Where Work is Heading

This is part 1 of 2 of a Facebook post written a year ago, with the conclusion that universal basic income could be the paradigm shift needed to support the economy of a brave new world with super-efficiency. Part 2 here.
What happened when Henry Ford shortened work hours and doubled workers’ pay

We might be heading into 5h workdays or shorter work weeks like 3 days. People are terrible for forecasting possibilities, but the more people who believe in something and making it happen, some possibilities can end up become self-fulfilling prophecies. There are 2 big trends which are taking place in the last few decades of civilisation, which confluence seems to suggest less time dedicated for work and more time for play, family or other non-profit activities to expend our energy.

First, the world is becoming increasingly homogeneous. A more common culture, language, beliefs and how we spend our time. Too many examples. It is also a fact that wealth gaps are widening to new extremes, but at the same time it is gradually becoming clear to people that having huge wealth or that much more money isn’t really going to make that much of a difference to people’s happiness, anyway. I believe a more homogeneous world due to globalisation weakens capitalism, which thrives on opportunities to fill large gaps.

Second, the world is increasingly becoming digitalised. Computers, internet, smartphones. So much can be done and so much needs can be met through digital technology. To the point that transactional costs are heading towards 0 due to tiny marginal costs for each extra unit of production. There will still be costs for now since data centers and the underlying infrastructure need to take up physical space, and IT people still need to be paid. However we have seen no lack of examples of free/open-sourced digital products and services that we use everyday.

I believe these 2 big trends are coming of age and when put together, is big enough to cause a big shift in modern civilisation. It goes back to the concept of land. If 100 people are on an island and you assign 1 person to be the owner of all the natural resources on it, it is as good as making the other 99 people slaves to that 1 person. If we are being charged a price for breathing oxygen we will think that’s crazy because it is vital to life. Likewise in the capitalist world, everyone is being charged a price to use land and its resources. Land and its resources are as vital to life as oxygen.

As cities grow in population, so does the value of land. Technological breakthroughs in general or improvements in human efficiency are not going to bring higher wages or an easier life. Because there will always be someone who is willing to accept a lower wage to live near socially defined subsistence levels. The people who really benefit are landowners as the price of land increase, they can command higher rents. Total profits increased but a big chunk will go to landowners as rent.

But, we are seeing now a technological breakthrough which is challenging this traditional definition of land. In the digital world, land is nearly free. There are still costs of physical data centers and infrastructure, but it does not take a genius to see that the physical land on which they are built to deliver digital products and services are a small fraction of businesses delivering products or services in the real world. And it seems that this digital breakthrough has struck a chord with the masses.

The 21st century human is faced with an onslaught of higher land prices (leading to higher rents, and higher costs of products and services). Human, like water or things in nature, generally move towards the line of least resistance. In an increasingly digital world where digital products and services can be obtained for free or very low costs, it is no wonder why people find that demands are increasingly being met digitally or enabled through digital technologies.

This is a problem to landowners. As human demands are increasingly being met digitally at low costs, people require lesser demands to be met through the physical world. For an example, instead of building one whole entire cinema for movies, or building physical infrastructure to manufacture and retail DVDs, we can watch it online at home or on the go through smartphones. Some real world industries are gradually being consumed by digital ones.

With each dollar spent in the digital world, is one dollar less being spent in the physical world. Lesser demand for real world products and services lead to lesser profits and eventually headcount cuts because there is just not that much work needed to be done. Rent and price of land is likely to drop, especially those holding physical structures which are far from basic subsistence needs of human. For eg the high-end residential penthouse unit which was sold at a loss of 11 million dollars last year.

If the cycles of lower and lower rents persist, we probably can expect lower wages and lower prices of products and services. A possible outcome of the confluence of these 2 big trends may lead to a world with lesser unit of work to be done, as digital goods carry so much mileage per unit of human labour. Lesser work and lower wages are ok since prices of goods become cheaper. The wages and prices that are furthest from human physical subsistence needs are likely to be the ones that depreciate the most. The cycle seems to have started already, if it persists, the lesser evil will be to spread the lesser work amongst the same workers than to make a large proportion of workers jobless. Lesser work, lesser pay, cheaper prices, and more time for play or activities not driven by profit.

PS: I do not think digital or internet or high-tech business is good business. There are a few success stories but they are the exceptions rather than the norm. I believe over the long term, substantial money can’t be made in the digital world. Being aligned to the nature of “free land of abundance” in the digital world, I believe non-profit activities will be the ones that bring the most value out of the digital world to civilisation, while physical world jobs provide the necessary accounting and currency cash flows for trade.

Maybe in about every 10 years we see market only able to support the birth of one digital juggernaut. In the first wave we had the IBM/HP/Dell, who provided the computer hardware to allow digitalisation. Then Microsoft, who really is a company providing interfaces between humans and computer hardware. And finally Google, who provided a gateway to internet content.

It appears that the 2nd wave already started and had been trending for about a decade. Apple, with the introduction of iPhone, brought forth the 2nd wave of computer hardware — on demand hardware due to mobility. Facebook, brought forth the 2nd wave of content, content created by people in a digital community. It is like the largest blogging / content / media platform in the world, besting even WordPress.

I won’t be surprised to see the 2nd wave coming for interface.