Discussion about post white collar labour economics
These days, I can't help but keep on thinking about post white collar labour economy and it's implication on our day to day life.... We can keep on dwelling in our wishful cocoon but fact remains that world is going to be vastly different in 4-5 years vis a viz today... In that scenario, let's us discuss some scenario : 1. What will be impact on rental yields of tier 1 cities and consequently what will be overall impact on Indian real estate 2. What would be impact on banking interest rates 3. Where will you park your money in that scenario : Gold, Indian Equity , Big Tech Equity , FD, Real estate or Cash.. My opinion : 1. As high paying jobs for majority of people diminishes, Rental yields of tier 1 cities will come down thereby directly impacting real estate. This will result in huge NPA by those people who have taken loans for 20-30 years period. This will eventually bankrupt real estate developers thereby making real estate deflationary. 2. We will begin to witness overall a deflationary society where cost of services like Education, software, finance etc will drastically reduce. Moreover due to high NPAs, banking interest rate will reduce. Home loans for tenure of 20-30 years will drastically reduce due to increased uncertainty. 3. Gold has historically been inflation proof asset. However will it still be a good asset to invest into in a deflationary society? What are things that will still hold value then? Don't you think current big techs will become East India Company of future indirectly controlling world's economy? I would love to know what do grapevine folks think about the same !
Agreed on all 3. After a lot of pondering over months, my worldview is similar.
A price collapse due to massive deflation is inevitable post-AGI. When cost of cognition is cheap, everyone (mostly big tech at first) can build almost everything for a few dollars or cents. Competition might drive prices down into the drain for most useful digital products. Most digital products will not survive post-AGI too as AGI most likely can directly work with your database so screw your UI and APIs.
Everything post-AGI is speculation. Real estate is already a bubble waiting to burst and will 100% not survive any deflationary pressures. We might (lower probability) even have currency collapse - if fewer people want INR and can't do anything with it. Gold/silver might still be useful but again depends on currency dynamics. Big tech stock is definitely going to valuable as they will be the oligarchs and the British East-India or Weyland-Yutani of our time.
Assets in order according to me:
US treasury bonds, US big tech stock, gold / silver, Indian bonds, Bitcoin + Ethereum + Solana, Indian big industry stocks, Real estate.
Another important point is that in a deflationary society that's in chaos, physical assets like real estate and possibly even gold / silver are easily prone to be captured or looted from you.
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These questions can not be correctly answered by plebs like us as they need a deep understanding of economics and a lot of fundamental research. Just by pure guesswork, I think rental yield at tier 1 cities is going to stagnate or only increase mainly due to metro development that is ongoing. When the metro routes reach a critical point (perhaps in 5 year's time), the once inaccessible areas would become a good location and thus lead to a real-estate boom. Not to mention, indias urbanization rate is low, so there would be a lot of demand for real estate in cities.
As for interest rate, it is completely dependent on inflation and closely associated with US federal rates. For a high growth economy like ours, there is a very little chance of deflation in the next few decades.
Further, your basic premise "as high paying job for majority of people diminishes" is premature. First, the number of people employed by tech is less than 10M people in India, so they are nowhere the "majority", though they are very important for cities like Bangalore or Pune. Second, we don't know for sure if AI is going to cause that much disruption in the workforce or how governments around the world are going to react. For all we know, the governments can simply shut down AI companies if it comes down to widespread job loss or heavily tax the AI companies.
For that to happen, all governments have to be in sync with this decision. What makes you think the US government will trust China and Russia or vice-versa? Currently, AI development is very crucial for all countries in their quest to be the most powerful country.
Yes, because the alternative (i.e AI taking all the jobs) would not be in their best interests of all these countries. Xi Jingping or putin would rather have stable economy with relatively contented citizens, instead of a few individuals controlling AI, all others have no jobs with widespread discontent. That is like sitting on a tinderbox , ready to explode. That being said, China or Russia are totalitarian countries, so they may not fully have best interests of their own people.
In a democratic country like ours or US or EU, there is ZERO chance governments will let this happen
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I don't agree with any of these. It's too soon to discuss this.
This is more like a tech bro in the valley which has never worked out in the rest of the world
Wanted to know your reasoning on point 1. Why would that happen? Due to AI or something else?
Why would you continue living in high cost of living tier-1 cities if you have no job? Why not move to a different tier city and control your costs? With large scale unemployment due to AI, most people will do this and let go of their costly rented places in tier 1 cities - leading to a rental yield collapse there.
Yeah that's what I wanted to know. Is the reason for predicted unemployment AI or younger folks taking over seniors
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NaivePoint62
Stealth
6 months ago
This shows how horse thinking works. As horse can see only what is in front of it and it considers the entire universe to be what is in front of it. Whereas the reality is different.
In today's economic world, there are 2 major contributors to the economy : Services (of which software is a part) and Manufacturing.
AI may impact software majorly but not manufacturing (i.e. labour intensive industry). Also, as @3xPlusOne pointed out software jobs are a fraction of overall jobs, so the overall impact would be less.
Apart from that, there would be people employed in the software field still as people will be needed to control the AI and to drive the results out of it so nature of jobs will change but jobs will still be there.
Now, coming to rental yields, few cities which are dependent on software services such as Bangalore and Pune may face some dull period but ultimately these cities have shown innovation is the key so I'm sure new AI focused jobs will mushroom in these cities thus making the low growth/stagnant rental yields a temp phenomenon.
There still will be plenty of white collar jobs that state of the art AI can't do , AI will just make the gross output much bigger by increasing productivity so the supply will increase for the things that ai can aid in doing but on the other hand a much safer bet is investing on things which is inherently AI proof so the supply of them wouldn't improve so massively.
BaatMaan
Stealth
6 months ago
Doomerism from people having no idea how the economy works. The only threat to the economy and high paying jobs is deterioration of world peace and unstable political environment, which are a big reason for the bad job market we have rn. Even if you listen to the FED press conference, JPow says he raised interest rates because there was a supply shock and they had to reduce demand to match with supply to control inflation. AI won't reduce jobs imo, at best it will just change the nature of jobs. Mostly that means we all will have better jobs to do. AI won't ruin your life, rising wealth inequality and global conflicts might though.
These all are based on the assumption that AI will take most of the white collar jobs. That's not going to happen as the biggest chunk of taxpayers are in that segment. If they don't pay the taxes, the government will collapse as the government services will not be there.
Try reading how the US government has broken the monopolies and large conglomerates. That will subsequently happen because there is no bigger monopoly than the government.
5 years is too early for these. For the last 2 decades, we have been hearing about NY's high rent and some companies have left but that didn't bring down the rents. It's still high and will be high for the coming decade.
DaringTrain
Stealth
6 months ago
People who bigger doomsday believers than OP say that as economies and currencies flounder, land and property remains the only real asset. So no, I don't think real estate prices are expected to dwindle anytime soon.
Also, think about it right, no white collar jobs implies reduced taxes implies reduced security. So societies as we know about them now will cease to exist. Each person will have to fend for themselves, so self sustenance will become key. Growing your own crops, keeping fenced wires, and dissuading your neighbours and have-nots from entering your property.
Banking is based on trust. If there will be no trust, there will be bank run on all banks, thus collapsing them.
Public utilities will suffer - No electricity, no metro, no police, no highway. You'll probably be connected to internet through decentralized setup like Starlink.
Hence you'll have to park money in physical assets or decentralized assets like crypto.
That's not me, that's just post-apocalyptic folks.
Do I believe it, nah. Will any of this happen, nope.
It's in government's interest to keep people employed. That's what luddites feared during industrialization. But new jobs got created and people were quickly reskilled. There will be several happy -accidents. Jobs that we don't think could exist, will exist in the future and they will increase the productivity frontier. Hard problems like how to solve traffic problem (like what The Boring Company is doing). How to solve and monetize space and interstellar travel (like what SpaceX is doing). So, you will always have brilliant folks working on hard problems for which you'll need the academically smart guys to then replicate (white collar) and the dumb ones to execute (blue collar).
Also, this is not a question for India. We are way behind the development curve.
White collar jobs going extinct? You're still thinking old school. Automation and AI is the future. "Naya zamana, nayi soch" (New time, new thinking). What makes you scared of change?
Waddup
Student
6 months ago
What your opinion on buying a flat in tier 1 cities now? Or which is the right time to buy a good family apartment ?
Doomsday scenarios have been around for centuries. But equivalent index or gdp or industrial growth and real estate is always on the rise. I have not seen any real estate market in India ever hit negatively ever.
VagueElbow
Stealth
6 months ago
Okay so my view on what will change is most UNPRODUCTIVE work that a lot of folks did passing on as REAL work will be taken up by AI. Thats it. There won't be a huge revolution in an instant, but more so like 1 industry ka 1 function getting disrupted (which anyways was lame) over a decade. Examples: Book keeping, compliance, follow up for payments, calling customer for refunds, etc. High level work especially in a country like India can't be replaced by AGI, forget AGI even if God comes down on earth he won't be able to figure out how to do it 🤣. Reason is we are so complex and people dependent, one small form to get filled you need to know 1 guy and his contact will come from the Xerox shop near the govt office. To extract payments you need to make friends with the peon/office boy type person to see when they get their payments.
Future is not so bleak. Prime real estate will ALWAYS go up on average. Stocks will actually go up as well as business profits - driving up luxury market demand which is very very physical touch oriented - say luxury hand made watches or spa or something. Real human workforce can become a MOAT for businesses. Blue collar jobs will start earning higher and lot of workforce will be directed there.
You guys have no idea...
How much of a vested interest the central banks have in avoiding deflation, even if it burning through your pocket for groceries, the message usually is, hope jobs get a better pay, upskilling
But never deflation
Correct for 1 and 2 but not for 3.
Hard assets like Gold is intentionally kept deflated with its paper replacement,that is there is more paper gold trading than actual gold present. So when the paper will begin chasing the hard asset where there is actually low quantity present than shown on paper the prices must shoot up ,unless govt put any restriction for sudden impacts. So what I can say in short is gold or in case any other precious metal will shoot up.
Regardless of AGI, people and companies will move out to tier 2 cities because the top 8 cities are now completely oversaturated and prices are too much inflated. Govt is also providing many schemes and wants companies to setup in these tier 2 cities.
TheOatmeal
Stealth
6 months ago
Your thoughts are really mature one @AGIcoming
Please keep writing here :)
Read Vivek kaul. I don't think property will go down that easily. However, jobs in tech corporate and other white collar 'bullshit' jobs will reduce.
But this doesn't mean real estate in tier 2-3 will go down that drastically.
Also, how different will it be for world and how different will it be for India is something that needs to be studied. I think a lot of the world is in a better position than India and we overestimate how good we are doing.
igotyou
Student
6 months ago
I don't understand the fact : Home loans for tenure of 20-30 years will drastically reduce due to increased uncertainty.
Aren't interest rates directly proportional to risk/uncertainty
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