Most of us think that work life earning may not be sufficient for old age, or say, will have
meager valuation in the next 20-30 years. On top, People are concerned about
losing their jobs due to technology-assault and super-speed automation.
How much of this will
prove to be true? To find this, I conducted detailed research and
published few papers. This blog is synopsis of all.
Fast Forward: year 2035 -
2040
Two factors will impact our earning capacity (rather negatively):
- Rapid automation & Artificial Intelligence
- Socio-economic imbalances across geographies
Two factors that will
reduce the cost of livelihood (positive effect):
- Democratization of Technology
- Government intervention - socialist economy
Automation and AI is no
longer buzz word. Effects are visible across the board, will spread to every
possible sector eventually. Despite best efforts by society champions (read politician), socio-economy
divide will continue to hound masses. In anticipation, countries
like Finland and Canada are running experiments to pilot the idea of
"universal basic income" — the unconditional provision of a
regular sum of money from the government to support basic living irrespective
of employment status.
This blog is dedicated to
the argument “Democratization of Technology” - which means, access to 'technology-endpoints' (products and services) will plummet abruptly, rendering it almost FREE.
As a Business Leader, understanding
of this trend and its implications is important. Because, this is connected to
Customer buying behavior and how it will transition in the next 10, 20, 30
years.
Cnsumer Spending Pattern
A recent UAE
government data* as well as IMF report* (July 2016) show similar patterns in household spend distribution. As expected, housing takes the lion share at 40%, 13% on Food & Beverage, 10% on
Transportation, 6% on healthcare, and 5% on Entertainment. In other words, about
74% of UAE residents' expenditures go to housing, food, transportation, health
and entertainment.
*Ref - http://www.dubaichamber.com/whats-happening/chamber_news/dubai-chamber-analysis-shows-uae-retail-sector-growing-5-each-year-through-2017
*Ref - https://www.imf.org/external/pubs/ft/scr/2016/cr16251.pdf
Spending habits around
the world tell a pretty consistent story — we tend to spend money on many
of the same basic products and services. Based on IMF data from four large
economies: USA, UK, China, and India, majority of expenditures are in these top
6 categories:
1.
Housing
2.
Food
3.
Transportation
4.
Healthcare
5.
Education
6.
Entertainment
Now, think... what if the cost all the above 6 items plummet with time. There is
compelling case behind this hypothesis, which I shall come back after next 2
paragraphs.
Technology Democratization
and Price Plunge
It is not the first time, this will happen.
Example - Telecommunication:
IMF 2000 millennium data
shows - on an average a typical household spent 7% of its income on communication. With the
advent of WhatsApp, Skype, Hangout, Facetime etc. this is practically free for
anyone carrying the most basic smartphone and internet connection. We democratized
communication channels. Whether you are a billionaire or a poor on road, has
same quality of communication service – FREE.
Ref: https://www.imf.org/external/country/ARE/
Example - Tuition /
Education:
Google, Wiki, Stanford-web, MIT-web, Khan academy (and many similar) give 100% free access to top quality education content. 20 years back, quality education was luxury. Today numerous free tutorials are available on information highway with the click of
button. We democratized access to knowledge.
One can think of many similar examples – On the consumer front, examples are photography, publication, entertainment, job
market etc. that were accessible only to rich before, is nearly free now. On the business
front, there are players who have democratized the once monopolistic nature of
businesses – AirBnb x Hotel industry, Uber x Taxi.
In fact, as we speak… we
are actually using more a million dollar stuff Free. We have taken them for granted.
This is How –
This is How –
See chart below.
Most of us would have purchased these products and services some point in time.
Those in 40s and 50s can relate better. Combined cost is nearing 1 million USD.
Today every one of us are using same product and services – almost Free. So
strange, in todays’ world we do not value these at all. Our expectations have
changed, rightly so because in a democratic paradigm things are taken for granted.
I. Housing
Think about what drives high housing costs. Why does a single-family apartment in downtown cost $10 million, while the same square footage on the outskirts of city can be purchased for $100,000?
Location.
Location. Location. People flock to high-density, desired areas near the jobs
and the entertainment. This market demand drives up the price.
Housing sector will democratize for two reasons: The first reason is because of two key
technologies which make the proximity of our home to our job irrelevant,
meaning one can live anywhere (specifically, where the real estate is cheap):
(a) Autonomous
Cars: If your commute time can become time to read, relax, sleep, watch a
movie, have a meeting — does it matter if your commute is 60 minutes?
(b) Virtual
Reality: What happens when your workplace is actually a virtual office where
your co-workers are avatars? When you no longer need to commute at all. You
wake up, plug into your virtual workspace, and telecommute from the farm or
from the island of Azure.
The second technology
drivers are robotics and 3D printing, which will democreatize the cost of
building structures.
3D
printing has slowly gone from a curious novelty to a totally viable option
for creating all kinds of useful things, from chocolate to athletic shoes, and now MIT has invented a way to
use the technology to print buildings, too. Given that most 3D printing takes
place inside a sealed box, it might be a bit hard to imagine exactly how a
structure could be built in such a way, but as you’ll see it can most
definitely be done. (MIT printer picture below).
A number of players in
the market are now exploring how 3D printed structures and buildings can
dramatically reduce the cost of construction and the amount of time it takes to
build a building.
WinSun in China was first
to 3D print an entire building, the building was non-functional though. Recently Dubai launched world's first fully functional 3D-printed building (see picture
below).
II. Food
FPO and USDA data suggest that the cost of food cooked at home has dropped by 55%. (Cost of food in restaurant has however increased for obvious reasons).
Additional gains will be made as we learn to efficiently produce foods locally through vertical farming (note that 70% of food's final retail price comes from transportation, storage and handling).
Also, as we make genetic and biological advances, we will learn how to increase yield per square meter.
III. Transportation
The automotive market (a
trillion dollars) is being democratized by startups like Uber. But this is just
the beginning. When Uber rolls out fully
autonomous services, your cost of transportation will plummet.
Think about all of the
related costs that disappear: auto insurance, auto repairs, parking, fuel,
parking tickets. Your overall cost of "getting around" will be 5 to
10 times cheaper when compared to owning a car.
This is the future of
"movator as a service."
Ultimately, the poorest
people on Earth will be chauffeured around !
IV. Healthcare
Healthcare can be roughly split into four major categories: (i) diagnostics, (ii) intervention/surgery, (iii) chronic care, and (iv) medicines.
(i) Diagnostics: AI has already demonstrated the ability to diagnose cancer patients better than the best doctors, image and diagnose pathology, look at genomics data and draw conclusions, and/or sort through gigabytes of phenotypic data… all for the cost of electricity.
(ii) Intervention/Surgery: In the near future, the best surgeons in the world will be robots, and they'll be able to move with precision and image a surgical field in high magnification. Each robotic surgeon can call upon the data from millions of previous robotic surgeries, outperforming the most experienced human counterpart. Again, with the cost asymptotically approaching zero.
(iii) Chronic/Eldercare: Taking care of the aging and the chronically ill will again be done most efficiently through robots.
(iv) Medicines: Medicines will be discovered and manufactured more efficiently by AIs and, perhaps in the near future, be compounded at home with the aid of a 3D printing machine that assembles your perfect medicines based on the needs and blood chemistries in that very moment.
It's also worth noting the price of genomics sequencing is plummeting (as you'll see below, at five times the rate of Moore's Law). Accurate sequencing should allow us to predict which diseases you're likely to develop and which drugs are of highest use to treat you.
V. Education
Education has already been democratized in many respects, as most of the information you'd learn in school is available online for free.
Coursera, Khan Academy, and schools like Harvard, MIT and Stanford have thousands of hours of high-quality instruction online, available to anyone on the planet with an Internet connection.
But this is just the beginning. Soon the best professors in the world will be AIs able to know the exact abilities, needs, desires and knowledge of a student and teach them exactly what they need in the best fashion at the perfect rate.
Accordingly, the child of a billionaire or the child of a pauper will have access to the same (best) education delivered by such an AI, effectively for free.
VI. Entertainment
Entertainment (video and gaming) historically required significant purchases of equipment and services.
Today, with the advent of music streaming services, YouTube, Netflix and the iPhone App Store, we're seeing an explosion of available selections at the same time that the universe of options rapidly demonetizes.
YouTube has over a billion users — almost one-third of all people on the Internet — and every day, people watch hundreds of millions of hours on YouTube and generate billions of views.
