Overview
Imagine a time in the not-too-distant future when “machines” are more effective than most humans at performing most tasks. The shift would be massive, but it has been happening continuously since the Industrial Revolution. For example, washing clothes and transportation shifted to machine-based tasks (e.g., with the washing machine and self-propelled vehicles).
Our Premise
If advances in robotics, machine learning, and other nascent technologies are accelerating, it is entirely conceivable that by the year 2050, the world will be a different place. The purpose of this installment is to outline developments, some of which are in the testing phase.
Energy – The cost of producing and storing energy via solar and wind has dramatically declined and continues to decrease with ongoing advancements. Furthermore, it is rapidly becoming economically possible to reach thermal sources via advances in drilling technology.¹ Affordable energy will be increasingly important as global energy use steadily grows, despite falling demand in developed countries.
Figure 1: Comparison of Solar Cost Forecasts: IEA vs. Learning Model ²
Figure 2: Energy Use Per Person (1965-2023)
Consequences – The consequences of these developments are massive. Not only will energy production become more economical, but the role of utilities (heretofore one of the most stable industries) is likely to be sent into turmoil.
Transportation – It is just a matter of time before self-driving (FSD or full self-driving) vehicles become the norm. Enabling trucks to be driven around the clock via FSD will massively increase productivity and reduce costs. Furthermore, with advances in optics and artificial intelligence (AI), we expect over time that FSD will become safer than individual drivers. Lastly, if certain roads are reserved for FSD vehicles, the threat to humans is massively reduced.
Manufacturing – By definition, many manufacturing jobs are redundant, boring, and dangerous. We expect the bulk of manufacturing will be automated over the next couple of decades.
Services – Our view is that it is just a matter of time before machines, particularly those equipped with AI, will replace most service tasks currently fulfilled by humans. Examples are the warehouse and delivery operations at Amazon, where many jobs have already been automated. Per the Business Insider: “Amazon's humanoid warehouse robots will eventually cost only $3 per hour to operate." ³
For a manager of risk or institutional money, perhaps the most productive approach to this topic is identifying which firms can implement the new tools effectively and which will be left behind.
Sources
[3] https://www.businessinsider.com/new-amazon-warehouse-robot-humanoid-2023-10