Investable themes: Leisure, healthcare technology, education technology, gold
Technology really is our saviour. All will be forgiven (past inequalities, debt burdens, health and education shortfalls, political instability, etc.) when technology delivers gains in standards of living that are of a critical mass. Critical mass means a standard of living resembling a near-utopian state that eliminates scarcity as an economic motivator.
We think that last sentence – and particularly the use of the word ‘utopian’ – has probably split our readers down the middle. We’d love to hear what you think.
The race is against economics, which calls for the three reckonings: the global debt reckoning, the global class reckoning, and global depression or secular stagnation.
Importantly, the race does not need to be won; it will never be finished, but if technology stays ahead of economics then – either continually or at critical junctures in time – the three reckonings will be staved off (the global class reckoning will become the global unification of people instead). Technology will be leading the race if it delivers ongoing reductions in scarcity, read: ongoing improvements in living standards.
Economics also calls for antitrust intervention, but this is only a problem to the extent that technology firms refuse to democratise the data they hold. Deflationary monopoly power is quite different to inflationary monopoly power, which translates consumer surplus into producer surplus. Technology increases both consumer and producer surplus through productivity gains; productivity gains increase the efficiency of both capital and labour in producing output. Antitrust will win some battles but technology will win the war.
Technology is a huge structural deflationary force and so it re-writes the relationship between growth and inflation. Our world is engineered to cope only with inflation and struggles with deflation or even very low inflation. The love affair with positive, stable inflation is based on the idea that growth and inflation are positively correlated, and more fundamentally on the assumption that growth is necessary. As technology changes the employment landscape, ‘growth’ may become less the holy grail it once was, inflation dynamics will change entirely, and standards of living will become the new primary benchmark.
Governments can play their part by recognising the cost disease and allocating resources towards accelerating the technological revolution. Foremost, this means investing in, and applying technology to, labour-intensive public services such as health, education, and public safety.
Technology can instigate a new wave of globalisation, this time mostly in services as opposed to goods, and this new wave was accelerated in 2020. The least developed countries of the world will – as they have done in the past – leapfrog technologies developed mostly in advanced countries. As countries that have barely had a chance to fall in love with growth and inflation, they may find it easier to transition to the new technological world order.
So, what can investors do? Invest in technology.
We refer to lots of linked posts in this post. We hope that by following the links you can answer any questions you might have, but if anything is unclear in this post, or you have any questions relating to anything investment-related, please submit comments or questions in the section below and we’ll do our best to answer them.
Thanks for reading. Sign up to receive some or all of our new posts by registering your email address
To the pound 