“The best leaders are constantly learning, curious about where they made mistakes and actively looking for areas where they might have it wrong”
“Every so often, we learn something new that rewrites all of what we have come to know and trust. In those moments, our foundation of knowledge crumbles—and with it, many of the beliefs that we have built on top of it. Those transitions are hard because we do not easily let go of our beliefs”
– Jeff Booth, The Price of Tomorrow
I just added a new book to my Book Library. In “The Price of Tomorrow”, Jeff Booth explores the pervasive nature of technology and its deflationary pressure. He tells a compelling story of mental models and our inability to see past them. In describing a history filled with long-held beliefs that governed the way we lived, he demonstrates the complex nature of change. For example, we do not kill witches anymore, a phenomenon that led to thousands of executions between 1450 and 1750. Catalysts emerge that force us to change, and as irrational as killing witches seems to us today, current day realities will look just as irrational to future generations.
I’ve written at length about Thinking differently; viewing a new era through a very different lens. Exponential technologies are changing the rules, but as Klaus Schwab said; we face the task of understanding and governing 21st-century technologies with a 20th-century mindset and 19th-century institutions. The pandemic has exposed those antiquated institutions, practically begging us to think differently. We are however creatures of beliefs and intuitions that accumulated over our lifetimes. Much like the curiosity of children, Jeff suggests that beginners have an advantage in times of great change. He states: “without the same fortified foundation of knowledge, the beginner’s mind asks why with the intent to discover the answer and not to defend a previous reality. Trapped in our own sense of reality, we often hold onto false beliefs.”
As a result, we do not see the cracks forming around us; a metaphor described very well by economist Tyler Cowen. Tyler describes the phenomenon of small cracks multiplying until stress collapses the entire system. Once collapsed, A Great Reset is inevitable. The major crack explored by the book is global debt:
“Quite plausibly, to keep driving growth against an exponentially increasing technology deflation, global debt could become a number so high that the only way out is to hit the reset button. The truth is we have probably already passed that point at which a complete reset is required.”
While debt accumulates, deflation puts pressure on an economic system not built for this technology-enabled phenomenon. This same argument was positioned by economist Jeremy Rifkin in his book on a Zero Marginal Cost Society. Rifkin explores the emergence of new energy, communication, and transport paradigms that lead to near zero marginal cost across domains. He concludes that a post-capitalism era is inevitable. Both authors focus on scarcity, inefficiency, and the relentless march towards productivity. Whereas our pre-technology era institutions count on growth and inflation spawned by this scarcity and inefficiency, the drive towards productivity creates abundance – the same Abundance described by Peter Diamandis in a book of a similar title. Jeff connects the dots, showing how the age of abundance takes us into an age of deflation. Jeff states: “with abundance comes price deflation. This is simple supply-and-demand economics: the more abundant something is, the more likely it is that its price falls.”
He uses two horizontal technologies to support this view: solar power and artificial intelligence. The world’s biggest transformations have occurred when Energy Paradigms have changed, while knowledge has been the foundation of invention for centuries – something I explored in my post on The Growth of Knowledge. What both horizontal technologies have in common is their ability to accelerate deflation rates and eliminate jobs. As Jeff describes, if there is no net job creation globally, the inflationary system that we have relied on for commerce throughout history cannot continue. This unabated march of exponential technologies attacks inefficiencies. Jeff does a great job describing this by showing the staggering amount of cost and inefficiency involved in moving your car. Our fossil fuel economy requires exploration, extraction, conversion, and movement either directly or indirectly, and involves countless jobs. The shift to renewable energy – specifically solar – eliminates that inefficiency, and by so doing, the countless jobs. Jeff states: “we stay on a wheel of inefficiency where our economies are addicted to the jobs and profits derived from exploiting energy – ignoring the fully loaded cost of fossil fuels.”
When it comes to knowledge, it is the engine that drives human development. As our base of human knowledge increased, invention and prosperity followed. What happens when artificial intelligence takes knowledge to its pinnacle? Jeff explores this phenomenon at length. He sees artificial intelligence as the natural next stage in this long trend of growth in information and knowledge – believing it will be far more profound than anything we have seen before. Much like the shifting energy paradigm, artificial intelligence attacks inefficiency, and as a by-product, reduces the number of jobs. As these horizontal technologies advance, Jeff sees very predictable social disruption, as our entire economies are designed around jobs and far fewer will be needed to run our societies.
What does all this imply?
“The trend of more wealth inequality, more polarization, and more discord is a major threat to our collective future. And it is all being caused by the same thing: adherence to an economic system designed for a different time.”
This growth and inflation-driven system has been propped up by debt. Jeff explains: “Any real growth that the world has seen is only because of an unprecedented spending spree fueled by easy credit and debt that masks what is really happening underneath. Since 2000, it has taken approximately $185 trillion of global debt to achieve $46 trillion of global growth.” Inequality is a byproduct, creating a concentration of wealth not seen since the late 1920s – an eerie set of similarities described in my look at a Post-Pandemic Society. To deal with a debt problem exacerbated by COVID-19, Governments will have four options: austerity, debt defaults/restructuring, printing money, or higher taxes for the rich. Jeff dives into the details of these options.
Jeff sees a pattern in seemingly random events like Brexit, populism, and a rise of hate in our world. They are all connected to a loss of hope for a better future for large portions of the population. As such, he concludes that we need to build a new framework for our local and global economies, and soon, or the same technology that has the power to bring abundance will instead destroy it. His simple solution: what if, instead of trying to stop deflation at all costs, we embrace it? As technology spreads, deflation happens at the rate it should. Deflation becomes something celebrated because it means that we are getting more for less. We might be able to adjust to earning less money if everything we need costs less.
Jeff describes tipping points that emerge suddenly, with little warning of the cascading effects. When discussing tipping points, the question is: how far will the world tip? If we combine the horizontal technologies described in the book with machines and biotechnology, the world may indeed experience a significant tipping point – the Third One in human history.
I highly recommend this book. Dialog is so critical right now, and books like this inform us and contribute to that dialog. So, lend your voice to the discussion. You can participate by visiting The Price of Tomorrow and/or This Facebook Group.