Author: Mr DDU.
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The world is changing faster and faster, the sharing economy is just one small part of what’s to come from automation, becoming more efficient and cutting out the middlemen.
If you’re scared or excited by that, I think that shows if you think you’ll benefit or lose out in the years to come.
We’ve already seen some big changes:
-ATMs and internet banking have replaced visiting a physical bank
-Self serve kiosks at shops, supermarkets and McDonald’s (ordering)
-Online accounting programs like Xero
-Apps of all kinds (betting, food ordering etc)
And the list goes on and on.
Every tech and car company in the world are racing to produce their first legal automated car. Once these cars are out in the world, there will be massive ripple effects. Is this going to put all taxis and Uber drivers out of business? Who’s going to own these cars? How long before non-automated cars are banned from certain roads? How is insurance going to work?
None of these are easy questions to answer. Automated cars are just the first stage of automated transportation that’s coming. Automated trucks, buses, delivery vans and trains are all being researched & developed.
Automation is an incredible technological development. Machines don’t need holidays. They don’t need sleep. They don’t get sick. They don’t go on strike asking for more pay (yet!). It will make companies and shareholders a lot of money – but what about the people they’re replacing?
Machines don’t pay taxes. They don’t spend money in local shops. They don’t get a mortgage, have kids or utilise local infrastructure like airports. The people who have jobs spend money, helping spread money around the economy.
In the industrial revolution we saw a huge percentage of (farm) jobs disappear. Since then, a large number of jobs in other sectors have been created. Job categories like lawyers, accountants, Government (teachers etc) and healthcare have all exploded in the last 60 years.
Hopefully more jobs can be created that didn’t exist before, such as social media teams. Will there be enough created to make up for potentially hundreds of thousands of jobs lost in Australia, millions in Europe and the USA? It’s hard to say.
There’s a wide range of possible scenarios from best case ‘The world will become a better place than it is now’ to ‘A large portion of society loses their job and can’t get another one’.
The potential game changer
Some countries are now facing up to these future issues by considering paying every citizen a Universal Basic Income. This is where the country’s government gets rid of most of its social welfare and replaces it with an income that every citizen receives.
How much income? Figures are as wide ranging as $12k – $30k. How much is enough? It depends on each country’s cost of living and generosity.
Switzerland recently had a vote to decide if each citizen would receive 2,500 Swiss Francs ($2,555 US) a month. This would have meant $30,660 US each year for every citizen. The amount reflected the Swiss high cost of living. But the vote was 77% no and 23% yes, so universal basic income was rejected.
But Finland are actually doing a trial of UBI with 10,000 people. Each person will receive 550 Euros a month for 2 years. If the trial works, it will be implemented across the country. According to a Finnish survey, 69% of Finns are behind the UBI idea – so Finland may become the first country to have UBI. It’s always a Scandinavian country that does this type of thing first isn’t it?
What are the advantages of a Universal Basic Income?
–No absolute poverty. If everyone has the guarantee of a basic income, everyone can afford a basic home, simple food, utilities and water. It would hopefully be enough to eradicate all homelessness.
-Freedom not necessity. If people have a guaranteed income, they don’t have to take that minimum wage job to pay their bills. They can instead open a business or do the training for a better job. This would hopefully mean they pay more tax to the government as well, helping pay for the system.
-Levels the welfare playing field. If everyone gets the same amount of welfare, there can’t be any uneven receivers of money. At the moment in Australia renters can get Govt money, home owning mortgage payers can’t. Parents get Govt money, childless people don’t. Older people can get Govt money, younger people don’t. So, tough luck if you’re a younger, childless home owner. Everyone would get the same amount, to use on whatever they want.
-May boost the economy. As we all know, most people have a tendency to spend a lot of their money. Therefore most of the money put into the public’s hands would get spent and spread around the economy.
-Time for creativity. I’ve read suggestions that once UBI is in place, that we’ll all have all the time in the world to enjoy the arts and culture of society, instead of wasting time earning money to live. Creativity can lead into the inventions and innovations of the future.
But there are potential flaws too.
Who will pay for it?
If there are so many people out of a good paying full time job, then that’s a lot less payroll taxes for the Government.
All the automation will probably put a lot of businesses to the wall too. In total there will be less businesses paying less income tax.
A lot of money is raised through speeding and parking tickets for local Governments, as well as normal parking. Automated cars won’t speed or park in a paid-for area.
The vast majority of the money will simply come from the current welfare pool of money, but that won’t be enough. Perhaps it will be initiatives like a $2 per Uber fare that will help raise the money needed.
The funds will probably have to come from other department’s budgets, or more taxes will have to be raised on the companies doing the automating. I’m not an economist so I’m not sure how feasible it would be for Australia.
Any other major criticisms?
UBI may encourage some people to never work again. Whether that’s a totally bad thing or good thing, I’m not sure.
Who will benefit from automation?
Back to the topic of automation; one of the biggest industries we’ve seen a glimpse of how the future could be is the car industry. So, it’s easy to speculate who might benefit.
Assuming all cars end up being electric cars, somebody is going to have to produce and distribute all the extra electricity. That could potentially mean companies like AGL (ASX:AGL), Origin (ASX:ORG) and Vocus (ASX:VOC) have a lot more demand for electricity. Electric cars should be a lot better for the environment and air quality too.
If the cars are automated, they’re going to be relying on data for location and direction. You’d imagine this is a LOT of data. Someone will need to handle that data. Will it be companies like Telstra (ASX:TLS), TPG (ASX:TPM) and Vocus (ASX:VOC)? Or a satellite company that sends the data?
There should be a LOT less accidents and deaths on the road, which is awesome for those people and their families. If even one life could be saved, wouldn’t this be worth doing?
Uber, probably, will benefit, but the current human drivers won’t. Although, if car companies produce their own version of Uber, they’ll have some stiff competition.
Automation is going to be a huge change for our societies. It has the potential to do so much good for the world. But we need to make sure that the negative consequences are thought through and planned for.
Readers, would you like a UBI in your country? What do you think of the upcoming wave of automation? Are you scared or excited (or both) by it? Will you buy an automated car as soon as it comes out?
Thanks for reading this article about our financial journey Down Under.
Onwards and upwards!