Introduction
"I don’t want a nation of thinkers. I want a nation of workers." —John D. Rockefeller, 1903
About a hundred years ago, our society became officially a nation of workers when the General Education Board, funded by John D. Rockefeller Sr. in 1902, announced its mission to support higher education in the United States with presumably good intentions to build a nation of workers. But today, stagnating income from labor is leaving an army of employees with little to no room to grow lasting wealth.
Why? Because our current capitalistic system’s dirty little secret is that, over time, capital tends to grow by several percentage points faster than salaries and wages. So, people working for money have been losing the race to building wealth and will always lose against those who use financial capital to create wealth.
The gap between the small minority of people who leverage capital to build wealth and workers is growing bigger each year. Spurred by technological advances, this trend is now even accelerating, and the value of skilled labor is declining to unsustainable levels.
Consequently, our over 200-year-old democracy seems to turn into an oligarchy. Then, power would rest with a small number of people distinguished by nobility, wealth, education, corporate, religious, political, or military control. Our society would then be controlled by families who pass their influence from one generation to the next. Is this what we want?
The Value of skilled labor
Today, the fundamental principle of capitalism, the concept of skilled labor, is at stake. Is it possible that we can all pass wealth from one generation to another? Can we manage a paradigm shift from nation-centered capitalism to a shared economy based on the Wealth of Generations by enabling all workers to become capitalists—sophisticated investors? The answer is yes! This book casts a positive outlook into the future by suggesting using artificial intelligence and other technologies to make us all capitalists, reaping equitable returns.
Studies claim a 100% chance of Artificial Intelligence (AI) replacing all human tasks by somewhere between 2060 and 2200. More importantly, these studies also reveal that this process has already started today and is ahead of every prediction. AI built into services like aitranslate.com are already translating languages, which specialists expected to happen by 2024, and apps like aiva.ai already create professionally composed music. The newest AI-supported applications can already write essays, which was predicted to occur in 2026. In 2021, AI is driving trucks on our highways, which was estimated to happen in 2027. What’s next? Retail salespersons, authors of novels and non-fiction books—the list is long and frightening. Many studies predict that AI will write bestselling books by 2049, and AI will work as a surgeon by 2053.
This book will discuss options for preparing us for an emerging job market collapse and building wealth for generations in a world without the need for skilled labor, transitioning our economy from nation-centered capitalism to human-centered capitalism.
For three centuries, since the birth of modern capitalism, ignited by Adam Smith’s book “The Wealth of Nations” in 1776, the general belief is that the desired way to make money is to get a job and sell our skilled labor to corporations and their helpers—the nation’s governments. But today, with technology claiming more and more of our jobs, this paradigm starts to fail us since emerging technologies get the work done faster, better, and cheaper.
This book will explore why our generation is in danger of becoming less empowered in our current capitalistic model due to an ever-shrinking value of skilled human labor. I will describe why our current form of capitalism will fail us if we do not make a fundamental adjustment, switching from nation-centered capitalism to a human-centered and decentralized capitalistic model.
The gap between the rich and the poor could widen to unsustainable levels. And with every new economic down-turn, this gap seems to worsen. In Figure 1a, later in this introduction, a graph shows data provided by the Federal Reserve’s research group that hints at the reason for this development: the value of skilled labor is falling significantly relative to productivity increases since the 1990s due to technological advances. The fundamental idea of capitalism, skilled labor, is at stake.
In my book, I will explore remedies for replacing human skills with technology, driven by artificial intelligence (AI), robots, and technologies like blockchain. The newest OpenAI GPT release (Generative Pre-trained Transformer) and other emerging technologies can be terrifying. Technology is starting to threaten reputable occupations like software developers, lawyers, journalists, and editors. For example, I am writing the text, which you are reading right now, using an AI-powered writing enhancement tool called Grammarly.
Since the beginning of humankind, we have continuously improved our mental and practical skills, and we applied them to make a living. With the appearance of this new breed of technology, we might face a terrible realization: we, as humans, are no longer the only ones who can learn and perfect a skill anymore. We knew that we would lose control of this technological development one day. Have we reached the technological singularity, the point where technological growth is becoming uncontrollable and irreversible with unforeseeable changes to our human civilization?
Some of us might feel already how these advances in technology affect our personal and professional lives? Technological improvements have already changed the way how we make money. Machines ’think’ and ’work’ faster than humans, have more endurance, and are less emotionally attached to decisions. This time, it is for real. With new developments in AI and blockchain applications hitting the market every day, the meaning of work is changing for all of us and forever.
What implications does the singularity have on the way we make money and provide for our loved ones? How can we prepare ourselves? Let’s start at the beginning of modern capitalism.
The Scottish 17th-century economist and pioneer of political economy is the author of the book “The Wealth of Nations,” published in 1776. He is known as “The Father of Economics” or “The Father of Capitalism.” His book is driven by the idea of the division of labor and industrial productivity. It is considered an “Inquiry into the Nature and Causes of the Wealth of Nations.”
In contrast, this book in your hands is an Inquiry into the Nature and Causes of the Wealth of Generations and focuses on making us, the people, more wealthy.
For centuries, the wealth of nations has risen dramatically, country by country, led by various governments and huge mega-corporations that have often turned into monstrous money machines. This trend has been propelled by The General Education Board, founded in 1902 after John D. Rockefeller donated an initial one million dollars to its cause. The board’s mission was to emphasize the need for real-world applicational skills like Demonstrative Farming and Industrial Education.
Since then, our school system mostly ignored practical financial education and teaching a systematic approach to building personal wealth. The book in your hands elaborates on fundamental principles and financial knowledge to building generational wealth.
Let’s look back in history. While nations grew richer, only a tiny proportion of us became wealthy. In contrast, founders of these mega-corporations, kings in the past centuries, and sophisticated investors today became free from working for money. For most of us, it has been, at best, a comfortable ride. As a matter of fact, the vast majority of people and their families today cannot be considered wealthy. Quite the opposite, it seems that families are mostly burdened by mountains of debt and little time for creativity. And the trend got worse since the Great Recession in 2008.
This book, The Wealth of Generations, is written for us, the people, the working people, it is written for us, humans! It explains in layman’s terms why it is essential for everyone to build wealth for generations and how everyone can do it. Today’s financial education is mainly based on how we can make nations and corporations richer by giving in to the division of labor and over-specialization, while being compartmentalized in the anonymous machinery, only to achieve mediocre financial successes for ourselves. The goal of this book is to describe how we can create genuine wealth to achieve freedom for generations.
What’s Wealth?
Simply put, wealth is the ultimate leverage. No, not leverage like in the world of physics as the exertion of force using a lever or an object applied in the manner of a lever. No, also not only the ratio of loaned capital (debt) to the value of its equity. Leverage in the sense of influence.
We can have moral influence, knowledge-based influence, and influence through money. Leverage enables us to move things forward—for ourselves and others. When we have enough leverage, we are free to create our future. Financial wealth exists in many forms. The terms capital and assets are essential to this book. So, buckle up!
Most people underestimate that being wealthy involves a lot of work and that wealth is the ultimate business no matter how large it is. Wealth is a combination of sufficient capital and the freedom and knowledge to deploy it. Ergo, wealth comes with responsibility, and someone needs to manage wealth, or it will disappear over time.
But the definition and symbols of wealth change over time. For example, kings used to wear purple clothes to demonstrate their wealth. For centuries, people associated the color purple with royalty, power, and wealth. Queen Elizabeth I did not allow anyone except close members of the royal family to wear it. The elite status of the color purple stems from the dye’s scarcity and cost to produce it.
Decentralized Wealth
Wealth Management is the planning and control of capital and its related transactions. An entire industry has evolved based on the need to plan and allocate people’s and company assets.
A large portion of wealth management is the settlement of contracts offered as a service by wealth managers in small and large financial firms. But one technology is now changing everything: blockchain. This new technology is transforming financial institutions and consequently transforms wealth management in itself. Blockchain is an open, distributed ledger that can authenticate assets and people’s identities and record transactions between two parties reliably in a verifiable way.
Blockchain is already reducing or eliminating the need for banks and governmental bureaucracy, increasing the audibility and trust between parties. Blockchain can help shape a more efficient healthcare system, detect academic fraud, create a better banking experience, provide a more efficient humanitarian aid distribution system, or help companies avoid personal data breaches.
Why is this important? It matters because blockchain is changing the way we build wealth. The meaning of wealth might even change completely. For example, today, bitcoin is the most used application of this new blockchain technology. Bitcoin is a drastic new way to store and transfer value. Unlike traditional financial networks, bitcoin can operate without central authorities or trusted administrators. That makes bitcoin the first-ever open and borderless quasi-currency. I have regularly invested in bitcoin as the price rose by over 80,000 percent after its inception in 2009. Today, the easiest way to buy and sell bitcoins is by using smartphone apps like Cash App.
What do I mean by Generations?
To me, generations are groups of people who live on this planet at a particular time. These groups can be families or larger populations like tribes, people who affiliate with a specific trend or are just part of an era in time. Millennials or baby boomers belong to their generations. By generations, I also mean groups of people that live during different times but are related. For example, farmers hand their businesses over from one generation to the next. We might view the term generations as a two-dimensional expression covering space and time: different generations who live together today in one space and new generations will take on their generation’s heritage.
What is Skilled Labor?
Investopia.com defines skilled labor as “... a segment of the workforce that has specialized know-how, training, and experience to carry out more complex physical or mental tasks than routine job functions.”
Let’s look at a definition of another term. The University of Minnesota writes, “... Artificial Intelligence (AI) ... is a general term that implies the use of a computer to model and replicates intelligent behavior. Research in AI focuses on developing and analyzing algorithms that learn and perform intelligent behavior with minimal human intervention.”
So, having “specialized know-how to carry out more complex physical or mental tasks” sounds to me like “learning and performing intelligent behavior with minimal ... intervention.”
We saw it coming: skilled labor is at the peril of being taken over entirely by artificial intelligence. A project run by OpenAI has developed an AI model called GPT, which stands for “Generative Pre-training Transformer.” It is a language model that generates world knowledge by training on vast amounts of texts. Today, AI can already write novels, poetry, provide legal services, computer programming, and drive a car without any human intervention on a level never seen before.
The carmaker Tesla, for example, is rolling out its first fully self-driving cars in the late 2021s. These cars turn into robotaxis, which removes the human driver completely. Implications for truck drivers and taxi companies are colossal. The question is not if AI will take over all skilled labor, but when the transition to a world without the need for skilled labor will be complete.
It becomes clear to me that we, as a society, need to start redefining the skilled labor paradigm and begin exploring the nature and causes of the wealth of generations in a world without the need for skilled labor.
Where does wealth come from?
Imagine a sprinting race where some runners get a head-start of several steps? Would you be surprised if these runners arrive first at a 100 meters sprint?
The title of this book, The Wealth of Generations, addresses this very problem by proposing a solution rather than merely pointing out or dwelling upon social inequality. It tries to explain why many people who live in impoverishment for generations, are tied hand and foot to the wage economy while others can leverage their efforts through a wealth of morals, mind, and money. Spiritual Capital, Intellectual Capital, and Financial Capital are designed to generate wealth. Wealth is essentially a generator of more wealth because profits can be reinvested to yield more capital, hence more wealth to its owners and beneficiaries.
Today, information is the one “commodity” that can be used over and over again without being depleted. That is why we are living at a time when more people than ever before are finding that they can generate resources that will outlast the needs of those who have created them. Human progress depends upon this surplus of ideas and physical structures, which can be passed on to new generations.
Mercantilism—Capitalism—Wealthism?
Between the 1500s and 1700s, as a way to make money, people were mainly trading goods. This system was called Mercantilism, and it was built on the idea to make money when purchasing goods in one region and selling them in another province for more money to make a profit.
In the mid-1700s, however, when nations formed and Adam Smith’s work The Wealth of Nations became known, Capitalism became the new prevalent economic system. This new paradigm has been based on the division of labor to create value by processing goods and materials. The idea of modern manufacturing was born. Now, the economic system was driven by two forces: trade and a labor-intensive component to create value and profits.
Today, this capitalistic system has created groups of individuals and families who became ultra-rich, ultra-wealthy. This same system has also created an army of workers and employees with some financial freedom but neglectable wealth. However, we have seen the gap between rich and poor grow for many decades. This new phenomenon has been first described by Joanie Bronfman, who originally coined the new term Wealthism in her 1987 doctoral dissertation at Brandeis University. Today, we can see Wealthism as a system where wealth is the fundamental factor of prosperity, whereas financial differences between classes create enormous tensions between wealthy and poor people.
Mercantilism and capitalism have brought unseen freedom and wealth to many. However, these economic systems are based on the assumption that humans can participate in that system by providing labor. This paradigm is changing today. The rate of technological progress is starting to exceed human abilities to adapt and to compete. This process will end with the result that all (labor-intensive) work can be done by technology.
Capital vs. Labor
In classical economics, factors of production are what is used in the production process to produce output (finished goods and services).
There are two types of factors of production: primary and secondary. The three primary factors are:
Land,
Labor (human capital),
Capital.
Secondary factors in classical economics are materials and energy because they are obtained from land, labor, and capital.
The primary factors facilitate production, but neither become part of the product (like raw materials) nor become significantly transformed by the production process (like fuel used to power machinery). Land includes not only the site of production but also natural resources above or below the soil.
Only recently, economists started to distinguish between human capital and labor. They now recognize human capital as the stock of knowledge in the labor force. This distinction illustrates a significant trend that seems to be the start of a more considerable change in understanding the economic system. No longer is labor defined as mere humans’ work, but human knowledge becomes a significant production factor.
With a nearing technological intelligence explosion propelled by artificial intelligence and robot technologies, is it possible that technology can replace both human capital and labor entirely in the next economic revolution? In that scenario, is it possible that the new primary factors of production should be as follows:
Land,
Machine Labor,
Capital?
Wealth WITHOUT WORK
The concept of getting paid for skilled work is entirely based on the assumption that only humans can perform professional work (paid work).
But robots exponentially improve their intellectual capabilities, dexterity, and fine motor control and compete with skilled human workers’ hands. They can now mimic the dynamic capabilities of human motion and deal with unpredictability. These increasing capabilities will ultimately also enable robots to maintain and repair themselves completely.
This trend is why skilled labor jobs are not safe from the robot apocalypse. Robots and artificial intelligence (AI) are cheaper, faster, and have more endurance than humans.
So, how will ordinary people be able to create wealth in the future? What will be our purpose? The only way to survive the robot apocalypse is to put a fleet of robots to work before they put us to work.
The trend of the last centuries has been that the overall sophistication of workers has risen dramatically. Today, high-skilled office jobs have become the norm rather than the exception. This book’s basic idea is to elaborate on this trend by suggesting that people should accept the concept of machine labor and put this emerging army of robots to work to create wealth. Here are just some simple ideas:
The company Tesla offers a smartphone app that allows car owners to put their cars into a robotaxi fleet. Their vehicles can then be used as taxis, driving passengers autonomically from point A to point B and making money for the vehicle owner.
Many truck drivers already operate their own diesel trucks and drive them to deliver goods to make money. In the human-centered economy, truck drivers can now invest in one or more self-driving electric trucks and build a fleet of self-driving trucks to make money.
Solar roofs. It is easier than ever to put electricity generated by solar back into the public power grid and make money by selling electricity.
What about providing content? Many entrepreneurs are creating intellectual property (IP) and offering access to it on the web. Many famous writers already make a living by selling their work on, for example, Substack.com.
You can train cooking robots and open a restaurant. The Spyce Restaurant in Boston is the first restaurant with a robotic kitchen. The owners employ only a small team who prepares the ingredients in an off-site kitchen. Robots do all of the actual cooking. A video on YouTube shows its operation.
Today, writing a book and receiving royalty payments is also a way to earn income from capital using AI. I wrote this book with the support of an AI-supported editing app called Grammarly. Furthermore, I distribute my book using a blockchain-driven publishing platform for digital distribution and a physical book distributor, which uses a fully automated distribution system from order processing to shipping.
YouTubers: well-known names like PewDiePie, Shane Dawson, and Smosh earn millions by uploading videos on YouTube and forming personal relationships with their fans.
Each of us has assets that we can share with others. You can use Airbnb.com to rent out your living space to other people, or use apps like Neighbor.com to rent out your storage space.
People are using smart, emerging technology, driven partly by AI to generate a scalable income, in many cases in the form of income from capital—meaning the hours they spend are not directly related to the money they make.
But a world without paid labor is not a utopia, an imagined place in which everything is perfect. A solid moral foundation, a sense of purpose, and belonging to solve existential problems become the center of our existence. More than ever, we need politicians with sound principles and businesses that promote morality, science that reflects humanity, a technology that considers ethics, an economy that includes sustainability, and knowledge from character.
volunteer Work
Volunteer work is an essential concept of The Wealth of Generations. With an increasing number of sophisticated investors, people have more time to help others in need. Retirees and other groups of people already offer their work in organizations like Rotaries and other non-profit organizations. Also, many people might not like to be opportunists and leverage machine labor to make money. Therefore, future sophisticated investors should have a unique and vital new civic duty to support these individuals in our society for the common good.
The Rate of Change
Ever since technological evolution started, the rate of improvement has been growing exponentially. For example, Moore’s Law originated around 1970 and states that processor speeds or overall processing power for computers will double every two years. That is exponential growth. It was proven correct for the past decades—even though the speed of processor improvement has slowed down somewhat in recent years due to technological limitations of materials used to make processors, growth on average is exponential over a longer time.
Human progress, in general, appears to be exponential. In general, we can observe accelerating progress in technological change throughout history, suggesting a faster and more profound rate of change in the future and may or may not be accompanied by equally profound social and cultural change.
Ray Kurzweil calls this phenomenon The Law of Accelerating Returns. On his website kurzweil.net, he states that “technological change is exponential, contrary to the common-sense ’intuitive linear’ view. So we won’t experience 100 years of progress in the 21st century—it will be more like 20,000 years of progress (at today’s rate). The ’returns,’ such as chip speed and cost-effectiveness, also increase exponentially.”
Past technological improvements have taken many jobs, and many new job categories have been created. People were able to adapt, relearn new skills, and find new employment in areas that technology could not replace yet.
But what if the rate of technological improvements surpasses the maximum speed of how fast people can change their careers? This moment in time has silently started three decades ago. Since 1990, productivity has increased by 70 percent, whereas salaries and wages only increased by 20 percent. This trend is accelerating. Today, many truck drivers will soon lose their jobs to self-driving semis, and taxi drivers are losing their jobs to robotaxis. Progress always prefers less expensive and more efficient solutions. And this time, employees are not challenged to learn just a new job. This time, they will need to adapt to an entirely new lifestyle and become sophisticated investors.
Figure 1a Household Income vs. U.S. Productivity based on fred.stlouisfed.org
In other words, skilled labor performed by humans is becoming less and less valuable. This trend is the reason why the average household is becoming poorer. The wealth of nations is rising, whereas the wealth of people goes down. Karl Marx must have been right in one thing: capitalism has always meant a struggle between capital and labor.
I wrote this book for people who want to start replacing their earned income partly or entirely with income from capital. I envision that we all become sophisticated investors who work for free, using tangible and intangible capital to create more capital. I predict that poor people will keep working for money, whereas sophisticated investors will use technology as the ultimate wealth creation tool.
This book attempts to shed light on the fundamental concepts of generational wealth creation, a subject that has never been taught in school. It will prepare you for the emerging technological singularity by exploring options to deploy your skills in a drastically changing labor market.
The approaching technological singularity can be a scary moment in time. But we should always remember that love is the one human ability that can not be replaced by technology or anything else. Love is the most powerful force in the universe. And as Ira Kaufman and Velimir Srića write in their book EmPower Us!: “Love is the secret human weapon that will out-think machines and drive progress.”
In 2020, we have seen what a global COVID-19 pandemic can do to our economy, and we have experienced a different reality at work and in our homes. Many of us have made permanent changes to our lives to focus more on family and friends. We have started to re-focus on The Wealth of our Generations.
Part One of this book evaluates our morals that are required to build wealth. Part Two describes the investor’s mind, and Part Three explains the money-related portion of wealth.