How Smart Technologies Challenge Public Sector Planning

Brett King is a futurist, an Amazon bestselling author, an award-winning speaker, and hosts a globally recognized radio show. He is also the founder of the first mobile neo-bank Moven, and in his spare time enjoys flying as an IFR pilot, scuba diving, motor racing, gaming and sci-fi. 

King advised the Obama administration on the future of banking, President Xi Jinping had his book on his bookshelf, and he has spoken on the future in 50 countries in just the last few years. In this conversation, he talks about his new book, The Rise of Technosocialism and its impact on society, jobs and economic systems. 

Calibrating for an AGI future

I wanted to start with your book that came out in 2021. You are proposing AI, the rise of technology, and the loss of jobs due to automation. And these would fundamentally change governance structures across the world. Please explain to us the macro thesis in your book.

King: When you combine [unemployment, inequality, AI and automation], you really need to force a philosophical change in thinking because the core economics is no longer working. How can changes thrust by AI and climate change affect the system? Let me explain: the current system to create wealth distribution is through human capital. And human capital is the mechanism by which we satisfy demand in the system. This is classic economics 101. 

There are other elements to that equation besides the human element. What about the resource element?

King: Yes, but today how do we respond to demand? In future highly-automated societies, demand will be satisfied through processing cycles through the application of AI and technology. The human factor becomes less important. AI breaks the link between human labor and the output of the economy. Some will argue that the very reason for AI is to eliminate humans from the workforce. And as we know, capital markets reward companies for taking humans out of the workforce and making them more productive or efficient. The free market has no mechanism to stop the change of employment structure based on the impact AI will bring.

So, how will this affect governments?

King: Sustained human unemployment will create social unrest and the collapse of society. We will have to create something like universal basic income (UBI) or a social safety net as our working practices undergo significant changes. We need to deal with this transition to a highly automated society and remove humans from the essential role of human capital to keep the economy going.  

On top of this, we have a climate impact. We will have 500 coastal cities that by 2050 are going to be affected by sea level rises. The economic impact on cities like Miami or Calcutta will be measured in trillions of dollars. This will need a response.  

Building the case for UBI

There are many questions about UBI. One basic one is, do you work for an income, or do you work to fill up your productive time? The answer becomes important because social unrest will not go away just because you have income.

King: Let me tackle your question. If you look at the UBI trials we've already seen, the interesting thing that came out was that entrepreneurship flourished. People that create their businesses do so at 300 or 400% higher rates than the general population. When people don't have to worry about putting food on the table to survive, they become much more creative. UBI is not about stopping people from working. This is about giving people the choice to do what they're passionate about. 

One mistake many economists make when arguing against UBI is that they assume people who are not going to have work will be sitting on the couch or in the metaverse. There was absolutely no evidence of this in the trials.

I always thought that you were an optimist, and you classified yourself as a futurist. But the scenario that you're painting is quite dystopian and negative. 

King: I wouldn't say it's dystopian; I would say it requires a philosophical change. I'll just put it this way to summarize the intention of artificial intelligence, particularly AGI (artificial general intelligence): it has always been there to eliminate humans from the workforce. 

The arguments by economists fall into two categories. One is that new technologies impact older jobs, but the other is that they also create new jobs in new sectors. The problem with AGI is that it simultaneously affects so many different professionals. It’s more akin to the industrial revolution in terms of its effect on restructuring the economy and the way it works. 

But we are not very good at understanding or responding to problems that seem to be happening 10 years or 15 years in the future. What’s your view?

King: We're worried about the next quarter, the next year's results, or maybe the next election cycle. It tends to limit our focus. That is a modern problem. If you look back at the pre-industrial and stone age civilizations, or even the humans of the Middle Ages, we tackled massive 5 to 100-year projects with budgets that extended over those years. A function of capitalism, to some extent, is to make us very short-term in our focus. 

CBDCs vs. cryptos

We talked about how CBDCs (Central Bank Digital Currencies) are going to change the banking scenario and how they are going to change the global fintech scenario. And how long do you think it will take to succeed?

King:  I think maybe in the next 20 years, we'll see a shift to CBDCs for a couple of core functions of the economy. But there are a couple of different levers that could change the timing. One is China's CBDC and its connection to the Belt and Road Initiative, and it may insist the participants use it.

That will not work very well. It's currently not really attracting a lot of transactions.

King: No, but if you are a trading partner with China, and they say we'd prefer to use this infrastructure, and you get all these benefits, including access to funding, I think there's a case for it potentially. 

CBDCs could also be the mechanism by which we create UBI. Keep in mind the highly automated economies of the 2040s and 2050s must work on smart contracts. So, you need more programmable money. The more automation we have, the more reliance on the CBDC we have. It means that we are essentially building two pieces of infrastructure: the wallet infrastructure that enables you to consider as a business to conduct commerce and to buy and sell. The second piece is the market mechanism, which is essentially algorithmic. 

For the first time in human history, you have a currency that is smart enough to be programmable in that it has a memory of past transactions and can accept a smart contract.

So will that mean the end of crypto as a currency? And in a sense, decentralized finances are getting more centralized? 

King: Not necessarily. Because you are going to have competing systems. You'll also have bartering AIs or a trading utility based on a token economy created between AIs that we may not have much control over. Take, for example, self-driving Uber vehicles. They need electricity to stay charged. So, how do these vehicles pay for that electricity? It could use self-contained closed-loop systems using crypto, which could compete against mainstream CBDCs. In the end, I don't think it's either-or. I think we will have a significant complexity with these smart contracts and will involve multiple types of programmable currencies.

This article summarizes part of an interview. To view the whole conversation, click here.

Yatish Rajawat is the founder of Centre Innovation in Public Policy, a think tank based in Delhi. His area of research includes everything digital affecting policy, people, and the biosphere. Feedback or contact at [email protected].

Image credit: iStockphoto/VectorMine