Skip to main content

The New New Economy -- Where theory goes to die!

Increasingly we are hearing stories about using big data into comprehensive working tools especially with the idea of AI (granted its more intelligent systems that the AI of Scify) will contribute to the world economy.

Already big data and intelligent systems are crowding out trading rooms at an unprecedented rates; why have expensive traders when a computer can do the job 24/7 at little cost. Bond desk have been decimated over the past decade, the same for F/x desk, and virtually all trading that is trough ETF is done via computer systems.

That's the easy part, now come the doctors and the lawyers -- already we are seeing the medical profession being overwhelmed with data, diagnosis was easier when the doctor had only 10/20 data points, but medical technology has come a long way, already the number of data points has increased by nearly an order of magnitude than what was available 10 years ago, lets assume you suddenly have 400 data-points, the human mind is unequipped to deal with so many variables. Suddenly the doctors are only used to write prescription and follow the computer's advise.

Lawyers are already in trouble drafting offering memorandums can be largely done by computer -- if you've ever tried to read these documents you know that 95% of these things are boilerplate -- with a few page of data.  How easy would it be to replace such high cost producers, the same for investment bankers.  Its not like these guys re-invent the wheel every day, they use tried and tested ideas.

Already, we have seen, via robotization, that blue collar jobs are disappearing at an alarming rate, new jobs are being created but at much lower salary points -- they require next to no skills because it has proven valuable for company to automatize the "skilled" portion of their production process.  Don't believe me, what do you think Carrier will be using the US$ 7 million windfall from the Indiana?  You got it, they will automatize process!

The world Western economic model is built on wealth creation, ideally where there's not too much disparity between all segments of the population (very rich people don't consume very much of their income), but now as the AI take over the world, lawyers and doctors and engineers will also face employment issues -- after-all designing a bridge is a simple process for a computer.  what happens as more and more of these profession disappear?

As an example the displacement of taxi drivers and of truck drivers that will certainly occur with the arrival of self driving cars, what about the car industry?  Currently the US consumes about 14 million new cars per annum, and most of these vehicle spend 90% of their life parked, you have self driving cars and the number of cars sold will fall, increasing car utilization from 10% to 40% should lead to a reduction in the sale of new cars by 75% -- its math!  Taxi will no longer require drivers and truckers will no longer be needed.

These all speak of major labor displacement and massive change in the economic system, because since the US system is based on consumption (70% of GDP) what will be left once people's income disappear?  All these doctors, lawyers, taxi and truck drivers will have no employment prospects -- obviously those at the top of the system will reap the benefit of the labor cost cuts, but for how long?

Some would say that the economy will adapt, probably true but for every new economic activity there will be an AI available that will doit better and more cheaply than a human.

The world's economy is simply not ready for this!  This is also true of economic theory...





Comments

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b) ground beef requires process

21st century milk parlour

When we first looked at building our farm in 2018, we made a few money-saving decisions, the most important is that we purchased our milk herd from a retiring farmer and we also purchased his milking parlour equipment.  It was the right decision at the time.  The equipment dates from around 2004/05 and was perfectly serviceable, our installers replaced some tubing but otherwise, the milking parlour was in good shape.  It is a mature technology. Now, we are building a brand new milk parlour because our milking cows are moving from the old farm to the new farm.  So we are looking at brand new equipment this time because, after 20 years of daily service, the old cattle parlour's systems need to be replaced.  Fear not it will not be destroyed instead good chunks will end up on Facebook's marketplace and be sold to other farmers for spare parts or expansion of their current systems. All our cattle are chipped, nothing unusual there, we have sensors throughout the farm, and our milki

So we sold surplus electricity one time last summer...(Update)

I guess that we will be buying an additional tank for our methane after all.   Over the past few months, we've had several electricity utilities/distributors which operate in our region come to the farm to "inspect our power plant facilities, to ensure they conform to their requirements".  This is entirely my fault.  Last summer we were accumulating too much methane for our tankage capacity, and so instead of selling the excess gas, that would have cost us some money, we (and I mean me) decided to produce excess electricity and sell it to the grid.  Because of all the rules and regulations, we had to specify our overall capacity and timing for the sale of electricity (our capacity is almost 200 Kw) which is a lot but more importantly, it's available 24/7, because it's gas powered.  It should be noted that the two generators are large because we burn methane and smaller generators are difficult to adapt to burn unconventional gas, plus they are advanced and can &qu