Business editor at large Liam Dann talks to Singularity University economist Amin Toufani about how the pace of technological change is re-shaping the world.
"The pace of technological change means our fundamental assumptions about economics need to be revisited," says Amin Toufani.
Toufani, is director of strategy at the Singularity University in Silicon Valley and was a key note speaker at the SingularityU Summit in Christchurch this week.
As well as a Stanford MBA and a masters' degree in economic policy from Harvard he has a degree in the science of artificial intelligence.
Toufani coined the term exponomics to refer to the economics of exponential technologies which are reshaping not just the business world but every aspect of life in the 21st century.
The sharing economy, block chain and micro-payments, the accessibility of big data and rise of robotics - not to mention the potential of self-driving vehicles, virtual reality, artificial intelligence and 3D printing - these things are reshaping the world faster than traditional economic policy of governments and central banks can adapt, he says.
There are US$13 trillion of negative yielding government bonds out there and countless billions have been printed to try to bring inflation back. None of it has worked, he says.
"We're not creating consumer inflation, we're creating asset inflation. We're sitting on a potential asset bubble."
He's only been in New Zealand a few days but sees us as a classic case in point. We've got interest rates at record lows, our inflation rate is still just 0.2 per cent and our house prices are the third most overvalued in the world, he says citing OECD house price statistics.
Toufani says the Reserve Bank response was about on par with the rest of the world. The re-think needs to go deeper than just our attitude to inflation, he says. In a world of ever improving technological efficiency GDP becomes a less valuable measure of success.
The SingularityU Summit was packed with speakers both warning and promising us a brave new world of abundance.
We are going to look back on this period in human history and question why we were so afraid of deflation.
It's a world where things are cheap but employment is uncertain.
Toufani uses the theoretical example of two new shampoo products. One is a more watery shampoo that requires users to use more of it and more often. The other cleans hair and also cures cancer.
According to the traditional economic model, if you asked the Finance Minister to choose which is a better product for the economy then it's the first shampoo that will generate more GDP.
Curing cancer will actually depress GDP.
In fact in most modern economies car crashes account for up to 3 per cent of GDP. "Exponential technological growth is magnifying extreme negative and extreme positives."
That's going to put the world at risk of more "black swan" (extraordinary and unpredictable) events.
Exponential technological growth is magnifying extreme negative and extreme positives.
If we persist with policies that exacerbate inequality and lock more people out of the new economy then we will see more Donald Trumps and Brexits, he says.
So will people cope? And what should we be teaching our children how to deal with the pace of change?
Toufani says we should be focused on AQ - adaptability quotient. Studies show that IQ is not a great predictor of success, and particularly after the first two years in the work place.
What people are going to need is the ability to "learn, unlearn and learn again", he says. "Unlearning should be a core competency."
But the risk is that many people will struggle and fail to adapt unless we look at more radical solutions.
Toufani believes the idea of the universal basic income - a guaranteed wage for everyone - will eventually have to be adopted.
"Countries have started talking about it. We are going to get there, its just a question of when."
Economists and governments need to reconsider their approach to scarcity, he says.
"A lot of our economic theories are predicated on the idea of scarcity. There is not enough of things to go around. It is true that exponential technologies will disrupt a lot of jobs but on balance there will be a lot more abundance in the world."
