This is the seventh post in my series on the future of work and labor. Here are the earlier posts:
- Macro Trends
- Increasing Productivity Opens New Opportunities
- Commoditization of Labor
- New Forms of Organizing
- Advice for Companies
- Tactics for Individuals
While the previous posts focused on major trends and their short-term effects, this post is going to cover the long-term implications and look at potential futures, positive and negative.
Predicticting is Insanely Tough
We’re living in an incredibly complex world. Myriad trends, institutions, and individuals influence each other in unpredictable and chaotic ways. While we can project some trends into the near term, the further we look, the more opaque the future; things will interact in radically unpredictable ways and black swans (highly unlikely, yet impactful events) will nudge or slam things in unexpected directions.
While it’s futile to predict too far out, it’s useful to explore a spectrum of scenarios and contingencies. With a grasp of the interdependent relationships, we can make guesses at how things will play out, attempt to influence positive outcomes, and create safeguards for the negative ones. Of course, we’ll need to adapt all plans on the fly, as future surprises us with which assumptions were wrongs.
Part of the reason prediction is tough is because outcomes are dependant on a race between different trends, including automation, outsourcing, productivity, and entrepreneurship. Depending on which trends outpace others, the future can be bright or dismal.
Since the first post, I’ve been talking about trends combining to destroy many jobs while creating new jobs. Until recently, America has seen more jobs created than destroyed and the new jobs are generally higher skilled, better paying, and more enjoyable. This trend probably can’t last and might already be over.
The first wave of outsourcing and automation decreased American manufacturing while creating many more white-collar jobs. Today, many of the white-collar jobs are going overseas or being replaced by robots. In the second post, I talked about how this is great for executives, entrepreneurs, and makers but tough for those rendered redundant or forced into highly competitive freelance marketplaces.
In the third post I looked at the ongoing commoditization of labor, even of skilled professionals like doctors and lawyers. As it continues, more people will be end up as interchangeable workers, fighting to secure enough gigs to survive. This growing, ad hoc labor pool will put further downward pressure on wages and encourage more companies to outsource work. Unless the demand for outsourced workers exceeds the pace of layoffs, the outlook seems grim for the commoditized worker.
Micro-entrepreneurship - making products for niche markets - will help many escape this cycle. However, not everyone is suited for the ambiguity and risks of entrepreneurship, nor do many have the creativity or drive to be a maker. Further, the markets might not be big enough for every micro-entrepreneur to carve out a niche. Hopefully, formal education and cultural norms will encourage more making and tinkering but it’s unclear how fast that shift will occur.
A Race Between Commoditization and Social Safety Net
Most of these trends can be boiled down to one crucial race: we have the commoditization and automation of labor that are reducing jobs and lowering wages, while at the same time we have low costs and high productivity allowing for a stronger safety net.
America is already in a place where we could eliminate homelessness and hunger and provide universal access to healthcare and higher education. Perhaps the greatest tragedy of our time is that we are capable of providing that safety net but fail to do so. As costs decrease and productivity increases, we will be able to provide an ever stronger social safety net and steadily increase the quality of life for even the most vulnerable members of our society.
If we increase the social safety net quickly enough, we can protect our neighbors from the brunt of commoditization and empower them to find their passions and create valuable products and experiences that benefit us all. If we act too slowly, many will be jobless and even more will be underemployed, slogging through meaningless work to make ends meet.
Innovation, Inequality, and the Social Safety Net
In these times of rapid change, I think two main goals should guide our country’s policies:
- Maximize the rate of innovation
- Increase the social safety net as much and as fast as possible
These two aims aren’t always aligned but a strong safety net can encourage entrepreneurs and researchers to take bigger risks that yield larger innovations. With a limited downside, individuals and teams can make huge bets without worrying about the cost of failure.
To a large extent, increasing the social safety net will help promote innovation. Other policies that encourage innovation include better funding of education and grant programs, clearer regulatory and tax guidelines, and a legible intellectual property environment that removes the threat of patent trolls and aggressive lawsuits.
With the success of Piketty’s ‘Capital in the Twenty-First Century’, inequality has become a major discussion around the globe. There are many ways to think about inequality but key questions are:
- How is wealth distributed throughout society? Is there a large gap between the rich and the poor?
- Is there social mobility? Is there an equality of opportunity?
- How bad off are the poorest or most vulnerable?
Wealth disparity is inevitable and probably essential to spurring innovation. The ability to improve one’s position and to benefit from one’s labor is a major incentive for the grind and risk taking of entrepreneurship. Wealth disparity only becomes a serious problem when it stifles social mobility and influences lawmakers to write public policy that hurts the non-wealthy; in America, campaign contributions have a major effect on policy and wealthy interests consistently warp legislators’ priorities.
Many of the trends around accelerating technology are further distorting the distribution of wealth and inequality will likely worsen unless there are major policy changes. This doesn’t have to be a bad thing - if we can protect all of society from the negative externalities and ensure that some of the gains accrue to the rest of us.
Social Safety Net and Basic Income
Our current social safety net consists of a patchwork of bureaucracies, regulations, and programs. It is highly inefficient, doesn’t go far enough, and many of our nation’s most vulnerable fall through the cracks. There are a lot of theories about better solutions but I’m particularly interested in Basic Income.
At it’s core, Basic Income (BI) is a guaranteed monthly cash payment to every adult citizen that is large enough to cover their basic needs. Variations of BI have the cash payment adjusted based on other income or based on hours worked. I like the simple version as it requires less bureaucracy to implement and cannot be gamed through creative accounting or fraud.
BI was successfully tried in a small city in Canada and quality of life increased while healthcare costs and drop-out rates decreased. There are many BI initiatives are favored by political groups in Europe and Switzerland will have a referendum on the topic in the next year or two - the proposed amount is ~$30,000 / year for every Swiss citizen.
As much as I like the idea of BI, it’s unclear if it is politically viable in America. Here, politicians seems to be more focused on job creations, which seems futile given the trends of automation and outsourcing; better for us to ensure people are comfortable without jobs than to force them into unfulfilling work.
For a long time, Americans have blamed poor people for their own poverty; as more jobs disappear, and especially as high status jobs (doctors, lawyers) vanish, sentiment will change and citizens will realize that many are unemployed due to larger trends rather than lethargy or poor decisions.
There’s something else that points to the political viability of BI - both far right and far left politicians are interested. The far left loves BI because it’s a stronger social safety net, no surprise there. The libertarian right is interested because it means dismantling the big, clunky entitlement programs in favor of a more efficient process with less bureaucracy. Perhaps some alliance of these two disparate factions can push us toward BI but it is unlikely in the near term.
Negative and Positive Futures
Now that I’ve extrapolated some of the major trends, I want to portray two potential futures. While I can guarantee our future won’t look like either, they serve as interesting points in the space of possible outcomes and as things to strive for or to avoid.
I’ve hinted at the dark future throughout this and past posts, partly because it seems to be our current trajectory. In a negative future, wealth inequality has increased and the middle class has eroded away. Wealthy individuals are able to thrive on their accumulated fortunes and have access to the best investments. Bright entrepreneurs can still carve out success, regardless of their background, but most of society is struggling to subsist.
Most full time jobs have been outsourced and the vast majority of work is performed by contractors. The large pool of freelancers keeps wages low - where opportunities for higher paid work exist, workers scramble to retrain and rates are quickly arbitraged away.
As automation increases, even the mediocre freelance gigs start to disappear. Individuals are forced to rely on the meager social safety net and spend countless hours navigating the bureaucracies to get food stamps, welfare, and slivers of work where they can get it.
There’s the potential for massive social unrest - the social contract between citizens and government may have frayed beyond repair. Perhaps the vast masses of unemployed and disaffected will rise up against a system that has left them bereft of stability or meaning - if so things might turn ugly as our nation descends into anarchy. More likely is that our leaders make marginal improvements to the safety net - just enough to dissuade revolt, especially when an increasingly militarized police force stands guard.
The plight of the majority will be even more tragic as the wealthy enjoy a golden age of innovation - the rich will reap the benefits as medical advances dramatically extend their lifespans and new technologies create ever better ways to live and play.
I’ve been most optimistic about the future of entrepreneurship but we can take advantage of the ongoing trends to create a better world for all. In a positive future, everyone will have their basic needs met. Whether through Basic Income or some other mechanism, no one will fear poverty, homelessness, hunger, illness, or violence. While the wealthy may bear the costs of these programs, they will also benefit from amazing investment opportunities and access to ever improving technologies.
Entrepreneurs of every size will be able to seize opportunities with incredible speed. It will take negligible time and cost to take an idea to market and to scale as big as the market will bare. With low cost to failure, wild experiments will be attempted and some will transform all of our lives.
Ordinary people will be free from meaningless careers and the worst off will be free from the stresses of poverty. All will be able to find and pursue their passions. Focus will shift from consumption to production as people have the time and resources to create amazing products and experiences for each other. Some of the output will be frivolous but others will be glorious and meaningful.
Most people will be engaged in artistic endeavors but the strong safety net will encourage others to focus on research and technology. Without fear of failure, the brightest minds can work on incredibly ambitious projects and some of them will succeed - yielding innovations we can only dream about today.
For all areas of interest, a kaleidoscope of ad-hoc teams will form, collaborate, and dissolve… only to repeat the cycle, producing a dazzling stream of creative content. With basic needs met, individuals can strive for and attain self actualization and a deeply meaningful life.
These trends are already unfolding but we don’t know how fast they’ll unfold and all consequences they’ll have. For those of us with the ability to affect their course, we have an obligation to steer them in a positive direction. In the next few posts, I’ll explore some of the gaps between our present and the bright future and discuss some startup ideas that can help us reach that vision.