Consumerism and Wealth
Can We Prevent a Permanent Underclass?
Now that the world has emerged from one of the greatest recessions in modern times, we can begin to take stock not only of the damage done, but of some of the irreversible changes it brought to the way our economy works. Companies both large and small that managed to survive the recession learned to deal with economic uncertainty by trimming workforces, automating procedures, and cutting benefits. But once prospects picked up, many companies driven by greed and/or fear squeezed as much productivity out of their remaining employees and rolled up the benefits for owners and shareholders, resulting in stagnant job growth even as market capitalization doubled.
On the consumer side, people pared down personal debt, cut back on spending, and adjusted to a new reality where jobs continue to be scarce and the idea of long-term employment, and the benefits that come with it, fades into the rear view mirror. Those unlucky enough to not get back on their feet joined the ranks of the permanently unemployed — that growing group of people deemed by the economy to have no useful monetizable function. We have eviscerated blue-collar jobs with automation, retail jobs with online shopping, and stunted various white-collar professions with outsourcing. There will often be a robot that will do your job or another person who will do it for a quarter of what you would charge.
Countering these trends somewhat is the rise of the so-called "sharing economy," where people monetize their time, cars, or houses in discrete, time-limited amounts. In addition to being only useful to those who have free time or expensive idle assets, this type of work only provides a partial safety net. Even sharing economy pioneer Uber openly states its goal to replace all drivers with the aforementioned autonomous vehicles as soon as humanly (robotically?) possible. Other labor-based sharing economy companies will face the same fate as soon as technology, as well as our tolerance for absence of human interaction, catch up.
And catch up it will. Ten years ago, the U.S. Department of Defense, through its DARPA research wing, created a prize competition for the development of an autonomous vehicle that could traverse a 150-mile off-road route without human assistance, and none of the vehicles entered was able to accomplish the feat. A few months ago, Tesla issued a software upgrade instantly turning tens of thousands of Model S electric cars into partially self-driving vehicles. One can only imagine what advances the next ten years will bring.
When the all-electric autonomous vehicle finally hits the tipping point, tens of millions of cab and truck drivers around the world will be made irrelevant. Add to this changing consumer habits, driven by the falling price of automated mobility compared to car ownership, and we will see 90 percent of the vehicles on the road retired. The auto industry, along with millions of jobs and related support in parts, repair, and accessories, will go the way of Route 66.
And that's just one industry. Let's take another. 3-D printing is in a phase of development similar to that of dot-matrix printers thirty years ago. When resolution, throughput, and material variety improve to the point where you can manufacture high-resolution, high-quality mass consumer goods on demand, untold millions of manufacturing jobs around the world will disappear overnight. For advanced countries such as the United States, there may not be much of an employment impact, but imagine what will happen to developing countries when one of their economic mainstays is eliminated in a matter of years.
Shahed Amanullah is the CEO and co-founder of LaunchPosse, a mobile app that helps people mine their social networks for the support they need to create and launch their own small businesses. He is also the co-founder of Affinis Labs, a Virginia-based startup accelerator that seeds and incubates businesses that have positive social impacts on the communities they market to.