What if the biggest challenges facing humanity today perfectly offset each other?
As sure as two minuses make a positive, the biggest threats we face could deliver an economic nothingburger that nobody is banking on. Or should I say investing in?
Half the population is terrified of demographic decline. Which is fair enough. Demographic pyramids are becoming so top-heavy that they’ll topple over eventually. That’ll trigger social and economic chaos.
The other half of us is horrified about Artificial Intelligence (AI). Robots will steal our jobs and do our chores for us.
Strangely enough, whether you hate or love Elon Musk seems to be the best proxy for which camp of panickers you’re in.
But I think the two groups of doom mongers need to take a long hard look at each other. They might realise something rather odd…
Don’t the two crises just cancel each other out?
Like the two tsunamis in the film Tidal Wave: No Escape, the two calamities combined will have a completely melodramatic ending.
It might seem less than plausible that two vast trends will neatly cancel each other out. But like a year 10 maths student sitting an exam, there’s every reason to suspect the correct answer is nicely rounded.
Capitalism is the force that brings balance to the galaxy
Fear mongering does have a poor track record to begin with. Sometimes it’s difficult to keep track of what we should be worried about…
We’ve gone from overpopulation to underpopulation. From cooling to warming. Nuclear power went from environmental threat to saviour. Imagine telling our great grandparents that our energy transition is to windmills. They’d tell us that’ll lead to a crisis too.
Last week we took the Luddites to task for their ignorance. How many times does history need to prove them wrong?
Of course the truth is that there is just something about human nature which fears technological change. I’m a pretty slow adopter myself. My dad just bought a Tesla. The acceleration gave me a backache for a week.
This week we need to ponder why the luddites keep getting it so wrong. How does the world economy manage to keep on an even keel despite all the transformative changes that keep happening? Because if you can understand the force that keeps things in balance, you can profit from it.
I think it’s capitalism that keeps us on an even keel – the profit motive. It’s what motivates change in the first place. And it gives us our ability to adapt to change too.
You see, when people want something, they are willing to pay for it. This creates an incentive to solve other people’s problems. Whether that’s a new technology or dealing with the problems new technology creates.
There are entire industries dedicated to “solving” climate change already.
If you fear the loom, you can buy hand made.
If you’re not a fan of innovation in food and farming, there’s all manner of products to cater to your preferences.
So, if we want to escape the worst effects of demographic doom and AI dominance, all we need to do is let the price mechanism guide us. And buy in accordance with our values.
That’ll ensure the transition to AI progresses no faster or slower than we want to offset demographic doom. If the demographic crisis is creating labour shortages, robots will become economical, for example.
It’s how the free market ensures the best possible path by balancing all possible considerations.
Of course the free market only takes into consideration our actual actions. It doesn’t care whether you’re worried about carbon emissions. Only whether you’re willing to pay for carbon offsets or stop emitting. But that’s just the harsh reality of…reality.
Any deviations from the free market leads to sub-optimal outcomes.
What would our carbon emissions look like today if government hadn’t constrained nuclear power for decades? We know by comparing France and Germany.
What would our fertility rate be without zoning, interest rate fiddling, pushing women into the workplace, bizarre childcare rules and whopping energy costs?
Through the price mechanism, the free market provides the most efficient allocation of resources. That’s because it is merely the interaction of everyoneacting in their own self-interest. No need to vote or appoint anyone.
So, unless the luddites manage to get into government, I am predicting the demographic implosion to perfectly offset the AI explosion. Because the profit motive will ensure that the transition will occur at the pace we want it to via our consumer choices. There will be plenty of whinging. But in the end, we express our wants through what we buy.
The question is how you can profit from this radical shift. My co-conspirator Jim Rickards has the answer.
Until next time,
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Nick Hubble,
Editor, Strategic Intelligence Australia
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