Our series on the modern economy ends with what lies ahead: the future economy.
In this final installment, we dive into completely unchartered territory as we predict what the future economy will look like for our sure-to-be-kick-ass offspring. These predictions are of those jumping into the workforce around the year 2040, or as we will dub them, the Creative Generation, or GenCreate. We’re taking bets!
Diversity ain’t goin’ away
Diversity will take on dichotomous trends over the next 20 years in the United States. On one hand, the melting pot will become more flavorful, as increasing ethnic diversity and global connectivity produce new and innovative ideas to further human progress.
On the other hand, increased diversity has usually come in tandem with deep divides between so-called natives, who desire an exclusive state. The mixing of different races and cultures will enrich us with new foods, art, and information that bring us together, but it will also come with different behaviors, norms, and beliefs that can be exploited to divide us.
Nonetheless, some of our kids will be zipping or flying (if Kalanick, Musk and co. come through) around in driverless cars, smoking marijuana while reading a history book on the ramifications of the Great Recession, and chuckling at the 2016 presidential election.
They will be enjoying a less violent world, nice inland apartments, and the new industries that emerge from the fourth industrial revolution. Others, while enjoying the fruits of these technologies, will be stuck in the lower rungs of the economic ladder.
Taking a stab at the future political arena
Policy-wise, the next few years will likely determine how the two parties realign for the future. If this election is anything to go by, the next generation will continue to see the ugly side of diversification in politics, along with even more outrageous mudslinging than the recent election. Per the prediction of former Prime Minister Tony Blair, the political divide will not be a fight between left and right but between open and closed.
Depending on the longevity of Trump’s influence, Republicans may continue to adopt a more nationalistic bent, pushing against immigration and incentivizing industries to stay in the states through subsidies and other privileges, while favoring programs like social security and Medicare to take care of our elders.
Alternatively, Democrats could begin to favor more libertarian-esque policy measures and champion immigration and more market-oriented policies. Left-leaning politics, garnished with libertarian stances on policy issues, will appear on the menu (with the transition to clean energy the most-likely signifier). However, they will ensure that the government remains involved in reshaping the workforce to compete in world markets.
Similar to the inversed cultural trends, the sharing economy and accompanying labor force will require specialization and collaboration. By then, the tycoons making cheddar from automation will be competing globally, bringing in specialized labor from around the world to collaborate under their roofs. This will create political tension as elected officials try to take on the murky contracts between workers and employers, consultant and client, contractor and app, or whatever they are.
Additionally, as the labor participation rate inches downward as a result of technology disrupting labor patterns and demographics, income inequality will continue to be a political issue. State-legislated distribution of wealth will be proposed, but in different ways from both sides. This period may finally allow a universal basic income to become a reality, garnering more support from the left side of the aisle.
On the other hand, if the electoral system is adjusted in the next couple elections to a preferential voting type system, our kids may be able to enjoy a more nuanced election with less mudslinging. The 2016 presidential election brought to light a general discontentment with the electoral process in which policy issues were seldom discussed, political contenders were left in the dark, and voters were generally unhappy with their options and ensuing selection.
This problem is often attributed to the “winner-take-all” method of winning elections, in which the one vote can go to only one candidate. Preferential voting allows voters to rank their candidates, giving the vote a little more weight. It takes into account that voters may prefer a second or third choice as their elected official. Who’da thought?
Machine learning transforms education
According to corporations, recent students display deficiencies in areas such as critical thinking, problem-solving, analytical reasoning, communicating and working in multicultural teams.
“We’re doubling down on the idea that machine learning will have a huge impact in transforming education to cater to these deficiencies … “
We’re doubling down on the idea that machine learning will have a huge impact in transforming education to cater to these deficiencies, especially during the primary and secondary years, over the next decade. These algorithms will adjust to different learning speeds and grow alongside the student, personalizing the educational experience. Universities will not die but will have to compete with apprenticeship-type schools that put the technical skills learned by software into practice.
As we transition from a service-based economy to a knowledge-based economy, the emphasis in these quasi-trade schools will be on creative collaboration and having the ability to work alongside not only machines, but other people. Being able to work synergistically with others and apply the second-natured technical skills will be paramount to the next generation’s success.
Indeed, as education becomes more personalized and attuned to individual strengths and weaknesses, it will assist the generation in creating more specialized skills for the freelance economy. But, human capital will not be enough. Social capital—who we know within our networks of family, work, and community—will hopefully bridge the cultural gaps and become increasingly important to GenCreate’s future earnings.
In the next couple decades, majors in philosophy, economics, and other social sciences will rise to prominence because these help students develop critical thinking skills, incorporate the lessons from history, and more clearly understand the impacts of technology on human life. The gender split will become more even within these realms, but we will still see the large gap in the more technical, engineering fields.
The dividend paycheck
Assuming inflation is a thing that happens, GenCreate will see much larger paychecks than millennials. However, how we get paid could be substantially different. In the next 10-to-15 years, productivity will increase so much that the average workday will officially decrease by at least a couple hours. Employers will either have to pay more per hour of work or will distribute ownership rights to the business and capital equipment.
We see similar pay structures today, particularly for top-level executives. Instead of CEOs getting monstrous salaries or large hourly wages, many receive stock options and partial ownership of the company. In other words, every quarter, they receive a dividend payment, which is a portion of the company’s profit divided amongst shareholders. This will either be a new, competitive way for employers to attract workers or it will be enforced through legislation.
At the same time, we will see much more remote working, in a labor force laden with individual contractors and freelancers. Although highly unpredictable, computer and mathematics, architecture and engineering, and management occupations will see increases while manufacturing, office and administrative, and construction jobs will see a decline as a result of the tech-heavy industrial revolution. GenCreate can breathe a sigh of relief because when we mean management, we mean management of machines and information systems, not people.
Retirement accounts vs. homeownership
Sadly, student loan debt will continue to plague the next generation much like it plagues our own, and may have even more of an impact on economic mobility. Seeing as income streams will likely be unsteady in a freelance economy, consumer debt will likely increase as well.
Unless the influential political economists decide that it doesn’t matter, the next generation will also see large tax increases in order to pay off the national debt that will have grown to well over 100 percent of the United States’ GDP.
Homeownership is known as a staple for building wealth. Home prices will surely increase, but homeownership will be shaky. Although millennials are now starting to purchase homes at a significantly higher pace, GenCreate will further the “access” movement we have started—i.e., we would rather have access to a resource than have outright ownership of it.
Don’t expect your kids to buy a home before they turn 40 unless you transfer your home to them when you die. However, technology might make savings and retirement accounts a less-daunting task. Fintech apps, pooled retirement plans, and easy-access health savings accounts will morph alongside the changing paychecks.
Although our (or anyone else’s) predictions should be taken with a grain of salt, we are undoubtedly in a position to shape the future of our children for the better. Getting along with people from different cultural backgrounds will prove to be super helpful to that task.
However, this begins with education. It opens our eyes to the cultural dynamics of the world. In addition, allowing the technological avenues to widen in this area will not only let our generation adapt to coming disruptions but also help our children soak in the necessary skills to be successful in a knowledge-based economy.
In some areas, our predictions seem a bit grim, but in others, they look exciting. Politics will take an important role in whether or not these times are dark or bright. Alongside politics, how the next generation of entrepreneurs in business ownership set up their business models will either exacerbate wealth and social inequalities or reduce them.
Drastically reducing barriers to opportunity and innovation, embracing global competition and the movement of specialized labor, will allow GenCreate to actually identify with their generation’s moniker—and create.
Tell us what you think of our predictions or if you want to throw any money in the pot.
Previously posted on GenFKD.