Introduction
In this article I explain why I think we can build a Utopia within the next generation and make more progress than in all previous thousands of generations combined. We can find a million reasons why the world is getting better, or worse, and at what rate. However, instead of discussing all these examples or opinions it is always the most useful thing to just focus on the central pattern in the data and extrapolate a unifying logic.
Let’s use my input/output matrix again here. When we talk about the world or our lives getting better we talk about the overall value (or output on the matrix) growing larger.
Value includes goods and services as well as problems that are solved and so on. We know that since we were cavemen we’ve increased output 100-fold, in the last 180 years 34-fold. That means we have fewer problems and better lives, generally speaking.
The reason I think we can build a Utopia in the next generation comes down to one single effect I call the exponential basics coverage/leverage. It’s quite simple: Our potential, capabilities and resources to solve problems and create value is growing exponentially faster than our basic needs and the problems we have, resulting in more and more resources becoming free to focus on the (decreasing) amount of problems and issues. I’ll explain this in more detail.
Generally, people have the impression that things are not really getting better (or perhaps even worse), that new problems arise every day and even that their income is not growing – a zero-sum game in a sense. But the opposite is true.
The Simple Bare Necessities
For thousands of years all we did day-in and day-out was to chase food – that was almost all the input and output. If there was a famine or we caught a disease, we died. Let’s take a look at the basic necessities of life – food, housing, transport, health care and education – and how they become increasingly easy to attain, i.e. with our input/work.
Food
Just two generations ago, in 1950, Austrians spent a whopping 45% of their household income on food (1), but to be fair that was after WWII. Americans, in 1960, still spent about 17.5% of their income on food (2), nowadays that figure is only 6.5% (3). In developing countries like Nigeria and Pakistan it’s 56.6% and 41.4% of household income, respectively (3).
Housing
On the second basic need, housing, a similar effect applies, except that it does not get cheaper but stays roughly the same in relation to our income. Maybe you’ve heard of the ‘30% rule’, i.e. that we usually spend about 30% of our salary/wage on rent or mortgage. In fact, in the UK for example it’s about 27% of income (4).
Now you might say that housing became extremely expensive in recent years and there are a number of rectifications to be made about that impression, though that would make a whole article. However, consider first that on average we have much more living space, i.e. twice as much as 40 years ago in US houses (5) so partly we pay more to, for example, have our own rooms rather than sharing with siblings. Also, while prices may be high in cities like London and New York, it’s because they’re better for many people and so you pay more but get more as well.
Transport, Health Care and Education
Here are a few stats that you can skip if you want:
- While our share of expenditure on health care has increased over the last two generations, rightly so, it now seems to be rather static as a percentage of GDP. For example, in the US, health care costs have grown only from 16.1% of GDP in 2005 to 18.2% 2018 (6). Countries where health care is less driven by the free market have significantly cheaper health care, e.g. Germany at 11.3% in 2017 compared to 10.2% in 2005 (7).
- Spending on education is at around 5.5% of GDP in the US and has not really increased over the last two generations (8). The world average is at 4.9% of GDP and has grown only 0.75% since 2005 (9).
- Spending on transport is at around 15% of GDP, but for individuals using public transport that figure drops closer to 5% as I estimate in this article.
Here’s the Kicker
This tells us something really important, and also fascinating. The expense on the basic necessities has become relatively static, except if we choose to increase our standards greatly. There are only so many calories we can eat. Maybe we consume slightly more, but not three times more as the economy triples in roughly 40 years. In the same sense our living space will probably not continue to expand by so much more (doubling in 40 years) and transport and health care neither. If, for example, health care costs continue to rise then it’s because we choose to simply spend more on it as it makes our quality of life better. Unless that rise in cost is due to a market failure (arguably the case in the US) then that’s fine.
Apart from a few exceptions, we have greatly increased our living standards over the last two generations where the average person in the developed world has plenty of living space, eats food like royalty in the past, enjoys high-standard health care and education, etc. However, now even though the standards of our “basics” have risen so much, they are still becoming smaller in relation to our overall output. We no longer spend 45% of our income on food like in 1950, not even 17.5% but below 10%. And that includes eating at restaurants a lot more.
This implies two important things for making our lives really good or even “Utopian”. And of course, everybody chooses what a good life is (the starting point).
First, if your priority is to consume as many goods and services as possible then you can cover your “basics” with about two thirds of your income. This means that as the economy grows exponentially, the leftover third also grows exponentially, which you can spend on more and more extraordinary things (e.g. holidays in Thailand, nice dinners and fun things to do every single day).
Secondly, if your priority is to just work on what you love, then that is also becoming increasingly easier. Two generations ago it was a joke when you said you wanted to live your dream (except if your dream was to work on a farm). One generation ago, it was possible, but not realistic. For thousands of generations you had to add “basic” value to the system so you could take “basic” value out of the system. But that is changing right now.
Why is that? We have to decreasingly worry about starving, being evicted or being left in the dirt if we’re ill etc.
Nowadays, it is at least a possibility to choose pretty much anything you want as your occupation, whatever your dream, and still make it. That includes not just becoming a teacher, doctor or consultant, but even an artist or musician. Somehow you can make it. As the GDP per capita will still double, if not triple, over the next generation that will be the standard way of living, especially if automation fully kicks in (next section).
If we keep our standards for the “basics” slightly lower, e.g. live on a few square meters less, cook at home and use public transport, a person with an average income can cover their “basics” with a part-time job and spend the rest of their time doing whatever they love.
To summarize, this is the main take-away: Looking at the input-output matrix we can see that the amount of input (work) needed in order to receive the amount of output we consider a good life is decreasing exponentially. Is your mind blown yet? That’s just based on extrapolating current economic trends. Much more is possible if we consider our technological potential (techno-social potential divergence).
The Final Step We Have to Take
Over the next generation we will gradually automate more and more. I’ve described in my article “Robots Building Robots that Build and Repair Robots that Produce Goods and Services” how when we let machines construct our buildings and self-driving cars deliver the goods, and so on, how things will become virtually free. Housing prices in city centers might still not be low, but more for practical reasons, and some jobs like psychiatrists and teachers might not be possible to automate. That’s ok, not everybody will want to live in the city center and some people will still want to be teachers. The point is not to automate everything, but just enough so that we don’t have to work (input) as something we don’t want to in order to make a living (output).
When automation makes life virtually free, it means most of us don’t have to “work”. It opens up an entirely new topic to cover of how such a society could function, which I will in the future. But it wouldn’t be that hard, even right now only half of people actually work, the rest are kids, retired, unemployed or students.
To summarize, over the next generation efficiency (ratio between input and output) will rise so much that for the first time in history it will become the standard that (in developed countries) people can live their lives the way they want while still have food, housing, free health care, pension etc., without being distracted by the daily hustle of survival. If that is not a Utopia I don’t know what is!
The Exponential Leverage to Solve Problems
This very same effect will apply not just to individuals, but our civilization at large. That means we have more and more leftover resources to devote to things other than our basic needs. That means we have an exponentially rising surplus that we can devote more and more to a relatively static number of problems. In fact, we already are. For example, one of the reasons why health care costs increase is because research and treatment of diseases like cancer is rising.
Here are three main problems that we still need to solve globally:
- Extreme poverty and starvation as the no. 1 priority
- Climate change
- Cancer and a number of other diseases
The level of difficulty of these issues (and others), although very high, is more or less static. Poverty’s solution is to grow economies to a certain degree and combine it with a social system ensuring equality. Climate change requires a switch to renewables and some other measures. Cancer has specific solutions like every other disease – it is not getting harder to solve as time goes on.
Even if donations and development aide of developed countries stay at an embarrassingly low 1%, when economies triple that will be worth a current 3%. At the same time developing countries are often growing at five or six percent a year. Hence, there is a diverging effect. Even if there are exceptions where things get worse, these exceptions become rarer.
The same logic applies to all the other issues as well:
Summary
The purpose of this article was to show you that what I call the exponential basics coverage effect is a unifying logic that makes virtually all debates of whether the future is becoming better or not redundant. The constant worries about financing an increasing amount of pensioners, unemployed or people studying too long are all distracting concerns – two-dimensional as I call it, as they are based on our static view of the world. The reality is that over the next generation our ability to create output will rise exponentially (just as it has been for generations) and except if people demand luxury and excess, to cover our human needs, from housing to food, will be very easy.
In fact, over the next generation, at least in developed countries, we will reach a tipping point where a normal life is no longer that we have to work to cover our human needs, but where a normal life will be to do whatever you want, e.g. live your hobby or passion, and your human needs will be covered automatically. That sounds like a Utopia.
In the same sense, we still have many problems to solve, from poverty to cancer. Due to the increasing excess output we can focus more and more of our resources (money, human capital etc.) as well as improving science and technology on these issues, making them exponentially easier to solve. Of course there are mitigating effects, like increased waste and new problems like antimicrobial resistance, but our leverage and ability to solve problems is still getting greater.
Therefore, it is possible that over the next generation, we create a Utopia considering the remaining problems in the world and the things that make our lives good will be easier to solve and obtain due to this exponentially increasing leverage.
References:
- Hierländer, J. (2011). Nahrungsmittel kosten mehr als je zuvor, werden aber immer leistbarer. Available online at: https://diepresse.com/home/politik/eu/648960/Nahrungsmittel-kosten-mehr-als-je-zuvor-werden-aber-immer-leistbarer
- Eliza Barclay (2015): Your Grandparents Spent More Of Their Money On Food Than You Do. Available at: https://www.npr.org/sections/thesalt/2015/03/02/389578089/your-grandparents-spent-more-of-their-money-on-food-than-you-do
- Plumer, B. (2015). Map: Here’s how much each country spends on food. Available at: https://www.vox.com/2014/7/6/5874499/map-heres-how-much-every-country-spends-on-food
- Peachey, K., Palumbo, D. (2017). How much of your salary is spent on rent? Available online at: https://www.bbc.com/news/business-42179119
- Perry, M. (2016). New US homes today are 1,000 square feet larger than in 1973 and living space per person has nearly doubled. Available online at: http://www.aei.org/publication/new-us-homes-today-are-1000-square-feet-larger-than-in-1973-and-living-space-per-person-has-nearly-doubled/
- Statista (2018). U.S. national health expenditure as percent of GDP from 1960 to 2018. Available online at: https://www.statista.com/statistics/184968/us-health-expenditure-as-percent-of-gdp-since-1960/
- OECD (2017). Health expenditure and financing. Available online at: https://stats.oecd.org/Index.aspx?DataSetCode=SHA
- A Century of Education Spending. Available online at: https://www.usgovernmentspending.com/education_spending
- https://data.worldbank.org/indicator/SE.XPD.TOTL.GD.ZS
Generation Utopia 