- Delivery drones > fewer delivery workers
- Turbotax > fewer tax professionals
- Robots, self-driving cars, automation, skynet, etc. > fewer retail salespeople, drivers, even fewer financial advisors (see wealthfront, betterment)
Robots and computers took er jerbs!
Kidding aside, this is a massive issue, especially for young people. The future will not be bright if your skillset can be automated. Automation is great for corporate profits and profit margins (and equity shareholders), but bad for median wage earners. Check out this recent divergence between wages and corporate profits as a percentage of GDP. This is because of technology growth, which will only accelerate.
To survive the jobs market in the future, education and developing a valuable skill set will be essential. Here is the divergence in earnings broken out by education level. Starting at the top are those with a graduate degree, followed by those with an undergrad degree, those with some college, those with a high school diploma, and those who dropped out of high school. These are averages, of course, so plenty of dropouts will succeed, but more will probably struggle without a specialized, non-replaceable skillset.
Too bad college is so f-in expensive (I think it’s a waste of money for a lot of people), and creates a secondary problem of accelerating student loan debt (more than $1T already). I loved studying philosophy in school, but I’m not sure it was worth the cost. I hope my son loves philosophy, too, but he’ll be learning how to program as soon as he can type. Vocational schools make a lot of sense in this economic landscape.
In this new environment, creativity and the synthesis of information will be the new gold standard. As Churchill said, “the empires of the future are the empires of the mind.”
Income inequality stinks, but I don’t know how we might reverse this trend. Part of the solution is to raise awareness and get young people invested in the stock market; in companies that will benefit from higher profit margins. Real stock market growth has outpaced real earnings growth for even the top 1% of earnings by a wide margin: between 1974 (the start of this current period of real income stagnation) and 2011, the top 1% of earners have gotten a 154% raise while the bottom 99% got nothing, but the S&P 500 was up 759%. More widely dispersed equity ownership would be a good thing.
Maybe we will have a modern day Solon. But that seems unlikely given the vitriol inspired by any mention of “redistribution.” For history buffs this is an interesting passage from Will Durant’s Lessons of History:
In the Athens of 594 B.C., according to Plutarch, “the disparity of fortune between the rich and the poor had reached its height, so that the city seemed to be in a dangerous condition, and no other means for freeing it from disturbances… seemed possible but despotic power.”35 The poor, finding their status worsened with each year—the government in the hands of their masters, and the corrupt courts deciding every issue against them—began to talk of violent revolt. The rich, angry at the challenge to their property, prepared to defend themselves by force. Good sense prevailed; moderate elements secured the election of Solon, a businessman of aristocratic lineage, to the supreme archonship. He devaluated the currency, thereby easing the burden of all debtors (though he himself was a creditor); he reduced all personal debts, and ended imprisonment for debt; he canceled arrears for taxes and mortgage interest; he established a graduated income tax that made the rich pay at a rate twelve times that required of the poor; he reorganized the courts on a more popular basis; and he arranged that the sons of those who had died in war for Athens should be brought up and educated at the government’s expense. The rich protested that his measures were outright confiscation; the radicals complained that he had not redivided the land; but within a generation almost all agreed that his reforms had saved Athens from revolution.
Here are some good links on the topic: