The only geopolitical certainty is that massive change is coming. Three macro trends are only just starting to accelerate, forming a very disruptive background to an already unsettled future.
One is that technological transformations exponentially more consequential and rapid than anything prior are in their infancy, and will play out like several simultaneous industrial revolutions.
ROBOT REVOLUTION
Photo: Reuters
It is still early days, but impacts are starting to be felt. Just yesterday, this line appeared in an article: “To meet demands at Foxconn, factory planners are building physical AI-powered robotic factories with Omniverse and NVIDIA AI.”
In other words, they used AI to design two factories, put them in the metaverse and to plan processes first, then will implement them in the real world in two facilities located in Taiwan and Mexico.
Those are baby steps, but they are happening now. Applying these concepts to science and technology, AI can run endless models online 24 hours a day, then direct AI-enhanced robots to conduct the actual science. This has enormous implications for materials science, medicine and engineering, and it will grow exponentially as their databases expand.
Photo: EPA-EFE
Today robots are still pretty clumsy in the real world as they learn to navigate it, but as each robot learns a new task, all the other ones do simultaneously through the cloud.
Autonomous humanoid robots are still fairly few in numbers, so there is not as much to share, but the learning curve will spike exponentially as more and more robots are released. Today there might be a few dozen robots sharing their learning curve, but someday they will be in their millions.
The human brain finds it easier to understand linear growth, but technological growth is often exponential. For example, a laptop USB-C charger is far more powerful than the Apollo Guidance Computer that landed on the moon. Read that carefully, just the charger, the laptop is more powerful than the first few decades of NASA combined.
The implications of AI, robotics and exponential growth in science and technology are going to profoundly reshape our lives, the planet and the economy. The question will not be what jobs will be replaced, but what jobs will not be replaced. Of course, new jobs will also be created.
COME BACK BABY
All economic and social models are based on the assumption of rising populations, but more and more countries are facing a demographic collapse. On the CIA World Factbook list of 227 countries and territories, only 95 are at or above the replacement rate of 2.1.
India is estimated to have dropped below it at 2.03, the US at 1.84, Germany at 1.58, Japan at 1.4 and Taiwan in dead last at 1.11. However, problems in many countries started much earlier than in Taiwan.
Through swathes of countries like Italy and Japan, towns and villages are emptying out and they are giving away homes for free or even paying people to live there. Whole traditional customs and artisanal skills are literally dying out.
Many more industries are threatened as the larger bulge of population in their 50s and 60s are retiring and those even older are passing away. Taiwan’s famed tea industry is in serious danger of literally dying out as most people doing the tea picking are elderly and often in their 70s. Young people are not willing to do it, even when offered high pay.
Though there may be other compounding reasons, one of the possible reasons why German cars — once the envy of the world for their fine engineering and superb quality — now consistently rank near the bottom in reliability is their skilled engineers and factory personnel are retiring. The baby boomer generation is taking a lot of talent, skills and knowledge with them.
It may turn out to be fortunate that AI and robotics are arriving on the scene now. We may need them for much of the work needed to power the economy.
That still leaves two problems. One was pointed out by analyst Peter Zeihan, that the most active investors with the resources to do so are in their 40s and 50s, but once people retire they mostly just run down their savings.
That means that the investment booms of the last couple of decades that fueled the rise of the Internet and other technological marvels are going to become harder to come by, and therefore more expensive as interest rates rise. In the short term, if president-elect Donald Trump keeps his campaign promises, inflation will spike sharply in the US due to higher tariffs on imported goods and even more dramatically if they round up all the illegal immigrants.
Longer term, the other problem is that declining populations mean fewer consumers. No economy or society has faced this problem before at this long-term scale, so it is unclear what the impact will be.
Whatever it is it will start manifesting more and more rapidly in the near future.
THE TECH TO TIPPING POINT RANGE
The Intergovernmental Panel on Climate Change (IPCC) has laid out some projections based on different levels of change based on the actual temperature rise.
The catch is that their reports are most likely compromise results based on committee consensus with not all of the inputs equally good. Their predictions could be accurate, or they may be understating or overstating the risks.
They predict that if temperatures rise above 1.5°C, things will only get worse, and more of Australia and California will burn and Europe will turn into a giant deadly water park, but as a species we will be largely alright.
On the hopeful side, it is possible that technological solutions could help mitigate the situation. If an inexpensive method of carbon capture is developed, that would be a game changer.
On the other hand, if the Atlantic Meridional Overturning Circulation (AMOC) ocean current that brings warm water up past Europe and cold water down the east coast of the US were to break down, things would get catastrophically bad. It has been slowing down for years, and has shut down in the past. The IPCC calls this situation unlikely before 2100, but two Dutch scientists are predicting it is likely to happen roughly mid-century.
Ironically, that could trigger an ice age. The last one dropped global temperatures an average 6°C covered all of Canada, the northern US, the UK, Scandinavia, the Baltics and Switzerland in glaciers, which I would assume would be inconvenient. On the other hand the oceans dropped and lots of new real estate opened up — though the land bridge from Taiwan to China would return.
If the IPCC predictions are accurate, a lot of investment will need to be made to ward off rising sea levels and weather-proofing our communities. That is expensive but doable in the wealthier parts of the world, but deadly in places that are not.
In the next column we will examine the political trends happening now against this megatrend backdrop. Taiwan is very tied into these geopolitical, economic and military shifts.
Donovan’s Deep Dives is a regular column by Courtney Donovan Smith (石東文) who writes in-depth analysis on everything about Taiwan’s political scene and geopolitics. Donovan is also the central Taiwan correspondent at ICRT FM100 Radio News, co-publisher of Compass Magazine, co-founder Taiwan Report (report.tw) and former chair of the Taichung American Chamber of Commerce. Follow him on X: @donovan_smith.
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