Not So Modern Times: The Backwards Thinking of Charlie Chaplin and Jeremy Corbyn

Not So Modern Times: The Backwards Thinking of Charlie Chaplin and Jeremy Corbyn

Written by: Richard Lightbound, CEO of ROBO Global EMEA

The fear of change is nothing new. Charlie Chaplin’s classic film Modern Times—one of the last silent films of the era—is perhaps the most famous critique of technology and its perceived impact on modern society. When the film was produced in 1936, Chaplin wasn’t alone in his fear of how a mechanized world would change lives and, indeed, the world as he knew it.

When Jeremy Corbyn, the U.K.’s current Labour leader, spoke at Wednesday’s Labour conference, his response to the “threat” of automation to today’s workforce was all too reminiscent of Chaplin’s theme of humans feeling lost and frightened in a world of increasing automation. Corbyn’s insinuation that “greedy” corporations are sacrificing the well being of society in exchange for money is inaccurate, and his recommendation to penalize companies who utilize “incredibly advanced technology” with added taxes is off base.

While it may be easy to criticize Corbyn for his comments (read The Telegraph’s article on his speech here), he’s certainly not the first to propose such a tax. Last February, Bill Gates, one of the world’s leaders in technology, went public with his support for a government tax on companies who utilize robots. Gates’ comments came on the heels of the overwhelming rejection of an EU proposal for a “robot tax” on technology owners designed to help retrain or otherwise support workers who are displaced by robots.

It’s a debate that is sure to continue for some time. Still, I can’t stop seeing the image of Charlie Chaplin comically resisting the emergence of a new era of productivity. As someone who operates in the world of robotics every day, this focus on taxation and job displacement is shockingly short sighted. There’s no doubt that companies around the globe are generating billions of dollars in revenue as the result of advanced technologies, and that revenue is, in turn, generating tax revenue. And while there’s no question that certain types of jobs will be displaced by robotics, AI, and other advanced technologies, Corbyn’s comments that these innovators are not “sharing the benefits with society” is just plain wrong.

Worldwide, more than 1.2 million lives are lost in car accidents every year, with 94% of those deaths caused by human error. Researchers estimate that driverless cars have the potential to reduce traffic fatalities by up to 90 percent—saving –by 2050.[1] Precision agriculture technology has been praised as the only viable solution to the need for a 70% increase in food production on the next 35 years to feed an exploding population. (See Investor spotlight: Agricultural robots are set to solve the global food crisis for details.) Robots are used in hospitals to precisely measure complex medications, kill otherwise undetected germs in operating rooms, assist with surgeries to minimize invasive procedures and improve patient outcomes, and supporting hospital staff by delivering linens and meals.[2] In the real world, robots are already helping to improve working conditions, increase the effectiveness of workers at all skill levels, and bolster the labor needed to meet the needs of a growing global population.

Related: China's Push Toward Excellence Delivers a Global Robotics Investment Opportunity

As well, research has shown that the fear that technology advancements are going to put us all out of work is unfounded. The McKinsey Global Institute recently estimated that more than 90% of jobs will not be able to be fully automated. Plus, according to the Wall Street Journal, automation has historically increased—not decreased—employment opportunities in many industries. In fact, because the labor force has steadily decreased since 1980[3] and that trajectory is not expected to change, economists are most worried about a labor shortage in the next few decades—not unemployment. Robots and AI are poised to help fill this growing gap in the labor force that, without their help, could be a major economic issue in the coming decades.

Jeremy Corbyn claims that the companies that are generating billions of dollars in revenues through the development of new technologies should share the benefits with society. Looking at the facts, taxation isn’t the best solution to meet that goal. In Germany, union leaders agree. Wolfgang Lutterbach, senior adviser on the future of work to the executive board of the German Trade Union Confederation, recently stated that, “If we don’t speed up our reactions to these developments, we will not shape digitalization, but digitalization will shape us.”[4] Clearly, he and his fellow union leaders understand the value and opportunity that this new era of productivity has to offer. Not only would Corbyn’s proposed tax slow the development of these valuable technologies, but it’s clear that the evidence points to a future in which the impact of robotics and AI more positive than negative—both for the workers themselves and for global productivity.

[1] Source: “Self-Driving Cars Could Save 300,000 Lives Per Decade in America”, The Atlantic Magazine, September 2015

[2] Source: The robots in your hospital, The Wichita Eagle, September 18, 2017

[3] Sources: Bureau of Labor Statistics; Alan B. Krueger, Princeton University

[4] Source: Wolfgang Lutterbach, senior adviser on the future of work to the executive board of the German Trade Union Confederation, in “Why labor loves robots”, Politico, September 2017
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Here’s Why Bitcoin Won’t Replace Gold So Easily

Here’s Why Bitcoin Won’t Replace Gold So Easily

What a week it was.

First and foremost, I’d like to acknowledge the horrific mass shooting that occurred in Las Vegas, the deadliest in modern American history. On behalf of everyone at U.S. Global Investors, I extend my sincerest and most heartfelt condolences to the victims and their families.

The memory of the shooting was still fresh in people’s minds during last Tuesday’s Hollywood premiere of Blade Runner 2049, which nixed the usual red carpet and other glitz in light of the tragedy. Before the film, producers shared poignant words, saying that in times such as these, the arts are crucial now more than ever.

I had the distinct privilege to attend the premiere. My good friend Frank Giustra, whose production company Thunderbird Entertainment owns a stake in the Blade Runner franchise, was kind enough to invite me along. Despite the somber mood—a pivotal scene in the film even takes place in an irradiated Las Vegas—I thought Blade Runner 2049 was spectacular. Even if you’re not a fan of the original 1982 film, it’s still worth experiencing in theaters. Hans Zimmer and Benjamin Wallfisch’s synth-heavy score is especially haunting.

CNET recently published an interesting piece examining the accuracy of future tech as depicted in the original Blade Runner, from androids to flying cars to off-world travel read the article here.

Still in the Early Innings of Cryptocurrencies
 

Speaking of the future, I spoke on the topic of the blockchain last week at the Subscriber Investment Summit in Vancouver. My presentation focused on the future of mining—not just of gold and precious metals but also cryptocurrencies.

Believe it or not, there are upwards of 2,100 digital currencies being traded in the world right now, with a combined market cap of nearly $150 billion, according to Coinranking.com.

Obviously not all of these cryptos will survive. We’re still in the early innings. Last month I compared this exciting new digital world to the earliest days of the dotcom era, and just as there were winners and losers then, so too will there be winners and losers today. Although bitcoin and Ethereum appear to be the frontrunners right now, recall that only 20 years ago AOL and Yahoo! were poised to dominate the internet. How times have changed!

It will be interesting to see which coins emerge as the “Amazon” and “Google” of cryptocurrencies.

For now, Ethereum has some huge backers. The Enterprise Ethereum Alliance (EEA), according to its website, seeks to “learn from and build upon the only smart contract supporting blockchain currently running in real-world production—Ethereum.” The EEA includes several big-name financial and tech firms such as Credit Suisse, Intel, Microsoft and JPMorgan Chase, whose own CEO, Jamie Dimon, knocked cryptos a couple of weeks ago.

To learn more about the blockchain and cryptocurrencies, watch this engaging two-minute video.

Understanding blockchain in two minutes

Will Bitcoin Replace Gold?
 

Lately I’ve been seeing more and more headlines asking whether cryptos are “killing” gold. Would the gold price be higher today if massive amounts of money weren’t flowing into bitcoin? Both assets, after all, are sometimes favored as safe havens. They’re decentralized and accepted all over the world, 24 hours a day. Transactions are anonymous. Supply is limited.

Have gold and bitcoin peaked for 2017

But I don’t think for a second that cryptocurrencies will ever replace gold, for a number of reasons. For one, cryptos are strictly forms of currency, whereas gold has many other time-tested applications, from jewelry to dentistry to electronics.

Unlike cryptos, gold doesn’t require electricity to trade. This makes it especially useful in situations such as hurricane-ravished Puerto Rico, where 95 percent of people are reportedly still without power. Right now the island’s economy is cash-only. If you have gold jewelry or coins, they can be converted into cash—all without electricity or WiFi.

Finally, gold remains one of the most liquid assets, traded daily in well-established exchanges all around the globe. Every day, some £13.8 billion, or $18 billion, worth of physical gold are traded in London alone, according to the London Bullion Market Association (LBMA). The cryptocurrency market, although expanding rapidly, is not quite there yet.

I will admit, though, that bitcoin is energizing some investors, especially millennials, in ways that gold might have a hard time doing. The proof is all over the internet. You can find a number of TED Talks on bitcoin, cryptocurrencies and the blockchain, but to my knowledge, none is available on gold investing. YouTube is likewise bursting at the seams with videos on cryptos.

Bitcoin is up 350 percent for the year, Ethereum an unbelievable 3,600 percent. Gold, meanwhile, is up around 10 percent. Producers, as measured by the NYSE Arca Gold Miners Index, have gained 11.5 percent in 2017, 23 percent since its 52-week low in December 2016.

Related: Gold and Bitcoin Surge on North Korea Fears

Look Past the Negativity to Find the Good News
 

The news is filled with negative headlines, and sometimes it’s challenging to stay positive. Take Friday’s jobs report. It showed that the U.S. lost 33,000 jobs in September, the first month in seven years that this happened. A weak report was expected because of Hurricane Irma, but no one could have guessed the losses would be this deep.

The jobs report wasn’t all bad news, however. For one, the decline is very likely temporary. Beyond that, a record 4.88 million Americans who were previously sitting out of the labor force found work last month. This helped the unemployment rate fall to 4.2 percent, a 16-year low.

Have gold and bitcoin peaked for 2017

There’s more that supports a stronger U.S. economy. As I shared with you last week, the Manufacturing ISM Purchasing Managers’ Index (PMI) rose to a 13-year high in September, indicating rapid expansion in the manufacturing industry. Factory orders were up during the month. Auto sales were up. Oil has stayed in the relatively low $50-a-barrel range, which is good for transportation and industrials, especially airlines. Small-cap stocks, as measured by the Russell 2000 Index, continue to climb above their 50-day and 200-day moving averages as excitement over tax reform intensifies.

These are among the reasons why I remain bullish.

One final note: Speaking on tax reform, Warren Buffett told CNBC last week that he’s waiting to sell assets until he knows the plan will go through. “I would feel kind of silly if I realized $1 billion worth of gains and paid $350 million in tax on it if I just waited a few months and would have paid $250 million,” he said.

It’s a fair comment, and I imagine other like-minded, forward-thinking investors, buyers and sellers will also wait to make huge transactions if they can help it. Tax reform isn’t a done deal, but I think it has a much better chance of being signed into law than a health care overhaul.

Frank Holmes
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Frank Holmes is the CEO and Chief Investment Officer of U.S. Global Investors. Mr. Holmes purchased a controlling interest in U.S. Global Investors in 1989 and became the firm ... Click for full bio