Tag Archives: income

In the middle

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I think that a robust and healthy middle class is essential to maintain a vibrant society. But what I see in the world is an increasing gap between the wealthy and an ever larger group of people living in debt and/or from paycheque to paycheque. The (not so) middle class now might still go on a family vacation, and spend money on restaurants, but they are not saving money for the future… they simply can’t do what the middle class of the past did.

A mortgage isn’t to be paid off, it’s something to continue to manage during retirement. Downsizing isn’t a choice to be made, it’s a survival necessity. Working part time during retirement isn’t a way to keep busy, it’s s necessity to make ends meet.

I grew up in a world where I believed I would do better than my parents did. Kids today doubt they will ever own a place like their parents, and many don’t believe they’ll ever own a house. Renting and perhaps owning a small condo one day are all they aspire to. Not because they don’t want more, but because more seems too costly and out of reach.

Then I see the world of AI and robotics we are heading into and I wonder if initially things won’t get worse before they get better? Why hire a dozen programmers, just hire two exceptional ones and they are the quality control for AI agents write most of your code. Why hire a team of writers when one talented writer can edit the writing done by AI? Why hire factory workers that need lunch breaks and are more susceptible to making errors than a team of robots? While some jobs are likely to stick around for a while like trades, childcare, and people in certain medical fields, other jobs will diminish and even disappear.

I don’t think a robot is going to wanted to provide a pregnancy ultrasound any time soon, but AI will analyze that ultrasound better than any human professional. A robot might assist in laying electrical wire at a construction site, but it will still be a human serving you when you can’t figure out most electrical issues that you have in your home. It will still be a human who you call to figure out how to fix your leaky roof or toilet; a human who repairs your broken dishwasher or dryer. These jobs are safe for a while.

But I won’t want my next doctor to be diagnosing me without the aid and assistance of AI. And I would prefer AI to analyze my medical data. I will also prefer the more affordable products created by AI manufacturing. The list goes on and on as I look to where I will both see and want to see AI and robotics aiding me.

And what does this do to the working middle class? How do we tax AI and robots, to help replace the taxation of lost jobs? What do we do about increased unemployment as jobs for (former middle class) humans slowly disappear?

Will we have universal basic income? Will this be enough? What will the middle class look like in 10 or 20 years?

There is no doubt that we are heading into interesting times. The question is, will these disruptions cause upheaval? Will these disruptions widen the wealth gap? Will robotics and AI create more opportunities or more disparity? What will become of our middle class… a class of people necessary to maintain a robust and healthy society?

Unrecognizable future

Did you ever see the movie Blast from the Past? Here is the premise from Wikipedia:

The film focuses on a naive 35-year-old man, Adam Webber, who has spent his entire life (1962-1997) living in a Cold War-era fallout shelter built by his survivalist, anti-Communist father, who believes the United States has suffered a Soviet nuclear attack (in reality, a plane crashed into their house). When the doors unlock after 35 years (the amount of time his father believes the nuclear fallout will take to clear), Adam emerges into the modern world, where his innocence and old-fashioned views put him at comedic odds with others.

It’s a cute movie. It makes me wonder what it would be like for someone today to jump ahead and see what the future is like 35 years from now? What does life look like in 2058?

Will work look any like it does today? What about transportation? Money? Space flight? Religion? Politics? Artificial intelligence (AI) and computing?

There is so much that could, and will, be different from today. Some of these things might look similar, but some are going to look considerably different. I can’t imagine a world 35 years from now being less different today than 1997 was to 1962. Life in 2058 will be unrecognizable compared to life today.

For example: The entire monetary system is going to be digital. The workforce is going to be mostly different depending on how much AI has undermined many of today’s jobs. That same AI is going to change the way we integrate technology. Today it’s our phones that seem to be getting smarter and smarter but 35 years from now it will be integrated/cyborg technology that will be enhancing and enriching our lives.

I can imagine glasses or contact lenses or implants that give us information like map directions, names and details about people we meet, and even health data like heads up display data in a military jet today. I can imagine this working in a way with a hearing implant that allows us to have a video conversation like FaceTime on our phone today. Phones won’t be something we carry, they will be something embedded as part of the tools we wear or tools we integrate into implants.

If you don’t think that things will be drastically different than now, then you haven’t paid attention to the exponential rate of change that has happened since the 1990’s. In 1990 there was no Amazon, Deep Blue was 7 years away from beating world Chess champion Garry Kasparov, there were no smart phones, no electric cars, and Google was still 8 years away from being a company. Author Arthur C. Clarke said, “Any sufficiently advanced technology is indistinguishable from magic.” Smart phones today would seem like magic in 1990. What does 2058 hold for us that will seem like nothing less than magic to us today? It’s cliche to say, but time will tell.

Two great divides

The gap between the rich and poor is getting bigger. The middle class seem to be lower down in the separation of this gap. One simple thing keeps the divide growing, and that is debt.

When a typical person buys a house, and starts paying a mortgage, then their future income is tied to their debt.

When a rich person buys a house, they are making an investment with their earnings, and their house becomes a future source of income.

One pays interest, the other reduces capital gains. One pays monthly, the other moves their money around. When one does renovations to add value to their home, they increase their debt, the other adds to their write-offs, and reduces taxes on gains.

But the part of this that really makes a difference is that with interest rates so low, the rich don’t use their own money, they too borrow money for expenses. But while poorer people use a large part of their income to pay off the low interest debts, the rich use their ‘extra’ money to make more money than the cost of the low interest debt. By borrowing, they increase the wealth gap. This great divide gets bigger.

This is a bit of an oversimplification, but it speaks to the fact that people live in different worlds. The same way I’ve described this gap, I can describe another gap between the ‘poor’ middle class and the truly poor. For the truly poor, they can’t buy a home, and so their rent does not go towards any equity. Their wages only go to survival. An unexpected debt of just a couple thousand dollars can be enough disrupt the balance and cause homelessness, or force the need to take out a high interest loan… because the poor are a risk to default and so they pay a premium on debt. Then payments for that debt become the focus of wages, but there is no house, no equity made on that debt, it’s purely an expense.

For the truly poor, the wealth gap is a an inescapable chasm. This is the gap that matters most in our world, the one that keeps people at or near poverty levels. This is the great divide that really matters, and it’s one that should be addressed by the leaders of our world in the same way that they are approaching climate change. It matters not just to the poor, it should matter to everyone. Because in this amazing world we live in, there is no need for the poverty we see to exist.