History teaches us that the path to immense wealth involves punting on the future. Today I’m going to focus on what I see as innevitable changes coming to the world in the next five or ten year horizon, how this impacts those pursing financial independence and early retirement and how that may underscore the importance of being unconstrained.
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The surfer mindset
Predicting the future before it comes upon you
Continuous observation of wave patterns determine risk/reward
But what if you sense an oncoming tsunami?
If you want to be unconstrained, you have to define your future and begin that today
Money
Freedom
Your mission
Work vs. leisure
What is important to you?
The FIRE movement approach
Given the choice, would you prefer to be smart (have a high IQ) or be wise?
Dungeons & Dragons - Intelligence vs. Wisdom
Why I predict labor has a limited future
Define “Labor”
Different forms of labor
Manual
Office/Sedentiary
Global economics has based its metric gathering around the amout of labor
Yet labor is being threatened by automation at levels never seen before
Industrial revolution
Electricity
Invention of computers
Why I feel qualified to make predictions
35 years working as a software engineer
I joined the tech industry with the invention of the first personal computer
I’ve worked in many countries, for business, governments, defense, healthcare, etc.
I’ve watched the advancement of computers
Personal computers
Networks
Databases
The Internet
eCommerce
Social Media
Robotics, AI, etc.
I’m not sure I like where this is heading
Assisting & Empowering humans vs. trying to define what “humans” are
Systems analysis vs. systems definition
The rapid advancement towards AI
Understanding the power (and danger) of leverage - we stand on the shoulders of giants
But is the future world you are planning for, one you want to live in?
The power of the future (based on automation & AI) will be in the hands of the few but in control of the many
Having amassed power, it is normal human nature to protect it
Surveillance
Predicting future threat
Once establishing automation, the natural next step is to create AI to protect the AI
Self-learning
Self-defending
Self-healing
Self-replicating
In the quest of creating human utopia, we will face the reality of our human flaws
Greed vs. goodwill
Haves & have nots
Political power to establish a “minimum standard”, forcing those above it back to it, and those under it to rise to it
Basic Income
Those “with” forced to give up to those “without”
The removal of the desire & motivation to progress as humans
Timelines
AI advancement since 2013 has been at rates never seen before
Today
Economics are being influenced more heavily by “game theory” and manipulation of variables (ie. interest rates define DJIA ups and downs)
National consolidation of power
US vs. China
Next five years:
Disruption in transport sector
Disruption in manufacturing (continues)
Continual advancement of the surveillance state, to protect those with the power
Next ten years
Natural resource consumption
Pollution (Climate Change?)
Air
Trash, plastic waste
Health technology advancing
More alive humans
Less resources
Reinvention of the concept of “Work”
There just won’t be jobs for humans out there at any meaningful level
Yet sunk capital cost & debt load will need to be serviced
With a shrinking tax base, govts will be forced to look for other ways to generate revenue
Tax the robots
Take over the robots
Seize wealth that is out there
Wars fought by autonomous machines
Application of self-learning, threat sensing, self-healing & self-replication will likely come out of military applications first
Risk of rising & falling empires clashing over power consolidation globally
After
Population overflow
10 billion population growth
Singularity
Truth is that this adjustment will have some time to settle
Could be a 25 year adjustment cycle
Past historical technology achievements not good comparison
Invention of PC
Internet
Smart/Mobile devices
More likely comparison would be industrial revolution
But unlike the disruption from automation then, new industries will already be covered with automated services
How does this impact those seeking FIRE or Financial Independence?
Amassing wealth today but with little prediction of what tomorrow might look like
If your goal is to save $2 million to “retire”, and that will take 5 or 10 years, put yourself in that future and realize that it will look a lot different to how it looks today
Those that own the machines and assets will own the wealth & power
But they will also be burdened with the costs of paying for those displaced
If you live in a country that is likely to have a lot of displacement, you can expect to lose treasure
Putting your entire investment portfolio in one easily manipulated and confiscated place is insane (ie. equities or bonds)
The best case scenario
We embrace the power of decentralization
We allow humans to move to places that reject AI (if possible)
We respect the “human” in “humanity”
We transcend our need to work, with our need to live a meaningful life
Embracing what makes us human - “right brain” vs. “left brain”
Art renaissance
We reject technology advancement unless it’s core mission is to serve ALL humanity and not a select few
We realize that laziness is the core raw material of AI advancement
We realize that giving up control and trust to third parties in a world of disruption is the worst thing you could ever do
We realize that what makes us have any hope for the future is to embrace our competitive spirit - our problem solving skills, and reject anything that would demotivate that (ie. socialism)
There are many “ifs” here
What is certain?
Moore’s law and the innevitable advancement of technology
Displacement during transition will be severe
Average incomes will fall
Wealth gap will rise
Governments run the risk of using old tools against a new problem
Capitalism vs. socialism
Regulate rather than understand
What could impact this?
Planetary colonization
Establishing future colonies for humans on other planets
Yet even this can be done by “remote control” now
What’s my strategy?
Collect passports
Buy/build multiple residences in multiple countries
Look to the opportunities of digitization of economics in short term
Crypto currencies
Look and invest in supply chains from emerging regions
Establish a “bug out” plan for foreign residencies
Look to countries that have limited exposure to AI and have strong independent sovereignty
Why I’m so bullish on Mexico & Canada
Staying in one place means that my family will be a simple target for wealth confiscation
Diversify all investments internationally
Total focus on decentralization
“Starfish vs. Spider” realization
Be cautious about power grabs from rising empires
Know that there will be an emerging lower class that require basic commodities
Food
Shelter
Clothing
Water
Education
Healthcare
Energy
Remember 2008? Banksters created an illusion that housing prices could keep going up and up because they artificially fueled demand by creating a new customer base of people who got mortgages that previously would never have qualified.
We are in a mess. We got this way because people forgot that the power brokers of the world treat life like a chess game, and we think of life like a daily or hourly experience.
According to Nielsen ratings in 2017, the average American family spent 7 hours and 50 minutes per day watching TV. And what did that average American family get for selling nearly 8 hours a day of their time to the square screen? A mass state of hypnosis that has carved out social norms that are far from normal, far from healthy, far from financially beneficial and far from unconstrained.