Sunday, 16 October 2011

The Future of the Global Economy

The following is an essay of my own composition around some of the ideas Edie Wiener presented in her fantastic keynote at TEDx Midwest. Sorry about the length. She brought up some really amazing points in a very condensed time period that made me think of a lot of other things.

("TL;DR Summary")

  • Technology makes us more powerful and smart than ever before
  • Innovation happens faster than ever before
  • Unemployment will raise as machines continue to replace people
  • We need to change our institutions so they can react quickly to innovation
  • We should use our excess labor to change the world

("The Speed of Change")

We tend to think that things are changing faster now than they used to. The past hundred years seems to have exploded with technological change. If you think back to the end of the last century, however, they would say the same thing: that the past hundred years have brought extraordinary growth, unknown in previous ages.

The wise, thus, say that change happens constantly, at the same rate.  The only thing that changes is that our perspective moves forward and thus those changes that happened most recently seem biggest.

The idea that "change is more rapid now is a fallacy" is actually a fallacy.  

Life on earth was single-celled for 7 billion years. It took just 600 million years from the moment multicelled creatures started appearing for all complex life on earth to evolve, and it took just 2 million years for man to come from early apes.

Similarly, civilization has evolved higher level economies based on the efficient solution to human needs at an ever-quickening rate.  We had an agricultural economy for over 2000 years. Just 200 years ago, we started to have an industrial economy. The information revolution started just 40 years ago. Edie Wiener argues that we are already in a new revolution, the emotile economy that started just 10 years ago: an economy of connecting you with people and things that make you feel a certain way.

("Why Faster?")

There are strong parallels with Maslow's hierarchy of needs.  The progression of these economies represents nothing but the mechanization and efficient "solving" of progressively higher human needs. The agricultural revolution "solved" the food supply problem for civilization. The industrial revolution "solved" our need for physical things and our power for physical change in the world.  The information revolution is currently solving our need for knowledge and the emotile revolution has just begun to change, at a fundamental level, how we feel.

Now, obviously, these revolutions don't happen strictly after each other. They feed into each other and innovations in each effect the others. As fewer workers are needed to make food, more people can make tools. The more tools that are made, the less people there are needed to make food. The more information technology we have, the smarter we become and the faster that innovative combinations of ideas can happen.

This not only explains how change accelerates, but also why it always feels fastest in the last hundred years or so.  The rate of change in the next hundred years will be about the same as the last few hundred combined.

("Social Change") 

Revolutions in economy typically necessitate social revolutions as well to remold the social institutions to better reflect the (for lack of a more inclusive word) economic reality.  The industrial revolution saw social revolutions across the world which did away with the institutions that were better suited for an agrarian society.

Unfortunately we still have institutions that are built for an industrial society. 

We raise kids with more stimulation and curiosity and energy and independence than ever before.  We then stick them in the same schools our great-grandparents went to and drug them when they can't sit still and focus on a stale curriculum taught on a black board.  

We have banks and economists that think that wealth should be concentrated and controlled by as few people as possible. We have a government that mediates the voice of the people through several layers of opaque representation and is afraid of asking its citizens to do things.  We have a tax structure that punishes work and encourages harmful behavior. We have old courts, old jails, old regulatory systems, and old intellectual property laws.  

We are only just starting to feel the tremblings of the social revolution in the West and Middle East that the information revolution must eventually cause.

Unfortunately for us, social institutions cannot change very quickly by their very nature of needing to be resilient to whim.  Now that economic revolutions are happening on the order of decades instead of hundreds of years, it is not clear that social revolutions can keep up with the rate of change.

The careful reader may argue that the free flow of information that the information revolution has facilitated should actually speed up the rate and effectiveness of revolutions and allow more small, nonviolent revolutions to happen now than in the industrial revolution. The industrial revolution, after all, was so tough and bloody because the state had mechanized weapons.

How quickly, though, can a revolution happen in today's emotive economy?  What are tanks in Tiananmen Square compared to think tanks on cable TV? How much harder it is to overcome a state that has emotional weapons of comfort and distraction!

This is why companies will continue to overshadow governments in power and influence in society. Our governments (as currently imagined) are not flexible enough institutions to change at the pace necessary in todays world. All that governments can hope to do is set the rules by which companies play together.

("The Future of the Economy")

Edie's description of the future economy is that it will be a "meta-space" economy. The important spaces in this economy are physical space (place for all the people in our crowded world), storage space (where to put all our trash and where to get new resources), temporal space (quantifying time as a commodity), cyberspace (creating ways and spaces to live online), outer space (going off our planet), innerspace (biotech and nanotech) and green space (valuing natural spaces and ecologies). These areas are going to be immensely important as the world gets even hotter, flatter and more crowded.

As the world gets flatter, people in progressively poorer areas move closer to the developed world.  This is great news for them, because businesses can move in and provide (for a price) the development that should have happened there already.  Businesses like which finance projects to bring basic necessities to populations that don't have these things can be profitable because it costs so little to purify water and people are willing to pay incredibly well for these basic necessities.  Charity becomes easier, as does "exploitation" which here I put in quotes because it is hard to not see providing clean water as a good thing. The future economy may just be the process of bringing the advances of the developed world to the world's poorest areas.

The problem is that the poorest areas on the planet are by definition poor and can't spend money on much more than basic goods. And the incredibly sad, frustrating news is that they never will.

The problem is this: the rich areas of the world don't need the labor of most of the worlds poor and uneducated anymore. The tragic, terrible paradox of the future economy is that because our tools are so good, we don't need everyone on the planet to be working to solve the rich people's problems anymore, and this means that in a greed-based economy such as we have and always have had wealth cannot flow down to the entire population.

It used to take an entire section of countryside to feed a royal family well in the dark ages. As the population grew and farming / tradesmen improved, more man-power could go into providing the rich with art and enlightenment: and we had the Renaissance.

In the modern world however, a few million dollars can build you a home that Louis XIV would have been proud of, and a mere $50 / month can buy you enough internet to keep you entertained (and happy?) for life. There isn't much higher left to climb on Maslow's pyramid! When solving the problems of the rich becomes too easy, unemployment becomes the norm and not the exception.

("The Way Out")

We need another war.  It is what galvanized the nation after the Great Depression and it is necessary now.  I don't mean a war with another nation.  The planet needs to rally together and focus on solving big problems as a whole.  We have the technology and the human resources to educate the entire planet, to solve global warming, to abolish hunger, to make sure that all water is drinkable, to build a spaceship to go to mars, and more.

The amazing thing is that for as much as this would "cost" governments to do, as a society it would actually cost nothing because there is so much unemployment: unemployment that is not caused by inflation or deflation or stagflation but rather by the fact that solving the problems of the rich is no longer a reasonable way to keep the entire world employed.

In a war, when humanity's very survival is at stake, we rally behind one cause and all contribute to making it possible. This employes not just enough of our population to get by, but enlists the help of everyone.  When everyone is contributing, everyone gets back because suddenly every other human being becomes (economically) valuable.

What mankind needs, at both the private level and at the largest, is a cause of existential importance: working toward a goal not just because you believe in it, but because you will perish if you do not succeed.

The good news is global warming may provide us with exactly what we need.

~Alex Madjar

No comments:

Post a Comment