Abundance isn’t inevitable. There are active and passive ways that people will get in the way of progress toward abundance. Here are some of the vulnerabilities on the path towards abundance.

Inflation

If capitalism and industrialization have such a long history of reducing prices over time, why does it seem like things keep getting more expensive?

This is a hotly debated topic among economists, but the most compelling argument I’ve come across says inflation due to currency debasement and deficit spending.

What is inflation?

The simple definition of inflation is when prices go up. This is difficult to measure over long periods of time because tracking the price of goods that are critical to the average person over time is a tall order. 

That list of goods changes throughout history. For example the cost of horses used to be more important to the average person before cars were ubiquitous. It would be silly to include the cost of buying a horse into today’s calculation of prices that deeply affect the average consumer.

This is why the US Bureau of Labor Statistics measures CPI (the Consumer Price Index). They choose a basket of goods that the average person commonly purchases and track the price of those goods over time. They’ll remove and add items as the conditions change in the economy (removing horses, adding cars as per our example).

Managing inflation is important because inflation hurts people. If prices go up, people can buy fewer of the things that are necessary to survive. If their wages don’t keep up, they’ll get poorer over time.

This is why the US Federal Reserve has a mandate to keep inflation low. Importantly though, their mandate explicitly isn’t to keep inflation negative (where prices going down over time, AKA deflation).

Cost of goods denominated in labor

If you remember back to the examples in the previous essay, the costs of goods were denominated in hours of labor. Each country, great and small, chose or created the currency they wanted their citizens to transact in. So there’s been no currency that’s been used widely over thousands of years.

The only semi-consistent proxy for a history-spanning currency is measuring the cost of goods in terms of the hours of human labor required to earn the wage to buy that good.

By that metric, over the long arc of history, the cost of goods has deflated over time.

Deflation is the natural byproduct of productivity gains

Increases in industrial capacity and efficiency across the economy means that goods and services can be produced at a lower cost because each worker is more productive. In a competitive market, if goods cost less to produce then prices go down (deflation). 

It’s hard to get robust data in the US from before the 1910s because the US started consistently tracking this data after the US Federal Reserve was formed in 1913. But in the 1800s it was a common experience that goods were significantly cheaper from one generation to the next. 

That’s not a surprise because at the beginning of the 1900s there were automobiles, electricity, lightbulbs, tractors, steel structures, all things that made humanity far more productive. None of that existed at the beginning of the 1800s. The 1800s were volatile times economically but prices rapidly deflated making life more affordable.

It’s well established in publicly available data that since the inception of the Federal Reserve moderate inflation has been the norm (whereas deflation ruled before that). So at some point between the late 1800s and the early 1900s the norm switched from deflation to inflation.

That’s just the story of prices. Up until 1971 when workers got more productive there was a matching increase in their wages. After 1971, gains in productivity did not lead to the same gains in wages as before. (source)

It’s hard to know for sure what’s causing inflation to outpace the deflation that should be happening, and why workers don’t reap the benefits from technology they historically enjoyed. But spikes in inflation tend to happen soon after periods of monetary debasement or abnormally high deficit spending (source).

Abundance requires letting prices drop

For the techno-abundance loop to work its magic, prices must be allowed to drop as technology increases productivity.

The forces of deflation must outpace the forces of inflation. The more that we can limit the forces of inflation, the faster the techno-abundance loop can help alleviate poverty and scarcity across the world. 

This flies in the face of the conventional wisdom around economics (Keynesian Economics), which sees deflation as an indicator of economic decline. The status quo from folks that subscribe to this way of thinking is to print money and deficit spend to counteract any deflation. This must be counteracted if the world of abundance is to emerge.

Concentration of power

Some folks will seize their own personal abundance at the expense of abundance for millions or billions of other people. These folks must constantly be removed from positions of power.

Regulatory Capture

Any sufficiently powerful technology is a threat to the powers that be. All too often the incumbents use their power to stymie upstarts instead of adapting to the new paradigm and profiting from it.

These incumbents (usually large corporations) band together to influence the regulators of their industry. Their goal is the implementation of policies that advantage the bigger players, perpetuating their advantage over any new players. This is called regulatory capture.

Utility regulators have resisted the adoption of solar power. Banking regulators have made it nearly impossible to create new banks. There are so many laws and regulations around cars that the number of car companies that operate at scale has remained nearly unchanged for almost a century.

This isn’t a new trend, the Interstate Commerce Commision in the late 1800s adopted policies and laws that formalized the existing US railroad companies as a de facto cartel.

Today, big tech companies seem to be attempting to create regulations around AI that would make it next to impossible for small companies to experiment with AI. 

Some proposals are extreme enough that individuals would not be allowed to operate their own AI on their own computer without approval from a federal agency. This would guarantee that Microsoft, Facebook, OpenAI, Amazon, et al will control the future of this revolutionary technology.

Because AI is so disruptive, it’s incredibly tempting to let regulatory capture grind progress to a halt. But if technologies like AI aren’t allowed to be tested and rolled out when they’re ready, the techno-abundance loop will be delayed or reversed and people will suffer.

Reinforcing oppressive regimes

The technologies that accelerate the techno-abundance loop (AI, robotics, energy abundance) are also technologies that help powerful people consolidate control over larger groups of people with the consent of fewer of those people. 

These technologies automate surveillance and tracking to such a degree that fewer people are needed to participate in the repression. Automating the extraction and utilization of resources means fewer citizens are needed for the state to get its tax revenue from this economic activity.

If dictators can get their tax revenue and suppress dissent with the help of fewer people, then they’ll need to share prosperity with fewer people to maintain their hold on power.

Higher income societies generally require the productive output of many people to make the system work. So the powerful in that society must spread prosperity more widely to keep the hold on the power they do have.

A good book that does a good job explaining this pattern is The Dictator’s Handbook (subtitle: why bad behavior is almost always good politics). 

Concentration of power will make the abuse of technological improvement more likely and must be actively fought against.

Potential Antidote: Decentralization 

Power has a gravity to it. It tends to accumulate unless people actively redistribute it. It’s also a truism that people that cannot be trusted with power tend to be the ones that pursue it most vigorously.

Given the human condition, there is wisdom in systems that actively distribute power widely. There are downsides to spreading power widely, but the question that must always be asked is whether the dangers of power concentration are worse than the dangers of power distribution.

If we look at history in most cases when a technology came along that redistributed power from the elite more broadly there were times of turmoil but people ended up better off.

The printing press disrupted the heavy hand of the Catholic Church on people’s faith and education. Thanks to this technology, access to books is so ubiquitous in the western world today that it’s hard to imagine the world without it.

Encryption was considered a weapon so dangerous that it was reserved for the military. (source). People used to have to pass flash drives and books with the code for encryption algorithms by hand because the transmission of them was considered akin to weapons trafficking.

Thank goodness encryption was demilitarized because the internet could not facilitate all that it does today without all the layers of encryption that are used to protect our traffic and data from malicious actors.

The debate today about technologies that advance the techno-abundance loop like AI and robotics, mirror the debate about the 2nd Amendment of the US constitution. Fundamentally it’s a question about the cost of freedom.

Is it better to disarm almost everyone and let the state be the only armed group, or is it better for everyone to be armed. Both ways have downsides, so it’s a question of what you deem to be the more dangerous risk.

One of the worst outcomes for humanity would be a situation where the power of the technologies talked about in this series are used to create an unaccountable, undisruptable class of elites. 

Spreading access to these technologies would decrease the risk of that dystopian future significantly.

Inefficient allocation of human labor

If the fastest path to reducing human suffering and improving conditions for billions of humans is by taking advantage of the techno-abundance loop, then one of the most valuable uses of one’s talents is participating in that loop. 

Few folks are actively pushing against the loop, but many more people are effectively on the sidelines.

Many ways to participate in the techno abundance loop

There are the obvious ways to contribute to the loop like construction, mining, manufacturing, farming, research, etc. 

There are less obvious ways to contribute, that will be important as well. 

For those with less technical skills, choosing to work for companies directly participating in the techno-abundance loop is better than choosing other employers. 

Consumers can also choose to buy goods from companies that are aligned with the goals of abundance. This can be anything from a new company that makes cheaper, high-quality toasters to choosing a car from a company building a better future.

Entrepreneurs can work on companies that help decentralize emerging technologies. George Hotz is a good example, he’s starting (at least) two such companies: 

1. Tiny Corp, which is building AI hardware that can be used by individuals in a residential environment (instead of a data center).
2. Comma.AI: which company creating self-driving car technology that can be installed on most cars by individuals instead of by a big company like Waymo or Tesla.

These are good examples of building businesses that will make decentralized versions of high-impact technology a profitable business.

For now, it appears most people are effectively on the sidelines, more focused on making money than being productive.

Making money over being productive

If you were designing a society that was optimally using human labor to accelerate the techno abundance loop, I doubt you’d say we need more lawyers. Or more bankers, or traders or consultants. Definitely don’t need more bureaucrats.

In moderation these pursuits are critical to a high-functioning, orderly society and economy. In their current allocations, there are many people making a ton of money contributing little to the advancement towards abundance. 

I’d include my own profession in this; there are likely too many software engineers. At the very least, there are too many software engineers focused on software that’s better at generating revenue than increasing productivity. There are certainly not enough of us working on software that directly participates in the techno-abundance loop.

Everyone can point to professions or companies that they’d agree are over-allocated if the goal is to improve society.

The causes for the misallocation of labor against this standard can be debated endlessly, but if the goal is to usher humanity into an era of abundance, many will need to change where they focus their time.

Under-allocation of labor to relevant skills

The techno-abundance loop requires the hard work of people of all backgrounds (from forklift operators to geneticists). 

People will generally have a higher impact if they have (and apply) a technical skill.

While the need for hard-working, technical folks is higher than ever, our education system’s outputs do not match. This seems to be caused by a change in young people’s ambitions and a lack of disincentives for students to choose low-paying majors while at university. 

Potential antidotes

There are no easy or quick fixes to a widespread misallocation of labor. There are many folks that are already out of school and deep into their career. Solutions to this problem can take many forms, from social pressure to economic policy.

Celebrate unglamorous work

Just because a banker makes more than a forklift operator does not mean the banker contributes more to a future of abundance. 

Spending your life making optimizations to manufacturing processes, or crop yield or the fairness of a small corner of the world are good things. They should be celebrated.

It’s a personal choice to actively update your sensibilities to celebrate people in your life who work an unglamorous job. Or encourage your kids to prioritize meaningful work over wealth. You can make that choice if you think it can support a better future.

It’s long, slow, but often uncelebrated work.

Don’t let your friends waste their talent

I’ve seen more folks in software say “friends don’t let friends work in B2B SaaS.” For those unfamiliar this basically means, friends don’t let friends waste their talents on lucrative but ultimately less meaningful work.

This isn’t a message about shaming people with limited options to provide for themselves or their families. Some folks don’t have much choice, but for those that do, some social pressure could be the nudge your friend needs to improve their life. Ultimately, it could be a difference-maker in humanity’s quest for an abundant future.

Reduce incentives to work unproductive jobs

Many incentives push people to work jobs that make a lot of money but don’t participate in the techno-abundance loop. Modifying incentives could help shift the labor market away from less meaningful pursuits.

For example, if student loans could be discharged in bankruptcy, banks would be forced to assess the risk of student loans based on other factors (e.g., the major of the student and/or the university they are attending). Majors with better job security and higher salaries would get lower interest rates and vice versa.

Over time people would not want to go to college until they know what they want to do; it’s likely the interest rates on an undeclared major would be ruinously high. They’d also be incentivised to prepare for a career that’s more productive instead of falling into a major they ended up getting just to finish school.

Another idea is a 1% tax on all sales of assets including securities (e.g. houses, stocks, bonds, and derivatives thereof, etc). This would be a very small cost to the average person, but to Wall Street and the adjacent sectors of the economy, it would be an existential threat. It’s not hard to imagine how this could end in a huge reduction in the scope of the finance industry.

That money could just be sent back to citizens as a rebate. The revenue isn’t the point; it would just change the calculus of being a trader so that only the ones that provide high value would remain.

These are just a few ideas. Any solution would need to be broadly palatable, which will be highly dependent on the jurisdiction.

Unsustainable development

An existential bottleneck

There is no point to extreme abundance if it’s temporary. 

Humanity has not properly priced the cost of our industry on our environment. Carbon emissions and industrial byproducts have tangible costs to our health, but they’ve been systematically ignored in the single-minded quest for more stuff at lower prices.

Those lower prices have saved a lot of lives and lifted much of humanity out of extreme poverty, extremely quickly. But industrial capacity built exclusively on fossil fuel consumption and overtaxing our freshwater sources is not sustainable.

Sustainability and longevity

Sustainability is a funny concept though. On a long enough timeline (millions, billions, or trillions of years) there’s no such thing. The sun is going to burn out, and all the energy sources we consider “renewable” rely on a not-burnt-out sun. 

Even if we migrate out of this solar system, the universe will eventually run out of stars. We’ll need to continue to evolve how we industrialize to deal with the resources available in our time.

Even without that long of a time-scale, humanity currently can’t sustain its level of consumption using current methods. It’s clear that current consumption patterns will continue to exacerbate climate change, deplete fresh water sources, poison our air and water, and devastate the biomass we rely on to produce food.

This isn't a reason to despair though, climate change is getting solved faster than most anticipate. Solar power capacity installs continue to radically outpace predictions, carbon emissions seems to be decoupled from economic growth, electric transport adoption is going hyperbolic, we’ve hit peak pollution, the Ocean Cleanup Project is making tremendous progress.

On the path to abundance, we must continuously choose a path that is sustainable. I’d argue that a society that has the symptoms of high levels of abundance but can’t sustain that abundance for thousands of years shouldn’t be thought of as in a state of abundance.

With the constraint of a timeframe of thousands of years, choices for how we industrialize to produce energy, food, and fresh water become much clearer. 

Sustainability tends to lead to lower prices anyway

Solar energy

Solar panels require no fuel, unlike coal and natural gas power plants. It’s not surprising that solar power plants are outcompeting fossil fuel plants on price. 

Even if you remove subsidies and have to add in batteries to account for the variability of renewable energy sources, the cost of power is roughly equivalent. Given the current rate of price collapse of solar panels and grid-scale batteries, it won’t be long before fossil fuel plants (by any measure) are a toxic asset on a purely economic basis.

Electrified transport

Electrified transport is far more efficient because electric motors utilize the energy far more efficiently than combustion engines. On top of that electric motors require far fewer parts and therefore less maintenance. 

It won’t be long until a new electric car is cheaper than a gas car, emits less to produce, and is cheaper to own, while lasting much longer.

Heating/cooling

Outside of areas that get extremely cold, heat pumps are a far more cost effective way to heat a home than a gas, wood, or coal furnace. 

Desalination

In places like Israel and Saudi Arabia, desalinated water is far cheaper to produce than natural sources. Given cheap enough electricity, this will likely be the case for any community that struggles with water scarcity today.

Choosing sustainability

We’re farther on the path to a sustainable future than most realize, but a change in course to increase abundance without addressing sustainability would be ruinous. 

Lack of imagination

If you pull random people off the street and ask “do you think it’s possible for society to be so abundant that most folks don’t have to work?” The overwhelming majority in my experience say “no.” People can’t even imagine that it’s possible. Let alone there’s a decent chance it’ll happen in their lifetimes.

There are good reasons for this, but the most fundamental roadblock on the road to abundance is people’s lack of imagination and lack of hope.

Foundations for hope: studying history

Existential bottlenecks

Humanity has faced many crises we thought were insurmountable and spelled the end of humanity. We have always innovated our way out of the problem.

One recent example is from the 1960s and 70s. People were convinced that there wasn’t enough farmland on Earth to sustain the population growth they were predicting. The consensus was that there would be widespread starvation and a population die-back. Obviously that didn’t happen.

Through innovations in chemistry and farming, we were able to increase the productivity of existing farmland and make land previously unsuitable for farming 100 years ago, productive for agriculture today.

This example and many others are explored in a helpful book called The End is Always Near, if you struggle with climate anxiety it’s worth a read.

World-ending technology

There perhaps has never been a greater threat to the whole of humanity than nuclear weapons. Yet they’ve only ever been used by one country in one war nearly 100 years ago, when the weapon wasn’t capable of threatening the whole of humanity.

Even as nuclear weapons developed into a world ending potential, that future never materialized. Humanity developed an equilibrium that recognised the realities of the existence of these weapons without relying on mutual disarmament to preserve the safety of humankind. Mutual disarmament would only be a temporary protection, easily spoiled by a single bad actor.

One could even argue that the policy of Mutually Assured Destruction has kept the peace between great powers for nearly 100 years, reducing the scope and scale of violence in war by orders of magnitude compared to the times before nuclear weapons were possessed by several great powers.

Even when there were errors and breakdowns in the system that could have ignited a global catastrophe, the humanity of the individuals in the chain of command stopped the catastrophe. (Kennedy and Khrushchev during the Cuban Missile Crisis, the man who saved the world, etc)

There were even American leaders after WWII (General Douglas McArthur to name one) who were actively advocating the use of nuclear weapons to establish American hegemony over the whole world. Those voices lost to the decency of others in power.

This doesn’t mean we can be complacent with dangerous technologies, but humanity has proven time and time again we are unwilling to destroy ourselves.

Humanity figures it out

History is messy. The path to increased abundance has not been a straight line.

The world gets better in some ways and worse in others in every period of history. What’s amazing is to see the trajectory of humanity over the long arc of history. It gets better.

I wouldn’t take a bet against humanity. Even if we don’t realize a post-scarcity civilization in the next few generations (as I argue we can), we will figure it out at some point. Especially if we all take part in shaping that future.

[Coming Soon] Part 4: What do humans do in a world of abundance? Preview

1. What happened to chess after AI beat all humans?
2. Working as a means to acquire nonstandard goods
3. The development of one’s craft(s)