Praying for the Rise of the Robots

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How cool is this? Over in Austria, two firms just did a demo of their new drone. This one costs US$336,000. That’s because it’s a ‘flying taxi’, doesn’t need a pilot and can seat two people[1].

Hello. How could you not be excited by the world when this kind of thing is right in front of us? Think short-haul passenger trips and urgent deliveries as far as the use case goes.

One of the men behind it says they’re essentially ready to start mass producing right now. They already have several thousand orders. The biggest thing holding them back is that no one’s sure how to regulate it all.

You might be tempted to worry. After all, there’s no pilot! Doesn’t that mean the world will lose another job to the onslaught of automation?

Not so fast…

You and I both should be down on our knees praying for more automation when it comes to everything, including air travel.

For example, there simply aren’t enough pilots to go around. There’s already an acute shortage now.

And air traffic in Asia is growing at a rocketing pace. Global traffic is expected to double in the next two decades[2].

This is not some far-off worry. Airlines are already cutting flights and pumping money into their own flying schools to train more people. China alone will be serving one billion more passengers in 2037.

I’m sure that if I polled a group of people, most of them would nominate the ‘rise of the robots’ as a long-term worry.

Many people around the world go as far to suggest we even need a ‘citizen’s dividend’ because there’ll be so many unemployed.

It’s an easy dystopia to believe in. It’s backed up by a lot, except the facts staring us in the face.

The latest data came out on jobless claims in the US this week. This is people filing for unemployment benefits. The figure is at a 49-year low[3].

The Economist this week cites a research paper that says — for the first time in history — there are now more people over the age of 65 than under five. In 20 years, the ratio will be two-to-one[4].

That’s another reason robots are a welcome addition to the world. The ageing boomers will need a lot of care. Robots can help deliver it.

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We can reasonably assume this pressure will drive prodigious investment in research and development as this trend just keeps building.

That means more technology innovation as exciting as the drone I mentioned earlier. This is a massive blessing. It’s amazing how many jobs are completely useless.

I had to laugh this morning. I read that the Egyptian civil service has five million employees. The Prime Minister admits that four million are probably superfluous.

The executive branch is just waiting for them to retire so the bureaucracy shrinks from natural attrition.

Hopefully, the next generation can do something more useful for their society.

It’s going to show up here in Australia, too…

Resistance is futile

I’d also expect to see a lot of this automation show up in the restaurant industry. Already, there are cafés that can do away with the barista completely.

I mentioned this to the guys in the office this morning. I met resistance. One objection was that people like interacting with other humans at their local café.

Indeed they do. But wages and rents are the biggest costs for a small business like a café.

Prices rises will get passed along to the consumer as these costs keep rising. If those costs aren’t offset elsewhere, that will reduce demand. Eventually, the consumer will vote with their wallet — and talking be damned.

There’s nothing you or I can achieve by worrying about such an outcome. We might as well attempt to make some money from it.

Any tech firm that can help businesses cut labour costs should be on your watchlist. There’s a high probability that a bigger firm will buy them out.

James Woodburn mentioned McDonald’s recent US$300 million buyout in last weekend’s Profit Watch. That’s one example.

And don’t assume that stocks related to this are more likely to be on the NASDAQ than the ASX. Lots of tech firms are killing it out here right now. Some commentators are even worried about a ‘tech bubble’.

Certainly, tech and resources are the places to find the action on the market right now.

Best wishes,

Callum Newman Signature

Callum Newman,
Editor, Profit Watch

PS: There are still some bargain tech stocks around. Two of them are in my latest report.

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