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? 

The Neptis Foundation here in Toronto just recently published a fantastic report looking at the regional economic structure of the Greater Golden Horseshoe area. It’s called Planning for Prosperity.

In it they identity the polycentric nature of employment in the Toronto region by way of downtown Toronto and three suburban “megazones.” Here’s one of their maps showing overall employment density and the megazones (light blue circles):

Here’s a snippet to give you an idea of the scale of these megazones:

“The Airport megazone, one of the three employment megazones outside Downtown Toronto, is the second largest concentration of employment in Canada, after Downtown Toronto. It represents almost 300,000 jobs, more than the central business districts of Montreal, Vancouver, or Calgary individually.”

And here’s a chart showing the hard numbers:

Downtown Toronto dominates in terms of employment. But it’s also fascinating to see how much more efficiently it provides that employment. It has the smallest physical area of all the employment zones (2,540 hectares or 6,276 acres) and the lowest percentage of car trips (29%).

But the big takeaway from their report is that we have not been focused enough on employment in our planning. Instead, we seem to be thinking residentially. Here’s a final snippet:

“This study shows that the Growth Plan and The Big Move, which are currently under review, do not address the challenges and opportunities of a globalizing regional economy or the reality of a transforming economic landscape.

The Growth Plan’s focus has largely been on managing residential growth rather than non-residential and employment-related development. Indeed, the Growth Plan is based on shockingly little hard evidence on the evolving economy of the region. Plans for city-regions a fraction of the size of the GGH typically involve more economic research, analysis, and evidence.”

Clearly we need to be looking at both the residential and non-residential sides of the equation as we grow the region. To read the full report, click here.

I love the work that LSE Cities (London School of Economics) is doing with Urban Age. If you haven’t yet checked out their site, you should do that now. If you’re a city geek, it’s the kind of site you can get lost in for hours. Especially if you’re a sucker for great diagrams like I am.

Here’s one I found today that shows where cities are growing in the world:

Each circle represents a city (well, metropolitan area). The dark green dot is the city’s population in 1950. The lighter green dot is the city’s population in 1990. And the yellow dot is the city’s projected population by 2025. Click here for a larger version of the map.

What’s fascinating about this diagram is that you can so clearly see how the most significant population growth has shifted away from the West to the rest of the world and in particular Asia. That is, those dots have more yellow than green.

We, of course, already knew this was happening. And population is just one dimension. But it’s still interesting to see this in diagram form. We are living through the rise of the East. And this diagram is a reminder of that.