I have noticed from your recent postings that while you recognize all the great outcomes technology will bring, you also recognize the downside consequences of all the displaced labor. Another effect on labor has been the financialization of our economy. Check out this article (open domain)   Thank you for your continued great work!

Eoin Treacy's view

Thanks for this link may also of interest to subscribers. I found the chart of wages and salaries as a percentage of GDP to be particularly interesting. 

Technology is inherently deflationary which means we can do more with less and each of us can easily come up with examples of how innovations have improved different aspects of our lives. However, the rapid pace of innovation in artificial intelligence, robotics and healthcare while representing truly exciting developments for corporations also mean that millions of jobs are going to be under pressure. 


What I find particularly interesting is the commonality between the decline in wages/GDP, government bond yields, and the velocity of money. 

Globalisation and technological innovation have both contributed to the impressive rise in corporate profits over the last forty years. In turn that has also represented the outperformance of the corporate sector versus labour and that particular trend is likely to be exacerbated by the accelerating pace of innovation. 

These are complicated interlocking themes but in constitutional democracies where these trends have been most acutely felt, like the USA and UK, we already see evidence of voters expressing dissent with the status quo. Political uncertainty therefore represents an increasingly pressing topic which is likely to have a significant effect on markets as the trends of globalisation and technological innovation unfold.