Earlier in the week, I came across this post (via Fred Wilson), arguing that rapid technological progress is causing systemic deflation in the broader economy.

Here’s a chart that illustrates the author’s point:

What is happening here is that despite advances in technology and increases in productivity, real wages have been stagnant for decades. (This chart is for the US, but it likely applies to many other countries.)

This is an interesting paradox. For a long time, increases in productivity were met with corresponding increases in income. So why the divergence?

The author believes that it’s because the gains brought about by “extreme technological progress” are being unequally applied to the economy. In other words, they do not benefit the majority of people. He then goes on to argue that we could be entering an entirely new macroeconomic era: 

“Economic growth may be over soon, at least in absolute terms. On the other hand that will be at least partially offset by the technological deflation. So instead of the decline of the innovation it will be just the opposite, the explosion of the innovation that will turn the economy to the decline. And moreover, it will not be a tragedy since we will be able to produce higher standard of living with fraction of the GDP today. Few adjustments needs to be done into our economic system to cope with the change for sure.”

When you read things like this it makes the idea of a “basic income guarantee” seem far more palatable.

The other chart that stood out to me was this one below, which shows the declining cost of solar panels and the rise of global solar panel installations. 

It’s a great reminder that it’s only a matter of time before we wean ourselves off of oil. And, that we could be headed towards some sort of third industrial revolution where the marginal cost of energy is almost zero. Already about 25% of Germany’s electricity comes from renewables.

On that note, I am going to end with a fantastic interactive chart from The Economist (screenshot below) that outlines oil reserves around the world by country. If you click through to their website, you can then toggle the price of oil (per barrel) to see how much of those reserves are actually viable.

With the price of oil where it is today ($27.88 per barrel as of January 20, 2016), there are only a handful of countries with profitable oil. I am sure you could have guessed which ones.

What will happen if, or should I say when, that oil is no longer needed? 

One of the things that Joe Berridge reminded me of in his talk yesterday, is that the story of Toronto is really the story of immigration. 

In his words, Toronto has become the success story that it is precisely because we are good at taking in lots of immigrants and making them economically productive. 

Sure, there are many things that we could be doing better, but you don’t get to be the most multicultural city on the planet without doing a lot of things right. More than half of this city is now foreign born. The term “visible minority” is quickly expiring.

And more than anything else, this accomplishment is arguably what has allowed us to become the global city that we are. Click here for a fascinating chart from the Toronto Star that allows you to see the number and source of immigrants that have come to this city over the last half century.

But of course, Toronto is not alone in this accomplishment.

Urban economist Edward Glaeser wrote a great essay back in 2005 called Urban Colossus: Why is New York America’s Largest City? It’s an incredibly interesting read for those of you interested in cities and so I definitely recommend it.

But the crux of his argument is that New York is the largest and most dominant city in America because of geography – specifically its deep harbor – and because of its success in manufacturing.

What this meant is that New York became the center of shipping in the country and the point of entry for the majority of immigrants coming into the United States. But since transportation costs were still relatively high at the time, most immigrants arrived in New York and stayed in New York.

Luckily, New York had a robust manufacturing economy – notably because of sugar refining, publishing and printing, and the garment industry. This allowed the waves of immigrants flooding into New York to become economically productive.

From 1850 to 1920, the population of the New York grew about 800% from roughly 700,000 people to over 5.6 million people.

So the moral of the story is simply that immigration has and will continue to play a pivotal role in the shaping of our cities. Canada has a sub-replacement fertility rate somewhere around 1.61 births per woman (2012). This is lower than that of United States, which is around 1.88 births per woman.

That means that without immigration, we do not grow. We shrink. And that’s usually not a great thing for economies.

Earlier in the week, I came across this post (via Fred Wilson), arguing that rapid technological progress is causing systemic deflation in the broader economy.

Here’s a chart that illustrates the author’s point:

What is happening here is that despite advances in technology and increases in productivity, real wages have been stagnant for decades. (This chart is for the US, but it likely applies to many other countries.)

This is an interesting paradox. For a long time, increases in productivity were met with corresponding increases in income. So why the divergence?

The author believes that it’s because the gains brought about by “extreme technological progress” are being unequally applied to the economy. In other words, they do not benefit the majority of people. He then goes on to argue that we could be entering an entirely new macroeconomic era: 

“Economic growth may be over soon, at least in absolute terms. On the other hand that will be at least partially offset by the technological deflation. So instead of the decline of the innovation it will be just the opposite, the explosion of the innovation that will turn the economy to the decline. And moreover, it will not be a tragedy since we will be able to produce higher standard of living with fraction of the GDP today. Few adjustments needs to be done into our economic system to cope with the change for sure.”

When you read things like this it makes the idea of a “basic income guarantee” seem far more palatable.

The other chart that stood out to me was this one below, which shows the declining cost of solar panels and the rise of global solar panel installations. 

It’s a great reminder that it’s only a matter of time before we wean ourselves off of oil. And, that we could be headed towards some sort of third industrial revolution where the marginal cost of energy is almost zero. Already about 25% of Germany’s electricity comes from renewables.

On that note, I am going to end with a fantastic interactive chart from The Economist (screenshot below) that outlines oil reserves around the world by country. If you click through to their website, you can then toggle the price of oil (per barrel) to see how much of those reserves are actually viable.

With the price of oil where it is today ($27.88 per barrel as of January 20, 2016), there are only a handful of countries with profitable oil. I am sure you could have guessed which ones.

What will happen if, or should I say when, that oil is no longer needed? 

One of the things that Joe Berridge reminded me of in his talk yesterday, is that the story of Toronto is really the story of immigration. 

In his words, Toronto has become the success story that it is precisely because we are good at taking in lots of immigrants and making them economically productive. 

Sure, there are many things that we could be doing better, but you don’t get to be the most multicultural city on the planet without doing a lot of things right. More than half of this city is now foreign born. The term “visible minority” is quickly expiring.

And more than anything else, this accomplishment is arguably what has allowed us to become the global city that we are. Click here for a fascinating chart from the Toronto Star that allows you to see the number and source of immigrants that have come to this city over the last half century.

But of course, Toronto is not alone in this accomplishment.

Urban economist Edward Glaeser wrote a great essay back in 2005 called Urban Colossus: Why is New York America’s Largest City? It’s an incredibly interesting read for those of you interested in cities and so I definitely recommend it.

But the crux of his argument is that New York is the largest and most dominant city in America because of geography – specifically its deep harbor – and because of its success in manufacturing.

What this meant is that New York became the center of shipping in the country and the point of entry for the majority of immigrants coming into the United States. But since transportation costs were still relatively high at the time, most immigrants arrived in New York and stayed in New York.

Luckily, New York had a robust manufacturing economy – notably because of sugar refining, publishing and printing, and the garment industry. This allowed the waves of immigrants flooding into New York to become economically productive.

From 1850 to 1920, the population of the New York grew about 800% from roughly 700,000 people to over 5.6 million people.

So the moral of the story is simply that immigration has and will continue to play a pivotal role in the shaping of our cities. Canada has a sub-replacement fertility rate somewhere around 1.61 births per woman (2012). This is lower than that of United States, which is around 1.88 births per woman.

That means that without immigration, we do not grow. We shrink. And that’s usually not a great thing for economies.