My Hopes For The World, Post 2020

It's the last day of 2020, a year many will be glad to see the back of. The last year has been associated with some of the most unpleasant memories, mainly because of the Covid-19 pandemic that disrupted normal life, impacted livelihoods, and -- not least, took many lives. For many families that lost loved ones or suffered economic hardship over the past year, the very sight of the number "2020" will forever retain a negative connotation.

The Tamil culture that I'm a part of has the astrological notion of the shani-dasai (period of Saturn), a phase of life that is associated with suffering, hardship, trials and tribulations. Importantly however, this period is believed to lead one to ultimate success by putting one through a test. Further, when the shani-dasai ends, Saturn is believed to leave one with a gift.

While I'm hardly superstitious, I like to take the positive from every example and allegory, and so this is what I wish will happen to the world once 2020 is but a memory.

The Way the World Works

I believe that we are on our way to the Leisure Society, but until we get there, work will continue to be a major part of our lives. Having said that, there is no reason why the nature of work should not make a clean break from the past.

I hope the culture of working from home forced by the pandemic has helped both employers and employees understand its benefits enough to want to retain this new culture. So much wasted time and effort has been eliminated from society these past few months. People haven't had to commute, and have saved at least a couple of hours every day. They could afford to get more sleep and spend more time with their families. So much energy has been saved and pollution avoided because of the virtual elimination of rush-hour traffic, especially its wasteful waits and crawling pace. For employers too, the opportunity to permanently save on commercial real estate would not have gone unnoticed. This also has knock-on effects. Employees can afford to move away from congested urban centres to more spacious homes in regional areas. The counter-magnets that urban planners have long been searching for have made their appearance at last.

We are 20 years into the 21st century. The world should not continue to work as though it is still in the 20th.

Some professions cannot operate remotely. Hairdressers, physiotherapists, care-givers to the elderly or the handicapped, all of these will have to continue working on site. But these professionals can also operate in local clusters, without unnecessary centralisation in CBDs.

Employers have to learn to embrace tools that give them the ability to set tasks and measure deliverables without having to physically watch over a roomful of employees like a strict schoolteacher.

The Public Health Landscape

I believe Covid-19 has permanently altered some aspects of public health. With the awareness that this is by no means the last pandemic we are going to see, the world has doubtless improved its ability to respond with alacrity to the next one. The admirable capability that East Asia as a whole has demonstrated this year (thanks to the experience of past regional outbreaks) will eventually be par for the course worldwide. Quarantining, social distancing norms, the habit of wearing facemasks, the infrastructure for contact tracing and alerting, all of these will become embedded in the hardware and software of society. The next pandemic will not take us by surprise the way this one has. We will take it in our stride, with little disruption to our daily lives.

Victory Over the Pathogen

Let me be even more ambitious in my predictions. I believe that the threshold of tolerance breached by this year's pandemic has finally forced humankind to stop seeing viral pathogens as merely a nuisance to be tolerated year after year. The flu vaccine of recent years has been a hit-and-miss approach with partial success against the ever-new strains of influenza that attacked every winter, but the tide has now decisively turned. I believe the forced research into the details of how viruses work will result in the the development of a super-vaccine, one that will end, once and for all, the threat of all viral diseases in humankind, including the flu and the common cold. In a few short years after 2020, we will not remember what a cold or the flu was like.

I think medical research in general has received a boost because of the urgency of the search for treatments for Covid-vulnerable people. I would not be surprised if cures for autoimmune diseases as well as other conditions classed as co-morbidities are also found in the very near future.

In short, while I agree with most people that 2020 has been a year like none other, I prefer to interpret that in a positive sense. I hope and believe that 2020 will mark a turning point in the fortunes of the world, because of the gift that Saturn is going to leave behind.

We are entering the future now. Cheers! 

The Three Singularities In Our Future

1. The Technology Singularity

Ray Kurzweil's 2005 prediction of the "Technology Singularity", the point in time when machines will finally overtake humans in intelligence, is looking more inevitable as the years go by.

We are seeing this first-hand today with the pervasive growth of intelligence in the everyday "network". GPS that can help us navigate efficiently through real-time changes in driving conditions, messaging software that suggests suitable responses and suitable endings to sentences, IVR systems that provide self-service functions over the phone, and many more. And we read about breakthroughs in Artificial Intelligence, such as the many applications of Deep Learning.

The moment that Skynet becomes self-aware...

All this is exciting, but it's also scary. That's not just because of some Terminator-style doomsday scenario, but because of the much more mundane prospect of mass unemployment.

2. The Energy Singularity

There is a second singularity that is also approaching, which I call the "Energy Singularity". I define it as the point at which the marginal cost of energy production and transmission is virtually zero. In other words, the world can access as much energy as it needs at virtually no cost. The infrastructure to deliver energy has already been paid for at this point, and the investment can thereafter be harvested ad infinitum.

We're putting in place the infrastructure for the Energy Singularity as we speak, but we don't realise that we're doing it. We think we're saving the planet from climate change by reducing the emissions from hydrocarbons, but we're actually doing something of far greater significance. We're making energy sustainably cheaper to produce, and one day the marginal cost per unit of energy will be virtually zero.

We're seeing some early signs of this. Germany is now producing 35% of its power requirements from renewable energy. Chile is producing more solar power than it can consume, and is consequently giving energy away for free! There is talk of households being able to go "off the grid" with solar panels and battery storage. The cost of solar panels has been dropping significantly over the years, and the cost of battery storage is beginning to follow a similar downward trend.

Solar is becoming a formidable source of alternative energy with each passing year

Wind farms are the fastest-growing source of renewable energy, rapidly catching up with hydroelectric power, and likely to be the largest source of renewable energy in the near future, much larger than solar.

Offshore wind farms seem likely to be the biggest source of renewable energy in the near future

It's not hard to extrapolate forward to a future where energy is available in abundance at a price point that is virtually free, because the cost of the infrastructure that produces this energy has already been amortised.

These two singularities together have very significant implications for the production of goods and services. At a high level, the three classic inputs to the production of any good or service are raw material, labour and energy. If energy is free and labour (even that of knowledge workers) can be replaced through automation, then it is only the cost of raw material that is relevant. Again, if the major cost of raw material is its extraction or harvesting from nature, and if these activities can be directed by artificial intelligence and powered by cheap or free energy, then the cost of raw material plummets as well. We could then say that the two real inputs to the production of anything are Energy and Intelligence, as I explain here.

These two trends together bode very well for the productivity of society in general, whether in the primary (agriculture), secondary (industry) or tertiary (services) sectors.

In fact, since energy is the ultimate currency, the availability of cheap and abundant energy (The Energy Singularity) means that human society will become unimaginably wealthy in a very short time. Humanity does not even have to exert itself to guide the application of that energy towards productive ends, because Artificial Intelligence is capable of doing it on our behalf (The Technology Singularity).

However, the imminent arrival of the Technology and Energy Singularities doesn't necessarily and automatically translate to a higher standard of living for human beings. There is a certain conscious economic "rewiring" of society that will be required to transition to this better future and to minimise the pain of the transition.

The point at which this rewiring takes place is what I call the "Economic Singularity".

3. The Economic Singularity

After all, the implied social contact between households and firms has looked like this for a few generations now:

A classic diagram from any economics textbook - "The Circular Flow of Income"

There are two cycles here, one clockwise and one counter-clockwise. The inner, counter-clockwise one is the employment cycle. Firms hire labour from households and pay wages as compensation. The outer, clockwise cycle is that of consumption. Households buy goods and services from firms, using the money they have earned through wages. The two cycles - inner and outer - have to be of roughly equal magnitude for the system to remain in equilibrium.

Consider however, that as firms become capable of replacing human labour with machine labour, the inner cycle necessarily begins to weaken.

"Jobless growth"/"Jobless recovery" occurs when the inner cycle weakens but the outer one remains healthy (for a time)

In other words, the consequence of rising productivity through increased automation is unemployment. Firms can continue to produce and sell the same volume of goods and services, without hiring and paying for labour at the scale they used to earlier.

But the inner and outer cycles have to be in equilibrium! That equilibrium is what sustains the economy. When the inner cycle weakens, it's only a matter of time before the outer cycle weakens as well.

It cannot last. The economy will grind to a halt if households have no money to spend. This is now being called "Secular stagnation"

It's easy to see that if households suffer from mass unemployment, they will not have the means to spend on goods and services produced by firms. So it doesn't matter how productive firms are, or how competitive their prices become. They will simply not be able to sustain their volume of sales as time goes on, and the economy as we know it will grind to a halt.

Of course, long before that stage is reached, there will probably be bread riots and violent revolution, because people are unlikely to starve quietly.

It's obvious that firms are being extremely short-sighted in their headlong pursuit of productivity advantages through automation of their workforce. They are unravelling the delicately balanced wiring that keeps the economy going. If the captains of industry don't want their heads to be carried on pikes at some point in the inevitable popular revolution, they should start to look at alternative wiring of the economy to compensate for the weakening of the inner circle. Governments and monetary authorities should both realise that monetary levers will not work anymore. Interest rates are at their historical lowest, and cannot stimulate the economy by going even lower. The stimulus has to come from fiscal levers.  Money has to be put into the hands of ordinary people to get them to spend.

The Economic Singularity, the point when society rewires itself in a sustainable way so that equilibrium is again attained, will require the intervention of governments. Here is what that could look like:

The long-prophesied "leisure society" after the Economic Singularity

In other words, the firms that produce goods and services for profit without employing human labour, consuming virtually free energy and using cheaply acquired raw material must pay taxes that are then distributed to households as a "Universal Basic Income", credited directly into bank accounts. Households then use this income to spend on goods and services.

Households are also shareholders in firms, and dividends too flow to them from corporate profits. Ownership of shares should also be uniformly distributed like Universal Basic Income. A skewed economy where a few oligarchs own the majority of shares will not work. Capitalism needs to be made socialistic.

This is a new equilibrium that gives every person what they need without their having to work for it. The Economic Singularity will mark the beginning of the much-awaited Leisure Society.