Editor’s Note: Today, we bring you a special Sunday edition of the Diary written by Bill’s eldest son Will.

There’s a major shift coming in the distribution of wealth in the United States.

It’s going to cause extreme wealth inequality, far beyond what we’re seeing today.

World-renowned physicist Stephen Hawking wrote about it recently on the social news website Reddit. In response to a question about the threat of artificial intelligence and robotics in the future, he said:

If machines produce everything we need, the outcome will depend on how things are distributed — everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution.

So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.

In other words, Hawking believes that one of humanity’s biggest challenges in the future is how we’re going to squeeze the wealth generated by technology out of the owners of the technology…

There’s little doubt that exponential technology will produce vast amounts of wealth for its owners over the next 20-plus years.

After all, big improvements to quality of life quickly become necessities, making every person on the planet a potential customer.

Aside from that, the EZ credit world we live in practically ensures that any promising technology venture gets all the funding it could possibly need.

At ultra-low or negative interest rates money is penalized for sitting still. It must be deployed to chase returns. The financial industry is flooded with cash seeking an opportunity.

Natural flows of investment into technology are elevated by the “unconventional monetary policy” of central bankers.

But technology breakthroughs are not a positive for the economy as a whole.

Unlike in the Industrial Revolution, today’s technology destroys jobs. In the Information Age, technology seeks to remove the need for human labor or input.

My father wrote about this phenomenon in the August issue of The Bill Bonner Letter… Here, he quotes our resident tech expert, Jeff Brown:

Exponential improvements in technology do not directly correlate to increases in GDP; in fact, they often have the opposite effect of reducing cost, demonetizing products and services, and thus lowering GDP and hindering GDP growth.

Technology will have negative consequences for the current measures of economic progress and for individual workers, especially workers with lower levels of education and who lack specialization.

Today’s breakthrough technologies are deflationary. They create huge financial rewards for a small group of people while demonetizing the services of labor, as Jeff Brown points out, making many of those services essentially worthless…

Menial laborers, truck and taxi drivers, fast food workers, retail workers, cashiers, kitchen staff, and construction workers will mostly be displaced by technology over the next 10, 15, or 20 years…

What jobs will these people get after that?

They will compete with the 7.9 million people currently looking for work and others let go from other industries.

Already the labor participation rate is the lowest it has been in 40 years…

And household income has gone nowhere in the last 19 years…

What happened to labor in agriculture is a perfect example. Technology has reduced labor participation in the sector by over 80% in the last 100 years.

And 77% of the existing jobs in agriculture are done by low-wage foreign-born and undocumented labor.

Today, one man in a modern tractor can tend to hundreds of acres of crops through the growth cycle. Tomorrow, we won’t even need the one man…

Gartner, an information technology research and advisory firm, predicts that one-third of jobs will be replaced by software, robots, and smart machines by 2025.

That’s just 10 years away.

Last week the Bank of England warned that 80 million U.S. jobs could be lost to robots in the next couple of decades.

Maybe new industries will open up that we can’t imagine right now. Perhaps some workers could become asteroid miners, for example… A few, of course, will be robot minders.

But the owners of the machines that build this new world will get incredibly wealthy. And the ones who do not own technology will get left far behind.

Technology economists are looking at “Guaranteed Income” programs. The idea is that these programs introduce a uniform floor for living standards.

The owners of technology will be expected to support such a program.

Regardless of what sort of wealth redistribution programs the political class cooks up, which side of the technology divide do you want to be on?

After six years of studying the ultra-wealthy families in the world of family offices, I can tell you which side they plan to be on.

You would be surprised to know how much they invest in technology both for their businesses and in their portfolios. Successful multigenerational families are very forward-looking. That’s why they are choosing to be among the future owners of machines… not among the group dependent on the owners of technology…

I know which group I want to be a part of. And I feel it’s important for the benefit of my children for our family wealth to be on the right side of the technology divide.

That’s why I’m so excited for our upcoming webinar with our new resident tech investment guru, Jeff Brown.

I’ve been looking for years for someone like Jeff who can curate real opportunities in exponential technologies. The qualifications of genuine tech expertise and proven investment savvy are extremely rare.

And Jeff is not some sort of starry-eyed technophile with his head in the silicone…

He’s been a longtime reader of my father’s work and understands the perilous state of the U.S. financial system. In a nutshell, he gets it. But I’ll give you a more detailed look at Jeff’s bio in another update.

Sincerely,

Will Bonner
Publisher, Bonner & Partners