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Robots Want Your Job

Time to write an article that will either make me sound like a genius or a crazy person years down the road…

If you are into sci-fi, you have probably thought about what the world may look like 10, 20 or 30 years down the road. There’s a good chance, what you pictured included lots of technology like self-driving cars, robot butlers and “smarter” apps. FI Girl and I both work in the IT field, so these are the types of geeky things we tend to talk about over dinner when we’re not talking about finances or value cruising.

While it sounds like a world we should want to live in for the shear fact that all of those things would make our lives easier (never mind the cool factor), the fact is, there will of course be adverse economic impacts if any one of those technologies goes mainstream.

For now, let’s just focus on one advancement in technology; self-driving cars. I’m a big fan of self-driving / autonomous technology and can easily list a number of benefits to human-kind if we were to go “all in” on it. Let’s take a look:

PROS to self-driving technology

  • Much lower accident rates due to minimizing or eliminating human error related to speeding, distracted driving, sleep deprivation and driving under the influence. This alone translates in to less deaths and injuries, which is great for society.
  • Less traffic jams because the cars can talk to each other.  Most traffic today is caused by accidents or people switching lanes unnecessarily.  If all of the cars on the road, know where the other cars are in relation to them and where they are going, then alternative routes can be selected via lottery to lower congestion and accidents can be avoided as noted in bullet #1.
  • You don’t need a license to be independent.  If you can tell your car where you want to go, it will take you there. This will enable people with disabilities, injuries or less than average reflexes to reclaim their independence.
  • Efficiency.  We typically take the route we know, not necessarily the best route to get somewhere. Autonomous cars however, will likely take the most efficient route to save on energy and time.
  • Productivity. Instead of being unproductive car zombies commuting in, we can reclaim our time to read, communicate, work or even sleep!

Despite these amazing benefits, we must not forget about the flip side of the coin.

Cons to self-driving technology

  • While there are numerous pros to autonomous cars, there are quite a few types of jobs that will no longer be needed because of the technology. To name a few:
    • Professional Drivers (Taxis, Ubers, Limos, Buses, Shuttles): Why would companies pay a driver a wage if the vehicle can do the same job more efficiently and with less risk?  Uber is already investing in this:
    • Freight Drivers (Truckers): Once again, there’s no reason to pay wages, worry about sleep deprivation or insurance.  Tesla is heavily pursuing this course of automation along with other companies:
    • Delivery Drivers (Food, Mail, Packages): Let’s face it, autonomous vehicles are likely to be more efficient than the average delivery driver. Ford and Domino’s are already partnering to bring you your pizza using self driving pizza delivery vehicles:
    • Auto Insurance Company staff: The primary goal of driverless vehicles is to reduce accidents that result in personal injury / death or property damage.  If accidents could be reduced to 10% of today’s rate, how could auto insurance companies continue to justify their current premiums?  In fact, since the cars drive themselves, wouldn’t the manufacturer of the vehicle get insurance rather than the owner of the car?  A single manufacturer like GM or Ford would have huge negotiating power over an insurance company.  In fact they may be able to self-insure.   Any company with a large revenue stream for vehicle insurance premiums today needs to think of what this world will look like for them when self-driving vehicles become main stream.
    • Department of Motor Vehicles staff: So if the cars drive themselves, why would you need a license?  You wouldn’t need to take a test for a learner’s permit or for the license itself.  You might still need still need license plates and have a government ID, but a huge revenue stream will be lost.
    • Town / State budgets: If cars are programmed to follow the law, how do you get a speeding ticket or run through a red light?  If the car is smart enough, it might not even park next to a hydrant.  This will be a huge revenue stream decrease for local and state police departments.  The government will find their way to get the money they need, it will just have to be another way.
    • Public Transportation workers: I don’t know about your city, but where we live it is very unreliable, expensive, gross and occasionally a safety concern.  Trains could be automated more easily than cars (tracks are simpler than roads.)  Ridesharing costs should go down significantly since 70% of Uber’s costs go to the driver.
    • Car dealership staff: If costs to take a driverless taxi or Uber were to go down 70%, the cost to own a car would be comparatively much higher.  Think of it this way;  If you commute 2 hours out of every day, your car is unused for 22 hours out of the day.  That’s a highly inefficient use of an asset.  Wouldn’t it be much simpler to only pay for what you need and rent your way to and from work?  Even if a fraction of people think this way and make the choice to rent their car over owning, this change would be significant in terms of how many sales of vehicles go to consumers through a dealership.  Less sales = less staff.

I’m sure there are other unforeseen disruptions due to this one technology but this alone certainly proves an important point.

In the US this will add up to millions of jobs lost.  So what does this mean to you?

If you are in one of the industries listed above, consider investing in a “plan B”.  Perhaps you need to learn other skills so that if your job gets disrupted you have a fallback strategy.  If you aren’t in one of those industries, consider how your company’s revenue stream changes as a result of a new disruptive technology like this (or others that are likely on the horizon).

I would also suggest investing in Civilization through low fee index funds.  Companies exist to make money.  Dozens of companies are all investing at the same time in driver-less technology.  They aren’t doing it for fun, they are doing it because smart people at those companies truly believe there is a huge market for it.  These companies are investing billions and billions of dollars. If they are successful, there will be a huge upside to the companies that make it work.  I can’t predict which ones it will be, but I’m sure it will be in one of our indexes.  Investing in 500+ companies means I will get a piece of the action for the ones that figure it all out.

Big companies investing in self-driving technology today:

It’s not just one or two companies trying their hand at this.  I was very quickly able to compile this list of companies betting on self-driving technology with their R&D budget:

  • Google
  • Tesla
  • Ford
  • Uber
  • Apple
  • Microsoft
  • Alibaba
  • Baidu
  • Qualcom
  • Volvo
  • Toyota
  • Domino’s
  • GM
  • BMW
  • Lyft
  • Hyundai
  • Kia
  • Audi
  • Mercedes-Benz

Prepare for the future, now.

The farmers pre-industrial revolution never saw the disruption coming.  The independent artisans prior to textile automation didn’t either.  Technology once again is changing the world and you have multiple options:

  1. Do nothing and hope for the best.
  2. Hedge:  Grow your skills so that you can jump to an unaffected industry.
  3. Invest:  Gain from the disruption.

I myself prefer a combination of options #2 and #3.  What about you?


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