If you remember back from high school history class, the Luddites were a group of English textile workers in the 19th century who smashed textile machinery as part of a labor protest. The Luddites were unhappy with new machinery taking their highly-skilled (and decently paid) jobs, and replacing them with low-skill, low-paid jobs operating modern textile machines.
Now days, the term luddite is more often used to refer to “someone who is opposed or resistant to new technologies or technological change.”
Today, I see echoes of the Luddite movement in all the dire warnings about AI and robots. The modern argument, is that robots are going take away all of our highly paid jobs and leave millions of people destitute and unemployed.
To this, I laugh. Anyone who’s actually built a robot knows how janky the things can be. Robots constantly need maintenance, repairs, and software updates. At the very least there’s going to be new jobs for humans just to take care of the robots.
Not to mention all the industrial engineers and mechanical engineers needed to design all these robots that will take our jobs. Oh, and we can’t forget the army of software engineers required to program the robots (and provide security fixes to keep them from getting hacked into). Then there’s the mountain of staff required to run a robot company — accountants, administrators, and even managers.
So no, I don’t think evil robots are going to be “taking our jobs” anytime soon. Neither do I believe there’s anything to fear from new technology.
All that said, I don’t believe new technology is necessarily an improvement over what came before. There’s always positives and negatives.
I Live In Tech-Nerd City
As a resident of the greater Seattle area, I’m positively surrounded by technology companies trying to change the world. Amazon, Microsoft, Google, Facebook, and dozens of other large tech firms make the Seattle area their home. It’s a tech-nerd town.
Living in this area, you end-up either working for one of the tech firms or you know someone who does… and that means I’m always getting a chance to see and try out all the latest new tech toys. From VR headsets to the latest smart home digital assistant, I get the opportunity to try out all the latest tech toys when I visit my friends.
They absolutely love to show off all the new toys, but seem disappointed when I never buy any of them. Frankly, I’m less than impressed by the tech giants’ latest offerings.
Take for example, the latest smart home digital assistants: Google Home Mini (starts at $29) and Amazon’s Echo Dot (starts at $29.99). What do these devices do? Play music, answer internet queries, power on/off smart-home controlled lights, and a variety of other tasks — all via voice control.
While the low end versions of these devices seem fairly affordable, I would argue that they’re actually just gateway
drugs devices to a larger “ecosystem” of spending.
Want to play music on your Amazon echo? Well, you’ll need a $99/yr Amazon prime membership, or Amazon Music ($9.99/month), or one of the other compatible music services to get the device to play music. The same goes for the Google Home. Out of the box you won’t be playing music without signing up for a music subscription service.
What about controlling your house lights and other devices? Well, without spending even more money you won’t be controlling anything. Smart plugs start at around $25 and smart light bulbs (for ceiling lights and other wall mounted fixtures) start at around $15. The same goes for smart home controllable video cameras, security systems, TV’s, microwaves, even washers and dryers. Nearly every device in your home can be controlled within these new smart home ecosystems… if you’re willing to pay for it.
This appears to be the true purpose behind all this new “smart” and “connected” technology — getting you to buy more stuff.
It’s The Productivity Stupid
As an intrepid investor, I’m always on the lookout for cool new investments — it doesn’t matter if it’s stocks, bonds, 3D printers, the latest electric car or even smart home tech. What I’m looking for is investments that can generate cash, save money, or improve my productivity.
Frankly, it’s been a long time since I’ve seen a new technology that really did any of those three.
Back in the old days when you bought a washing machine or dishwasher, the productivity improvements were immense. You went from hand-scrubbing your clothes in a sink for hours, to tossing them in the machine with a little soap. One machine freed up hours of your time to do other things.
But most of this modern technology isn’t going to be saving money or time in the form of productivity improvements. It’s going to cost money and you’ll spend hours getting it all setup and working properly. The end result of installing one of these smart home devices? A “hands free” home that has almost exactly the same level of productivity you had before.
Yes, it’s all very “Star Trek” to have a home you can talk to… but it’s not really any faster to turn the lights on or off with my voice instead of the lightswitch. In the same time it takes to say “OK Google, turn off the living room light”, I can just walk over and hit the light switch.
Old fashioned light switches are also far more reliable than any wifi enabled smart plug or smart light bulb. In fact, when was the last time you bought any electronic gadget that was durable enough to last more than 5 years?
Planned obsolescence is alive and well in all of your electronic gadgets. Don’t fool yourself into thinking any of this cheap new tech is going to last longer than one of those cheap toys you bought your kid for Christmas.
On the flip side, I’ve got light switches in my home over 30 years old (they still work) and they’ll probably keep on working for another 30 years. In the very rare case that one of these light switches needs replacing, the replacement cost is a mere $1.29 at my local hardware store.
The ROI winner seems pretty obvious to me.
Maybe it’s just a bad habit of mine, but I hold my investing lens over every single purchase to see if it passes muster. Does that make me a luddite? Well, maybe I am something of a luddite.
I love new technology as much as the next nerd, but the frugal investor in me says it rarely wins against existing tech that’s dirt cheap and far more reliable.
Even the smartphone, (which took the world by storm this last decade) I’m not entirely convinced about. As awesome as it is to have tons of computing power right in your pocket, a smartphone can also be a huge productivity waster. People can get sucked into social media, games, videos, and other time-wasters any time of the day. For all the big positives brought about by the smartphone revolution, there’s also big negatives.
Productivity stats seem to support my observation too — over the last decade productivity growth has slowed considerably. Coincidence? Maybe.
As an investor, I find these productivity statistics rather disturbing — I want my stocks to grow, but the only way that’s going happen is if the population grows (it’s under 1% in the U.S. now) OR labor productivity improves (growth has slowed considerably in recent years).
All the signs seem to point toward lower stock returns in the future, but it’s not related to a lack of new technology. There’s plenty of new tech around (more than ever), but we’re spending an increasingly large amount of time goofing-off with that technology — not producing more.
Are these devices just digital distractions used to lock you into one tech giant’s ecosystem, and then sell you even more devices and services?
I think so. It’s something to think about next time you hook-up that new smart home enabled device or power up that new tech gadget. Is it all really worth it?
What do you think — Will buying devices give us more freedom or time with family and friends? Or, should we simply invest the money into stocks instead?
[Image Credit: Flickr1]