How big a crisis?

Crisis are cyclical, and the global financial crisis dated 2008 left scars in our social tissue that are still far from healed. While the top 1% recovered almost entirely in a fairly quick fashion, the larger part of western population’s wages keep shrinking in terms of real purchasing power, now contributing to the rise of right wing populism, the resurgence of racism, white suprematism, sovranism and protectionism.

This scenario ignited a race against time where automation is challenged by the risk of authoritarian drifts within our society.

Technology is almost never inherently good or bad, and Artificial Intelligence applied to Robotics is no exception: in itself it is nothing to be feared, but it becomes scary when artificial stupidity  gets embedded into robots by mislead dictatorial intentions.

Automation must win the race against authoritarian drifts: it is very fair to fear that a dictatorial regime would not use automation primarily for the common good, but rather for keeping the status. In turn, it is very possible that good automation could change our economic framework by causing the end of work as we know it, and therefore ending the current trend of widening wealth inequality.

Research & Development in recent decades has been fueled by neoliberalism’s surplus: by taking money from the lower layers of society and pumping more and more money towards the top, it leaves the top in the position to be able to invest in research even where there’s little hopes for an adequate return on investment. A popular example is Tesla: founded in 2003, and only 15 years later started aiming to break even.

A side effect of neoliberalism is that it’s widening in-country wealth gap in western countries. While this happens, the lower layers of society are growing wary of the dominant political and economic system and voting towards populist models that claim to offer a better alternative. If these models were to successfully mitigate the wealth gap,  R&D funding would suffer for the reasons explained above, and innovation would slow down.
Also important, the “alternative” models have some traits in common with dictatorial governments from the last century, and currently politicians are beginning to flirt with an authoritarian communication style that does not offer much reassurance in this respect.

To complicate things further, for months now whenever a perturbation hits the market, a journalistic race begins for being first to predict the next financial apocalypse.
The idea behind it is clear: we had 10 year of strong “bull” market, everything has been awesome, financial crisis are cyclical, and so when is the next one going to be?

Understanding when is going to be is important also because the timing will impact the size of the crisis.
Right now we are just about at the apex of a cycle, automation hasn’t created major disruption in our productive cycles yet, unemployment is low, and population wealth is still at a level where is not causing major social disorders.
By 2030 we expect unemployment rates to be over 30%, and the more the next crisis was to delay, the closer we would get to those numbers. A crisis impacting an already exacerbated population and weaker economy, would not be as easy to overcome.

None of the effects of the next crisis are easy to predict, but I tried imagining two opposite scenarios: that of a mild or medium sized crisis, and that of a deep, devastating crisis.

In the event of a mild crisis, smaller than the one that happened in 2008 (it was the biggest in a very long time anyway), we can imagine a repeating pattern similar to what we saw at that time.
The initial panic caused a wave of unemployment, which was however soon reabsorbed.
The worsened conditions of the masses initially gave birth to movements such as occupy wall street, 99% and similar, but eventually they contributed to widening xenofobia, and we are now reinforcing attempts to defend our countries’ economies with trade wars, and in general with protectionism.
Protectionist solutions tend to come from right winged populist voices that will happily throw in some anti-immigrant propaganda, but despite the questionable ethics they carry, what’s of paramount importance is that as of today they don’t seem to have the strength to overthrow democracy in any direction, a fact that -as we will see- differentiate this hypothesis from that of a deeper crisis.
Under such scenario, innovation could continue following its current course of action with minor speed bumps until automation would take over causing the end of work as we know it and a complete revisitation of the economic framework while the dominant political system remains democratic.

In the event of a deeper crisis, poverty levels would rise sharply causing social disorder and under those circumstances it’s very likely that an emergency plan would rise.
Many values that we consider fundamental to our civilization are actually built on top of the lowest layers of Maslow’s pyramid of needs. As those layers get endangered, our whole cultural framework would be at risk of collapsing.

maslows-pyramid

 

A 1929 style crisis, with galloping inflation at a time with high unemployment rates would have similar implications to what we saw happening back then: an already impoverished working class, faced with further dramatically diminished conditions, did whatever it took to improve their status.
In the case of germany and many other countries, this meant supporting dictators such as Hitler, who promised to better the economic conditions of the masses, and gained more and more popularity as they initially delivered on those promises.
Needless to say, there is nothing auspicable about this scenario.

To sum things up, while a crisis and automation may seem two completely unrelated topics, no one in their right mind would want a new Hitler or Stalin supervisioning the development of artificially intelligent robots, and this is where the eventuality and size of a financial crisis has a spectacular importance at this point in history.

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