The Devaluation of Skill

A couple days back, I was trying to explain to a client about the misguided expectations of profit growth for companies, where they are looking to add year on year profit, indefinitely. Of course, while the goal is there, in practice, it just doesn't really work that way, because due to compounding, what it means is that eventually a company would consume everything else.

I gave an example to him where a company such as the one he works for will make a billion in profits, but expect an increase of 10% a year. This means that every 7.5 years or so, the profits would need to double, 2, 4, 8, 16, 32, 64, 128, 256... In 60 years, the company would have the same profit as the GDP of Finland. And 15 years later, it would be the size of Saudi Arabia.

It doesn't add up.

But of course, this is why there is inflation in the monetary system, because printing more money allows for the increase in profits, even if there isn't a relative increase in goods provided. As they say, it isn't that things are getting more expensive, it is that money is worth less.

Because all companies and governments are on an endless quest for profits, they are also on a continuous path of creating efficiencies to reduce costs. For instance, @bozz wrote a post about automation and replacing human intelligence recently, questioning where it leads.

Instead of automation development geared toward solving actual problems, it is made to make our lives "easier", which means replacing the need for us to learn skills, apply skills, or even have skills at all. And, while it does make our lives easier, it also means that we are unskilled, meaning that we are no longer valuable to a company, which is fantastic for the companies, because it increases their profits, when they don't have to pay staff, and they can run robots 24 hours a day, without unions complaining.

We are getting stupider.

Yet, many still have what I consider a mistaken understanding that once we have all these machines doing all the valuable work for us, we will have the time and space to do as we please, explore our creativity, be the best version of ourselves. This is nonsense, because in order to be the best version of ourselves, we also need resources, and an economy that maximizes wealth, only uses its resources to make more value, more wealth, take more control.

There is no obligation from business or government to care for people, it is just an opportunistic relationship. Business and government need people to operate, because people are their customers, but, people don't need businesses or governments to operate. It isn't a symbiotic relationship, it is a parasitic relationship, with people being the hosts. But, this is hard to visualize for many, because most people believe that they are necessary for humanity to survive, even if they don't add any value to society.

When people aren't adding value to "the tribe" they become a resource drain, and in an economy of scarcity of resource, where that scarcity is used to generate wealth, blocking the drains means retaining more resources. Automation and artificial intelligence is one way to block the drain of value leaking out of a business by reducing headcount, but once this happens, the same people become a drain on a government, which is also playing the resource maximization game.

Most countries these days have various levels of challenge with homelessness and addictions, with increasing knock-on problems caused, theft, violence, disease and the list goes on. Now, most people who are working hard, holding down a job, paying their bills, raising kids, paying taxes etc, are also paying for these people to survive, essentially funding their addictions.

Economically, the best solution for average society would be to not have drug addicts in the streets, or drug addicts at all. Socially, it would also be better, but while those working feel that in order to benefit from society, a person needs to add to society, the problems still persist, because they are human problems.

There are lots of reasons for people to fall into that kind of lifestyle, but what happens when the majority of us are unable to work, because we are unable to add value to an organization, because automation of some kind has made us redundant? Handing out money for nothing isn't a solution, because it breaks the economy of trade, and can't take into consideration what resources are needed where, because every person will also be of the mind that they deserve more of the resources, than someone else, even if they haven't contributed to the pool of value.

Many seem to think that once they have time on their hands, they will be able to spend that time improving their skills in something they love, and then using that to provide some kind of entertainment or value to an audience. The thing is though, that even with all that time on our hands, what the average person will be able to create, is not in demand. But, it is also more than this, because there is the issue that we have a mindset of convenience, so we are also looking to automate our lives, make things easier, so how many would actually have the drive to be brilliant at something, and what are the chances of being brilliant at something that a robot isn't able to do better?

We are making ourselves economically useless.

And, while people will say it isn't all about money, it is all about resources. Without the differentiators in skills, without the diversity of value-adding activities, how does the economy decide what resources go where, who gets what, which scarce opportunities go to who, and why? Once you start to answer some of these questions, a workless world becomes dystopic very, very quickly.

What people need to recognize is that what automation is doing, is adding massive amounts of inflation to human skillsets, by being able to easily replicate what we do in an increasing amount of areas. What this then also means, is that just like money being worth less, our human skills are also being worth less, and can therefore buy less. This means that in order to get the same amount, we have to get exponentially better, competing against technological skillsets that advancing far faster than we humanly can.

And, the amount of resources going into advancing these economic assets is immense, because they are able to increase efficiencies, therefore increasing profits for the companies. Just like Nike doesn't care whether you are fit or not, no corporation, nor government for that matter, cares about your wellbeing. You are simply a resource, a host to suck dry until only a husk remains. Once there is nothing left to extract, there is no reason to target, or keep people, because there is nothing left to gain.

Corporations don't market to homeless people and drug addicts, because they have nothing to spend on those kinds of goods and services. Drug sellers provide for them though, because they are able to trade a gram for some money that was given to them by the government. There is still economic activity, but it is largely being funded by the taxpayer, like normal. But, eventually, there aren't enough taxpayers to cover the increasing number of people who need social support, and keep consuming from corporations.

Which buying choice do you think gets made?

The economic buyer will make decisions on the long-term costs and potential for gains on their purchases, and this is what corporations and governments will do in their decision making. At what point is it in the best interest of the economy to support people who are not adding to the economy in some way, even if indirectly?

It never is.

So, the time is quickly approaching where the practices and focuses of the economy are going to be put into question, because it is geared toward monetary profit maximization. This focus supports the increase of automation to replace human tasks, and it also supports the decrease of support for people who aren't able to add to the economy. And, that group of us is increasing, due to automation.

The decisions of corporations and the activities of governments, are made with money as the currency, and profit increase as an indicator of success. This is always going to lead to a minimization of human value. If the economy focus and greatest profit potential was in maximizing the wellbeing of people, then we wouldn't be in this situation. However, people have also started to conflate "wellbeing" with not having to work, which feeds into the for monetary profit framework, not the quality of life model.

Everyone thinks they are better than the tools being created.
Even now, very few are. The only thing that is slowing down the irrelevancy of humans, is the cost of acquiring and ramping up the tech. Another scarcity of resource problem - but they are solving that one.

Soon, most of us will have a lot of time on our hands, and have nothing useful to do.

Taraz
[ Gen1: Hive ]