You Are Going To Lose Your Job

The techies are coming, the techies are coming!  Sound the alarm.  There is no hope.  The middle class is going under and we are going to have a two class system with have and have nots.  It’s all the fault of technology.

Moore’s Law is dropping the cost of tech at such a rate, we will all just have to become grape pickers, until they invent machines to do that.  Oh, they already have.  Wait, we will become taxi drivers and limo drivers, truck drivers. Oh, Google invented the driverless car.

What’s a person to do?

I have seen a lot of doomsday articles on the advancement of technology lately.  Paul Krugman characterizes the technologists of this age as “robber barons”.  Those greedy bastards.  They are inventing to take you down.

But, this has been the trajectory of human development ever since the dawn of time.  It’s just happening faster now because technology allows research and development to happen more quickly.  When we developed the wheel, people that carried individual items were out of business or had to adapt.

Ask a farmer or a housewife if they hate technology.  Technological innovation made them more productive and made their lives easier.

There are several things going on all at once in our economy and technology is bearing the brunt of the blame for the sputtering economy.

First, demographically, our country is aging.  Older people consume less when it comes to consumer goods.  But, they consume more when it comes to health care.  That’s yet another reason Obamacare will be a total fail and budget buster.  Old people get rid of stuff, they don’t acquire stuff.

Second, as Gary Becker notes, our society has radically changed since the late 1950′s.  More single parent household‘s exist.  That automatically puts children in that house behind a statistical 8 ball.  Out of wedlock births are way up.

James Heckman has stressed that lower class children are by age 5 already considerably behind children from the upper classes, and that these differences grow as children age. As a result, children from lower classes are much more likely to drop out of high school, and much less likely to receive a college education. They end up with worse jobs, greater unemployment, and much higher crime rates.”

We need to change the economic incentives to make it more desirable to have a two parent family.  How we do that is subject to a lot of debate and conjecture.  Current policies in place incent current behaviors.  People aren’t animals.

Third, immigrants into the US generally don’t make as much money when they first come over as their heirs do.  Generally immigrants take lower paying jobs.  Succeeding generations do a lot better as they become acclimated to their new country.  This has been true ever since the great migrations of the mid 1800′s.  If we change current immigration policy to let more people come to the US, surely our contrived “middle class divide” will expand.  Long time statistics bear that out-but that doesn’t mean we shouldn’t do something about immigration.  We should.

Fourth, the technological revolution is starting to reach into virtually every job that exists today.  We don’t need as many people to build things, monitor things, take care of things.  We are continuing the transition from a physical labor force to a mental one.  However, because the cost of technology is dropping, we a democratizing opportunity.  More people have access so more people can do things.

Moore’s Law isn’t the danger it is played out to be.  Want to really freak out?  Check out the cost to do research on DNA.  It’s dropping at a far faster rate than Moore’s Law.  The implications to that are going to be longer human lives.

The implications for the health care industry are clear.  However, the Chicken Little‘s run around and worry about a population explosion that we can’t support.  Don’t buy into their logic.

Where there are problems, look to innovation to solve them.  The unfortunate piece of the puzzle is that instead of decreasing the role of government in our lives at the precise point innovation costs are dropping rapidly, we are hyperventilating and fearful-and rapidly increasing the role of government meddling into our lives.  The Patriot Act was only the start.  Obamacare and many of the rules and regulations Obama’s administration put forth will only curb innovation.

Governments are albatrosses on economic development and creativity.  They concentrate power, and centrally plan events.  Innovation works best when there is creative destruction and free markets to allocate capital to the best ideas.  We don’t have that today.  Capital is locked up in many cases in government bonds to pay for the hyper expansion of government and increased debt that comes with it.

Free market solutions to problems are messy though.  People can get “hurt”.  But free market solutions solve problems the most efficient way for the greatest amount of people.  More people are lifted up by the arrived upon solution than are hurt.

We just have to swallow our fear and let the market lead the way.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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