The Daily Reckoning UK

The Economy Of The Future Is Already Taking Shape…

Darren Sinden

by

Posted 12th July 2017

In recent times we’ve all had to get used to change in our working and daily lives. Some of it good, some of it bad but overall we have as a race proved to be adaptable.

For example: have you bought your parents or grandparents a smartphone, or insisted that they get broadband? If you have, I imagine you’ll have been pleasantly surprised by how quickly they became used to that technology – even though they were probably reticent about the need for it in the first place.

Yet these changes and the ingress of technology into our daily lives are nothing compared to what lies ahead…

As a populace we will, over the next decade or two, get a sense of what our forebears experienced during the industrial revolution.

That is; social and structural change on an unprecedented scale.

Historically that meant a move away from the agrarian or agricultural life that had been the staple of the majority, to towns and cities which offered new and often better-paid employment opportunities.

As a society we face changes at least as dramatic as those that tested our forebears. However if we can adapt then future need not necessarily be bleak. Though to my mind, in this case adapt is spelled with a capital A.

The rise of the robots…

“Will robots become co-workers or job takers?” That’s a question that many people are asking themselves today.

The academic research on this subject is quite negative, showing that up to 47% of job types in the USA are subject to automation (that is, a machine or a piece of software doing the job that a person has previously done).

For employers the attractions are obvious: machines don’t need to be paid or take holidays and could potentially work 24/7, rather than for just a portion of the week.

The flipside to this equation is that deploying automation has large upfront costs, particularly where industrial robots are concerned.

Robots are not likely to be as flexible as human workforce, who for example can easily switch between jobs on production line, or quickly re-tool/re-skill to make a different product.

Of course machines can be repurposed too, but I suspect that will currently take longer than with the human work force.

The graphic below sourced from Citigroup’s report the future of technology at work and the potential impact of automation on the global job market.


Click image to enlarge.

What’s interesting to me is that that the developing world has a bigger exposure to automation than developed economies.

As the cost of deployment of automation falls to become comparable to the costs of a human workforce, places such as China and Ethiopia may face some difficult social challenges.

This probably helps to explain why both countries’ governments are trying to create jobs further up the value chain.

In China they are doing this in service industries and technology, moving away from low-cost manufacturing. In Ethiopia they are moving in to low-cost manufacturing and away from agriculture.

The reason for this is that lower or unskilled jobs are more easily automated, though there’s also a future threat to many white collar jobs, particularly those in admin and clerical roles.

Artificial intelligence: master or servant?

This question has generated much debate over recent years, bringing some of the world’s leading technologists and thinkers down on different sides of the discussion.

But the truth is; despite advances in computer science, machine learning and programmes designed to recognise the world we inhabit, the all-seeing, omnipotent machine is still non-existent.

That said; interacting with artificial intelligence on a daily basis is becoming more common.

Think about personal assistants on our phones and tablets… when we ask Siri or Alexa a question or set them a task they understand our request and action it, which is nothing short of miracle and a tribute to the machine learning programs at Apple, Amazon and Google.

This is the positive side to advances in machine intelligence and I think that we should focus on the opportunity it provides to improve our lives, rather than the negative aspects.

That attitude is what we find when looking at the research – the graphic below once again taken from the Citigroup report bares that out, with 76% of respondents questioned taking a favourable stance about new technologies.


Click image to enlarge.

Does a shared economy equal more opportunities?

One of the most recent developments that technology has created is the shared economy, built on the premise that hundreds of millions, if not billions, of us are now part of a network.

And that through this network we can interact directly with each other, to offer goods, services and labour to the network.

Perhaps the best example of this new shared economy is Airbnb, the US app that has created an online market for accommodation, allowing householders to rent rooms on demand in way that just wasn’t possible 10 years ago.

The renter gets to stay to in a property that suits their requirements, whilst the owner generates an income from the rental. A win-win situation (unless you are an hotelier of course).

Airbnb is just the top of this shared economy, which will spread across most sectors.

That growth could potentially be driven by Ethereum, a cryptocurrency similar to Bitcoin.

In fact Ethereum is almost identical to Bitcoin because it was developed out of the Bitcoin software, but with one significant difference: The Ethereum token can be programmed.

Ethereum is a ‘smart currency’ that can be purposed for a specific task – for instance in what are called ‘smart contracts’.

Imagine a smart contract based on Ethereum that gathered data about when a particular song was streamed or played online…

The contract would know when the tune was played, who the provider was and debit that provider with a charge. This charge would then be validated by the Ethereum blockchain, before being credited to the artists and writers who created the tune.

It’s even been suggested that smart contracts could identify the sampling of songs and charge and collect smaller pro-rata fees accordingly.

Ethereum will also play a role in collaboration, allowing individuals to work together on a project outside of traditional corporate structures.

These collaborators will be rewarded with Ethereum, or other smart coins, that have been specifically issued for that project.

The coins will increase or decrease in value depending on the future success of the project…

For example, let’s say you created an app. If your app is downloaded and used, you will receive a royalty or licence fee through the blockchain and the smart contract embedded in their tokens.

The more royalties you accrue the more your coins will be worth. And of course those coins can be traded in their own right as a result.

This might sound like a pipe dream but it’s not…

In fact, take a look at the image below which shows the launch members of an organisation called the

‘Enterprise Ethereum Alliance’.


Click image to enlarge.

You can see that there are many corporate heavyweights interested in Ethereum and the opportunities it can offer.

If they are interested perhaps you should be as well…





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