The video below is a short talk given by Balaji Srinivasan, who is the CEO of a DNA testing company, and who to my knowledge is not some type of “right winger”. He discusses a concept he called “Exit” in which technology will essentially give us the opportunity to live our lives free of government interference. He defines it as “giving people the tools to reduce the influence of bad policies over their lives without getting involved in politics, without lobbying or sloganeering”. It is peaceful and done with no malice. You simply vote with your feet for the better alternative for you. He believes that in the future that while one can continue to try to lobby and sloganeer, that will not be as effective as “opting into” an alternative. He mentions Bitcoin, mobile medicine and 3D printing as current examples.

My thoughts are below

I do agree with much of what he is saying and it seems that many will be able to “opt out” of whatever obstacles the federal gov’t puts in their way. But my fear is that this may only apply to the cognitive elites (like those in Silicon Valley) with lots of education and/or lots of skill. Even right now, the elites “opt out” of regulations and taxes by moving their factories to low tax/low regulation/lower population centers. This is probably only going to increase as the tech gets better. They will have many options and the feds will be nearly irrelevant to their lives.

Meanwhile, we hear that the labor participation rate has dropped to 1978 levels in spite of the massive influx of women into the labor force. Some even say it is a “cleansing“. I know that many Republicans like to blame Obama for this, but this is not really about a particular politician or even politics. So what is happening? According to George Mason professor Tyler Cowen’ book ‘Average is Over’, technology is the real culprit. It is quickly replacing human beings in many sectors. Such as (McDonald’s is testing the concept in Europe) or even replacing some servers. There are other examples in factories (see: Detroit) and other sectors as well. No, automation has not and will not replace everyone (who wants a vending machine instead of a bar tender?? And would you rather speak to a human being or the automated system? And certainly skilled construction workers are safe for the foreseeable future) but it has replaced lots of people in the labor force and will continue to do so. In 20 years, automation will likely replace many taxi drivers, truck drivers, bank tellers and many others. Heck, we may not even need as many soldiers in the military.

In short, the labor rate will continue to fall (unless of course we create a lot of “make work” jobs) and the middle class will continue to shrink regardless of who is elected President in 2016 or who is in charge of Congress. This is why I don’t put a lot of stock in who can be President in the next race. This is why I do put a lot on local community and why I tell everyone that will listen that this is where we need to concentrate our efforts.

So while “retraining” will work for a few, the nature of technology improvements will mean that many people will simply not find work that will sustain the type of lifestyle to which they are accustomed. Thus they drop out of the labor force. What I suspect will happen to the people on the bottom (the regular people) is that they will have to rely upon family and local community (yes, that theme again) to fill in the gaps. This will be absolutely imperative for “regular” people. That could even mean that having a 35 year old living in the basement could be pretty normal in the future as families coming together to save on living expenses and pitch in will be a smart move for those who are not rich. We will need to create our own way of “opting in” at the local level.

I worry about this issue mostly with regards to our children and grand children. But then again as health care gets better (and more privatized in an alternative system), many of us can expect to live to see this too. A few educated and highly skilled people will have lots of options and more freedom, while the masses will have a hard time finding sustainable employment and have less freedom – unless they ban together in their local communities.

Update: Those interested should check out this chart of “superzips” that show where the cognitive and economic elites currently live. The analysis is adapted from information used by Dr. Charles Murray in his book ‘Coming Apart’ (I highly recommend his book on this topic to those who have not read it already)