AI will change the world III
A new Industrial Revolution
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There have been 3 Industrial Revolutions: The First Industrial Revolution in the late-1700s to early-1800s, which delivered technologies like steam engines and mechanized textile mills, The Second Industrial Revolution in the late-1800s to early-1900s which delivered technologies like electricity and railroads, and The Third Industrial Revolution in the mid-1900s to early-2000s which delivered things like the personal computer and Internet. We’re now at the beginning of the Fourth Industrial Revolution, enabled by Artificial Intelligence (AI).
The Fourth Industrial Revolution, like those that have come before it, will profoundly change American life. Specifically, the Fourth Industrial Revolution will change how we make things, how we work, and how much we can afford. Its impossible to predict exactly what changes the Fourth Industrial Revolution will bring, but here are some forecasts based on the past.
How we make things
The First and Second Industrial Revolution brought people from the farm to the cities, because that’s where the factory jobs were. America used to be a nation of farmers, today 83% are urbanized[i]. The birth rate has plummeted as a result. On the farms, you need lots of labor to help do the work; in the cities, kids are expensive. Computers and the Internet in the Third Industrial Revolution enabled offshoring, the relocation of those factory jobs overseas. The resulting problems are numerous, and there is no bigger problem in American life today.
AI, and the robotics it enables, will make it cheap to build things in America again. Many worry about the loss of blue-collar factory jobs in America from robotics, but those jobs are already gone, and have been for a while. The unemployment rate has been historically low for some time, and there is a labor shortage. Just ask any local restaurant trying to hire workers. Add in immigration restrictions and its clear we’ll have a blue-collar labor shortage for some time
How we work
The First and Second Industrial Revolution created factory jobs that led to the 9-to-5 work day, suburbanized the American geography, and even created the high school to college education pipeline. This has led to unaffordable urban housing, a student debt crisis, and a business culture of credentialism.
The late-Third Industrial Revolution has already led to the rise of remote work, which will reshape American Geography and lead to deurbanization (see my article Exurbia Rising). This trend will accelerate. AI will further decentralize factories and the hunt for more affordable housing will spur a migration from urban cores into the Heartland.
How much we can afford
The First and Second Industrial Revolutions led to mass production and the assembly line, which dramatically reduced the cost of goods. The Third Industrial Revolution led to basic automation and offshoring, which further reduced costs. To take the example of shoes, the entire shoe used to be handsewn by a single shoemaker. The result was a shoe of inconsistent quality, made in small volumes, and only available in the shoemaker’s immediate vicinity. Today Nike mass produces identical shoes using sewing machines, probably in Vietnam. The consumer has benefitted, and today everyone has relatively affordable and high-quality shoes.
The Fourth Industrial Revolution will result in even cheaper, more ubiquitous goods. Instead of producing things offshore, they will we made close to the consumer, eliminating transport and shipping costs. 3D printing will reduce supply chain complexity and repair costs. Instead of hunting for cheap human labor abroad, automation will allow wages approaching $0/hr in America for robot workers.
Looking ahead, it's clear that AI and The Fourth Industrial Revolution represent more than just technological advancement - they herald a fundamental restructuring of American society and economics. Just as previous Industrial Revolutions transformed how and where we live, The Fourth Industrial Revolution will reshape our communities, work patterns, and access to goods. With localized automated manufacturing reducing our dependence on global supply chains, remote work dissolving traditional geographic constraints, and AI-driven productivity gains making goods more affordable and accessible than ever before, we stand at the cusp of changes as profound as those brought by the steam engine, electricity, or the internet. While the exact path forward remains uncertain, history suggests that embracing and adapting to these transformative technologies - rather than resisting them - will be key to ensuring their benefits are broadly shared across society, just as they were in previous industrial revolutions.
[i] https://tradingeconomics.com/united-states/urban-population-percent-of-total-wb-data.html
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