One area where I think we need to really re-evaluate how we understand things is when it comes to jobs. Before his flame out from the Presidential campaign (surprisingly due to having an affair, rather than being too stupid to have an opinion on Libya) he had these pearls of wisdom to share about the world of work:
Don’t blame Wall Street, don’t blame the big banks, if you don’t have a job and you’re not rich, blame yourself!Now, I know what he was trying to say, but frankly, he's an idiot. Everyone, no matter how limited their understanding of the world, thinks everyone can be rich. Even in the best economic times there will always be the rich and the poor, if only because the definitions of those terms will change to reflect the new reality.
However, on a more fundamental level, how much longer can we go on pretending that there will always be enough jobs for everyone. Amazon has around 33,700 and a revenue of $43.59bn according to the most recent figures I could track down. Of course it also creates thousands of jobs by providing a service through which third parties can retail their products, in a way which would have been impossible without Amazon. However, there is no way of cutting it to suggest that Amazon is, or ever will, create the vast numbers of jobs a company this successful would have done 50 years ago.
The norm, increasingly, is that companies are going to drive towards more knowledge based systems. This is true even of manufacturing, where robotics will continue to improve until humans are essentially unnecessary, apart from in the event of some catastrophic failure, although possibly not even then. Even my job, a market research position, will one day be a job I share with sophisticated AI programs, who will do the lions share of the boring things, while I (hopefully) am retained to do the "story" part of the job.
With that in mind, it will eventually become the case that there is simply no way of pretending any more that there are going to be enough jobs for everyone. What will society look like when politicians have to face up the reality that there is one less job than the total number of people, let along a deficit of a few million jobs? That's the world we're heading for, without a shadow of a doubt, and there is nothing that can change that.
The present day welfare state is nothing compared to what is to come. When hundreds of thousands of people will live their entire lives without any real chance of employment for the majority of that time the state will have to radically reform its role.
My prediction, corporation tax will go up, and income tax will go way down. The state will need to provide the benefits required to prevent civil unrest, and the money won't be coming from the legions of the unemployed, and the state will have a vested interest in making sure that those who do have jobs are spending as possible supporting the high revenue, low employing, companies which support the economy.
However, there will also be much larger numbers of people creating small companies, which will exist at the periphery of the larger entities, much as Amazon works with third party retailers today. This will provide many people a small income, which will help ensure the state isnt completely crushed by the weight of organising the welfare for its citizens.
Anyway, that's my predication for the day, but the most important part of this is that we need to start moving away faster than we are from the assumptions which governed the world as it existed previously. The emphasis of Government cannot be to recreate the world of yesterday, but it must instead work to build the world as it will exist and create institutions which are resilient enough to survive change.