Alternative thinking on the robot apocalypse, hedge fund talent, and Trump's triumph

May 5, 2016 08:37 AM

"One of the big causes for the stagnation of middle class wages is essentially because of clever computer programs."

Hedge fund chairman David Siegel of Two Sigma says that technology has fueled income problems over the last few years.

He’s late to the party by two centuries.

It’s rather stunning that the news media covers the story of how technology impacts job markets with such wonder and misunderstanding… and they never, ever… at any point… explore any solutions to this pending problem.

Instead, we get headlines like this one from Reuters: “Rich and powerful warn robots are coming for your jobs.”

Come on Reuters: It’s actually the rich and powerful who are coming for your jobs, since they are building the technology that renders your skillset obsolete by creating a technology that doesn’t need healthcare, 10-day vacation leave, eight-hour days, overtime, union rights, and so on.

As I explained Possible Hedges Against the Robot Apocalypse, the story of technological waves is as old as the United States itself, and different waves of innovation have caused significant job displacement.

Remember, 99 percent of this country were once sustenance farmers. Today, less than 1 percent of the population produces enough food to feed more than the total population as a whole.

The issue is that automation increases both widespread increases in standard of living, while at the same time creates growing income disparity.

The guy who owns the self-driving tractor will need fewer people to operate his farm. He’ll make more money, but the positive tradeoff is that you don’t have to be a sustenance farmer.

And the income disparity is a direct issue that economists still don’t have a grasp on when it comes to the impact of technology. Karl Marx wrote a lot about it, and then everyone avoided studying it too much… because… you know… he is Karl Marx.

This is what we know: the people who own the robots make more money… the people who are displaced are forced to find new jobs and take up new trades.

There’s a pretty handy chart of the technology waves in Part I of that story.

The hypothesis is that we are seeing levels of automation coming faster and faster than any time before while our workforce is larger than ever. The internet has displaced a wealth of different professions.

And the ones that have been created by new technologies – think Uber drivers – are displacing another wave of human workers from taxis. And none of that will matter when the self-driving vehicles take over.

In fact, one of the top jobs in many states is being a truck driver. It’s also one of the most important given the American reliance on diesel trucks within the supply chain of everything we buy. When the Google or Amazon trucks take over… watch out.

The real issue at hand is addressing the solutions. No one in Washington has one.

And the Silicon Valley overlords are pitching some pretty basic ideas.

For example, a universal basic income has been pitched. The invention of large-scale 3D printers has the capacity to disrupt the entire housing market. (This is a thing.) Some are saying this is a solution to the unaffordability of housing in the United States. Give everyone a house if they need one with this technology.

While the charitable idea is in place, it lacks incentives to humans.

Basically, you’re just promising a world where people receive free food, free housing, free healthcare, and free whatever else has become the next tangible demand someone has termed as “a right.”

As P.J. O’Rourke once said, “Those aren't rights, those are the rations of slavery — hay and a barn for human cattle.”

Last year, I proposed a list of seven different ideas that I believe we should explore to address the transformation that is on the horizon.

Given that they all focus on personal empowerment and less government regulation, I’m not sure many politicians will get behind them.

But let’s at least get a conversation going…

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About the Author

Garrett Baldwin is the Managing Editor of the Alpha Pages and the Features Editor of Modern Trader. An author and Baltimore native, he earned a BS in journalism from the Medill School at Northwestern University, an MA in Economic Policy (Security Studies) from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University.