’t available employers don’t really have any other
don’t have any other way then turn to machines in order to you know take out
you know be be at the level of productivity that they are required to
be at you know to to keep the company to keep the company going so at the same
time as this is happening I think technology is making the machines better
obviously and less expensive as it progresses much of the job automation so
far has been fairly benign when it comes to jobs
for the most part it has replaced a highly dangerous factory work or other
you know boring and tedious unpleasant repetitive manual labor so as a result
this type of automation makes human workers more productive instead of you
know specifically replacing them that’s about to change as artificial
intelligence technology improves me myself personally as a marketing
consultant there’s a lot of tasks in my day-to-day that I just leave to the
machines I I set and forget and check up on them whenever I need to but often I
have automated rules that triggers that gives me a message that sends me an
email right at the moment something happen if there’s a you know if I have a
certain benchmark for something and whatever happens crosses that benchmark
I get notified so I can be reactive you know while the Machine does the work
before that happens giving me way more time to do other stuff which increases
my individual productivity but as artificial intelligence technologies
improving these machines will be able to perform cognitive tasks that once
required highly trained and highly experienced humans now at any given
company this trend can look like a good thing to the owners
you know what you do is simple you invest in machines you lay off people
you meant more profits and you know in in a previous in the previous episode
where I talked about uber cutting you know in two in two different sessions
over the course of a couple of months they slashed about 835 employees and how
basically a Wall Street’s investors they tend to applaud those
moves right but it’s pretty short-sighted in the aggregate because
someone has to buy your products in the end so the workers that your company and
other companies just laid off won’t be able to spend as much unless new jobs
replace the one you just eliminated so in theory automation will enable lower
prices which will rise the demand and create more jobs but in the report labor
2030 the coalition of demographics automation and inequality by Bain &
Company they don’t think it will happen that way so basically they foresee up to
40 million permanent job losses in the u.s. even accounting for higher demand
so what they’re basically saying is that in the next 10 12 years the economy of
the United States will swing from a labor shortage to a huge labor surplus
so with the labor force presently around hundred and sixty million this implies
an unemployment rate around 25 percent so it’s hard to see how that could be
called an economic boom by anyone but if we try to see from an optimistic point
of view and assume that you know other jobs that we don’t even know yet what
what it is that they will do appear for a lot of these displaced workers then
the situation still won’t be ideal for either them or the economy at large
because they will likely make less money and have less spending power so the
report points out that wages will face downward
pressure long before workers get replaced by machines so basically the
mere existence of the new technologies they will ultimately cap wages as the
price of automating versus employing humans falls drastically now the result
that will be even more inequality between lower wage workers highly
skilled professionals and business owners so the inequality gap will widen
it will create a variety of problems one of which is consumption growth the small
number of wealthy people at the top can only spend so much because basically
they save most of their income and lower income people they spend more of their
income so this pattern that already is existent that we can see in our society
will only intensify so you can picture that for yourself this is a scenario
that really doesn’t have a happy ending best case scenario is that the reduced
consumer demand caps growth and we’ll see more decades of flats or mild growth
as we’re doing right now that’s the best case that the worst case will be
something like economic dislocation economic inequality lead to social
breakdown and more calls for government intervention higher taxes on the wealthy
more generous welfare programs more regulations for businesses so none of
these outcomes is good but it’s really not clear how those can be those things
can be avoided and also these projections aren’t coming from some
liberal think tank either like painting companies pretty much as business
friendly as it gets so it’s it’s it’s real valuable insight that we should pay
attention to now another important point is the
demographic I think whatever degree of life extension that we might achieve
obviously we have achieved a longer life extension right now than previous
decades even but zooming out and looking at the last
hundred years then it’s pretty remarkable the the achievements that
we’ve done in the medical field to extend life expectancy in the Western
world but whatever degree of life extension we might achieve in the future
the results won’t reach every population group right this inequity will result
will inevitably result in distortions and that could get very uncomfortable as
well because already now like like I said the the the life extension I mean
the life expectancy excuse me is more notable in the Western world it’s not
something that the whole world has equally experienced but with life
expectancy comes a couple of arguments that are interesting for instance like I
mentioned in the in the device episode that covered these sixty five-plus
people choosing to continue to work instead of retiring one could argue that
this life expectancy an extension of that could enable older people to work
longer that could accelerate automation driven job losses younger generation
will feel the impact of this trend disproportionately and many won’t like
it rights which could also be a dark
forecast so as we see large parts of jobs destroyed displaced workers won’t
really surrender weekly nor will they be happy that small numbers of highly
talented mostly older workers receive most of the rewards they will want help
and in democracy they will have the power to demand it being the
overwhelming majority so that could spark more populist
movement springing up all over the world it’s already populist movements on both
left and right it’s already springing up but it will probably keep gaining
momentum and increasingly taking control of governments if they do the resulting
policy changes could be significant mild measures like job retraining probably
won’t suffice we could see a major expansion to redesign the safety net
programs rather than trying to re-educate and retrain people to to
adapt to the changes in the future of work now the potential for left-wing
populist movement to arise is pretty high it’s at least 50/50 and those odds
mean higher taxes larger governments more government controls so populist
movements they basically tend to look for a strong leadership to be able to
direct the country in the correct path and if that happens how to how to pay
for all this well the the report says most likely is a pressure for a wealth
tax not an income tax but attacks on all your wealth listen to a podcast episode
recently I think it was actually couple of days ago from The Wall Street Journal
where Elizabeth Warren Bernie Sanders they are all proposing that the wealth
tax so if you own the yacht or house or company you’re taxing on the value of
the worth of those assets not when you not not when you sell something and you
pay capital gains tax it’s just the fact of having that owning that that will tax
you on your wealth now how aggravating will that be to many
who have already paid tax once when they earn that wealth right I imagine having
to donate 1% 2% of your net worth to the IRS every year so it could happen
and if it does it will make it that much harder to keep your assets growing
against other headwinds so a populist backlash could take us to a different
state of mind especially now that AOC way much younger
more charismatic version of Bernie Sanders or Elizabeth Warren has emerged
her siren song of how the rich should be made to pay to make society more just
and equal because they benefited the most and the majority of the population
did not will resonate well will resonate even more it’s already making its is
already making its way right so many of us would suggest that this outcome would
be a terrible thing it’s quite possible that many more voters in in all
countries will disagree and things will change a significant majority of
Millennials who will be voting in the greater numbers think that socialism is
superior to free-market capitalism now that we have ever actually tried
free-market capitalist capitalism of course but there’s a there’s parodies of
it but not a real tested and tried empirical empirically tested free-market
capitalism so of course all of this what we’ve done in the name of making sure
that things are more equal and fair and it’s just not just large corporations at
the top of the food chain that do this when we need to complete 500 or 600
hours of very expensive school and the princess ship and in order to be able to
qualify to apply nail polish a talent that every young teenager learns on
their own there is regulatory overkill at all levels and cosmetologist unions
make it even more difficult for a young person to break into their niche right
so for investors a wealth tax would mean the merrily keeping your wealth much
less growing it may get a lot harder in the next decade