Automation has already
had a big impact on productivity. Indeed, most of the so-called “jobless
recovery” has been caused by the increased effectiveness of automation, which
reduces headcount. Off shore outsourcing is responsible for just 15% of recent
job losses.
The problems of
abundance
What do traffic jams,
obesity and spam have in common? They are all problems caused by abundance. By
achieving abundance, technology destroys the natural checks and balances of
scarcity.
The technology guru
George Gilder has long postulated: "Every economic era is based on a key
abundance and a key scarcity." Interestingly enough, many of our current
problems are centered on these recurring anomalies. Every new abundance brings
its matching scarcities.
The human body was
designed to survive on scarcity, and it developed over tends of thousands of
years. When food was abundant, it was stored as fat to protect against future
scarcity. We are now surrounded by an excess of food, and the body still stores
energy as fat for lean days - which no longer arrive. Hence, the obesity
epidemic.
The automobile made it
possible for humans to travel twenty times faster, reducing natural constraints.
When it's so easy to travel independently, everyone does it, and causes traffic
jams.
The speed and
negligible cost of e-mail delivers an abundance of potential customers to anyone
with a computer. The huge amount of aggravating spam in your mailbox is a direct
result of wide availability of the technology.
There are lots of other
examples. People have always copied music, but in limited quantities because
copying an audio tape took time, was relatively expensive and the quality wasn't
the same. Today, a CD can be copied easily and cheaply, and the quality is the
same no matter how many times it's copied. So, digital music is a cheap
commodity – and yet, the music industry continues to expect to sell it as if it
were a scarce resource.
Technology has enabled
effortless, inexpensive communication with anyone in the world. It also means
that sending work to the other side of the world is much easier, and the cost is
greatly reduced. Work is now geographically neutral, so almost any white-collar
work is being displaced. Joblessness in one place is simply caused by an
abundance of equivalent resources elsewhere.
When technology creates
abundance, it brings problems which are invulnerable to simplistic solutions.
Like genies let loose from the bottle, the new problems are almost impossible to
control. Traffic congestion cannot be solved by artificially reducing the speed
of traffic, or increasing the cost of driving – through taxation. Obesity cannot
be reduced by making food more expensive or less available. Spam cannot be
eliminated by making it difficult and costly to send e-mail. The ratios of
abundance are too great to be overcome by artificial restrictions.
Any technology which
creates abundance poses problems for any process which existed to benefit from
scarcity. The beneficial abundances caused by technology usually bring
unpleasant societal side-effects. Then we complain about the very things that
were previously benefits.
Technology thrives
by turning scarcity into abundance
Think about this:
scarcity=high price, abundance=low price. New businesses start to provide
new alternatives for high priced scarcities. Indeed, their very existence is to
provide goods or services cheaper or faster or better. And proprietary
technology advantage brings success – higher margins and profits – which are the
very things that business strive for. And patent protection is developed to
prevent others from copying, which would minimize the advantage.
As technology advances,
competitive offerings become cheaper and faster and better. As
competition appears, proprietary advantages dwindle and, unless new benefits are
developed, prices and profits quickly decline.
Mainframe computers
declined till mini-computers came along, in turn displaced by PCs. PLCs were
expensive and highly profitable till the technology became widely available and
they are now cheap commodities. Huge distributed control systems (DCS) were
displaced by PC-based software and SCADA systems. Technology companies must
invest heavily and consistently to stay ahead. When they lose their proprietary
edge they are left with few alternatives, other than service offerings to
satisfy their old customer base.
Regulations & taxes
to restrict abundance
Abundances continue to
expand till the opposing scarcity brings backlash – rules and regulations to
artificially restrict the abundance. Perhaps the only way to stop spam is by
charging for email. Can food be regulated to stop overeating?
How about tobacco? How
much tobacco tax will stop smoking? When it became clear that smoking caused
cancer, a warning was required to be printed on every cigarette packet; but that
didn't stop smokers. Tobacco companies have paid heavy penalties, which they
simply add that to the cost of cigarettes, and their stock rides high, bolstered
by billions of dollars of "reserves". And today, as part of their penalty, they
are required to sponsor advertising that warns about the dangers of smoking, and
offers addiction antidotes.
As we get softer and
flabbier, there is an abundance of pills, potions, equipment and exercises
telling us how to lose weight easily, quickly, safely "in just minutes a day!"
Have you seen the proliferation of pill commercials on TV? In spite of tight FDA
regulations, there are pills for virtually anything and everything. There are
some people who actually take several pills, several times a day, without
considering possible dangerous reactions. And the pharmaceutical companies
manipulate prices through federal regulations.
Artificial
restrictions to create scarcity
There are many who
manipulate the rules of abundance to cause scarcity. For example, diamonds are
found in abundance in nature. But, for over 200 years, the diamond cartel has
stifled, by any means necessary, the flow of diamonds from sources not under its
control. Today there are synthetic diamonds, with differences that are
impossible to distinguish; indeed, they are better than natural diamonds. But
the diamond cartel still manipulates the market, to create the "scarcity".
Another major example
is Oil, once thought to be available in abundance and hence a cheap commodity.
But, the owners of abundant resources quickly realized that they could restrict
supplies to create artificially inflated prices – the fundamental reason for the
existence of OPEC. What will the price of gasoline need to be before traffic is
reduced? At what levels of scarcity will alternative energy systems come into
play?
The cyclic problems of
"scarcity and abundance" are deep rooted in the human condition, in human
society. Look around you, and you’ll find the causes and effects around you,
everywhere.
Related links:
***
Jim Pinto is an industry analyst and
commentator, writer, technology entrepreneur, investor and futurist. You can
email him at:
jim@jimpinto.com. Or look at his poems, prognostications and predictions
on his website:
http://www.JimPinto.com
. Read extracts from his new book, “Automation Unplugged” at:
http://www.jimpinto.com/writings/unplugged.html
