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Tech dreams and nightmares 

 

Tech dreams and nightmares 

In this week’s video insight, I discuss the transformative potential of advanced technology. As futuristic innovations like flying vehicles and AI-powered robots become reality, we must consider their broader socioeconomic implications. Will these advancements enhance our lives or create new challenges? How will they impact job markets, consumer costs, and wealth distribution? 

Transcript: 

Today, I’m diving into a topic that combines nostalgia with cutting-edge technology and raises some thought-provoking questions about our future. If you’re anything like me, you might have fond memories of watching “The Jetsons,” a Hanna-Barbera-produced cartoon. There was something incredibly promising and hopeful about seeing George Jetson arriving home in a flying car, greeted by his wife Jane, and sitting down to dinner with their kids Judy and Elroy, and, of course, being served dinner by their robot maid Rosie. 

Fast forward to today, and some of those futuristic dreams are almost a reality. 

Numerous well-funded companies have developed quadcopters and VTOL aircraft to tackle the road congestion that eats up hours of our daily lives. And some of these have already taken the next step. In China, EHang (NASDAQ:EH) has received approval for fully autonomous passenger-carrying air taxis. Meanwhile, in the U.S., the Federal Aviation Administration (FAA) has released a plan allowing similar autonomous flying vehicles. And, of course, if you’re an Elon Musk fan, you will have heard his hints that Teslas (NASDAQ:TSLA) could be flying soon. 

On another front, the robot startup ‘Figure’, backed by Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), and OpenAI, is already demonstrating artificial intelligence (AI) and LLM-powered robots that can reason, serve food, and even take out the garbage. 

Just a few months ago, the company, Figure showcased a video where their robot, ‘Figure’, responded to a human’s question about what it sees, conversationally explaining the items on the table. It then chose an apple when asked for something to eat, and then it explained its decision, all while throwing out some rubbish. That demonstrated Figure’s advanced natural language processing and visual capabilities and highlighted its reasoning abilities. 

We are witnessing the dawn of another new era, but this brings up a critical question: Will these advancements make us richer or poorer? While Figure might be like a human baby taking its first breath, it could also be the harbinger of a future that impoverishes many—a future for which we’re unprepared. 

Governments are racing to make autonomous air taxis safe and are also working to address the existential threats posed by AI. However, once those issues are resolved, what are they doing about the risk that capitalism’s current structure only benefits a few while making everyone else poorer? 

We all know about the displacement of jobs due to the mass rollout of autonomous robots, and Goldman Sachs estimates that AI could displace or degrade 300 million jobs across the U.S. and Europe. 

What hasn’t been extensively covered, however, is how the revenue models of these technology suppliers will impact businesses and consumers. Take your local mechanic, for example. The advent of more complicated cars, or more reliable cars with fewer moving parts, might seem like a threat to their income. Today, vehicle repairs often start with diagnosing an error code, requiring multiple software and hardware systems, all supplied by subscription services. These service providers hold their customers captive because these systems are essential to the business. This creates a local monopoly, allowing providers to continuously raise their prices. 

And it’s not just mechanics. Accounting systems, hardware, tools, and equipment suppliers are all moving towards subscription models. This forces customers to adopt new systems and pay ongoing fees, adding to their costs. 

For years, we’ve celebrated the rise of Software as a Service (SaaS). We look at the increasing proportion of a company’s earnings that are recurring and see it as a good thing. But, this increase in value for shareholders might come at an equivalent cost to consumers. 

AI and automation offer a Jetson-like promise of an easier, cleaner, and faster future, but they also carry warnings of job losses, consumer entrapment, and rising costs. Will these advancements accelerate the transfer of wealth that unregulated capitalism guarantees? Will they squeeze the few remaining resources out of consumers for the benefit of a few trillionaire shareholders? 

If that’s plausible, a different model than what we have today might be needed. If we allow companies to grow to become monopolizing titans before breaking them up, isn’t that just a repeating game of whack-a-mole? Instead, governments might need to collectively consider how to reset the entire system. They can’t regulate the unknowable future side effects of SaaS-based automation and AI, so should they force a democratization of these companies instead? Should the consumers who are forced to subscribe to their services or forced out of work by them all own them and share in their profits? Should companies that cause job losses be required to pay a universal wage if the disruption is epochal? If not, why should the governments be forced to pick up the pieces? That’s just privatizing profits and socializing losses, which cannot be sustained, as ever-increasing government deficits are already demonstrating.  

I believe the disruption caused by the next wave of technology will be significant, and I now wonder whether the legislation and structures that respond might need to be equally disruptive. 

Don’t forget to like, subscribe, and share your thoughts and comments. See you next time! 

INVEST WITH MONTGOMERY

Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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