How Serious is Wealth Inequality?
If we look at the rate of the acceleration of wealth inequality, in terms of a minority owning the majority of wealth (and growth) on the planet, it’s getting worrisome. The generation that comes after Millennials, namely GenZ and Alpha, have their own, new struggles.
The reason being is we are on track not for AI to democratize opportunity and convenience, but for it to further enslave us. Witness in China a social credit system that punishes citizens with very harsh penalties (e.g. not being able to travel home to family!), higher rates on loans, etc…
In the U.S. when we look at rising student loan debt decade by decade it’s an even more alarming trend. The cost of healthcare, housing and “tier-1” cities is also highly problematic in relation to a lot of uncertainty at work. Stagnant waves, more underemployment and more able bodied males falling through the cracks and outside of the labor force semi-permanently.
Since those working in the freelance and “Gig-economy” don’t typically have access to “benefits”, unions or protection from fraudulent employers and contracts, it’s very difficult for their lifetime earnings to be adequate to save for retirement.
We know that the generation who began their careers after the recession of 2008, are basically permanently stunted. Born anywhere between 1977 and 1992, these citizens have delayed home ownership dramatically, pair up less, and have less children due to economic factors and pressure. With inflation, further generations will still be feeling the effects of the great recession, as those that control the financial system and the best jobs are typically young baby boomers or belong to GenX.
GenZ (Who are growing up with video and mobile) and Alpha (who grow up with AI), graduate to a world where automation has started to accelerate. The skills they acquire will more quickly go out of date. They may retrain in fields, that also risk or will be vulnerable to automation. This will increasingly be seen in fields above the $20 dollar threshold, where the first wave of automation will take place. Even white collar professionals won’t be safe, in the 2030s and 2040s. Without significant changes in the system, the Middle class weakens tremendously between 2020 and 2035, to the point where the bottom 60% instead of the bottom 30% live in relative poverty.
Meanwhile, digital immersion increases in its addictiveness, not just with smart phones. So if one generation was on Netflix and YouTube, the next might be on future channels of digital immersion that isn’t conducive to living productively in real society or giving back to the physical community which they belong. While this is good for the profits of tech companies, it’s not good for society on a sociological level or for career development of young professionals.
It’s likely that each subsequent generation gets poorer in terms of lifetime earnings, job opportunities with hyper-competitive high-skill positions and a skills-gap where jobs exist but not the required workforce. While convenience of technology adds value to our lives, Millennials indebted and living at home don’t make the best consumers, so recessions when they occur could be deeper. Global fertility decreases and this feedback mechanism grinds global growth to a halt. “AI” thus becomes simultaneously what drives productivity and growth, and what makes generations less autonomous financially as capitalism and democracy themselves struggle to adjust.
If young people cannot afford to live or move to the cities where the opportunities are, it creates a rift between cohorts. While young people must continue to migrate to cities and countries where greater opportunities exist, American youth will be more reluctant to move to places like China, than China is to send its youth to be educated in American colleges.
Economic Megatrends, Inflation and the New Consumerism
One challenge in answering that question is defining what (and where) we mean by “poorer”. In absolute terms, it is likely that if you have a job your job will pay more ten years from now than it does today. However, the likelihood of having a job will diminish over time, and the amount of money received may be fighting a rate of inflation that sharply reduces the real spending power of that money.
In relative terms, demographically, the US is in a long term bear cycle, one that may end up lasting another 20–30 years, as the Boomers move from being net investors to being net consumers of those investments. The population is also transitioning from a period of hyper growth to one of stagnation — without immigration, the US would in fact be heading to a shrinking population base by 2030. As apparent wealth tends to be fairly heavily correlated with population growth differentials, this implies that the amount of disposable income per person will almost certainly be dropping in relative terms.
Capitalism is Changing
The old signal to the economy of “baby boom = more workforce = more wealth per person” will no longer hold true. Our values are changing. The market looks at digital and AI-generated value as greater. The new wealth they generate is not distributed evenly. The ownership of these wealth-generating platforms is held by a handful of corporations and names.
Late-stage capitalism has shown us there is reason to expect more “fear” cycles as baby boomers age completely out and demand services. This could take the form of more “stable” cryptocurrencies — at first, simply what has been around longer and is still scalable (Ethereum and then NEO fit the bill). BitCoin will continue to play pioneer-martyr as it is replaced by later generations of crypto.
If Nick Bostrom’s digital wealth creation theory holds true, AI system owners will be able to generate and control exponentially increasing amounts of capital. AI is the new means of production. The counterbalance of free AI access towards some kind of post-capitalist world of makers and intention-setting philosophers is just as likely.
How will we allocate, how do we allocate all this new wealth and resource? It is an age-old question and dialogue point accelerating quickly into the future.