My 100-year-old self, a pig’s heart and my grandson

My 100^th Birthday celebration will take place about mid-century.  You’re all invited. It won’t be easy to reach that age.  My Dad passed away a few years shy of his 90^th.  But, I figure 100 is within reach with the help of a handful of highly skilled people and a lot of technology.

There’s a history of heart disease in my family.  So, I might have a new heart by then – one grown using my stem cells inside a pig or perhaps printed in a 3D printer. 

I may need the help of a home health aid, a robot that first analyzes what pharmaceuticals I need each day by means of a transdermal scan.  It will mix my drug cocktail of the day and administer it through a patch.  

My medication will keep my energy up and an artificial limb may keep me physically able.  I won’t be old and frail – just old.  And, that’s a good thing because my financial planner projected I would have been gone long before my 95^th birthday.  So, I’ll have to work. 

My commute will be comfortable.  A self-driving electric car dispatched directly to my home will pick me up.  Its batteries will be constantly recharged by a system embedded in our highways.  This service will be provided by one of the big three integrated transportation service companies – GM, Uber and Delta (nee Delta Airlines).  I won’t own a car and won’t care which of these companies takes me to work.  I’ll likely choose the one with the best rewards program.

Of course, all this assumes I can keep my skills up to date.  Lots of jobs will be gone by then.  Those wanting to work will have to be either smarter or cheaper than machines enabled by embedded sensors and big data analytics. 

Highly skilled labor will still be much in demand, of course.  If you’re the doctor who can implant my new heart or install my bionic leg, your financial rewards will be great.  Same goes for those who can create the algorithms that will keep modern society functioning.  And, the AI revolution will create lots of new jobs for the post-Millennial generation trained in robot repair, higher math or data analytics -- just not enough to replace the ones that will be lost.

Many Millennials will be unable to find work, as they will have been well educated for 20^th Century jobs.  Taxpayer dollars providing free college educations will have been wasted. 

No worries though.  The government will guarantee a level of income sufficient to maintain a middle-class lifestyle.  The industrial revolution that spawns this new economy will produce vastly more national income.  So, we’ll be able to afford a new, huge safety net. 

My grandson, Jake, will be gainfully employed having graduated from the U.S. Air Force Academy (Class of ’48) and will be on his first tour piloting UAV’s in outer space.  This new network of satellite-based drones will act as a deterrent, capable of launching hypersonic rockets to take out the power grids of any country on earth, disabling their capability to make war or function as a modern society.  The operation of drones still flying within earth’s atmosphere to take out single human targets, like terrorists, will have been turned over to artificially intelligent fire control systems that will analyze data and evolve assassination algorithms consistent with the agreements reached by the industrialized world in the new Geneva Conventions. 

So, if I have to work, how will I earn a good income in this new economy?  Well, I was educated in the 20^th Century before the digital revolution.  So, I will still have skills that will be valued and can’t be replaced by artificial intelligence.  I know how to motivate, negotiate, persuade and coordinate. 

Try to get your robot to do that.

WHO WILL LEAD?

The Libertarian Case for the Universal Basic Income

When I first heard of the Universal Basic Income (UBI), I thought, “Oh no, not another entitlement.”  But, the context within which I heard it got me thinking.

In a post last year (Advice to Give Your Kid in theAge of AI), I cited a 2013 Oxford University Study projecting that 47% of US workers would lose their jobs to automation over the next 20 years.

Many have already lost their jobs to industrial automation.  Stationary robots producing perfect welds in an auto plant are now commonplace.  The jobs lost to that phase of automation are a fait accompli.  The next phase of job losses will come from self-driving vehicles, algorithms and the Internet of Things (See From Turing to Musk to Industry 4.0).

If the technologists predicting this future world of work are correct, a world of luxury awaits.  Vast amounts of mundane work will be eliminated.  We’ll see a dramatic increase in our national wealth as businesses become more productive.  Our social welfare will improve as goods and services are produced more cheaply.

However, the elimination of mundane work means the elimination of income for a great mass of both skilled and unskilled workers.

And so, the concept of the Universal Basic Income was born.  The idea is that everyone would receive a check from the government every month.  Let that sink in for a moment.  Everyone – rich or poor, working or not, able or disabled – would receive a check from the government every month!

Some proponents have suggested an amount equal to about 60% of median household income or about $30,000 per year.

This is an idea that liberals can get behind, right?

However, a conservative case can be made as well.  I contend that the seminal thinking of conservative economists would support it.  The idea of a “safety net” was proposed by Freidrich Hayek in his most read work, The Road to Serfdom.  And, it was Milton Freidman who first floated the idea of a negative income tax.

Let’s pan out and widen the view a bit. 

The UBI would replace all other social welfare programs – HUD housing, SNAP (aka food stamps) – as well as the need for other lightening rod government rules, such as the minimum wage.

Vast government bureaucracies would be shut down.  After all, if there are no rules associated with who gets a monthly check, there is no need to fill out forms or for the bureaucrats who review applications. 

What about concerns that people will just stop working?

Would you?  Would you live on $30K per year if you could find meaningful work?  Wouldn’t you want a job anyway?

There is another benefit to the UBI.  Current programs intended to help the poor aren’t working.  A working paper produced by the National Bureau of Economic Research concludes, in part, “the safety net is doing less to provide protection for the most disadvantaged. In the post-welfare reform world, TANF did not respond in the Great Recession and extreme poverty is more cyclical than in prior recessions.”  And, 89% of those working for minimum wage are earning a second or third income for the household in which they live.

In other words, those initiatives are not working for the impoverished people they are supposed to help. 

Getting Congress to pass the UBI would be difficult, to say the least.  And, it must go hand in hand with other reforms.  The tax code would have to be overhauled – egad! 

However, if we could keep it simple… if we could remain true to the concept… if we could focus on the benefits, it just might work for everyone.

There are only two kinds of people who could screw it up… Republicans and Democrats.

WHO WILL LEAD?

It's the 1930's again and there's nothing a president can do about it

My last post (The American Dream is alive and well) got a mostly positive response.  I am an optimist.  I don’t think that the American Dream is out of reach for anyone.  It’s simply a matter of making good choices and persevering.  (Well, maybe it’s not simple.  But it still works.)

There was one respondent, however, who believes that the loss of traditional values is responsible for our inevitable demise.  He cited well-researched books asserting that America is in decline – The Decline of the West by Oswald Spengler and TheCollapse of Complex Societies by Joseph Tainter.

His response comes from the right wing of American society.  However, he’s not alone.  Recently, I met a politically active liberal at a social gathering.  She asserts that our children will not be better off than we. 

There is a natural human tendency to see conditions as static and trends as continuing ad infinitum.  However, nothing could be further from the truth.  Remember the tech bubble of the 1990’s and the housing bubble of the 2000’s?  Many were convinced that what goes up doesn’t come down.

Oops!

Economist Harry Dent (author of The Demographic Cliff: Howto Survive and Prosper during he Great Deflation of 2014-2019) takes a different approach.  He has researched demographic data going back 150 years.  His conclusion?  The life cycle of American adults drives spending habits and the economy.  Family spending tends to peak when the chief earner in the household reaches age 46 – the kids are older; you need a bigger house, the furniture to fill it and an SUV.

The pig in the python over the last 70 years has been the Baby Boom generation.  The out of pattern birth rate following WWII drove a housing boom in the 1950’s and 60’s, the expansion of the university education system in the 60’s and 70’s and an increase in household income from women joining the workforce in the 80’s.

According to Dent’s analysis, spending for Baby Boomers would have peaked from the early 1990’s to the mid-2010’s.  Seems about right. 

So, what happens now? 

The oldest Baby Boomers turned 65 in 2011.  In retirement, spending on big houses and the stuff to fill them is over.  Downsizing and spending on services drives the consumer economy then.  In this decade, industries that have taken off include financial planning, insurance and healthcare.

Dent contends that we are at low ebb in the economy because Millennial spending hasn’t yet offset Baby Boomer retirements.  The oldest Millennials turn 40 in 2020. They will get married and have kids.  And, consumer spending will repeat the cycle -- housing, clothing, vehicles, education and so on.  We’ll be back to the races again.

The last time we were in a similar demographic trough?  The 1930’s!

His analysis may be outside mainstream economic thinking.  However, it should not be dismissed.  Dent predicted the stock market crash of 1989; the bursting of the housing bubble in 2007 and the dump the market took last summer. 

Further, he has performed a similar analysis of the industrialized world and found demographic trends in Europe, Japan and China to be consistent.

So, I take issue with those who think that western culture is in decline.  To be sure, US economic growth in the 21^st Century means being more open to immigration and a more diverse, urban and open society. 

Politicians and the media love to feed the fear frenzy.  Conservatives blame immigration and the shift in values for our economic malaise. Liberals blame free trade.  But, the real cause of our economic malaise – our lackluster growth – is the dip in aggregate demand for goods and services.  Lack of demand means that businesses can’t raise prices and don’t invest in capital goods to expand.  Ultimately, capital investment drives job growth and increased wages. 

Politicians, even the president, can’t change these inexorable forces.  The best response is to pursue trade agreements.  The wealth of nations increases through the comparative advantage that results from global free trade.  And, the agreements in play with Asian nations and the EU will increase American exports.

Unfortunately, comparative advantage means that the prospects of many improve while the prospects of others suffer.  Free trade might mean more jobs for college grads but won’t much help someone who lost their factory job in High Point, NC or Messina, NY. 

To help those who are disrupted, we need to focus on a combination of the best ideas of the left and the right:  improved education, immigration reform, community development and a stronger safety net.

As for the impact of demography, we’ll just have to wait for Millennials to start having babies. 

WHO WILL LEAD?