Future Imperfect: How to Prepare for an Uncertain Future

Shanghai at night. Source: http://commons.wikimedia.org/wiki/File:Shanghai_from_the_SWFC.jpg

Sometimes I look back on the changes of the first half of the 20th century, and I try to put myself in the shoes of someone growing up in that time and imagine what it must have been like to experience life in that period. I think back to 100 years ago, which is really a short amount of time in the grand scheme of things; short enough for us to be connected by the memories of the living and the recently departed.

Someone living 100 years ago would have seen the beginnings of a nascent car industry, but they would not yet have seen the profound changes that widespread motorization would have on a society, letting people live further from their work and in more spacious lots and homes, but also bringing with it the problems of air pollution and traffic accidents. However, the automobile displaced the still worse problems of dirty, congested streets filled with manure.

Traffic in the 1910s. Source: http://commons.wikimedia.org/wiki/File:Pike_Place_Market_-_North_Arcade_and_Armory_-_1919.jpgToday, we take it for granted that we can send a message around the world effortlessly and seamlessly, and that you can read this blog post anywhere in the world you have an Internet connection. A century ago, the radio and telephone were emerging technologies and that sort of many-to-many communication did not exist.

There’s no doubt that technological advancement and capital accumulation have led to a vastly richer society. When my grandmother was young, she used to ride her bike five miles to get to school, whether it was sunny, rainy, or snowy. There were many chores to do and many younger brothers and sisters to take care of. Wanted to wash clothes? Well, forget about throwing it in the machine and going back to watching TV: There was no TV and no washing machine.

When I look back at how much things have changed, I feel grateful to be living in today’s world. We often like to romanticize the past, but it’s a little hard to be nostalgic about the truth of high infant mortality, disease, and real hardship, when you consider how ordinary people actually had to live, not merely the lives of the rich and powerful as glamorized by Hollywood.

…Where’s my flying car?

If one focuses on more recent times, it’s a little harder to see how things have been changing. When I grew up, cars, TVs, and radio were already widespread. The technology has gotten better but we’re already long past the disruptive phase. By now we were supposed to have flying cars and personal jetpacks… right? Shouldn’t we be well on the way to colonizing space by now? :)

The truth is there has been a lot of change in recent times, but you need to look a little harder to see it. Communications improvements like the Internet and mobile phones have greatly increased access to information for the average person. No longer is the spread of information limited to those with large budgets and official channels; now, anyone with an Internet connection can make their voice heard around the world. This is speeding up the flow of information and it’s changing how we see the world. People can now have “friends” living thousands of miles away from them; geographical boundaries are not as important as they once were.

New technology also brings with it new problems.

Adapting to a changing and uncertain future

One of the main goals of Invest It Wisely is to explore the different ways to maximize our lives — not just today, and not just when we’re retired, but over the entirety of our lifespan.

I recently read Future Imperfect, a book by David Friedman which explores how technology may change privacy, communications, and life as we know it. All technologies have the potential to be put to good use as well as misuse, and David explores both sides of the coin.

Here I’m going to look at a few of the biggest changes which are likely to come, and how we can adapt to these changes and benefit from them.

Privacy is changing

Bansky, One Nation Under CCTV. Source: http://commons.wikimedia.org/wiki/File:Bansky_one_nation_under_cctv.jpgThe world is becoming more transparent. Satellite imagery in conjunction with face-recognition software may have played a role in Bin Laden’s capture and death. Scandals erupt and people are fired over information placed on Facebook and similar sites. CCTV cameras, mobile devices and license-plate recognition software track us as we move about a city.

As far as the public sphere is concerned, privacy is nearly dead. As CCTV proliferates and cameras become smaller and easier to hide, we will soon come to a time where every step made outside one’s own home will likely be recorded in some fashion. It probably won’t be too hard to spy inside a home; either: even today it’s very easy to listen in to conversation and see what’s going on through the windows of someone’s home.

The important question is whether all of this surveillance power is kept in the hands of an elite, or whether the watched can also watch the watchers. It’s my belief that the spread of media and information has had a great impact on the way that war is conducted by leading western powers, and it has also had effects on internal policy such as police brutality and violence.

Widespread surveillance technology raises the ghost of 1984 and government CCTV within one’s own home, but even if we don’t get to that point I think we need to be aware that everything we say and do in public may be recorded without our knowledge, and may also come back to bite us.

At the same time, privacy is also increasing if you know where to look for it. It’s possible, though still not straightforward, to setup communications on the Internet so that it is difficult to tell what a person is sending and receiving, and with whom they are communicating. I’m not one of those people that believes that privacy is only for those who want to commit immoral acts, because sometimes you need to hide information from those who would commit an immoral act against you. Privacy is needed not only so that thieves can’t use your private information to make purchases in your name and things like that, but for those who live under repressive regimes, the ability to communicate unimpeded is vital to exercising basic human rights.

Did anyone ever believe that the Internet would pose serious competition to brick & mortar a couple of decades ago? As someone who shops regularly at Amazon.com, I think brick & mortar has some serious competition today.

In some ways the digital revolution is only beginning. We are seeing the birth of the first truly distributed digital currency, Bitcoin, which has now reached more than $10 million dollars in circulation. Where does this price come from? Nothing more than pure supply & demand. The currency is based on a distributed peer to peer network and its ultimate quantity is fixed. Nobody can gain an unfair advantage by changing the quantity. Whether or not it is ultimately successful, gets attacked by the government or is simply the first stepping stone on a long path to the future doesn’t matter; this is history in the making and sooner or later I believe that this sort of technology will be commonplace.

Whether it’s Bitcoin or something else, we can easily imagine a future where it’s very easy for a government to connect all transactions made using its official currency, but difficult for it to connect transactions made using distributed currencies. This will have profound implications in terms of a government’s ability to finance spending, redistribute wealth, and levy taxes. It may also make it easier for criminals to hide activity which few would approve of. At the same time, it may wrest economic power away from those with privilege and distribute it more evenly, the same way that the Internet has been pounding on traditional media and giving a voice to anyone with a connection.

The danger comes in the connection to the physical world. We all must live in the real world, where we do not have the freedom of bits and bytes, and an encrypted connection isn’t much good if one can remotely sniff out your keystrokes and steal your password. Digital currency could be stolen in a matter of milliseconds. In fact the Bitcoin model doesn’t even use a password at the moment, and I feel that security is one of its strongest weaknesses as it exists right now.

The main lesson to take away from all this is that it is important for us to live a moral life because everything we say and do is increasingly visible and will be increasingly scrutinized in the future. It has always been somewhat true that those who are dishonest and cheat eventually lose in the end, but enough have gotten away with it that this behavior has remained attractive for some. This sort of behavior will be less attractive going forward.

At the same time, moral doesn’t always mean what is legal, and what is illegal is not necessarily immoral. Sometimes it takes history and the passage of time for us to realize this.

Employment is changing

Factory automation robotics palettizing bread. Source: http://upload.wikimedia.org/wikipedia/commons/2/22/Factory_Automation_Robotics_Palettizing_Bread.jpgIt is only a short generation or two ago where the notion of lifetime employment with a specific firm was commonly accepted and expected. The reality for people today is different, with a job change every few years and a career change every decade being much more commonplace and expected today.

In not too long from now it is entirely conceivable that robots will take over much of the menial jobs which humans don’t like doing today, but not only that, artificial intelligence will gradually take over more and more of the mind jobs as well. I don’t believe that machines and AI will never displace humans so the question becomes a matter of when, and not if.

This isn’t necessarily a bad thing. A world with a huge amount of capital abundance created by the productivity of machines and AI would be one where work isn’t really necessary because the basic human needs of food, water and clothing would be extremely cheap and available to all. One can argue that we’ve already considerably advanced on this road in comparison with 100 or 200 years ago; think back to my grandmother and her life as a young child only 70 years ago, and the life of a young child today. We’re not there yet and not everyone in the world is on the train yet, but we’re on the way.

As our lifespans continue to lengthen, will long term care insurance become more or less necessary? Will these people simply be content with their basic necessities? A world with no absolute poverty could still be a world with huge income inequality, and even well-fed and well-clothed people get unhappy when there are people with 1000x the income and wealth that they have. Envy is an emotion that has not served us too well since we left the tribes and entered the cities.

I think it’s still a while before we get there, though. For now, the reality is that we face increasing competition mainly from other humans: people in China, India, and elsewhere that want to have the same living standards that people in the West do. Do they deserve it? If the customer thinks so, then you bet they do.

As individuals we can often fall into the trap that employment is a dichotomy between employee and owner, or employee and manager, and that they hold all of the keys. It’s not quite like that though. First off, a job doesn’t exist because an employer or owner creates it; it exists because a customer has a demand for that good or service. Nobody gets to have a job just because they think they deserve it. Whether we are employees, owners of a business, or contractors, we must never forget that ultimately, we are there to serve the consumer. They are the ones that create our employment. Our work is useful only insofar as it is valued by the person paying for the work.

When it comes to investing, most people believe that it’s not wise to hold all of your eggs in one basket. I believe this applies to employment as well: it’s never wise to place all of your fortunes in the hands of one company. When all of your income comes from one salary, you have a lot of risk the same way you’d have a lot of risk if you held everything in one stock. Because companies sometimes grow inefficient and complacent over time, and sometimes they make mistakes, the consumer may switch their dollars over to another firm that’s better at satisfying their wants, switching your job to someone else along the way.

Our retirement is not guaranteed. To become more resilient against employment risk and to better deal with change, I believe it’s very important to build up capital and side income and diversify where your money is coming from. This can be done by building up savings and investing it, and it can also be done by starting side businesses and building up side income, and placing some of the money saved in a high interest business bank account. This is easier said than done (if I had a magic formula then I’d already be independently wealthy) but along the way, your guiding light should be “how does this benefit the other person”? Wealth is not a zero-sum game; when we become wealthier legitimately by serving the other person in trade, we are both better off for it.

Future Imperfect

Audi from I, Robot. Source: http://imcdb.org/vehicle_1833-Audi-RSQ.htmlThere is so much I didn’t touch on, such as how changes in medicine and genetics will greatly increase lifespans and redefine old age. The biggest trap we can fall into is assuming that things will always be the way we know and understand them. While it is true that some things, like human nature, don’t change all that much, the way in which that nature is expressed has changed drastically. War at some points in history was an act of total annihilation, with cities razed to the ground and the population killed in an act of mass slaughter. This kind of behavior isn’t really accepted today except by a few trolls in YouTube comments.

For 99% of human history, the idea that some humans could be the property of other humans was also widely accepted. This was not always racially motivated, but was also based on religion, gender, and sometimes it was just a consequence of the loser of a battle facing either slavery or annihilation. The idea that no man can be property of another is a very recent development that has little historical precedent and is a testimony to the power of ideas.

So, as you can see, even the way that humans behave can change a great deal. It’s all about incentives.

Not all of the changes coming will necessarily be good. They may be good so long as everyone wants to do the right thing, but sometimes people wanting to do the right thing end up doing something horrible in the name of the good, and sometimes people do something horrible because they are horrible.

As individuals we only have so much power, but we can shape our own lives. We can’t predict exactly what will come down the road, but we can make ourselves more adaptable and resilient to change. It’s not very likely that the way things are today will be the same 40 years down the road; will social security still exist then? Will countries still have the same borders that they do today? Will I be able to continue in this line of work for the next 30 years? We need to start thinking more like 21st century humans.

Things seldom stay the same way; this is why bubbles always eventually burst and why nobody can defy the truth forever. Some politicians believed they were intelligent enough to coordinate an entire economy; history proved them false. Others believe that they can stop change by simply legislating against it; history will eventually prove them false as well.

The only way to deal with change is to accept it and to seek the truth. In Jim Rogers’ A Gift to My Children: A Father’s Lessons for Life and Investing, Jim tells us the importance of thinking for ourselves and never accepting the wisdom of others at blind faith.

Life is change, and change is life. Those that work against change are ultimately working against life and for death. To remain alive, we must work at not becoming fossilized in our ways and mode of thinking. Nobody else lives your life for you; you live it for yourself. You owe it to yourself to experience it to the fullest of your own potential.

So, reader, for those of you that made it this far, what do you think about the future and how a changing world will affect your own life? What is your own approach to a world of uncertainty and change? I personally sometimes worry that I’m letting life become too static and that I am not being proactive enough in my own personal development, but hindsight is always 20/20. I also sometimes wonder if all of these new technologies will truly benefit everyone, or only a well-connected few.

I want to enjoy life in the present, but at the same time I realize the importance of having a vision for life down the road. This is why I am keeping savings high and spending low, because I believe I’ll have that much more freedom later on and that the sacrifice will be well worth it. I also believe that nothing is certain, just like no road is perfectly smooth, and for the same reasons we put shock absorbers in cars I also view my savings as a buffer against the uncertainties and unexpected events of the future.

Finally, I am optimistic and hopeful. More and more, people will have access to opportunities previous ages could only have dreamed of, and more and more, people’s lives will be defined not by where they were born and other such random facts of life, but by the possibilities that the future presents to them and the path they choose to follow.

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  1. says

    “what do you think about the future and how a changing world will affect your own life?”

    I think about this all the time! I wonder how my 94yr old friend perceives the changes in the last 75 years. Can’t say I notice his “awe struck” look in his eye every time he walks in the door at Hardee’s. Or when he may need help walking to his car, but buckles up and starts his 2009 Malibu and drives the 6 blocks to his 60 year old house in the middle of a small residential neighborhood.
    I gotta say, the only thing i notice….is the “mind set”….a rudimentary set of governing belief systems ingrained into the very fabric of the building blocks of his and others his age’s way of thinking. To my surprise, i half expect to a look of shock and awe in his face everytime he sits in his car, or see’s an iphone 4. But, alas….he has a Facebook account, has his own cell phone, runs a couple car washes in town, and carries photos of his comrades and old war buddies….he gets together with other war vets once a month, and instead of reminiscing, talks about fishing, and what the grand kids are up to. They make plans for their community, and other elderly folks in town.
    The mindset difference i see is….Myself (mid 20’s) I feel like when i reach an age where I’m retired…I would play video games, get on the internet, and play with the latest computer devices…..He plays bingo, STILL WORKS, is a community planner, and loves molasses, prunes, and the price is right…
    Personally, i believe our morals are the same, but with morality comes a choice. For example, take dating / courting ( i.e..open the door for ladies, lend her your jacket, buying dinner ) Where I come from, these little gestures of kindness have evolved.( i.e.. Automatic doors, her jacket being suitable in all weather conditions now a days, and double dutch!)
    Conclusively, folks think of technology, fashion, and lifestyle changes when addressing the last 100 years, and how things have progressed. Let’s NOT forget the mindsets, and how they’ve impacted different generations over the past 100 years. Thanks for a great article!

    • says

      This is a great comment. I believe that socially and morally speaking we have definitely come a long way. It’s only 100 years ago where woman were seen as the inferior sex, races other than white were subhuman, 100 years ago wasn’t too far away from the days when slavery around the world was still commonplace.

      I don’t think this journey has ended, yet. What we think of as normal today will probably be seen as barbaric in another 50 or 100 years from now!

      I hope that I can be as active as your friend when I reach that age.

  2. says

    Wow. That was a truly awsome post, and I don’t mean “awsome” as in cool, but rather as in awe-inspiring.

    My husband and I live in a house that was his great-great-grandparents that they built in 1873. We still have the originally deed to the land and everything. There are little reminders everywhere about the vast difference between our existence now and how it was back then. Even the summer kitchen, which was used to cook in to keep the (un-airconditioned) house cooler in the summer months–there is a stone firepit for cooking in one corner and then an antique gas stove in the other. Now, we have an electric stove inside the main house. Each generation adds something new to the farm.

    The speed at which technology changes things has always fascinated me. I’m sitting here on a ranch in Kansas, and I run a successful business at home that has clients all the way in the UK and India. The builders of the very office I am sitting in would probably be amazed that I am able to commute to town (15 miles away) whenever I get the urge (if gas didn’t cost so much, anyway–hehe).

    Truly astonishing.

    Great post!! :)

    • says

      That’s an incredible amount of history for one home; you guys really kept it in the family! When that house was built, the west was still “untamed”. It’s amazing how much things have changed since then…

  3. jas says

    wonderful post!
    Thanks for sharing these interesting thoughts and views with us.

  4. says

    Interesting…. I followed the link and I’m skimming through the book. I hadn’t heard to of the Society for Creative Anachronism, so first of all, thanks for the posting the link and the article. Here’s one concrete example of Friedman’s privacy and information trend, the fact that 30,000 people can create an online community which then meets up in the physical world in a shared pursuit – in this case, recreating the Middle Ages.
    I like science fiction that explore near-term future (Neal Stephenson, David Morgan, Kurzweil), as well as non-fiction that explores the same theme, looking through a glass darkly. The question is always whether the future of dystopian or utopian. I remain an optimist, since I would like to believe that the accumulated knowledge and its ready storage and dissemination that is possible with today’s technology is a game changer.
    One recent book I read with dire enough predictions was “Dirt: The erosion of civilizations”. All correct, all facts, yes indeed, did past civilizations rise and fall with the loss of their topsoils and productive agriculture. That is undoubtedly going on today and has been for some time around the developed and developing world (pretty much everywhere, really). But never before has the cure, or rather, *a* cure such as regenerative permaculture been available to so many and be spread so quickly as it has.
    Nice article, Kevin, and good points on the personal development. As we live in the physical world, I’m personally trying to learn to be more productive and acquire the skills to personally be able to make more “stuff”.

    • says

      I’m glad you enjoyed the post, 101. I am an optimist myself, though a vigilant one. I don’t believe problems solve themselves although it may seem that way from 1000 miles away. I think we do need to be on guard and vigilant, but I am not a doom & gloomer because there is simply no benefit to complaining about how bad things are without offering a solution. Sometimes the doom & gloomers raise valid points, but to really benefit we need to act on those points. That is something I don’t understand about the peak oilers — they almost think that things would be better once the oil is all gone and we’re back to living in small villages, or however they imagine post-oil life to be. There is no benefit to moving backwards when the only truly sustainable path is forwards. I am against technological ludditism and conservatism because it’s a dead-end road — technology is what has enabled the greatest progress in freedom and living standards, and it’s what will continue to do so in the future.

  5. says

    I do think that technological advances makes us feel “rushed”. At least, it does for me. I’m trying to relax and control aspects of it (use tech where possible) not not let it affect me. And it does affect me–the pace of change, I mean. I’m more rushed. I think I spend less quality time with people and more time messing around online. TO counter that, I’ve tried to meditate, to take in some ancient ways. I can handle about ten minutes a day, but meditation is simply awesome! Great post Kevin, as usual!

    • says

      I haven’t done any meditation much of late but sometimes when I was really stressed out for no reason at all, a little bit would help me out quite a bit. Definitely something useful to know and practice. I agree we should use technology as a tool to benefit us and not become slaves to the technology itself. Sometimes we do need to hit the ‘off’ button, if only for a while.

  6. says

    Agreed Andrew.
    We are refusing to get iTechnologies or smart phones. We don’t want TV or a phone line at our cottage. There are times in life when you truly need to slow down and get away – especially in the world we face daily.

    • says

      I’m personally surprised at all the hate against smart phones — mine is certainly not a chain and I enjoy using it. But, I agree that sometimes we just need to get away from it all. Good idea on not bringing that stuff over to the cottage!

  7. says

    Great post Kevin!

    Change can be great, and it can be a bummer. I am odd in that I struggle with even good change. It is just part of my core, and my oldest son is the same way. We don’t fight it, but we just don’t adjust very easily. However, I too have thought like you, am I stagnating? What else SHOULD I be doing?

    You have a fantastic perspective and there is no doubt in my mind that you will have plenty of choices as you get older. I wish I was as wise as you are now when I was your age. However, I have 3 little kids at the point and was just trying to keep my head about water. Now that life has settled some, I have gained new perspective that I think you obtained at a much younger age.

    Continue to live for now, and continue to save for the future. Keep your mind and your heart open and your wallet closed, and you will be all set! :)

    • says

      I think that as humans we suffer from two biases; one being that the grass is always greener on the other side and that hindsight is always 20/20. It’s easy to judge past decisions when we have the benefit of the full knowledge of the results.

      I think it’s natural for all of us to look back 5-10 years, and wonder “wtf was I smoking?” because we have the benefits of knowledge that we didn’t have then. I do it all the time. 😛 At the same time we can also feel accomplishment at where we have gone, and the important part is that we follow the compass which leads in the right direction, even if we make mistakes along the way.

  8. says

    Wow Kevin, that was quite the lengthy post. I have to say that I’m not too crazy about the times we live it. Technology is great, but the more it is revolutionized, it seems the more evil it gets.

    Also, the faster we grow and change, the more difficult it is to keep up with the times. I can’t imagine what this world will be like in 50 years! Will I still be keeping up with technology? I seriously doubt it….

    • says

      I’m not sure I’m keeping up with all of the technology today and I’m not even in my thirties, yet. 😛

      I don’t really see the evil side of it. Definitely nothing evil about reducing costs in solar power, mobile phones, computers, and in the spread of information. These are all trends that actually work against evil.

      However, your warning is a wise one because many technologies have the potential to be used in an evil way to great effect, and we always need to be on guard against that.

  9. says

    Kevin, Wow, you put a lot of time and thought into this excellent article. I am constantly mindful of living in the dichotomy of planning for the future and living in the now. I also try to maintain a degree of face time with my friends and not lose myself in the on line world.

    • says

      True, one downside of technology is that it can be very easy to become distracted. We need to make sure our use of it is helping us and not hurting us overall.

  10. says

    Wow Kevin, epic post!

    It’s hard to imagine where the world will be in another 50, or 100 years. I guess I just hope for mankind, it is sustainable. I can only hope and help do my part :)

    • says

      Agreed, Mark. Technology is a tool and it’s up to us to use it effectively and for good! Just the past 10-20 years you can see a lot of change if you know where to look. I’m excited for the future.

    • says

      I don’t know, Sam. We live in the present, but if you live only for the present then why would you save anything at all? Saving and investing is for the future.

      On the other hand we can interpret this as meaning to make the best of ourselves and live fully now and not later, and I can agree with that.

  11. says

    One of my favorite moves is Time Machine that stars Guy Pearce in the late 1800’s. He builds a time machine because he is so impressed by the technological advances of man and can’t wait to see what the future holds. However, he ends up thousands of years in the future. It takes a turn when our own technological advances destroy modern society and our species eventually evolves into three separate species. My husband always comments that he would love to see society 3,000 years before our demise. But then I ask what if this happens to be it? I don’t necessarily think we’re coming to the end of civilization anytime soon, but there’s always that what if..question. 😉

    • says

      I watched an old version of this and it was quite strange. The fear was of nuclear war so they showed cities getting bombed, and then the people of the future were like drones. I don’t think things will end up going this way, but the thing about the future is that we don’t really know what’s going to come.

      There’s another weird school of thought that says that statistically speaking you’re more likely to be born near the end of civilization because more people are alive then… so because we’re alive we’re near the end of civilization. Yeah, it is strange. :)

  12. says

    I’m glad you touched on the fact that retirement is not a guarantee. A lot of my clients are really taken aback when I explain to them that these days, if you start planning too late, you may not be able to reach your retirement goals. For some, that means retiring much later than expected, and for others it means not retiring at all. It’s a scary thought, but it can also be motivation to start making better financial choices earlier in life. Not to mention, as you pointed out, there are lots of advances in medicine. That means people are living longer, working longer and, unfortunately, accumulating more debt. I think people just need to embrace the times!


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