What’s the most important resource? What is it, that if you control it, gives you power?
Here are four of the most common answers you will hear:
- The most important resource is land. Without land we have no food (or anything else for that matter).
- The most important resource is the labour of massed workers. Without anyone to do the work, nothing will get done and we will have nothing.
- The most important resource is the environment. Without air to breathe or water to drink, there is no economy.
- The most important resource is the capital that dictates what gets done. Money is power: we should try to remove aberrations that send capital into unnecessary and pointless directions.
Most people can align with one of these viewpoints. In fact, in Australia these viewpoints are so strongly held that we even have political parties to represent those who hold those views (in order: the Nationals, Labor, the Greens, the Liberals).
As far as I can tell, in the USA the middle two align with the Democrats and the outer two with the Republican party. In some states in Australia, a similar merge has happened with the Nationals and Liberal party merging.
We look at these answers as if they have been around forever and that there can be no other significant factor, ignoring the fact that “the labour of workers” as a significant asset was a rarely-expressed thought prior to 1850, nor was there much coherency to the green movement before “Silent Spring” in the 1960s.
But something has just changed. We’re seeing it first in Australia because of our preferential voting and large numbers of micro-parties. In this week’s elections, the vote for “other” parties grew. About 1 in every 4 Australians did not vote for any of the major parties, but instead voted for one of about 50 “other” parties.
There’s a good chance that “other” parties will end up holding the balance of power in the lower house and even with desperate changes to the voting rules enacted by the previous parliament, there are likely to be numerous “other” parties in the upper house.
And I think it’s an acknowledgement that there are other answers to my first question.
Let me add three answers, which statistically (according to the election results) must be viewpoints held by at least 250,000 adults in Australia:
- The most important resource in a society is the quality and depth of the religious faith of the members of that society.
- There is no important resource that is worth getting worked up about. Let’s all have sex and smoke dope.
- The most important input in the 21st century is the accessible and useable corpus of science, technology and engineering.
The religious faith answer is interesting in itself and maybe one day I’ll write an article on it. There are lots of different threads to that one.
The Sex Party and HEMP party alliance together polled nearly as well as the Christian parties. If we add in the Drug Reform party, they were well ahead. I’m not sure what to make of this. Does this show that we are a very mature country, well up on Maslow’s hierarchy of needs, or does it show the opposite?
But for now, let’s look at what happened with science, technology and engineering.
Have a look through the candidates for the Science party (which surely is the party closest to this last answer), and you will find a list of bright folks: a PhD in biochemistry here; a technology startup founder there; a professional scientist.
It’s a funny co-incidence, but those are all job titles of future equity lords. If you are a wealthy founder of a high-tech company, you probably at one point had a job title like one of those.
Let’s rewind. If you wanted to get wealthy twenty years ago, you went into finance, did some deals, took a cut and everyone came out smiling because there was always margin to be made. Play things right and you could make a few million just getting the right people and the right money together. You really only needed some capital.
If you wanted to get wealthy fifty years ago, you would have started a factory, employed lots of workers to churn out goods and made a profitable living on the marginal value that each worker could produce. You needed a supply of trainable workers and a bit of capital to get going.
If you wanted to get wealthy one hundred years ago, you needed to own land. The more of it you had, the more you could grow on that land. Come harvest time you would employ as much temporary labour as you could acquire and sold the goods produced. You needed land, a supply of semi-trained workers and a lot of capital.
Today, if you want to become wealthy, you need a skillset that lets youautomate somethingso that you can leverage your own brainpower to do the same work as a hundred people without that skill set. Here are some examples:
- A biotech startup that works out how to get bacteria to synthesise some useful industrial chemical.
- The machine learning / artificial intelligence startup that works out how to automate a white collar (or blue collar) job.
- The medtech startup that has some new process for treating or identifying a disease.
- The software company that creates a viral product that everybody wants.
You need very modest amounts of capital (the most expensive of these would probably be the medtech startup which would probably need to raise $5m). Since any of these occupation titles (computer scientist, biotech developer, medical device engineer) can generate very valuable intellectual property in a very short time, there’s a good chance that you would maintain a significant equity stake in your business after all the capital raising has been done and the company that you form goes on to become worth tens or hundreds of millions of dollars. There’s a name for the people whose lives have these trajectories: “equity lords”.
Emphatically, to get there, equity lords don’t need:
- A large workforce of unskilled or semi-skilled labour. Unlike manufacturing, doubling revenue does not require doubling the workforce. So right-wing parties trying to rail on the side of big business against labour unions are unlikely to be saying anything of importance. Let’s just put this into perspective: I overheard a salary negotiation for a potential new employee the other day. The employer had offered $140-$150k plus equity. The candidate replied that this was way too low, doubled the equity component and asked for $20k extra. The employer happily agreed saying “well if it’s only an extra $2,000 per month…” This company has less than 5 employees, but would have wages approaching $1m / year.
- Hundreds of millions of dollars of capital. We have moved into a world where the financiers are desperately trying to find returns and the only place they can find them is in the leftovers of startups. Financiers are trying to figure out how they can make cost-effective smaller investments because there just isn’t the call for big rounds of capital raising any more. So right-wing parties in the pockets of Wall Street (and its international equivalents) aren’t particularly relevant here either.
- Special government programs. (In fat, there is clear evidence from the that some of these can be actively damaging.) So leftist parties aren’t going to be terribly interesting to the equity class.
- Natural resources, land area, or access to particular places. I’ve seen (and worked with) hyper-growth firms that have operated out of heritage listed buildings, garages, beach fronts, dedicated incubators and top-floor city offices. I’ve had meetings with people running significant startup companies where we brought our children to the park and they worked sitting on a picnic rug. High population densities (to bring together the skills and resources required) do seem to be important, so both the parties supporting farmers and parties trying to keep the natural environment preserved are irrelevant and in some cases actively antagonistic. (Try suggesting “no genetically modified organisms” to a biotechnologist and see what happens.)
The story of the Australian (and the world economy) over the next 20–50 years is going to be the rise of this equity lord class. In the same way that the landed gentry gained wealth and then used that to leverage political power in the past, the equity lords will grow in wealth and in numbers and in their desire to be represented politically.
Who is going to represent them? Based on the dot points above it doesn’t look like any existing major party is well positioned for it. But there is at least one minor party that looks very well aligned. Looking at the parties at the last Federal election, it’s obvious who it will be representing the experts who will be running the artificial intelligences and nanotech factories that will be pervasive in our lives mid-century.
So, while it would be easy to dismiss the Science Party / Cyclists coalition as just another silly minor party (the one who polled lowest outside of their alliance), I’m predicting a steady growth over the next decades in both its size and its support. Paul Graham has written about the possible political implications of startups, and in Australia we’re seeing that play out starting right now. Don’t dismiss the possibility of Prime Minister Meow-Meow Ludo Meow defending the seat of Grayndler in the 2036 election.