Money in the future

Earlier in the week I posted about robonomics and how robots are changing economics and life. Part of that change, I think, will be the end of money as we know it. Because price of production will fall so low, over time, the need for money will really go almost away. not completely, but almost.

Prices will be so low that for many basic goods, things can be given away, this includes food and basic necessities. This ends poverty right there. People will not need to work too long or hard to have access to better things. What will people do to measure and control the flow of this new wealth. I simply don’t know.

Musings on the Future (Robots took my job)

The idea behind this blog is to allow me to expound on the three general things that fascinate me. History, current events, and the future. This started out simply being a discussion on how robots will take our jobs, and we wont care. But the history muse kicked in and it started to evolve.

Think back to when our civilization was pre-natal, anyone remember that? Humans lived nomadically, some still do. They lived off the land, hunting and gathering, moving on when the resources thinned out. Populations were small and mobile and healthy. Darwinistically the sick and old were picked off by predators, Lions, bears, rivals, etc. Fewer children were had. Then some day, some one figured out that you can grow your own plants. Doesn’t really matter right now how this came about, but it did. And it changed our world, for ever.

You see, if you can grow your own plants, you don’t need to wander around and gather them. Sure the guys still had to go and hunt, but the women could hang out at home and grow food. So this created a more reliable supply of steady food. It also created the village, because now there was reason to stay in one place, say a fertile valley, and make a home. This also gave the population a chance to grow because now there was more ability to produce the needed food. The men could also go and defend the valley from other people. This is called horticulture, or low intensity farming. Usually such acts are dominated by women, and this caused confusion and distraction to the Europeans who came to America to see women farming and men hunting. Europeans who had long forgotten their foremothers had done the very same thing.

Over time, this farming got more intense and complex. The benefit of this was a steady supply of food, weather permitting, the downside was 60 to 80 hours a week of labor, compared to the 15 or 20 that nomadic hunter gatherers had.  The other change was villages grew and became more complex. Now it wasn’t just one extended family but hundreds. Who’s the boss? It’s no longer grandpa and grandma, its that guy over there, in the big clay building, who says he is half god. Agriculture created stratified society, and radically altered human theology.

It was the most fundamental technological change in human history. Until the 1700s. James Watt was a Scottish engineer who was fooling around with his Church’s steam engine when he realized he could make it work better. By connecting the improved Watt style engine to the developing machine technology of western Europe a new radical change was started. the Industrial Revolution. This coupled with the urbanization movements around the world created a new social situation that throughout the 19th century unfolded to radically change humanity again. No longer were we using physical hand, beast, wind, or water power, now we were unleashing chemical fuels to do our work for us. Productivity soared, but so did stratification.

Economic historians tend to divide the Industrial Revolution into two sections, steam and electricity, but for our purposes here they are basically the same. The third major invention is a double invention set, computers and robotics. This revolution really started in the 1940s. The 1947 Bell Labs invention of the transistor allowed for micro computing to take off. But the real exciting stuff is happening now, in the 21st century. I suggest this century will see more profound change than the 19th century. Robots are taking human jobs and creating no new jobs to replace them.

While the steam tractor replaced hundreds of day laborers, they opened up thousands of urban factory and support jobs. The tractor forced people into cities, and they found jobs in those urban environments.  Robots will not do so because the people who design robots and program computer systems already have jobs. Not many new jobs will be needed to fill the output.

This is a positive thing, in some respects, robots are filling a void, cheap labor. It is a economic fact that the demand for cheap goods is driving down price of low skilled labor. On the other hand economic development of the third world is driving up labor skills. While it’s not happening cleanly or evenly, the third world is pricing themselves out of the old style industrial market. Example: China picked up much of American sweatshop labor in the 70s and 80s. But now Chinese are beginning to export their sweatshop labor to south east Asia and east Africa.  China is starting to develop much more automation in its industrial output as well. The sweatshop jobs for thirty years helped china develop a growing middle class, and the same thing is happening in south east Asia and will happen in Africa, which we shall see, i predict, by 2040. The resulting development of a middle class has created a domestic supply of service demand.

Many people think of service as low wage menial jobs, but don’t forget that doctors and lawyers are service jobs. Also are artists, people who perform or create for pleasure. Sports teams, musicians, actors, comedians, and many others. Abstract creations are harder to see but are often more valuable in economic terms. A writer works for five months creating a novel and sells a million copies, makes a fortune for the publishing company, wealth created, but much of it is in ebook form. It can be hard for people to track mentally.

By the time the exporting of jobs reaches west Africa, the last place on earth that can be outsourced, the Robonomic revolution will be well under way. Robotic factories and robotic farms and robotic trucks and robotic restaurants are all being tested here and now. Some Australian mines work with minimal crews using a great many automated systems to produce ore. Google and DARPA are both developing unmanned street safe cars for profit and security reasons. This can easily be applied to trucking and taxi services. the US Navy landed an unmanned drone on an Air Craft Carrier. Several fast food chains are working on unmanned restaurants. Drone companies are developing systems to help farmers be more efficient. And Lights out factories are being expanded around the world. Part of this explains why the 2008-present downturn has been so limited in new jobs, the businesses are finding cheaper ways to get the jobs done, ie humanless.

What does this mean for all of us? A life time of poverty and destitution? Hardly. I propose a cultural flowering, maybe not one the academics would love, but a massive cultural outpouring none the less. But it will have brutal birth pangs. There will be tumult.

As robots take people’s jobs, unions will be hit first and hardest. They will use political pressure and their organizational skills to stall this, at least in places where they are strong. This will create uneven development and deployment of robonomic systems. But what will the rest of us experience?

Think of a hamburger at McWendykings. Lets think about what’s in it. a bun, a patty, some lettuce, ketchup, and a paper wrapper. The farmer that grows grain will use robonomics to grow and harvest many more acres of land than he can now. He can have a dozen tractors and drones to crop-dust and monitor. He needs to hire a lot fewer hands and his price per acre can go down while still maintaining a good profit. So grain costs less.

Drive that grain, probably in an unmanned train, to a bakery. It’s a lights-out bakery, unmanned train feeds grain into the hopper, unmanned, which mills it into flour, and mixes it with stuff to make buns. All unmanned, except a few inspectors and maybe a mechanic. So the bakery pays alot less for staffing, and their health inspection ratings tend to go up. Unmanned truck delivers these buns to McWendykings.

How about the beef? Well, the cattle, free range or feedlot, are monitored by drones who scan RFID tags. The modern cowboy is sitting in a control console, maybe in Houston, maybe in Abu Dabi, and uses drones to keep the cattle together. They are taken for butchering and the butcher uses automation to cut the animal down to pieces. The parts to be ground up into hamburger are done automatically, like the bakery. They are frozen and sent in unmanned delivery truck to McWendykings.

Same with all the other stuff.

The parts are loaded into the automatic McWendyKing’s loading bay, all marked with tags and robotic systems store them safely. A McCustomer walks in and instead of seeing a pimply high school student or a octogenarian sees an Ipad. They punch up their order on the touch screen and swipe their card, (maybe feed in bills) and are given a number. They wait around at the delivery window and a robot, maybe even an android, hands them the food. The entire meal was cooked by machines. (The hamburger making machine already exists, youtube them, they are nifty)

So we have reduced manpower on farms, ranches, bakeries, butcher shops, delivery systems, and the actual restaurant themselves. The restaurant might have a manager in the office going over the books. All of those employee costs, paychecks, taxes, workmancomp, are now removed from the bill. You can imagine a 50% cut in price each step along the way. What is now a $2 burger could end up being fifty cents by 2030 (Adjust for inflation….. Bernanke).

So we laid off skilled and unskilled labor, and get a 75% reduction in price. How does this help us? Well, we can guestimate that a 30-80% price cut for all things, depending on how labor intensive and how much labor can be automated. Government would be a great example of automation (and a great example of how unions are preventing that). People sitting around in offices doing things that computer programs can do much more efficiently and for far less cost. The word processor has replaced the typing pool for example.

What do we do? We work 75% less. Instead of 40 hours of work a week, (down from 80 for agrarian societies) we work 10 hours a week. This means we have all that other time to do useful and useless things. What kind of things? Blog of course! make rageface comics! remix videos! go to clubs! Blame president Bush for things and then protest him! the sky is the limit here people.

How quickly will this happen? It is hard to say. Watt improved the steam engine in 1750s but England didn’t fully industrialize for 100 years after that. Germany and the US both started major industralization in the 1870s and took the US until 1920 to urbanize, Germany was set back by that little dispute they had with France, followed by the other dispute they had with Russia.

I strongly suspect that by the 2030s the USA and other countries will fully realize they are in the middle of the Robonomic revolution. Part time jobs, they say, are becoming the new norm, and this path we are on, I think it will be something that isn’t bad, because the price of everything will drop making part time all the work one needs to sustain themselves.

Not only will prices go down, abundance will go up. This will help many things. The destruction of real poverty in the 3rd world will end population growth. People who leave poverty also have fewer kids. By 2050 the world population growth will be 0 (based on current trends, baring any kind of major global war and following baby boom). This will help end the pressure for new land for living space. But it will be coupled with improved usage of urban space. Towers will allow cheap and spacious living for those who wish the urban life, and improved transit will allow suburban and rural living for those who choose it.

Production will be so abundant that very few things will be scarce, mostly land and human ability. Beach front property will still command a lot, as will the penthouses. But skilled doctors, talented actors, and random celebrities like today’s Kim Kardashian and Paris Hilton will command more resources than common people. But I think the common people will want for less because their material and luxury needs will be easily met. The Play Station 7 will be easily had and baring disasters, they will not have many bottlenecks.

This is just the dreams of a dreamer. But thus is the point of this blog, then, now and tomorrow.