4. HOW THE ECONOMIC MACHINE WORKS
https://www.youtube.com/watch?v=PHe0bXAIuk0
5. SO WHAT IS AN ECONOMY?
• IN SHORT: TRANSACTIONS ARE THE ECONOMY
• THE ECONOMY IS MADE UP OF MILLIONS OF TRANSACTIONS BETWEEN PEOPLE,
GOVERNMENT AND BUSINESSES. WHEN WE EXCHANGE MONEY OR CREDIT WITH
SOMEONE FOR GOODS, SERVICES OR FINANCIAL ASSETS, A TRANSACTION IS
CREATED. THE ACTION OF SPENDING DRIVES THE ECONOMY – ONE PERSON'S
SPENDING IS ANOTHER PERSON'S INCOME.
• SO WHAT HAPPENS IF YOU TAKE THE HUMAN OUT OF THE ECONOMIC
EQUATION?
8. AI AND THE ECONOMY
• FOR A TRANSACTION TO OCCUR, BOTH SIDES MUST HAVE THE
“GOODS/SERVICES” FOR THE TRADE. IN ANCIENT TIMES, BARTER TRADE IS USED.
IN MODERN TIMES, THE MEDIUM OF TRADE IS MONEY.
• LOOKING DEEPER, IT ALSO MEANS HUMAN BEINGS MUST BE “PRODUCTIVE”, IN
ORDER THE CREATE THE GOODS AND SERVICES FOR TRADE. AS HUMAN
POPULATION GROWS (1% PER YEAR), PRODUCTIVITY ALSO GROWS (ROUGHLY 2%
PER YEAR)
9. AI AND THE ECONOMY
• IF AI AND MACHINES TAKE OVER PRODUCTION, PRODUCTIVITY WILL STILL GROW
(AND MAY EVEN GROW AT A FASTER RATE!)
• BUT THEN, IF HUMANS ARE NOT IN THE EQUATION, WILL TRANSACTIONS
OCCUR?
• WHO PRODUCE GOODS FOR WHOM?
10. THE FUTURE OF WORK
https://www.youtube.com/watch?v=TUmyygCMMGA
11. LABOUR PRODUCTIVITY PARADOX (SOLOW
PARADOX)
https://shift.newco.co/2016/06/07/where-did-the-productivity-go-f
14. THEN AGAIN, WHAT IS A JOB?
• THE OBSERVATION THAT TECHNOLOGY DISPLACES JOBS AND CREATE NEW
ONES, I.E. THE TRANSFORMATION OF JOBS.
• SUDDEN DISPLACEMENT OF JOBS LEAD TO HIGH UNEMPLOYMENT, BUT USUALLY,
GOVERNMENT INTERVENTION MEANS ABSORBING THESE PEOPLE INTO
“REDUNDANT JOBS”, JOBS THAT DON’T PRODUCE ANY VALUE.
• AT WHICH POINT DOES THE JOB BECOMES A HOBBY/LEISURE/INTEREST, WHERE
MONETARY CONSIDERATIONS TAKE A BACKSEAT?
• A NEW FORM OF TRADE?
16. MODERN MONETARY THEORY
• HTTPS://WWW.YOUTUBE.COM/WATCH?V=QYZKBLOTZJG
• HTTPS://WWW.YOUTUBE.COM/WATCH?V=LQ3S-IFX1FO
• HTTPS://WWW.THEMACROTOURIST.COM/POSTS/2019/01/23/MMT/
17. MONEY AS A CONDUIT FOR THE ECONOMY
• REMEMBER THAT MONEY IS NOT A COMMODITY, IT IS JUST A TOOL THAT ASSISTS
TRADING.
• THINK OF IT AS A WATER SUPPLY SYSTEM: WHEN THERE IS HIGH SUPPLY AND
DEMAND FOR WATER, YOU ADD MORE PIPES (I.E. INCREASE THE MONEYS SUPPLY) TO
LOWER DOWN THE PRESSURE. WHEN THERE IS LOW SUPPLY AND DEMAND, YOU
WOULD HAVE TO TAKE OFF THOSE PIPES TO RETURN THE PRESSURE TO NORMAL.
• BUT IF THE ECONOMIC SYSTEM HAS A FUNDAMENTAL PARADIGM SHIFT, ARE THE
ASSUMPTIONS STILL VALID? (I.E., WHAT HAPPENS WHEN YOU TAKE THE HUMAN OUT
OF THE PRODUCTION PROCESS?)
• WILL THERE BE A MONETARY SYSTEM PARADIGM SHIFT? BEYOND MONEY?
18. NASSIM TALEB ON ECONOMISTS
• “AN ECONOMIST IS A MIXTURE OF 1)
A BUSINESSMAN WITHOUT COMMON
SENSE, 2) A PHYSICIST WITHOUT
BRAIN, AND 3) A SPECULATOR
WITHOUT BALLS.”
• “DISCUSSING GROWTH WITHOUT
CONCERN FOR FRAGILITY: LIKE
STUDYING CONSTRUCTION WITHOUT
THINKING OF COLLAPSES. THINK LIKE
ENGINEER NOT ECONOMIST.”
Nassim Taleb is the author of Black Swan, who accurately predicted the 2008 Great Financia
19. ECONOMIC THEORIES NEED TO BE
INNOVATED
• ECONOMIC THEORIES STILL STUCK IN THE NEOCLASSICAL AGE, WHERE
RESOURCE SCARCITY IS THE MAIN FACTOR FOR CONSIDERATION.
• CAPITALISM, SOCIALISM, COMMUNISM… TOO MANY LABELS, DOES IT EVEN
MATTER?
• USA VS. CHINA, IN PRACTICAL TERMS, ANY DIFFERENCES?
• INNOVATION ECONOMISTS BELIEVE THAT WHAT PRIMARILY DRIVES ECONOMIC
GROWTH IN TODAY’S KNOWLEDGE-BASED ECONOMY IS NOT CAPITAL
ACCUMULATION, AS NEOCLASSICALISM ASSERTS, BUT INNOVATIVE CAPACITY
SPURRED BY APPROPRIABLE KNOWLEDGE AND TECHNOLOGICAL EXTERNALITIES.
20. INNOVATION ECONOMICS
Economic thought Focus Growth Context
Neoclassical
Market price signals
in using scarce
resources
Productive factor
accumulation
(capital, labor)
Individuals and firms
behaving in vacuum
Innovation
Innovative capacity
to create more
effective processes,
products, business
models
Knowledge/technolo
gy (R&D, patents)
Institutions of
research,
government, society
21. POLITICAL UPHEAVALS
• FAILURE TO INNOVATE THE
ECONOMIC SYSTEM WILL
LEAD TO POLITICAL
UPHEAVALS.
• THE LUDDISM MOVEMENT
IN 1779 WITH THE
INVENTION OF LOOMING
MACHINES.
• PEOPLE VIEW TECHNOLOGY
AS THE CATALYST FOR
SOCIETAL COLLAPSE.
22. INVOLUNTARY UNEMPLOYMENT
• CHART REPRESENTING MALINVAUD'S
TYPOLOGY INCLUDES A REGION WITH
KEYNESIAN UNEMPLOYMENT, WHERE
THERE IS AN EXCESS SUPPLY OF
GOODS AND LABOR, AND A REGION
OF CLASSICAL UNEMPLOYMENT,
WHERE THERE IS AN EXCESS SUPPLY
OF LABOR AND EXCESS DEMAND FOR
GOODS.
23. #LEARNTOCODE
• BACK IN 2014, AFTER PRESIDENT BARACK OBAMA’S “WAR ON COAL” AND COAL-
PLANT SHUTDOWNS, MEDIA OUTLETS RUSHED TO REPORT THAT LAID OFF COAL
WORKERS COULD LEARN TO CODE IN ORDER TO GET A NEW JOB.
• IT HAS SINCE BECOME A BACKLASH “THAT REPRESENTS THE ELITISM OF MODERN
JOURNALISTS AND HOW THEY TARGET CERTAIN COMMUNITIES WITH DISDAIN.”
• TECHNOLOGICAL INNOVATION MAY NOT BE ABLE TO SOLVE PROBLEMS AT A
SOCIETAL LEVEL. FOR THAT YOU MAY NEED SYSTEMS INNOVATION.
https://gigaom.com/2014/04/09/michael-bloomberg-you-cant-teach-a-coal-miner-
25. IN SUMMARY
• THE ARRIVAL OF AI AND INDUSTRY 4.0 WILL TRANSFORM THE NATURE OF JOBS
AND THE FUTURE OF WORK.
• HOWEVER, ECONOMIC SYSTEMS HAS UNABLE TO KEEP UP WITH THE
TECHNOLOGICAL PARADIGM SHIFT.
• THERE IS A DIRE NEED FOR A NEW PARADIGM SHIFT IN ECONOMIC SYSTEMS IN
ORDER TO SUSTAIN A POST-SCARCITY SOCIETY, OTHERWISE THERE WILL BE
POLITICAL CONSEQUENCES.
• ECONOMIC THEORIES MUST JUMP THE S-CURVE!!!
